This is the first of two collections of website entries or posts on one of the key challenges of the century: sustainability with prosperity. The first part will look at the needs for change and the second on ways forward for the future: innovative solutions and different ways of seeing and doing things, different goals – and the processes of innovation, learning and change in society.
For example, the need to attend to: How the way we use materials and generate energy in our economy affects all life systems on our planet, on which we depend, How can we use limited resources more effectively and How we can meet everyone’s basic needs and ensure equal opportunity for there to be stable and healthy societies.
I will address such questions as:
What does it mean to live sustainably within our natural environment in the 21st century? What do we need to change in both our understanding and behaviour and why? How are we to achieve sustainability with prosperity and at the same time maintain and improve the quality of life for all?
Our technology is now very powerful in its effects on nature and each other, our population continues to grow, and what happens in any one country can affect others across the globe much more than before. Is there a need for greater collaboration and synergy: Between us and nature – the living systems of which we are a part, and Between us, richer and poorer, within and between societies
Does this mean a new kind of economy and technology? A fundamental change in the way we see and do things, and in how we identify our needs and get them met – a change in our culture and mentality?
Are these changes to co-exist with a changing capitalism?
Has social evolution towards another kind of economic and socio-cultural system started? How far is there a shared felt need for a change and what are the signs of it?
How much do we need to change, how can we make this attractive and possible, and how can technology help?
Does economics need to be a multidisciplinary subject covering all natural and social sciences?
Part 1: Forces for change, felt needs and challenges in adapting to them
1. Destruction of our Habitat
Human activities are now causing dangerous damage to the earth’s living systems and the sphere of life (biosphere) on which we depend – on land, in water and in the atmosphere: “ravaging” them as Martin Rees, the Astronomer Royal and recently President of the Royal Society, put it.
This is now called the anthropocene period due the impact we are having. As E. O. Wilson puts it: us humans have “palaeolithic emotions” (i.e. useful as hunter-gatherers), institutions that can bring out the worst in people (“evil” as he calls them) and “God-like power”. Gregory Bateson wrote around 40 years ago: the power of our technology demands an equal sense of responsibility towards our habitat and that Darwin should have given his book (Survival of Species) the title of “survival of species and habitat”.
We run the risk of causing irreversible serious damage to our habitat and its ecosystems in four key areas:
(1) Global climate change Virtually all climate scientists agree now that we are fast approaching a point of irreversible temperature increase, and that this is largely due to human activity, population growth and the nature of our technology. Rising temperatures can cause extreme weather conditions leading to drought and flooding that can affect food production, and in turn cause death, disease, mass migration and extinction of many plant and animal species. It can damage or destroy oceans, rain forests and soil. For the effects of temperature increases at each stage up to six degrees and how the effects accelerate see the book by Mark Lynas . It received the Royal Society Prize in 2008. For a summary see the effects of climate change by degree of temperature increase see this six page PDF .
James Lovelock proposed in the 1960’s that the living and non-living parts of the Earth form a complex interacting system, and that the living parts, the biosphere, have a regulatory effect on the Earth’s environment that acts to sustain life. Refinements of this hypothesis resulted in the ideas framed by it being used in fields such as Earth system science, biogeochemistry, systems ecology, and the emerging subject of geophysiology.
He has argued that the lack of respect humans have had for the biosphere, through the damage done to rainforests and the reduction in planetary biodiversity, is testing the earth system’s capacity to minimize the effects of the addition of greenhouse gases in the atmosphere that give rise to global warming. This in turn warms the oceans, which prevents the rise of oceanic nutrients into the surface waters and eliminates the algal blooms of phytoplankton on which oceanic food chains depend. The phytoplankton and forests are the main ways in which the interacting system draws down greenhouse gases, particularly carbon dioxide, to take it out of the atmosphere. This eliminates the planet’s negative feedbacks and increases the likelihood of homeostatic positive feedback potential associated with runaway global warming. Predictions about this, initially extreme from Lovelock, are uncertain as the systems involved are complex. For more on the uncertainties in predicting the accelerating increase in global temperatures see the work of David Wasdell in videos here: first an explanation and introduction to a new study and then an update . And further updates on his own website.
There is hope that we can keep the rise to 2.7C by 2100 following the 2015 Global Climate Change conference if the intended nationally determined contributions of 146 countries accounting for 90% of emissions are adhered to, and a five year review process agreed for ratcheting up to nearer the 2% limit considered to be safe by scientists. But there is much doubt about this due to the uncertainties in predicting the accelerating effects.
Sceptics remain and vested interests are fighting to maintain the technologies that
emit carbon. But in many ways the tide is turning around climate change at lease (see “The winning of the carbon war by Jeremy Leggett, and his e-mail summaries and commentaries on the Great Transition drama.
Lord Martin Rees sees the debate now to be about the ethics around our obligations to future generations more than about climate change itself. For more on his views see the TED talk . He calls for the commitment of scientists, engineers, economists and all disciplines, of politicians and the general public – a commitment similar to putting a man on moon in the 1960’s, but from all countries, The Global Apollo Program as it is now called. This needs to attend to both stopping putting so much carbon and other greenhouse gases into the air and to taking carbon out of the air through carbon sinks and other methods that mimic nature. We will watch for updates on progress on this.
(2) Extinction of plant and animal species and loss of biodiversity There does not seem to be sufficient awareness and appreciation of the implications and importance of this for us: the quality of our life is linked to that of all living species – see the work
of Kathy Willis Professor of Biodiversity at Oxford University and Director of Science at Kew Gardens, UK, where she has initiated the Kew World Report . All species (microorganisms, plants and animals) within ecosystems have a function and some are more key than others for the survival of the system as a whole, due to the interdependencies between them. Extinction rates of plants and animals are rising (destruction of their habitats through other uses of the land being a prime cause), and there could be mass extinction in the biosphere – which, as the Nobel prize winning scientist E. O. Wilson put it, future generations will least forgive us for. For the urgency of the situation see the iBooks on Life on Earth free to download from his Biodiversity Foundation
(3) Pollution Limits to maintain the Resilience of Ecosystems The most intractable wastes are nuclear wastes, hazardous wastes (like human synthesized chemicals), and greenhouse gases (such as CO2 and methane). They are chemically the hardest to sequester or detoxify, and economically and politically the most difficult to regulate. A recent report by the Stockholm Resilience Centre highlights the high risk of the biogeochemical flows of phosphorous and nitrogen, pesticides and fertilisers alongside changes in land use and the loss of genetic biodiversity, and the increasing risks of climate change (including 1 and 2 above). See a report and TED talk on all the nine planetary boundaries, or safe limits to keep within, to maintain the resilience of our ecosystems.
(4) Demands on our Planets Resources and Ecosystems: the Limits to Growth – An integrative model
We are drawing on the world’s resources faster than they can be restored, and we are releasing wastes and pollutants faster than the Earth can absorb them or render them harmless. For a video interview with Peter Jones on this website go to.
Donella Meadows, Jorgen Randers, and Dennis Meadows and the Club of Rome published the Limits to growth in 1972 and then Beyond the limits in 1992 when we had in many areas “overshot” our limits or expanded our demands on the planet’s resources and sinks through exponential growth in population and industrial production or output per capita, beyond what could be sustained over time; our “ecological footprint” had moved beyond the “carrying capacity” of one earth. The model integrates climate change, pollution the loss of biodiversity and habitat and the degradation of soil and oceans, population growth, poverty and inequality, linking to sections 1, 2 and 3 above and to 5, 6 and 7 below.
The Limits to Growth study and its updates used the theory of systems dynamics developed at Jay W. Forrester’s Institute at MIT to create a model. The model (World3) focuses on key factors or variables that have the greatest effect. It keeps track of stocks such as population, industrial capital, persistent pollution, and cultivated land. In the model those stocks change through flows affecting these such as births and deaths; investment and depreciation; pollution generation and assimilation; land erosion, use and development. Internal feedback loops within the structure of the system influence the entire system behaviour and the outcome of various scenarios. For example, as more land is made arable, what’s left is drier, or steeper, or has thinner soils. The cost of coping with these problems dramatically raises the cost of developing the land—a nonlinear relationship.
For more than a century, the world has been experiencing exponential growth in a number of areas, including population and industrial production. Positive feedback loops can reinforce and sustain exponential growth, and shorten the doubling time. From 1930 to 2000, the money value of world industrial output per capita grew by a factor of 14—an average doubling time of 19 years.
The model was used to create different future scenarios based on different amounts of resources available, different levels of agricultural productivity, birth control and environmental protection. The authors developed the model to understand the broad sweep of the future – how the expanding global population and materials economy would interact with and adapt to the earth’s limited carrying capacity over coming decades – not to make predictions. But the energy economist Matthew Simmons wrote (around 04), “The most amazing aspect of the book is how accurate many of the basic trend extrapolations … still were some 30 years later.”
In the scenarios only drastic measures for environmental protection proved to be suitable to change the systems behaviour, and only under these circumstances could scenarios be calculated in which both world population and wealth could remain at a constant level.
It has been “business as usual” from 1970 to 2010 with both the population and the economy growing and so we moved into overshoot by 1990. It was expected that delays in human and institutional decision making would lead to overshoot. Delays or mistakes in perceptions and in responses to try and keep the system within its limits can arise from inattention, faulty data, a false theory about how the system responds, deliberate efforts to mislead, or from the momentum that prevents the system from being stopped quickly.
To overshoot means to go too far, to grow so large so quickly that limits are exceeded, where we are drawing on the world’s resources faster than they can be restored, and we are releasing wastes and pollutants faster than the Earth can absorb them or render them harmless. When an overshoot occurs, it induces stresses that begin to slow and stop growth. Most scenarios resulted in an ongoing growth of population and of the economy up to a turning point around 2030. In 2004 in the 30 Year Update, the authors concluded that humanity is dangerously in a state of overshoot.
There have been changes and developments in technology but technology and markets by themselves are unlikely to prevent overshoot and collapse, as they are merely tools to serve the goals of society as a whole. For this we would need to have a different concept of growth as an Increase in the quality of life rather than an increase in material turnover. This would mean more security, greater happiness and wellbeing and sustainability.
If society’s implicit goals are to exploit nature, enrich the elites, and ignore the long term, then society will develop technologies and markets that destroy the environment, widen the gap between rich and poor, and optimise for short-term gain. In short, society develops technologies and markets that hasten a collapse instead of preventing it.
While there is more awareness and there are new technologies and institutions, there is no fundamental change yet in our obsession with economic growth as material turnover.
A useful and clear short video summary of the 2004 update of the Limits to Growth explains the basic concepts and the conclusions and corrects misunderstandings or misrepresentations. See the Club of Rome website where you can also find its reports and current projects.
2. Growth in Population
Population growth together with increasing industrial output are key drivers of the problems caused by making excessive demands on our ecosystems for food and resources, creating more waste and pollution than can be handled, taking too much land for habitation or production and, by more greenhouse gas emissions, increasing global temperature to a level that threatens life on land and in the oceans, and makes whole areas uninhabitable and dead. Population growth can give rise to many other challenges too: poverty, lack of healthcare, rising unrest and crime. See the website Population Matters.
In 1650, the world’s population had a doubling time (100% increase) of 240 years. By 1900, the doubling time was 100 years. The world population increased as countries began to industrialise from 1750 on, and dramatically so in the 20th century, due to medical advances and agricultural productivity. When The Limits to Growth was published in 1972, there were under 4bn (billion) people in the world, doubling in 47 years – much faster. There were more than 6bn in 2000, approximately ten times as many people on Earth as there had been in 1700. In 2015 there are now 7.3bn and current forecasts are around 9.5bn by 2050, and between 9.6bn and 12.3bn by 2100, 40 – 75% higher than 2015 – hopefully not more than 10.95 billion (3.9 billion or 50% higher than 2015, a growth rate of 0.59%). The annual global growth rate (percent growth over a period divided by number of years) peaked at 2.2% in 1963, and has declined to 1.14 in 2000 and 1.08% in 2015. If the global population in the last half of this century increases by 1.5bn then the annual rate over those 50 years will be 0.36%.
The decline in population growth rate is due to the demographic transition from high birth and death rates to low birth and death rates as a country develops from a pre-industrial to an industrialized economic system. For the stages countries go through, and variations, go to.
While the decline in population growth rate is forecast to continue for this century it will not down to near zero; population is likely to be still increasing according to the latest projections, as growth remains high in Latin America, the Middle East and Sub-Saharan Africa.
How far and when all countries reach the stage where birth and death rates are in balance and the rate of population growth goes back to where it was in agrarian economies, 0.5% a year is uncertain, and unlikely in this century. Hopefully though fertility rates will come down to a global average nearer to 2 per woman in the population.
3. Poverty and the Difference between Rich and Poor
(1) Extreme Poverty and The Gap between Rich and Poor Countries
In 1800 poverty evenly distributed across world, then the gap grew between developing and other economies. This gap is closing as China, India and now the more peaceful African economies have been developing over the last 30 years. South Korea invested in improved child mortality and human conditions and then economic growth. This has shown to be one of the shortest routes.
The UN Millenium Development Goals (MDGs) in 2000 set a target of reducing the extreme poverty rate in half by 2015, a goal that was met 5 years ahead of schedule in 2010; that year the World Bank estimated that around 1.29 billion people (18.4% of the world population then) lived in extreme poverty, as measured by subsisting on less than US$1.25 per day at 2005 prices. On September 23, 2015 the UK-based Financial Times reported that the World Bank intends to revise its income-based benchmark upward, to $1.90 a day. As a result, poverty numbers are likely to swell, according to that paper.
But income alone can be a misleading indicator of poverty. The 2010 Human Development Report introduced the Multidimensional Poverty Index (MPI), which measures not only income, but also basic needs. Using this tool, the United Nations Development Programme (UNDP) estimated that roughly 1.5 billion people remained in extreme poverty as opposed to the conventional figure of 1.2 billion. As this figure is considered more “holistic,” it may shed new light on relative deprivation within a country. For example, in Ethiopia, 39% of the population is considered extremely poor under conventional measures, but 90% are in multidimensional poverty.
Another version of the MPI, known as the Alkire-Foster Method, created by Sabina Alkire and James Foster of the Oxford Poverty & Human Development Initiative (OPHI), can be broken down to reflect both the incidence and the intensity of poverty. This tool is useful as development officials, using the “M0 measure” of the method (which is calculated by multiplying “the proportion of people who are poor by the percentage of dimensions in which they are deprived”), can determine the most likely causes of poverty within a region
Regional differences are key as this reduction in extreme poverty over 20 years since 1990 took place most notably in China, Indonesia, India, Pakistan and Vietnam. In other countries, especially in sub-Saharan Africa, extreme poverty increased between 2005 and 2011.
It seems unlikely that extreme poverty will reach “global zero” (reduced to 3%) of the population by 2030 as the UN and World Bank target suggests. Many think that the global reduction will slow down, especially in Africa, so that it will take five decades to reach this level. The most pessimist predictions over the next 20 years estimates is that 660 million will be still in extreme poverty in 2035. For a more optimistic view see:
There are a variety of factors that may reinforce or instigate the existence of extreme poverty, such as weak institutions, cycles of violence and a low level of growth. Recent World Bank research shows that some countries can get caught in a “fragility trap,” in which the above factors prevent the poorest nations from emerging from low-level equilibrium in the long run. Moreover, most of the reduction in extreme poverty over the past twenty years has taken place in countries that have not experienced a civil conflict or have had governing institutions with a strong capacity to actually govern. Thus, to end extreme poverty, it is also important to focus on the interrelated problems of fragility and conflict, which the UN recognises. At the same time ending extreme poverty is an investment as it can prevent conflict and war.
In 2013 The UN published a report by a “high level panel” on post-2015 goals. It stated: “Ending extreme poverty is just the beginning, not the end. It is vital, but our vision must be broader: to start countries on the path of sustainable development.”
Moving out of extreme poverty means families on average have two rather than five children independent of culture and religion which helps to address the issue of population growth. To attend to environmental sustainability countries need to reach higher levels of economic development
(2) Country Differences in Living Standards and Global Co-operation for Environmental Sustainability
Poor countries naturally seek to address poverty and to achieve the standard of living of the rich countries. This they feel needs to be addressed first before playing their part in addressing the environmental problems of climate change, and depletion of resources and biodiversity. In Maslow’s hierarchy of human needs survival comes first before attending to the needs of future generations and the wider living systems of which we are a part and on which we depend.
They seek compensation for the suffering and costs arising from the environmental effects of the technologies for development used by the richer nations, such as climate change and increases in global temperatures as well as more localised effects on ecosystems, livelihoods and communities resulting from the actions of multinational corporations.
But they also seek at the same the same economic development using these very same technologies that cause such damage to our shared global environment, and so damage to us all, alongside those that are more eco-friendly, such as renewable energy generation. India plans in 2015 to build a new coal power station each month (extracting and burning 1bn tonnes a year) to achieve its goal of 8% growth in GDP, while carbon capture technology is still undeveloped – following the example of China. They aim to eradicate extreme poverty and need to cope with nearly 400m more people over the next few decades. “You did it – it is our right to do the same – you cut your emissions first”.
In the Brandt report in 1980 it was clearly stated that environmental and social sustainability go together.
Rich and poor countries with high and low levels of emissions per person need to be treated differently in the move towards equal emissions per person across the planet – by contraction in permitted emission levels each year until convergence, or by cap and share.
(3) Inequality and Capitalism
Capitalism helps to reduce poverty through investment to move poorer countries into the next stage of economic development and hopefully beyond. But in the current system, economic growth benefits the rich more than the poor: it generally occurs in the already rich countries and flows disproportionately to the richest people within those countries. It is often easier for rich populations to save, invest, and multiply their capital.
Thomas Picketty published a book in 2013: Capitalism in the 21st C: The Economics of Inequality based on historical research in Europe and the US since the 18th century. The book’s central thesis is that when the rate of return on capital is greater than the rate of economic growth over the long term, the result is concentration of wealth. He argues that when growth is low, then wealth tends to accumulate more quickly from the rate of return on capital than from labour, and tends to accumulate more among the top 10% and 1%, increasing inequality. He sees this continuing in the 21st century, while the last century he sees as an exception to this, due to the great depression, world wars and government policy after world war two. This implies that not only is inequality a feature of capitalism, but that it increases as long as the rate of return on capital exceeds economic growth. If growth needs to be carefully managed to achieve sustainable prosperity, this feature of capitalism needs to be managed also. Unequal distribution of wealth causes social and economic instability.
But he can only see this trend towards greater income inequality being reversed through state interventionism. He proposes a global system of progressive wealth taxes to help reduce this and avoid the vast majority of wealth coming under the control of a tiny minority. Piketty proposes that a progressive annual global wealth tax of up to 2%, combined with a progressive income tax reaching as high as 80%, would reduce inequality, although he concedes that such a tax “would be politically impossible.” Richard Wilkinson (see next section) has other ideas on minding the income gap so that societies can be prosperous and stable and provide a good quality of life for all.
See also the studies of global inequality by Branko Milanovic Global Inequality: A New Approach for the Age of Globalisation
(4) Degree of Income Inequality within Countries
This affects the stability and health of societies and the quality of life for all: it is a key factor in sustainable living.
The degree of income inequality varies – in the UK for example it increased greatly in the 1980s, then more gradually in the 1990s, but in 2014 fell back to what it was two decades before (early 1990’s). Richard Wilkinson stresses the importance of minding the income gap so that societies can be prosperous and stable and provide a good quality of life for all. Thomas Picketty says income inequality matters as it causes social and economic instability. Richard Wilkinson’s research goes further in setting out the effects of a wider gap. Wilkinson and Pickett have shown in their 2009 book
Spirit Level, and on the Equality Trust website, that there is now a body of evidence that in richer countries income inequality, not the average income of a society, has harmful effects on the health, well being and quality of life in a society, and leads to a variety of social problems. This affects both high and low income groups: everyone is better off if there is a lower gap. Their study focused on 23 of the World Bank listed richest societies, and the income of the top 20% was 8 – 9.8 times higher than the bottom 20% in the more
unequal societies and 3.7 – 4.0 times higher in the more equal. Keeping within a healthy degree of income inequality can be more important than economic growth once material standards of living are at a good enough level.
For more on this in this website see:
4. Political Order, Governance, Concentration of power and the Voice of the Citizen
The evolution of forms of political order continues and together with inequalities has a great effect on the stability and health of societies, and their ability to adapt and work with larger systems of which they are a part – both international networks or organisations and the natural environment and biosphere. All this affects the quality of life for all. In both liberal and non-liberal economies and countries, the strength and efficacy of state institutions (and, these days, the rule of law even in countries that are still strongly tribal or controlled by an army) is critical. This includes intolerance of corruption. Whether a government is more autocratic or democratic, it needs to be in touch with and hear the voice of its citizens and to provide for them in order to be stable and effective in the longer term. The centralisation or concentration of power in business corporations or governments or the media is usually destabilising and can be destructive. “Absolute power corrupts absolutely” as the saying goes: a balance of powers is needed – and was built into institutions in many countries as the political order evolved over the last millennium.
Over the last century we have seen a growth of large multinational corporations (MNCs). In many cases their income exceeds that of smaller countries. There are of course economic advantages of size, such as economies of scale and influence. But at the same time they are very powerful and influential. National and international regulations may be insufficient to control their actions where these affect local communities and their natural resources and livelihoods or ecosystems – such as forests, rivers and oceans that can also serve an important function in the world and the biosphere as a whole. These might be crucial in maintaining the temperatures and climate that support life and food sources, in preserving necessary species diversity and in absorbing or treating pollution in water, soil or air. There is a risk that, driven by the profit motive, they will pursue one set of goals and values to the exclusion of others unless restrained by institutional investors and shareholders and by government regulation that can be enforced.
See Colin Crouch on the power of large corporations and the effects of neo-liberalism and trust in the markets
Some trade agreements between countries and global regions can increase the dominance of short-term economic gains over the quality of life for future generations. For example the Transatlantic Trade and Investment Partnership (TTIP) conducted outside the public eye between the EU and US is about reducing regulatory barriers to trade for big business, such as: food safety law, environmental legislation, banking regulations and the sovereign powers of individual nations. The process is undemocratic and secretive.
As Steve Randy Waldman has pointed out on his website technological change creates new concentrations of power (such as Google) that demand state action to protect a more broad based sharing of wealth and democratic government.
When a regional common market moves to form a federation with a parliament, a shared bureaucracy and a common currency demanding shared fiscal and monetary policies as in the European Union, it feels as if an undemocratic regional super-state is being created, with a complex process of negotiation between ministers from a number of countries. The movement towards ever greater union rather than close co-operation between nation states creates a backlash in which the demand for more local control can override the economic and other advantages of co-operation between the countries in many areas as seen recently in the UK voting to leave the EU.
In an age of increased globalisation and interdependency through innovation in the technologies of information, communication and transportation, international organisations and forms of governance are needed. But national sovereignty and identity prevails. International organisations such as the UN need the full agreement of the Security Council to intervene for peace and to protect against the excesses of war, and international agreements, such as the Climate Conferences, can only progress at the pace which most nations feel ready for, facilitated by international co-operation between countries.
Some Westernised liberal democracies are in dire need to reform as whole segments of a society can feel unheard and forgotten without their interests and needs being represented or even understood. This can be lower income groups or second or third generation immigrants. This can be destabilising both from within (as with the UK exit from the EU and the growth of extremist movements or political parties) or from without (vulnerability to the import of terrorism). Reform is not only necessary to address this but also to build a social consensus where needed on different important issues as they arise in an age of continuing turbulence and change.
In the 1980’s with the growth of neo-liberal ideology and belief in free markets, political party newspapers disappeared or were bought up by commercial media and broadcasters who then became the most important builders of social consensus. Elections became a battle fought out in the media for the favour of voters. (See Colin Crouch 2004 book called Post-Democratic Society) Organised civil society lost ground. Because civil society has become weaker, a gulf has opened up again between the state and the individual.
But elections and referendums become dangerously outmoded tools if they are not enriched with more sensible forms of citizens’ participation. An example of this the citizen convention. This is assembled by returning to the central principle of Athenian democracy: drafting by lot, or sortition as it is presently called (similar to selecting juries). Experiments with sortition have been successfully applied in the US, Australia, the Netherlands and Ireland (Northern Ireland and the Republic together). (See Reybrouck on citizen conventions ). There is a social movement promoting sortition.
This can be a mixture of 33 elected politicians and 66 citizens, drafted by lot, a random group put together by an independent research, taking account of age, sex and place of birth. The group might meet one weekend per month for more than a year. It could invite experts, rely on professionals to moderate debates and put questions to citizens.
The decisions made by such a convention do not have the force of law but it is essential that action is seen to be taken by the government as a result. Legislation arises from the interaction between the convention and an elected chamber, and may involve a referendum.
By talking to a diverse cross-section of society, politicians can get further than they can by just talking to each other. By exchanging views with elected officials, citizens can give much more relevant input than they could have in an election or a referendum. The rest of society has a chance to follow and contribute to the deliberations. A cross-section of society that is informed can act more coherently than an entire society that is uninformed.
Elections and referendums become dangerously outmoded tools if they are not enriched with more sensible forms of citizens’ participation. Structured deliberation with a random sample of citizens promises to generate a more vital, dynamic and inclusive form of democracy. Voting on the basis of gut feeling is replaced by sensible deliberation, as those who have been drafted are exposed to expert opinion, objective information and public debate. The risk of corruption is reduced, election fever abates and attention to the common good increases.
5. Unstable financial and economic systems: Regulation of Markets and Size and Diversity of Suppliers
The crash of the financial system in 2008 had three main underlying causes: deregulation of markets, alongside the globalisation of the economy and the development of information and communications technology. Deregulation began in the early 1980’s, the Reagan and Thatcher years. It followed a neo-liberal ideology that discarded contradictory evidence and was not based on a sound understanding of how economies function, the limits of markets and how to make them work – as the economist Joe Stiglitz has stressed. The safeguards set up after the Great Depression in the 1930’s were abandoned – such as the separation of investment banking from retail banking.
As Colin Crouch Professor of Governance and Public Management at Warwick University Business School has said: We know that when markets are extended they generate what is known as “negative externalities” – damage caused by market behaviour that does not enter into the cost calculations of those producing it. The most obvious and biggest examples concern pollution, climate change and exploitation of nature to the detriment of future generations. Left to itself, the market only rarely gives firm incentives to reduce any damage it causes to the general environment. But there are many other less obvious examples of such externalities, such as the exaggerated and highly disruptive effect produced on the economy by the movement of vast funds of speculative finance. Or the need to control food processing businesses that supply convenient tasty food that affects health and life expectancy, and which in turn increases demands on the health services. The single-minded concentration on profit maximisation undermines values and common decency. In his book on the non-death of neo-liberalism he emphasizes the power of large corporations and the effects of under-regulated markets.
Governments had to bail out the banks as they were so big that they could not be allowed to fail as the effect on the economy would be disastrous. This removed the natural boundaries set by the market itself, going out of business as a consequence. On top of that those who had profited from the excesses did not seem to suffer – but the poorest in society did suffer as there was a hole in public finances and the reduction on government spending hit them hard. This increased the sense of injustice and the anger at the failures of the capitalist system.
There has been an increase in regulation of banking since. Barclays in the UK began separating its investment and retail businesses in 2016, eight years later. The German banking system has more diverse set of institutions of different sizes and constitutions, where regional savings banks and co-operatives, which make up 70% of the banking sector, are mandated to provide credit for productive use, the common good and for financial inclusion, and local savings are used for local loans and small businesses, with profits staying within the region. This was previously looked down on, but is now seen as a sound model. Alternative forms of exchange and finance have emerged since the crash. There are blogs on this site on the instability of the financial system (from a talk by Lord Adair Turner) and on conference on
We have known how to reduce the degree of leveraging in financial markets, how to tax the volume of transactions in those markets, and how to protect banks’ main holdings from speculative activity. But the power of big business and the predominant ideology of the time prevented government action until there was a disaster.
Hopefully now the learning from the crash of the unstable financial system can be applied generally to the managing of markets and the economy in ways that meet more comprehensively the needs of human beings and living systems of which we are a part, around a set of goals that put the quality of life, indeed all life, first, in which a sound and stable economy would be a part.
Reforming capitalism and regulating markets sufficiently, and allowing a diversity of institutions and models of the economy and ownership to flourish together (as in German banking and in alternative forms of finance and exchange) might then be seen as the way forward in facilitating the emergence of an economy and ways of governance that fit the needs to the 21st century and beyond.
6. Will Capitalism remain the dominant economic paradigm?
The capitalist system helped improve the material standard of living immensely but at a cost, to people and more recently to our natural environment. It may have fulfilled its function and had its place in history while still having a role –in a different kind of economy that fits the needs of the 21st century.
In the last 250 years capitalism has been the dominant organising framework for economic activity with an accompanying narrative on human nature. As Rifkin points out, every economic paradigm has a source of energy, and a means of communication
and mobility. In the first century of capitalism these were coal mining, railways, and the telegraph. To build the infrastructure for these and to provide cheaper products affordable to larger numbers of people, companies needed national rather than local markets and to raise massive capital. To do this they needed to integrate economic activity across markets, regions and then countries. All this raised living standards and provided many benefits. But the rich got richer as the flow of wealth was to the top, to those controlling these big corporations. Some economic paradigms create more concentration of wealth and power. Recently it has been noted that the accumulated combined wealth of 65 people equals that of half the population of the world. Many have been excluded from the benefits of capitalism, despite the attempts of left wing governments to redistribute them through taxation. The capitalist system also tries to turn and package everything it can into a commodity that can be priced and exchanged in a market as property, even trying to price the priceless. The market mentality can then enter into areas of life and human activity and exchange for which it is not suitable, and erode the ethics and values that underpin civil society and the quality of life. In Part 2 we will look at both changes in what people feel they need and also at signs of new forms of organising our economy and society so that it meets our needs more comprehensively, including our needs for a healthy natural environment.
7. Looking ahead to Part 2: Ways forward for the Future Sustainable Prosperity within ecological limits and a Good Quality of Life for all – are these incompatible needs within the current system?
As seen in Part 1 for our survival and the survival of the habitat on which we depend we need not just to reform capitalism – though this may be part of the solution – but change our concepts of wealth, growth, and quality of life. This would entail a broader understanding and a greater social consensus on what the quality of our life, and of our wellbeing, depend on: the quality of our societies and the quality of our natural environment alongside material living standards. We have seen how, once material needs are sufficiently met the degree of income inequality and the balance in social organisation between reciprocal co-operation and status or dominance hierarchies (the health and stability of a society) affects our health, our access to information and our opportunities to progress through access to more than basic education and through personal rights and freedom, choice and inclusion (see Wilkinson and the Social Progress Indicator). There is a felt need for more mixed forms of organising, sometimes enabled by the internet, such as horizontal networks and collaborative circles alongside hierarchy, and the humanising and localising of economic exchange, and more local control over it.
As the updated Limits to Growth stated in 2004, a sustainable scenario for the future would mean stabilising population and output per person and creating technologies to preserve resources and the biosphere. See summary of the update. But technology and markets by themselves are unlikely to prevent overshoot and collapse, as they are merely tools to serve the goals of society as a whole. For this we would need to have a different concept of growth as an Increase in the quality of life in all its senses rather than an increase in material turnover. This would mean more security, greater happiness and wellbeing and sustainability. This requires a richer concept of the quality of life, which would include the quality of the natural environment. This in turn requires an ecological awareness and a connection with nature, preferably from early years.
So two themes are emerging around which a social consensus can form for a redefinition of the goals of society as a whole:
Growth as the increase in quality of life rather than the quantity of material turnover
An economy that emphasises collaboration and reciprocity both between us and with nature
There is a growing awareness that if society’s implicit goals are to exploit nature, enrich the elites, and ignore the long term, then society will develop technologies and markets that destroy the environment, widen the gap between rich and poor, and optimize for short-term gain – rather than be working in tune with the environment and needs of all, now and in the future. In short, society has been developing technologies and markets that hasten a collapse instead of preventing it. The signs of this, alongside the human needs that are not met by our current economic system, are disrupting the current economic paradigm.
While there are signs too of the development of low carbon technologies and greater efficiencies in the use and reuse of materials and resources the concept of growth remains the same while the need for change is all the more urgent.
The Limits to Growth model was used to create different future scenarios. Most of them resulted in an ongoing growth of population and of the economy up to a turning point around 2030. This is now fast approaching. There is a greater awareness than there was and for some a greater sense of urgency. There is a growing consensus at a global level as shown in the Climate Conference in Paris in 2015 as many countries have begun to address climate issues at local level since 2011. But there is not yet a comprehensive social consensus in countries that incorporates an integration of sustainable social, economic and environmental objectives. This would create a new paradigm for our societies, economies and technologies as well as our relations with our natural environment. There are encouraging signs of innovation which demonstrate realistic alternatives in technology and in ways of doing things. But until a new way of thinking about quality of life in all its aspects (economic, social and environmental) takes shape any hope stemming from these signs is not likely to be well grounded yet. It seems we are in what the Chinese have called a spring-autumn period: the old ways of organising society and our lives are dying and the signs of new ones are emerging. Maybe in such a period of transition the new and old will coexist in society while experimentation with, confidence in, and attraction to, the new in diverse forms reaches a critical mass, perhaps accompanied by the emotional shock of disasters in a larger scale caused by the outmoded old system. Many have seen an epochal change or major paradigm shift occurring in society with the onset of a new millennium. Once problems or issues arise that cannot be explained or resolved well enough within the current paradigm and system, inconsistencies build up and fester until there comes a point at which there is a strong felt need for change and people see that the fundamentals of the current system need to be questioned and changed. In such times of turbulence we need to work together, with a clear sense of what is needed and important, and how to go about it, so that we can build our confidence and hope and exercise our creativity, with a sense of urgency and realism – rather than becoming the victims of the anxiety, powerlessness, anger and despair that lead to escapism, distraction and denial.
Joanna Macy’s writing on the great transition has inspired many in finding an way of participating actively with others in it. The founder of analytical psychology, Carl Jung, described what he saw to be a major transition and the key role human beings play in being part of it, both unconsciously and consciously.
In Part 2 we will explore all this further.
For the full synopsis by Donella Meadows and her co-authors in 2004
For more information on how change the drivers, structure and dynamics of a system such as the one described in the Limits to Growth see Thinking in Systems by Donella Meadows (Earthscan) and chapter six on leverage points and places to intervene in a system to enable change – see also a paper on this. This is based on the system dynamics model developed by Jay Forrester at MIT (Pegasus Communications 1990) and see www.systemdynamics.org for the system dynamics society.