Milliband’s Reading Cheers Monbiot

George Monbiot has a striking piece in the Guardian this week, asking how much of the economic growth of the past 60 years is real and how much an illusion created by levels of borrowing that cannot be sustained. Ireland is his exemplar:

“Go to Ireland and you’ll see that even bricks and mortar are a mirage: the marvels of the new economy, built on debt, stand empty and worthless.”

And it’s not only financial borrowing, but also ecological borrowing:

“…we have inflicted more damage since 1950 to the planet’s living systems than we achieved in the preceding 100,000 years.”   Continue reading “Milliband’s Reading Cheers Monbiot”

Prosperity without growth

Prosperity without Growth: Economics for a Finite Planet

I paused for a while wondering whether a review of a book on sustainable economics had a place in a website devoted to climate change. But only briefly. One can’t worry about climate change for long without considering the economies which have given rise to it and wondering how they will survive under the low-carbon regime which they must now adopt.  Anyway carbon emissions figure frequently in the course of Tim Jackson’s book Prosperity Without Growth: Economics for a Finite Planet. Published last year it was based on a report he wrote earlier in the year as Economics Commissioner of the Sustainable Development Commission, the UK Government’s independent watchdog. Increasingly climate change has imparted a new urgency to sustainability thinking. It sits as one of many issues, but it underlines the seriousness of the need to come to grips with the finitude of the planet.

The prosperity Jackson writes of is our ability to flourish as human beings. It transcends material concern. It has to do with such matters as physical and mental health, access to education, relationships and sense of community, meaningful employment and the ability to participate in the life of society. He argues that in the developed countries we can (and must) have such prosperity without the economic growth paradigm that currently rules our thinking.

Jackson recognises the difficulties of the situation we have landed ourselves with.  On the one hand growth is unsustainable, at least in its current form. The burgeoning consumption of finite resources and the heavy costs being imposed on the environment are accompanied by profound disparities in social well-being.  But on the other hand “de-growth’ is unstable, at least under present conditions. Declining consumer demand leads to rising unemployment, falling competitiveness and a spiral of recession. It adds up to a dilemma, but one which we must face and think through.

Some economists place hope in our being able to decouple economic growth from growth in physical inputs and environmental impacts.  Capitalism’s propensity for efficiency figures strongly in these scenarios. Jackson doesn’t think either the historical evidence or the basic arithmetic of growth can support the decoupling notion.  The deep emission and resource cuts needed can’t be achieved without confronting the structure of market economics.

He takes a closer look at this structure. The engine of growth is driven by the ability of the profit motive to stimulate newer, better or cheaper products and services through a continual process of innovation and ‘creative destruction’. This is matched by expanding consumer demand for these goods. A complex social logic drives this demand. Consumer goods have come to play a symbolic role in our lives.  Somehow, beyond the simple material needs they meet, they can become vehicles for our dreams and aspirations, however much they fail in delivering. The economic structure thus combines with our nature to “lock us firmly into the iron cage of consumerism”.

What we need, claims Jackson, is a new ecological macro-economics.  It will still include a strong requirement for economic stability, but it will add conditions that provide security for people’s livelihoods, ensure distributional equity, impose sustainable levels of resource throughput and protect natural capital. New variables need to be brought into play to complement and affect those already part of economic thinking. They will reflect the energy and resource dependency of the economy and the limits on carbon. They might also reflect the value of eco-system services or stocks of natural capital. Ecological investment will be important, and will mean revisiting the present concepts of profitability and productivity and harnessing them to longer term social goals. He urges the abandonment of the infatuation with increasing labour productivity in favour of high employment in low-carbon sectors.

We will need to be weaned from our dependence on consumerism, but he provides evidence that a less materialistic society will be a happier one and a more equal society a less anxious one. Greater attention to community and participation in the life of society will reduce the loneliness and unsocial behaviour which has undermined the well-being of the modern economy.

He argues that there is a clear case today for an increased role for government.  We have already seen an acceptance of this in relation to the 2008 financial crisis. The principal role of government is to ensure that long-term public goods are not undermined by short-term private interests and to deliver social and environmental goods. This role has been diminished by the need in the growth economy to support the consumerism which keeps the economy afloat.

Jackson is leery of revolution, but he proposes steps through which to build change. They fall under three main categories. First, changing the limits. Here he writes of caps on resources and emission, considers the contraction and convergence model, discusses emissions trading schemes and ecological taxes and emphasises the need for support for ecological transition in developing countries.

The second category of steps for change is fixing the economic model. The ecological macro-economics discussed above will lower expectations for labour and capital productivity and account for the value of natural capital and ecosystem services. Ecological investment in jobs, assets and infrastructure will include retrofitting buildings, advancing renewable energy technologies, redesigning networks such as the electricity grid, building public transport infrastructure, maintaining and protecting ecosystems, developing public spaces.  There will be increasing financial and fiscal prudence, including regulation of financial markets.  A Tobin tax on international currency transfers may be considered. Banks will be required to hold higher asset reserves. National accounts will be revised to be more robust than the present rough and ready GDP.

The third category is changing the social climate. Working time may be reduced. Systemic inequality will be tackled. Better measurements of prosperity will be found. Social capital will be strengthened. The culture of consumerism will be carefully dismantled.

Utopia? No, he says firmly. A financial and ecological necessity.

In a final chapter he faces the question of whether this spells the end of capitalism. Certainly growth would be slowed – labour-intense activities mean slower productivity growth, and ecological investment means a lower and longer return on capital. There would also be a larger role for the public sector in taking some ownership stake in the longer-term less productive investments. But capitalist economies often have elements of public ownership.  There is a wide spectrum of possibilities in a capitalist system.  There’s no need to polarize the debate.

I thought the book was splendid. Jackson’s writing is lucid and well organised. He has a gift for the telling sentence. (It was not altogether surprising to discover that in addition to his academic life he is a professional playwright for BBC radio.) He is cautious and sensible, not pretending that the transition to low growth is a doddle.  But he holds firmly to the conviction that it can be made and that the society which emerges will be better than the one we currently inhabit.