Prosperity without Growth? - The transition to a sustainable economy

[Ghost Dog]

Prosperity without Growth? - The transition to a sustainable economy - .pdf - 3045 KB (UK Sustainable Development Commission report - free download).

Questioning economic growth is deemed to be the act of lunatics, idealists and revolutionaries. But question it we must.

Foreword

Every society clings to a myth by which it lives. Ours
is the myth of economic growth. For the last five
decades the pursuit of growth has been the single
most important policy goal across the world. The
global economy is almost five times the size it was
half a century ago. If it continues to grow at the
same rate the economy will be 80 times that size
by the year 2100.

This extraordinary ramping up of global economic
activity has no historical precedent. It’s totally at
odds with our scientific knowledge of the finite
resource base and the fragile ecology on which
we depend for survival. And it has already been
accompanied by the degradation of an estimated
60% of the world’s ecosystems.

For the most part, we avoid the stark reality
of these numbers. The default assumption is that
– financial crises aside – growth will continue
indefinitely. Not just for the poorest countries, where
a better quality of life is undeniably needed, but
even for the richest nations where the cornucopia
of material wealth adds little to happiness and
is beginning to threaten the foundations of our
wellbeing.

The reasons for this collective blindness are easy
enough to find. The modern economy is structurally
reliant on economic growth for its stability. When
growth falters – as it has done recently – politicians
panic. Businesses struggle to survive. People lose
their jobs and sometimes their homes. A spiral of
recession looms. Questioning growth is deemed to
be the act of lunatics, idealists and revolutionaries.

But question it we must. The myth of growth
has failed us. It has failed the two billion people
who still live on less than $2 a day. It has failed
the fragile ecological systems on which we depend
for survival. It has failed, spectacularly, in its own
terms, to provide economic stability and secure
people’s livelihoods.

Today we find ourselves faced with the imminent
end of the era of cheap oil, the prospect (beyond the
recent bubble) of steadily rising commodity prices,
the degradation of forests, lakes and soils, conflicts
over land use, water quality, fishing rights and the
momentous challenge of stabilising concentrations
of carbon in the global atmosphere. And we face
these tasks with an economy that is fundamentally
broken, in desperate need of renewal.

In these circumstances, a return to business
as usual is not an option. Prosperity for the few
founded on ecological destruction and persistent
social injustice is no foundation for a civilised society.
Economic recovery is vital. Protecting people’s jobs –
and creating new ones – is absolutely essential. But
we also stand in urgent need of a renewed sense
of shared prosperity. A commitment to fairness and
flourishing in a finite world.

Delivering these goals may seem an unfamiliar
or even incongruous task to policy in the modern
age. The role of government has been framed so
narrowly by material aims, and hollowed out by a
misguided vision of unbounded consumer freedoms.
The concept of governance itself stands in urgent
need of renewal.

But the current economic crisis presents us with
a unique opportunity to invest in change. To sweep
away the short-term thinking that has plagued
society for decades. To replace it with considered
policy capable of addressing the enormous challenge
of delivering a lasting prosperity.

For at the end of the day, prosperity goes beyond
material pleasures. It transcends material concerns.
It resides in the quality of our lives and in the health
and happiness of our families. It is present in the
strength of our relationships and our trust in the
community. It is evidenced by our satisfaction at
work and our sense of shared meaning and purpose.
It hangs on our potential to participate fully in the
life of society.

Prosperity consists in our ability to flourish
as human beings – within the ecological limits of
a finite planet. The challenge for our society is to
create the conditions under which this is possible. It
is the most urgent task of our times.

Tim Jackson
Economics Commissioner
(UK) Sustainable Development Commission, March 2009

[orpupilofnature57]

1. The last paragraph said it all ,Our Ability to flourish is the only Rosetta stone.

[Ghost Dog]

3. Yes of course. And that's only possble through the art of recognising what is possible

and what is fatal, is it not?

[Ghost Dog]

2. (Cutting to the chase): 12 STEPS TO A SUSTAINABLE ECONOMY

(From pages 105-109 of the cited report)

Building a Sustainable Macro-Economy

1
Developing macro-economic capability
There is an urgent need to develop the capabilities
required to build a new macro-economics for
sustainability. This will include developing tools to
explore different configurations of the key macroeconomic
variables and to map the interactions
between these and ecological variables. Particular
challenges include 1) exploring the investment
demands associated with a sustainable economy;
2) investigating the economic implications of strict
resource or emission caps; and 3) evaluating the
impact of changes in natural assets and ecosystem
functioning on economic stability.
Examples/precedents: Canadian LowGrow model;
climate-economy models (cf. IPCC, Stern Review);
Cambridge Econometrics’ MDM-E3 model; the EU’s
TEEB study, the Millennium Ecosystem Assessment.2


2
Investing in jobs, assets and infrastructures
Investment in jobs, assets and infrastructures
emerges as a key component – not just of economic
recovery – but of a new macroeconomics for
sustainability. Targets for this include: public sector
jobs in building and maintaining public assets;
investments in renewable energy, public transport
infrastructure, and public spaces; retrofitting
the existing building stock with energy- and
carbon-saving measures; investing in ecosystem
maintenance and protection; and providing fiscal
support and training for green businesses, clean
technologies and resource efficiency.
Examples/precedents: the American Recovery and
Reinvestment Act (ARRA); UK Pre-Budget Report
‘green stimulus’; UNEP’s global Green New Deal;
Deutsche Bank ‘Green Investment’; SDC Sustainable
New Deal.

3
Increasing financial and fiscal prudence
Debt-driven materialistic consumption has propped
up economic growth for over a decade. But
maintaining it has destabilised the macro-economy
and contributed to the global economic crisis.
A new era of financial and fiscal prudence needs to
be ushered in to: reform the regulation of national
and international financial markets; increase public
control of the money supply; incentivise domestic
savings, for example through secure (green) national
or community-based bonds; outlaw unscrupulous
and destabilising market practices (such as shortselling);
and provide greater protection against
consumer debt.
Examples/precedents: G20 statement on regulation
of finance and currency markets (Nov 2008);
Tobin tax; Obama Administration plan to protect
borrowers.

4
Improving macro-economic accounting
The shortfalls of conventional output or
consumption-based measures of the GDP are now
well-established. There is an urgent need to develop
more robust measures of economic wellbeing that
correct for the most obvious drawbacks in using
the GDP. These new measures will need: to account
more systematically for changes in the asset base;
to incorporate welfare losses from inequality in the
distribution of incomes; to adjust for the depletion
of material resources and other forms of natural
capital, to account for the social costs of carbon
emissions and other external environmental and
social costs; and to correct for positional consumption
and defensive expenditures.
Examples/precedents: longstanding critiques in the
economic literature; the World Bank’s Adjusted Net
Savings measure; RDA policies on Regional-ISEW;
Sen/Stiglitz recommendations from the French
Commission on the Measurement of Economic
Performance and Social Progress.

5
Sharing the work and improving the
work-life balance3
In a declining or non-increasing economy, working
time policies are essential for two main reasons: 1)
to achieve macro-economic stability; 2) to protect
people’s jobs and livelihoods. But in addition,
reduced working hours can increase flourishing by
improving the work-life balance. Specific policies
need to include: reductions in working hours;
greater choice for employees on working time;
measures to combat discrimination against parttime
work as regards grading, promotion, training,
security of employment, rate of pay and so on;
better incentives to employees (and flexibility for
employers) for family time, parental leave, and
sabbatical breaks.
Examples/precedents: French, German and Danish
work-time policies; TUC Green and Decent Work
seminar.4

6
Tackling systemic inequality
Systemic income inequalities drive positional
consumption, increase anxiety, undermine social
capital and expose lower income households to
higher morbidity and lower life satisfaction. Too
little has been done to reverse the long-term
trend towards income inequality. But redistributive
mechanisms and policies are well-established
and could include: revised income tax structures;
minimum and maximum income levels; improved
access to good quality education; anti-discrimination
legislation; implementing anti-crime measures and
improving the local environment in deprived areas;
addressing the impact of immigration on urban and
rural poverty.
Examples/precedents: proposals for higher income
tax on higher rate earners in PBR 08; restrictions
on bonuses in the financial sector; Obama ‘shared
prosperity’ plan; history of redistributive taxation, in
many countries.

7
Measuring prosperity
The suggestion that prosperity is not adequately
captured by conventional measures of economic
output or consumption leaves open the need to
define an appropriate measurement framework for
a lasting prosperity. Specifically this would entail the
assessment of people’s capabilities for flourishing in
different sections of the population and across the
nation as a whole. Developing national accounts of
wellbeing (or of flourishing) could proceed through
the measurement of outcome variables such as
healthy life expectancy, educational participation,
social wellbeing, trust in the community, social
capital and so on. A further requirement here is to
adjust existing economic measurement frameworks
to account systematically for ecological and social
factors.
Examples/precedents: Defra SD indicator No 68;
Dutch capabilities index; nef’s national wellbeing
accounts; the Government Economic Service project
on sustainability and Green Book.

8
Strengthening human and social capital
Understanding that prosperity consists in part in
our capabilities to participate in the life of society
demands that attention is paid to the underlying
human and social resources required for this task.
Creating resilient social communities is particularly
important in the face of economic shocks. Specific
policies are needed to: create and protect shared
public spaces; strengthen community-based
sustainability initiatives; reduce geographical
labour mobility; provide training for green jobs;
offer better access to lifelong learning and skills;
place more responsibility for planning in the hands
of local communities; and protect public service
broadcasting, museum funding, public libraries,
parks and green spaces.
Examples/precedents: Cabinet Office study on social
capital; Foresight study on wellbeing and intellectual
capital; Transition Town movement; Environmental
Action Fund; Young Foundation’s Local Wellbeing
Project; the ‘Capital Growth’ project.

9
Reversing the culture of consumerism
The culture of consumerism has developed in part
at least as a means of protecting consumptiondriven
economic growth. But it has had damaging
psychological and social impacts on people’s
wellbeing. There is a need systematically to
dismantle incentives towards materialistic
consumption and unproductive status competition.
This recommendation will require: stronger
regulation in relation to the commercial media;
enhanced support for public sector broadcasting;
more effective trading standards and stronger
consumer protection – particularly on questions
of product durability, sustainability and fair trade.
Other measures might include: banning advertising
to children, the establishment of commercial-free
zones and times, and a funded right of reply to
advertisers’ claims.
Examples/precedents: Scandinavian advertising
policies; public transport ‘quiet zones’; Brazil’s Lei
Cuidade Limpa.

10
Imposing clearly defined resource/emissions caps
A lasting prosperity requires a much closer attention to
the ecological limits of economic activity. Identifying
and imposing strict resource and emission caps is
vital for a sustainable economy. The contraction
and convergence model developed for climaterelated
emissions should be applied more generally.
Declining caps on throughput should be established
for all non-renewable resources. Sustainable yields
should be identified for renewable resources. Limits
should be established for per capita emissions and
wastes. Effective mechanisms for imposing caps on
these material flows should be set in place. Once
established, these limits need to be built into the
macro-economic frameworks developed in 1 above.
Example/precedent: UK climate change budgets; the
Supplier Obligation; rationing – post-war and Cuba;
contraction & convergence proposals; Kyoto and post-
Kyoto negotiations; concept of ecological space.

11
Fiscal Reform for Sustainability
The argument for an ecological tax reform – a shift
in the burden of taxation from economic goods (e.g.
incomes) to ecological bads (e.g. pollution) – has
been broadly accepted for at least a decade and
has been implemented in varying degrees across
Europe. But progress towards this goal has been
painfully slow. In the UK the proportion of taxation
from green taxes is now lower than it was in 1997.
There’s an urgent need to achieve an order of
magnitude step-change in the structure of taxation.
A sustained effort by government is now required
to design appropriate mechanisms for shifting the
burden of taxation from incomes onto resources and
emissions.
Example/precedent: UK Government 1997 Statement
of Intent on Environmental Taxation; Danish, German
experience in Ecological Tax Reforms; the UK Green
Fiscal Commission (reporting 2009).

12
Promoting Technology Transfer and Ecosystem
Protection
A key motivation for redefining the basis of
prosperity in advanced economies is to make room
for much-needed growth in poorer nations. But as
these economies expand there will also be an urgent
need to ensure that development is sustainable and
remains within ecological limits. International policy
will be required to establish a global technology fund
to invest in renewable energy, energy efficiency,
carbon reduction, and the protection of ‘carbon
sinks’ (e.g. forests) and biodiversity in developing
countries. This could be funded through a carbon/
resource levy (payable by importers) on imports
from developing countries, or through a Tobin tax
on international currency transfers.
Example/precedent: Global Environmental Facility,
Clean Development Mechanism; Development Aid
targets; funding provisions of the UN Biodiversity
Convention.

In summary, these 12 steps offer the foundations
for a comprehensive policy programme to make the
transition to a sustainable economy. There is a unique
opportunity here for government to demonstrate
economic leadership and champion international
action on sustainability. But it’s also essential to
develop financial and ecological prudence at home.
And we must also begin to redress the perverse
incentives and damaging social logic that lock us into
unproductive status competition and materialistic
consumerism.

Above all, there is an urgent need to develop a
new ecologically-literate macro-economics capable
of offering meaningful guidance for a lasting
prosperity: a prosperity that for now at least will
have to do without growth; and may eventually be
able to replace it altogether.

[wuvuj]

5. If only humans were sane....

...

[Ghost Dog]

6. Or, our governments, mostly,

you mean?

Within a sensible framework such as outlined above, regulated by representatives of the people in government, economic enterprise would continue, and continue to help lives "flourish", of course.

[midnight]

4. Equality will end slavery that keeps us in this no win situation.