The Design Characteristics of a Sustainable World
Paper prepared for Workshop C3 of the INES Conference, Stockholm, June 2000
The goal of sustainability owes much of its popularity to the freedom people have to define the term in whatever way they wish. Twenty-four different definitions were assembled in 1989 for the book Blueprint for a Green Economy and many more have been formulated since. Consequently, rather than spending time choosing between existing definitions, it might be better to develop one for ourselves. Here goes: in a sustainable world, all the processes by which things are produced, once established, would be capable of being carried on unchanged for an indefinite period without causing a progressive deterioration in any factor - human or environmental - which they affected or on which they relied.
'Capable' is the key word here. The definition does not mean that each process has to remain unchanged for the foreseeable future but excludes processes which we know will require to be changed at some stage, perhaps by a still-to-be-developed technological innovation, to overcome features such as a build-up of pollutants or the exhaustion of mineral deposits which would otherwise make them unsustainable. On the other hand, the definition does allow processes which cause initial changes to be regarded as sustainable so long as they can then be continued for hundreds of years without causing further changes. For example, a farming system which involves the clearance of a limited area of scrub could be regarded as sustainable if, once the scrub is cleared, no further scrub clearance is necessary, no species suffers a significant fall in numbers and farming can continue for generations on the cleared section without its fertility declining or its soil being lost.
By the terms of our definition, the set of processes by which the needs of most of humankind is currently met, the world economic system, is seriously unsustainable. The most obvious reason for believing this to be the case is that the process releases into the atmosphere each year such large quantities of carbon dioxide and other greenhouse gases that they have overwhelmed the planet's natural absorption capacity and are causing the climate to change slowly in ways which are, on balance, almost certainly unfavourable. At best, severe storms can be expected to become more frequent and tropical diseases to spread. At worst, a new ice age might be induced.
Another reason to regard the world economy as unsustainable is that the agricultural methods it employs cause soil to be lost at up to thirty times the rate it is being created In addition, the natural genetic resistance of crops to pests and diseases is being neutralised to such an extent that within a few years it could become impossible to grow one or more major food crops however much insecticide or fungicide is applied.
A third reason for claiming that the world economy is unsustainable is that some of the chemicals it employs mimic human hormones and disrupt the body's endocrine system. As a result, the sperm counts of European men have been falling at three per cent per year since the chemicals concerned began to come into use half a century ago. The same chemicals are also causing increases in testicular and breast cancer and are causing fewer baby boys to be born relative to the number of girls. Moreover, of those boys born, increased numbers have defective genitals. In short, the world economic system is undermining humanity's ability to reproduce itself. If the human race is not sustainable then its economic system certainly isn't either.
Many, many more examples of the unsustainable aspects of the world economy could be mentioned but the three above are enough to make it clear that the process by which most of humanity lives has to be changed radically before we can rely on our being able to continue it for very much longer without bringing one or more catastrophes upon our heads.
Most economists would agree the economic system is not sustainable in its present form but would go on to argue that a definition of sustainability which precludes change - as ours does - is invalid because it prevents the economy responding to price signals and using changes in technology to correct its faults. They would point out that the economic system has been changing through the centuries and if at any time in the past five hundred years contemporary trends had been projected far enough into the future, the economy of the period would have been unsustainable by our definition too. In this context, one of them would be certain to trot out the anonymous and possibly apocryphal nineteenth century prediction that if the volume of traffic in New York continued to grow at the then-current rate it would not be long before the streets were six feet deep in horse manure.
Until his death early in 1998, Julian Simon of the University of Maryland was one of the most prominent economists to argue along these lines. He believed that there is no need to establish sustainable systems now because human ingenuity will allow us, and our descendants, to invent our way around whatever crises our perpetual unsustainability creates - just as people appear to have been able to do in the past. He stated this position clearly in a debate with Norman Myers at Columbia University in 1992: Myers had been talking about what he saw as increasingly acute shortages of water in many parts of the world. "Some people might say 'Well, technology always comes up with a substitute'. We haven't found a substitute for water yet" Myers commented. To this, Simon replied:
Here we have the difference in our basic views. Norman's view is: "We cannot go on like this. The well must eventually run dry"...Nevertheless, the evidence of history is that these positive trends [he had mentioned improvements in the quality of drinking water in the US, side-stepping the issue of the limits to the supply] have indeed gone on forever all throughout our history. And there's no reason I know of why this cannot continue to go on forever. Three hundred years ago, people used to worry terribly in England about smoke in the air. And for good reason: it was awful in London. Now look at the average smoke levels.... from 1922 to 1970-71. The smoke levels have been going down, down, down, The air was awful early on but became less and less awful.
Very few economists have opposed this view. One of the pioneering exceptions was E.J. Mishan of the London School of Economics who pointed out that just because we've got away with relying on technology to rescue us from our follies in the past doesn't mean that it always will: "A man who falls from a hundred-storey building will survive the first ninety-nine storeys unscathed." Mishan wrote in 1976 "Were he as sanguine as some of our technocrats, his confidence would grow with the number of storeys he passed on his downward flight and would be at a maximum just before his free-fall abruptly halted."
Herman Daly who, strangely, was a colleague of Simon's at the University of Maryland, is the leading economist today to attack the idea that constant economic expansion is sustainable. He argues that a sustainable society has three characteristics:
* it does not use renewable resources faster than they regenerate
* it does not use non-renewable resources faster than renewable substitutes are developed for them
* it does not release pollutants faster than natural systems can break them down.
The many definitions of sustainability can be grouped into two categories according to whether or not they accept the existence of limits: those which do, like Daly's and the definition which opened this chapter, are 'strong' while Simon's approach - I have been unable to trace a formal definition by him - is 'weak'. Tim O'Riordan termed weak sustainability definitions 'technocentric' because of their reliance on technology to remove constraints which would otherwise make them untenable. The strong sustainability definitions he called 'ecocentric' because they accept ecological limits. There is no middle ground - one either accepts that there are limits or one does not.
The essential difference between weak and strong sustainability is ideological. If one believes in free markets and thinks that the effects of government planning are usually bad, one is intellectually unable to accept a strong sustainability approach. This is because, once one accepts that the level of resource use is limited, one has to have some way of sharing the right to use those limited resources not only among the Earth's present population but also among future generations who cannot stake their claim to use them through free market mechanisms. Indeed, a large segment of the today's human population is currently too poor to register its resource use needs in the marketplace and if the acceptance of limits causes hopes of providing higher incomes and extra resources for them to be abandoned, the fact that they are deprived while others consume resources profligately becomes ethically unacceptable. As Henry Wallich put it: "Growth is a substitute for equality of income. So long as there is growth there is hope, and that makes large income differentials tolerable."
In short, the acceptance of limits means that the role of the market has to be curtailed and not only have value-based judgements to be made about who is to get how much and when but that government planners have to be involved in sharing things out. As both of these are anathema to economists trained to regard their discipline as 'positive' and value-free rather than normative, it is scarcely surprising that, despite all the evidence, they insist on believing that growth can go on.
The clash between the strong and weak definitions of sustainability is in fact between two paradigms - the conventional, growth-based one, and an emerging ecological rival which holds that sustainability is closely related to stability and that fiercely competitive markets and the completely free movement of goods and of capital stand in the way of the development of a socially, culturally, economically and environmentally sustainable future.
Obviously, a very different world would emerge if there was a general insistence on a strong definition of sustainability rather than a weak one. Weak definitions, such as the World Bank's "non-declining per capita utility" lead to rapid and accelerating rates of social and economic change while strong ones lead to economic systems, and thus societies, which change very slowly. Some people oppose strong definitions for this reason alone. As John Maddox, a former editor of the British science magazine Nature wrote in 1972: "Widespread acceptance of what the doomsday men are asking for could so undermine the pattern of economic life as to create social stagnation."
But is the choice of definition a simply matter of one's political persuasion or ideological taste? Do left-wingers and pessimists choose strong definitions while right-wingers and optimists pick weak ones with no-one able to show that either is wrong? This paper will show that there are four grounds on which weak sustainability approaches are so deficient that they have to be rejected. These are:
1. Complexity. The interactions between humans and the natural world are now so complex and far-reaching that we cannot rely on our having the knowledge and means to correct the consequences of unsustainabilities before catastrophic damage is done. Instead, a safety-first policy needs to be adopted and known unsustainabilities eliminated as quickly as we can. However, as I explain later on, removing one unsustainability can aggravate another, so we would need to proceed with care.
2. Reaction time: Every year, the current pattern of economic growth increases humanity's impact on the planet and thus reduces the time available to implement solutions to any unsustainability crises which arise. The only forms of economic growth which do not require faster reaction times are those rare types which reduce human environmental impact rather than increase it. However, countries cannot prevent forms of growth which make their economies less sustainable while at the same time maintaining their international competitiveness and obeying the rules of the world trade system; nor can they deal with sustainability crises by themselves. International agreement is required before action can be taken to deal with sustainability crises and the need to secure such agreements makes the achievement of increasingly fast (and, ultimately, infinitely fast) reaction times impossible.
3. Absence of limits: Because the weak sustainability position says, in effect, that there are no constraints and anything might happen, it makes it impossible to imagine a desirable future and to work out the steps required to move towards it. Technocentrism also removes any basis for voters to say that an unsustainability has become sufficiently serious to require an immediate, costly, legal remedy because they cannot know whether or not a marvellous innovation is just around the corner which will enable the problem to be solved cheaply overnight. In other words, although weak sustainability postulates a reaction mechanism to remedy the unsustainabilities in the economic system, its refusal to accept fixed limits means that there is no point at which a legal correction mechanism is certain to kick in. Moreover, the price mechanism technocentrists favour will only make it profitable to develop solutions if the those affected not only have enough cash to constitute a significant sales opportunity but can ignore a barrage of propaganda from vested interests and express their fears through the market before the problem becomes insoluble. This absence of a guaranteed correction mechanism invalidates the whole weak sustainability approach.
4. Efficiency. Although allowing a crisis to develop and then seeking a solution is generally much less efficient way of using resources than attempting to eliminate the problem at the design stage, because technocentrists believe that there are no limits to the earth's resources, they do not consider it necessary to be efficient in the way those resources are used. This paper shows that inefficiencies arising from the failure to plan are already so large in several industrialised countries that the cost of remedying the problems created by the way the economic system operates is now consuming so much of the total amount of goods and services produced that each year's economic growth destroys more resources than it creates. In other words, the free market system has gone into reverse as a way of generating benefits for the many rather than the few. There could be no more powerful reason for rejecting it.
Let us look at these four objections to the weak sustainability approach in more detail.
Those urging a technocentric approach seem to know little about current technologies and their consequences. Consider, for example, the problems being created by just one small aspect of the present economic system, its growing use of chemicals. According to the UN's 1997 Global Environmental Outlook "The increasing, pervasive use and spread of chemicals to fuel economic development is causing major health risks, environmental contamination, and disposal problems." It adds: "Environmental emergencies involving chemicals appear to be steadily increasing."
Surprisingly little is known about the health and environmental effects of most of the high volume chemicals in commercial use, let alone the obscure, low-volume ones. A recent report took a random sample of 100 chemicals out of 486 which were produced in large quantities (over 5,000 tonnes per year) and which had already been the subject of environmental concern. It found that:
* 63% of the sample had no published carcinogenicity data.
* 53 % lacked reproductive toxicity test data.
* 67% lacked neurotoxicity test data.
* 86% lacked immune system toxicity test data.
* 90% had not been tested for their impact on children.
* 58% lacked recent chronic toxicity test data
Just identifying those chemicals which present a threat to human fertility by acting as endocrine-disrupters would involve an immense about of work and removing the offenders from use would require even more as international legislation would have to be enacted and safe substitutes found. About fifty chemicals have been identified as endocrine disrupters to date, most of which are still in use, but roughly 70,000 commercial chemicals are still untested. An American commentator recently outlined what thoroughly testing this number would involve:
To understand the problem of endocrine-disrupting chemicals, we must study the interactions between combinations of chemicals; we must study these interactions on at least two generations of live animals; we must expose these animals at different moments in their lives (different times prior to birth and after birth). And of course, the animals must be exposed to various concentrations of the chemicals to see if a dose-response relationship becomes evident.
The need to test combinations complicates the picture enormously. For example, to test just the commonest 1000 toxic chemicals in unique combinations of three would require at least 166 million different experiments (and this disregards the need to study varying doses given to animals at varying times during their lives). If we wanted to conduct the 166 million experiments in just 20 years, we would have to complete 8.3 million tests each year. The US presently has the capacity to conduct only a few hundred such tests each year. Just training sufficient personnel to conduct 8.3 million animal tests each year is beyond our national capacity.
The task of establishing whether or not our present economic system is building up insuperable problems for humanity and then taking corrective action is therefore huge. Indeed, given that the unforeseen effects of chemical use are only one potential source of unsustainability among many, some might suspect that the job cannot be completed before a serious breakdown occurs. The fact that the majority of economists seem happy to think otherwise might well be because they are working at a theoretical level and haven't the faintest idea of the practical problems involved.
2. Reaction Time
A minimum response to the complexity problem is to adopt the "If you are in a hole, stop digging" principle and refrain from making it worse. For chemicals, this principle would mean freezing the output of untested chemicals already in production until adequate safety data were on file and making it illegal for new chemicals to be put into use without being properly screened first. More generally, it would involve stopping those forms of economic growth which increase the human impact on the environment and, as a result of the introduction of new substances and new technologies, make that impact more complex.
Unfortunately, halting almost all forms of growth and refraining from doing anything new until existing unsustainabilities have been identified and corrected is not a viable strategy because it will, itself, cause the system to collapse. The world is in a classic Catch-22 situation - we can't make its free market economic system sustainable because it is so unsustainable that it breaks down if we try.
This is why. In industrialised economies, roughly a fifth of all the goods and services produced are ploughed back into the economy each year to increase - not just to maintain - the country's capital stock, its national collection of machines, factories, roads, houses and so on. If an individual government introduced legislation to ensure that the only projects which went ahead made the country more sustainable by reducing the impact its citizens were having on the environment, most investment projects would be ruled out, causing job losses among builders, machinery suppliers, architects, lawyers and financiers. At least in the short-term, the investment funds would be moved abroad and as the newly-unemployed people would have less to spend, the chain stores, travel agents and garages dealing with them would be forced to make lay-offs too. These job losses would in turn lead to further ones and the economy would spiral downwards into an ever-deepening depression. There is no way that a country which works alone while insisting on staying within the constraints of the global market economy and allowing the free movement of goods and capital could avoid such a collapse.
Does collective international action offer a way ahead then? The answer is almost certainly 'no' as in the unlikely event that an international treaty involving measures to restrict growth was signed, it would probably prove unenforceable since, in a world in which jobs and prosperity depend on being internationally competitive, governments would be certain to collude with companies operating within their borders to ignore some of the treaty's provisions and thus steal a march on their neighbours. Even if an international agency undertook the policing, the result would probably be the same. After all, the UN has not been able to assure itself that Iraq is not making chemical weapons despite having inspection teams in that country.
Moreover, even if governments supported the treaty and there was a low level of evasion, there is a risk that introduction of more stringent project approval criteria would cut the proportion of world output being ploughed back into investment and cause an international slump unless demand for consumer goods was increased by shifting spending power to the poor to compensate. Such a shift would require a global planning exercise which would be rejected by those who believe in the free-market approach.
It is thus almost impossible to stop the growth process increasing the level of international economic unsustainability if policies protecting the free movement of goods, services and capital are maintained. As a result, human pressure on the environment will almost certainly increase since the only mechanism in the technocentric model which could prevent it from doing so, the price system, is not operating effectively at present and is unlikely to be allowed to do so within the foreseeable future. On optimistic assumptions about the rate at which this impact will increase, it seems likely that a possible growth rate of 3% a year will increase levels of pollution and resource extraction by 100% in less than 50 years. Such an increase would be equivalent to doubling the speed of a car which has already been battered and scratched by being driven too rapidly at night along an unknown, narrow road. If the headlights aren't adapted to reach any further ahead, the faster pace means that the drivers of the future will have half the time to see obstacles and take avoiding action.
If the world economy is going to grow, we need to ask whether a growing world economy is sustainable. The answer is in two parts. The first is that it cannot be sustainable in the long term purely because if exponential growth went on for centuries, the amount of the annual increase in world output in cash terms would become, for all practical purposes, infinite. If this output had any resource content at all, the total resource requirement would therefore becomes near-infinite too, and, whatever level it was set at, would quickly exceed the weight of the planet. Only if one postulates that growth can be completely dematerialised, and that as a result, the increases in sales that the process produces would be entirely the result of improvements in quality rather than increases in volume, can one pretend that it can go on for ever. Why do I say 'pretend'? Simply because economists who make the infinite expansion case can only do so if they ignore one of their key concepts, that of diminishing marginal utility. What the concept means in this context is that the marginal utility of each improvement in quality would fall until at some point people would decline to spend more money on the items in which it was embodied and, rather than earning the money to do so, prefer to take the time as leisure instead, thus bring the growth process to a halt.
The second part of the answer is that a growing world economy is sustainable in the short term only if the international speed of response to a potential crisis continues to be rapid enough to head off any problems before they cause it to break down. This means that either the ability to anticipate obstacles (the distance the headlights reach) or the (drivers') response rate to them has to be improved each year by at least as much as the impact of the economy on the natural environment grows. As we saw in our discussion of complexity, our scientific knowledge is inadequate to anticipate many problems. How rapid, then, has been the response time in the crises we have handled so far?
The best example is the protection of the ozone layer. Here, on the face of it, the response time looks remarkably good. The first scientific paper demonstrating that a group of chemicals, chlorofluorocarbons (CFCs), was destroying ozone in the upper atmosphere and allowing more of the damaging ultra violet (UV) component of sunlight to reach the earth's surface was published in 1985. An international agreement to phase CFCs out was signed in Montreal two years later.
When one looks further, however, it becomes apparent that luck and unusually good headlights produced this result. The luck was the chance discovery in 1969 by James Lovelock, a maverick scientist who could not get funding for his work, that CFCs which had been discovered thirty-nine years earlier and were already being used on a large scale in many industries, were accumulating in the atmosphere. Had Lovelock not bought a holiday cottage in the West of Ireland and been puzzled about the haze in the Irish air, this discovery would not have been made at the time it was.
Although Lovelock realised that the chemicals were a potential threat to the ozone layer, he did not see them as an immediate one and was sceptical when a paper suggesting that they might be was published in Nature in 1974. Fortunately, however, the suggestion was taken seriously by the United Nations Environmental Programme which turned its headlights on the problem in 1975, organised an investigation by other UN agencies and, disturbed by these, got twenty countries to sign the Vienna Convention for the Protection of the Ozone Layer ten years later. As a result, an international mechanism for handling the problem was already in place when in May 1985, a month after Vienna, an atmospheric scientist working for the British Antarctic Survey, Joe Farman, published conclusive evidence that CFCs were eating a hole in the ozone layer above the Antarctic.
The unsustainability caused by the use of CFCs could scarcely have been more serious. UV light is used for sterilisation in the food and pharmaceutical industries because it breaks down living cells and when more of it reaches the earth's surface, it destroys cells there too. In the surface layers of the ocean, even a small rise in UV is enough to kill plankton cells, the basis of the marine food chain and the sea's ability to convert carbon dioxide back into oxygen. On land, UV damage to leaf cells at best cuts crop yields, at worst kills the plants. In short, the survival of most life on earth was at risk.
In these circumstances, one would have expected a rush to halt CFC production within a month or two. Not a bit of it. Under the Montreal agreement, twenty-six industrial nations agreed merely to cut their production of CFCs in half by 1999, an arrangement which left American firms free to promote a new use for CFCs, the cleaning of computer circuit boards, the following year and to equip a factory in India to make refrigerators with CFCs as the coolant. In 1989, however, another agreement was signed in Helsinki under which all industrialised-country CFC production was to be ended by the year 2000. Even this was too tardy for Joe Farman. "We [have been] very slow about tackling the crisis" he said in a radio interview in 1990. "We should be phasing out CFCs much faster". Other commentators agreed, pointing out that by the end of the phase-out period, 30% more CFCs than had already been made would have been produced.
In fact, industrial countries ended CFC production by 1996 but production is set to continue in 'developing' countries until 2010 and a significant amount is being smuggled from there to countries where use should have ended. Moreover, HCFCs, the main CFC substitutes, are ozone depleters themselves, albeit much less potent ones, and the EU is sufficiently concerned about them to want their use discontinued by 2020 rather than 2040, the date agreed at present. In addition, a substance whose impact on the ozone-layer was unknown when the 1987 agreement was signed, methyl bromide, which is used to fumigate fruit and vegetables for export, has been recognised as as serious a threat as CFCs themselves. Although the US and Canada demanded a world ban on this chemical by 2001 at a meeting in Caracas in September 1997, major fruit exporting countries including France, Spain, Italy and Mexico objected. A compromise was worked out under which the industrial countries will phase it out by 2005 and the developing world ten years later.
The net effect of these delays was that in 1998, eleven years after the Montreal agreement, the ozone holes over the poles were the largest, longest-lasting ever and no-one was sure when they would stop getting worse. Unanticipated releases of halons by China had been sufficient by themselves to invalidate a 1997 prediction by the World Meteorological Organisation that the width of the holes would increase until the year 2000 and that thinning over the Antarctic would end in 2050. In other words, we still don't know what our system's stopping distance will be. Even if the WMO's prediction had been right, it would have taken 25 years from the time that the possibility of CFC damage to the ozone layer damage was noted to halt it, and 15 years from the time the destruction was proved. Now it's longer still - a very unsafe stopping distance indeed.
This episode shows two things. One is that if governments bow to commercial pressure for an international agreement to be signed before taking action, it greatly lengthens the response time. The other is that, at present, even in situations of acute danger, commercial considerations are given very much more weight than environmental ones. Accordingly it is difficult to be confident that human common-sense and ingenuity will always enable sustainability crises to be defused before catastrophic damage is done. This is particularly the case if economic growth is allowed to increase unsustainability, as it did with CFCs. As Joe Farman told his radio audience in 1990: "It's very worrying - industry can grow so fast these days. How many times can we stop them?"
3. Absence of limits
Why is it that, even though the impossibility of achieving infinite exponential economic expansion in a finite world would seem to be a matter of common sense, few economists consider that an economic system which needs to grow for ever is therefore unsustainable? The answer a mainstream economist would give is that there are no limits to economic growth in a market economy because a combination of new technologies and price changes will enable the system to cope with whatever shortages of raw materials, unpolluted surroundings or intact social systems its functioning creates.
This counter-intuitive argument has been exposed to surprisingly little public debate. The only time the matter was widely discussed was after the 1972 publication of The Limits to Growth, a report by a seventeen-strong team at the Massachusetts Institute of Technology led by Dennis Meadows. This used computer projections - a great novelty at the time - to show that if growth continued in its conventional form there would be a sudden and uncontrollable decline in world population and industrial capacity within the next hundred years.
Limits advanced two main arguments. One which mainstream economists queued up to attack was that as fossil fuels and minerals became increasingly scarce, the growth process would progressively grind to a halt. Essentially, their opposition amounted a denial that an increasing level of real resources would be required to extract minerals as lower and lower grade ores and more and more difficult coal- and oilfields had to be brought into use until, eventually, the amount of resources expended on extraction almost equalled the additional ones produced and further growth became impossible. Here again the economists were denying their concept of diminishing returns.
Robert Solow was one of the more influential economists of the time to claim that a lack of natural resources would not constrain economic growth. In the text of a lecture published in the prestigious American Economic Review in 1974 two years after Limits appeared, he argued that, provided humankind had access to unlimited energy - from, he suggested, nuclear breeder reactors - it would always be able to find substitutes for natural resources as they ran out. "At some finite cost, production can be freed of dependence on exhaustible resources altogether" he wrote. He ignored the fact that nuclear reactors require large quantities of exhaustible resources for their construction, perhaps because he felt that, with enough energy available, seawater or ordinary rocks could be processed for the mineral traces they contain. His view, in fact, was simply a re-statement of an important principle in modern economics, that if you have enough of one factor of production, it is infinitely substitutable for all the others. Solow was later awarded a Nobel prize for work that 'proved' that an exponentially-growing population in an economic system experiencing economic growth could enjoy an increasing real wage.
By natural resources, Solow meant raw materials. His analysis completely overlooked the importance of another type of natural resource, the natural systems and sinks which break down or absorb wastes produced by human activities and which can only handle a limited amount in any given period before they become overloaded and pollution becomes a problem. This omission was inexcusable because the second major argument made by the Limits team was that if growth continued indefinitely, pollution levels would eventually cause a population crash. Even if steps were taken to reduce pollution, they showed, the cost associated with such steps would rise as industry continued to grow because higher and higher standards would be required to prevent the total level of pollution increasing to life-threatening levels. Eventually the additional anti-pollution measures would require all the income produced by further industrial expansion. In a well-regulated world, this would bring industrial growth to a halt but in one such as ours in which the economic system has to be allowed to grow to prevent its collapse, the necessary restrictions would not be introduced, pollution would rise and the sicknesses it brought would cause the world population to fall.
Pollution is an insurmountable problem in any economic growth scenario. However much emissions of heat or anything else from a particular industry are cut, there will always be some. Consequently, if industrial growth takes place year after year, emissions will eventually grow by enough to outweigh the cuts. Even the escape of heat as a result of the use of Solow's vast and perpetually-increasing amounts of energy from non-solar sources would cause problems and be a form of pollution. Indeed, the Limits team presented a graph showing projections for the levels of waste heat in the Los Angeles basin showing that, by the year 2000, it could amount to 18% of absorbed solar energy. Even at its 1970 level, 5% of absorbed solar, it was affecting the local climate, they said. Solow was either sloppy or dishonest in not taking this point on board.
Paul Romer of the University of California, Berkeley, and Stanford University's Hoover Institution is Solow's anointed heir and is also tipped for a Nobel Prize. He believes that growth can be limitless because ideas are limitless. "Old growth theory says we have to decide how to allocate scarce resources among alternative uses" he is quoted as saying. "New growth theory says 'Bullshit'.....all that stuff about scarcity and price systems is wrong."
Julian Simon believed that agricultural land 'is not a fixed resource.... and it is likely to continue to increase where needed'. Similarly natural resources 'are not finite in any economic sense' and population growth 'is likely to have a long-run beneficial impact on the natural-resource situation.' With energy 'finiteness is no problem here either'.
This absence of limits in the technocentric position is one of the most powerful objections to it. Because it says, in effect, that there are no constraints and that anything is possible, it is impossible to imagine what form a desirable future might take and then work out the steps required to move towards it. Imagining the future in the absence of limits is like trying to design a house without knowing the site, what building materials will be available, how many people it is required to accommodate, the budget and even the climatic conditions the building will have to face. In such circumstances one can do nothing. One can't even say when pollution levels have gone too far because a technology might be just around the corner that will enable whatever problems the pollutants are creating to be overcome.
But then, perhaps we are not meant to try to work towards an appealing possible future because such a course implies interference with the free market. After all, the essence of the technocentric approach is that the system, via the market, looks after itself. It is on auto-pilot and thus in many areas of life leaves the individual, the community and the country totally disempowered.
Most unsustainabilities have been and are overcome by treating their symptoms technologically rather than removing their cause. For example, when the growing volume of garbage generated by the system threatens to exhaust landfill sites, it is rare for anyone to examine how the economy might be made more efficient so that less waste is produced. No, the preferred remedy is usually to recycle whatever bulk components of the waste stream can readily be separated out and to incinerate the rest. This approach adds activities and costs to the system and thus makes it less sustainable in the longer term. For example, incineration might well release dioxins which cause illness, a problem which in turn will be solved by costly medical treatment rather than tackling the root cause. Round and round the cycle goes with activity being added to activity, solution to solution, and because the solutions consume fossil energy themselves and introduce new technologies, they both create new unsustainabilities and aggravate existing ones. They build an increasingly complex economic edifice which is likely to collapse more catastrophically when it eventually breaks down.
Joseph Tainter, who has investigated the collapse of previous complex societies, believes that they broke down because they solved their problems in ways which led to greater complexity, higher costs and diminishing returns. "In time, systems that develop this way are either cut off from further finances, fail to solve problems [and] collapse or come to require large energy subsidies" he writes: "Energy has always been the basis of cultural complexity and it always will be... In the days before fossil fuel subsidies, increasing the complexity of a society usually meant that the majority of its population had to work harder."
The increasing levels of research and regulation required to anticipate and avoid the undesirable consequences of a growing economy can be themselves unsustainable. "Bureaucratic regulation itself generates further complexity and costs" Tainter writes. "As regulations are issued and taxes established, those who are regulated or taxed seek loopholes and lawmakers strive to close them. A competitive spiral of loophole discovery and closure unfolds, with complexity continuously increasing. .. Such a strategy is not sustainable."
Since strategies which fail to tackle the fundamental causes of unsustainability and merely ameliorate its symptoms require a greater and greater proportion of the system's output to keep it from collapsing, they reduce its overall efficiency. Indeed, there is now firm evidence that the efficiency loss has been so great that the economies of some industrialised countries are running backwards and that as they grow, rather than producing additional benefits, they consume more goods and services themselves than the new growth creates. "In fact, economic theory would lead us to expect [this] at some point," writes Herman Daly. "There is no a priori reason why at the margin the environmental and social costs of growth in GNP could not be greater than the production benefits.... When rising marginal costs equal falling marginal benefits then we are at the optimal level of GNP and further growth would be uneconomic [as it] would increase costs more than it increased benefits. Why is this simple application of the basic logic of microeconomics treated as inconceivable in the domain of macroeconomics?"
The evidence that the optimal level of national income has been exceeded in some countries comes from examining the costs and benefits which make it up. Every country's Gross Domestic Product figure is a combination of the costs of producing it - such as cleaning up after an oil spill - and benefits, the value of the products and services it delivers we actually want and enjoy. Until about twenty-five years ago - the actual date varies from country to country - the ratio of costs - the value of the things which were produced or the services provided simply to keep the system going satisfactorily - to benefits was more or less constant. As a result, when the figures showed that a country's GDP per citizen had risen, one could be reasonably sure that the population was getting materially better off. Now, however, this is not the case in several countries where the Index of Sustainable Economic Welfare - a measure of the value of the output left for each citizen after the system has taken its share and corrections have been made for the irreplaceable natural resources producing that output used up - is declining. In Britain, the US and Australia, for example, the decline began in 1973 and in Germany in 1980, even though national incomes of these countries has risen steadily ever since.
These results are scarcely surprising as it is obviously more efficient, for example, to stop a pollutant getting into a drinking water supply in the first place than to take it out later. But wealth-destroying growth goes on because the firms which spill the pollutants make profits because they do not have to pay the full costs of mopping them up and curing the sicknesses they cause and because, as we have seen, investment might falter and depression set in if too stringent safeguards were put into place.
In economics as in building construction, projects generally run more smoothly and are less wasteful if they are planned properly at the start. In both, if one erects a fundamentally unsafe structure one might well have to tear up the foundations and start again, exactly as the world is being forced to do in order to reduce its reliance on fossil fuels. In this case, the economic system is going to have to be totally transformed and a lot of the investments that have been made in the past fifty years will turn out to be seriously mistaken.
The Way Ahead
If we reject the technocentrist position and accept that there are limits within the framework of what is known at present to the world output which can be achieved without exposing humanity to a high risk of an unsustainability catastrophe, we ought to re-design the economic system accordingly. What features would a sustainable world economy have?
First, it would not put all humanity's eggs in the one basket. Since a local unsustainability in one place cannot cancel a local unsustainability in another, a sustainable world necessarily consists of a number of territories each of which is sustainable independently of the others. In other words, rather than having a single global economy which would damage almost everybody if it crashed, a sustainable world would consist of a plethora of regional (that is, sub-national) economies which produced all the essentials of life from the resources of their territories and were therefore largely independent of each other. This is not to say that these regional economies would not trade with each other. They would, but never out of necessity. Needing to trade rather than choosing to do so is often a sign that the economy concerned is unsustainable and could certainly lead to its becoming so. The only motive for trading in an economic system designed in accordance with the emerging paradigm would be to increase a population's range of choice. Relatively trivial exchanges would take place like swapping apples for oranges, perhaps. That way, if one economy got into serious trouble its neighbours would not automatically get hurt too. Indeed, they would be well placed to help deal with the emergency.
The fact that these territories produced the all their essentials of life for themselves would be more efficient than the present system under which a high proportion of the world's population eats the same foods, is housed in buildings constructed of the same materials, and lives and works in much the same way. Today's uniformity means that much of humankind competes on world markets for the same raw materials and thus puts sources under a high - and perhaps unsustainable - degree of pressure. A greater diversity of diet, clothing, building materials and life-styles would relieve these pressures just as it does in the natural world where species have their own ecological niches and avoid competing directly with each other.
Regional economies would develop by finding good ways to use the resources of their immediate areas to meet the needs of local people rather than the demands of uniform markets far away. New cuisines and vernacular architectures would develop and new cultures would be born and, because there was no absolute necessity to trade, there would be no great pressure within these economies to use their resources unsustainably provided the population of a territory did not exceed its carrying capacity. Moreover, the optional nature of trade would leave regional economies free to ban technologies suspected of having undesirable side effects regardless of whether or not other regions did so too, thus speeding the rate at which the world could react to a sustainability crisis. In the present system, by contrast, the need to be competitive means that not only is it impossible to take unilateral action to achieve sustainability, as we saw, but there is constant pressure to increase profits or employment by reducing environmental or social standards
The fact that a regional economy was not compelled to trade would not make it problem-free, of course, and if it wished to maintain its sustainability it would have to be able to protect itself militarily and economically from territories that had destroyed their own resources by behaving unsustainably and wanted access to resources that had been managed well. The problem of providing military protection - which would include the policing of borders to stop sustainability being destroyed by an influx of environmental refugees - is outside the scope of this paper. We should however note that if an arms race developed between a sustainable part of the world and an unsustainable one, the pressing need to use resources for the purchase or manufacture of weapons could destroy the sustainability of the former.
For economic protection, a sustainable territory would need its own independent currency and banking system. One reason for this is that the moment a territory gets its own currency, its people no longer have to trade with the outside world to assemble the means of exchange to trade with each other. In other words, the volume of business they are able to do amongst themselves becomes independent of inflows and outflows of national or international currencies. Having to ensure that enough outside money is always available for local trade to be carried on at the optimal level makes it very difficult to become sustainable.
Similarly, if a territory has its own banking system, it can ensure that interest rates are related to the rate of profit possible on projects within the territory rather than to the highest rate of return that can be found anywhere in the world. This means that there is very much less pressure for the territory's resources to be used unsustainably in order to generate the financial returns required for investment funds to be committed and projects go ahead.
A sustainable region also needs to be able to prevent net capital flows across its borders either by enacting laws against them or by creating a social climate which makes investing elsewhere a matter for shame. Why? Consider what happens when a sustainable economy becomes mature, by which I mean that although its buildings are repaired and its capital equipment is replaced as it wears out, no new buildings are erected and no extra equipment is installed because the benefits from doing so are so small it's not considered worth while. In other words, all the sustainable projects which give a reasonable rate of return have been carried through and the territory's economy has ceased to grow significantly although from time to time, new technologies do come along which make additional projects or production possible without upsetting the area's sustainability by using more resources or releasing more waste.
The low rate of return in such an economy means that the owners of capital there will always be tempted to remove their funds to unsustainable or immature sustainable economies to get a higher rates of return. If these capital movements take place, the mature economy runs down because funds which would have been used to repair buildings or replace worn-out equipment get invested elsewhere. The resulting shortage of equipment causes unemployment to appear, increasing competition for jobs and pushing down wage levels. Moreover, less goods and services are produced, pushing prices up. Both these changes enable businesses to make additional profits and thus pay higher interest rates and when these rates match those available elsewhere, the capital outflow ceases.
Capital movements out of sustainable economies therefore reduce the territory's total output and shift a larger share of this smaller output to the owners of capital, who also benefit from the interest payments they receive from their investments outside. Put another way, allowing capital movements maximises the return per unit of capital but not per citizen. It therefore means that no territory can become sustainably mature until everywhere else in the world does too. .
It might be thought that allowing outside investors to put funds into sustainable projects in immature sustainable economies would allow those economies to reach maturity faster. This, however, is wrong because if the interest on this capital had to be paid in an external currency earned by selling goods and services on external markets in competition with output from places which subsidise their prices by using unsustainable systems, the need to trade to earn this external currency would undermine the territory's sustainability.
Even if the interest was to be paid in a currency which could only be earned by trading in sustainably-produced goods, there are two reasons why capital transfers between territories, or even parts of the same territory, are undesirable. One is that capital creates work in the place it is spent. In Ireland after independence, the banking system collected savings from the rural areas and lent them in urban ones, enabling factories, shopping parades, cinemas and houses to be built. This work attracted young men from the rural areas who needed housing, shops, pubs and recreational facilities in the towns, especially if they married a girl who came from the country herself. These needs created a further demand for loans and more work for the building trade. Meanwhile, back at home, businesses went into decline because the young people had left, and it became very difficult to find new projects which would support the rate of interest being asked by the banks in view of the declining population. So with fewer opportunities there, the emigration from the countryside went on and whole villages were completely abandoned. Capital transfers are therefore destabilising and undesirable even within the same territory if more than, say, twenty miles is involved.
The second reason for rejecting external investment is even more powerful. It is that people investing outside the areas in which they live can only be interested in one thing - the rate of return they get on their money. All the other income streams their investment starts - payments to workers and suppliers, for example - are seen as reducing their profits and every effort is therefore made to minimise them. If someone invests in a project in their own community, however, there are many ways in which they can get a return on their money quite apart from the interest they receive. Indeed, these non-interest returns might be so important that those financing the project might be prepared to charge no interest at all and even contribute to an annual loss in order to be sure it goes ahead. This might be because the project will provide employment for themselves or their children. Or because it will increase incomes in the area and help their existing business do better. Or because it will cut unemployment, thus reducing family breakdown and crime.
Community investment projects are therefore very different animals from those run for the benefit of outside investors. For one thing, they seek to maximise the total incomes the project generates in the community, not just the profit element. So, far from seeing the wage bill as a cost to be minimised, they regard it as one of the project's major gains. Attitudes to work are different too. Whereas outside investors seek to de-skill work within the factory so that they can hire the cheapest possible labour, a community company, particularly a workers' co-op, would want the work to be organised so that those doing it find it interesting and fulfilling.
Outside investors also have very short time-horizons for their projects, wanting to earn their capital back in three or four years . After that, if necessary, they can close the plant and move on. Communities, on the other hand, need long-term incomes for long-term projects like raising children, and a community-owned factory would want to produce for a safe, stable markets, most probably in its own area, rather than the market with the highest immediate rate of return. Similarly, while outside investors merely ensure that a plant's emission levels stay within the law because anything better would cost them money, a community company is likely to work to much higher standards to avoid fouling its own nest.
A world economy which was sustainable would therefore be almost the exact opposite of the present unsustainable one. It would be localised rather than globalised. It would have no net capital flows. Its trade would be confined to unimportant luxuries rather than essentials. Each self-reliant region would develop to a certain point and then stop, rather than growing continuously. Investment decisions would be made close to home. And assets would be owned by the people of the area in which they were located.
There is no space here to discuss how such a sustainable world might be built or the steps that would have to be taken to establish a self-reliant regional economy and how that would have to be organised so that one section of its population did not take advantage of another. This is a task I attempt in my book Short Circuit. All we can do here is to summarise the essential features of a sustainable territory:
* It has a stable population
* It provides the basic necessities of life for its population from renewable resources under its control and expects to be able to continue to do so without over-using or degrading those resources for at least the next thousand years. It is therefore able to trade with the outside world out of choice rather than necessity. This frees it from the need to do unpalatable or unsustainable things in order to compete such as adopting potentially dangerous technologies or curtailing social protection provisions.
* It is able to protect its renewable resources and its population both militarily and economically. Its collection of economic protection weapons includes an independent currency and banking system. It has no debts to lenders outside and there are no net flows of capital across its borders, thus allowing its interest rate to fall to close to zero as it moves towards maturity.
* It does not depend on continual economic growth to stave off collapse. Its economy grows very slowly if at all.
This paper has shown that the present world economic system is grotesquely unsustainable and that for all practical purposes it is impossible for a sustainable world to emerge and be maintained via the workings of an unconfined, undirected market system. Accordingly, it suggests that international efforts to achieve sustainability are likely to deliver too little too late and that the development of largely self-reliant regional economic systems is a better way to build a stable, sustainable world. It has also argued that perpetual economic growth is totally incompatible with sustainability and that in some industrial countries the growth process is now destroying more wealth than it creates. Growth continues to be the primary national objective in these countries, however, because unless it is generated, investors will withdraw and the economy will collapse.
The answer to the question with which we began this discussion - Is it possible to build a sustainable world? - is clearly that it is. Unfortunately, however, since the unsustainabilities which threaten us have been created by the current dominant paradigm and it is virtually impossible to remove them while working within that paradigm, an entirely new way of thinking about the world has to be adopted first.
Richard Douthwaite is particularly interested in identifying the characteristics of our economic system which make it unsustainable so that they can be changed. He was born in 1942 and worked as a journalist in England before studying economics at the University of Essex and the University of the West Indies, Kingston, Jamaica. All told, he lived in the Caribbean for six years, setting up a boatyard building concrete fishing boats for Jamaica's fishing co-ops, helping produce a report on the economic effects of tourism on the Jamaican economy and working as Government Economist on the tiny island of Montserrat.
He has lived in Ireland since 1974. For the first ten years, he and his wife ran a manufacturing business but he returned to journalism in 1985. His first book, The Growth Illusion: How Economic Growth Enriched the Few, Impoverished the Many and Endangered the Planet, (Green Books, Devon, 1992) is widely regarded as a classic and Green Books brought out an extensively-revised and updated second edition in late 1999.
His second book, Short Circuit: Strengthening Local Economies for Security in an Unstable World (Green Books, 1996) gives dozens of examples of currency, banking, energy and food production systems which communities can use to make themselves less dependent on the world economy. A German version, Jenseits der Globalisierung, appeared in 1998.
In 1998-9 he was a consultant to an EU-funded project to establish experimental community currency systems in Scotland, the West of Ireland, Amsterdam and Madrid. The Ecology of Money (Green Books, 1999), a short book which proposes a radical restructuring of national and international money systems, grew out of this experience and his work as economic adviser to the Global Commons Institute, which is concerned with halting human-induced climate change.
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