How Do You Degrow an Economy, Without Causing Chaos?

16 05 2017

An article written by a Facebook friend of mine, Jonathan Rutherford, who is Coordinator of the New International Bookshop and a ‘Simpler Way’ activist. Originally published at the Resillience website.  The real challenge for those in charge is not ‘jobs and growth’, it is how to best manage the looming contraction……

‘Houston, we have a problem’. On the one hand, there is growing acceptance among environmentally conscious people that rich nations and affluent regions of the global economy must dramatically reduce overall resource and energy consumption levels – that is, undergo a process of ‘degrowth’ – if humanity is to bring about a sustainable world order. On the other hand, we have a growth economy that cannot go two steps in this direction without causing huge economic and social problems.

If you doubt the first part of this statement (i.e. the need for ‘degrowth’), consider just one metric – the material footprint (MF) indicator. This measures consumption of all natural resources (biomass, fossil fuels, metal ores and minerals) extracted from the environment. Humanity’s current MF is about 70 billion tonnes – a figure that has more than trebled since the 1970s. As we know, already this rate of consumption is generating waste, pollution and land-use change that are driving environmental problems such as global warming and species extinction. But now consider the fact that the per capita rich nation (i.e OECD) MF is about 30 tonnes. If the 9+ billion humans expected to be living on earth by 2050 rose to this level, we would need 270 billion tonnes per annum – that is, four times the present rate, which is unsustainable. Using similar figures in the 1990s Friedrich Schmidt Bleek estimated that rich nations need to make ‘factor 10’ reductions in overall resource use (renewable and non-renewable), if we are to move down to a globally fair share and at sustainable levels. And that estimate, it should be noted, does not factor in the likely increase in MF that, recent history suggests, will inevitably result from the continuous pursuit of economic growth by all nations, included the wealthiest.

Many people hope that we can make ‘factor 10’ reductions via technological advance and efficiency gains alone, without having to make cut overall rates of production, consumption (i.e. GDP). But, as argued in a recent peer reviewed article by Giorgos Kallis there are strong reasons to think that this will not be viable. Few want to admit it, but the kind of radical reductions we need to make will require GDP contraction i.e. de-growth.

But if we in the rich world need to degrow the economy, as it appears we do, how is that done without causing utter social chaos and breakdown?  The problem was recently illustrated in a series of articles run by the ABC. The first article highlighted the trend among some young Australians to adopt relatively frugal lifestyles of reduced income expenditure and increased savings. A follow up article, however, asked: what would happen to the economy if everyone did this? The answers were revealing, and implicitly revealed fundamental flaws in our existing economic system.

The article cited data which suggest every year Australians spend $955 billion on all forms of consumption. Of this about $416 billion (44%) is made up items such as ‘food, clothing, housing, utilities, health, transport, insurance’ which the article defined as ‘necessities’ (note: one, of course, may question whether i.e. all clothes consumption are truly ‘necessities’!). The other $523 billion was made up what the article defined as discretionary items. Economist, Saul Eslake pointed out that, even if we exclude from this discretionary figure the $100+ billion worth of imported goods & services, if  all Australian households ceased all the remaining discretionary spending, GDP would be immediately reduced by 25 per cent. But, as Eslake pointed out, the impact on the economy would eventually be far greater than this, due to knock-on effects. The reduced spending, for example, would result in firm bankruptcy and thus laid off workers which, in turn, would further reduce aggregate demand in a cycle of downward depression familiar to students of economic history.

But while all this is entirely correct, reducing societal consumption – degrowing the economy – need not necessarily result in chaotic economic breakdown, as the ABC article implicitly assumed. This is indeed an inevitable outcome within our present economic system, but possibly not others.

Our present system – both in Australia and now most of the world – is, of course, the capitalist market economy. This 500-year-old system has certain defining features that mark it out as unique compared to other economic systems humans have devised.  It is a system in which a) most (if not all) the major means of production are privately (these days corporately) owned by a small minority of the population; and b) where the fundamental economic problems (what, how, and for whom to produce) are solved “automatically”, through the price mechanism, rather than through conscious social decisions.

Importantly, for this discussion, the system is characterised by a growth compulsion. Due to competition, all firms – particularly large shareholder firms – are under constant pressure to invest in new techniques, methods of production and products, to improve competitiveness and their sales figures. If they fail to do this, they not only risk profits margins but also eventually being taken-over by other firms, or made bankrupt. Since no firm wants to perish, and since all must expand if they want to continue to exist, a general growth compulsion arises, not just for individual firms, but for the macro economy as whole. So, while almost everyone wants growth, it is also true that the system needs growth for its basic functioning.

In fact, the system cannot possibly tolerate even a slow-down in the rate of growth, let alone a contraction. Richard Smith points out that even when capitalism approaches a ‘steady state’ of zero GDP growth, such as what happened in the USA in the wake of the GFC, the outcome for society at large is ugly. The situation is characterised by “capital destruction, mass unemployment, devastated communities, growing poverty, foreclosures, homelessness and environmental considerations shunted aside in the all-out effort to restore growth.” Obviously, nobody wants this, including advocates of degrowth.

What then would be required to contract the economy, in an orderly and fair way? The influential ‘Steady-State’ theorist Herman Daly argues that we can do so, while retaining a basically capitalist system, on the condition that the state steps in to play a far more active regulatory role than at present. Among other policy suggestions, Daly proposes that the state impose escalating resource depletion quotes, that can be traded in a market, while retaining private enterprise and the market system.

An emerging school of eco-socialists argue, however, that this will not work. Saral Sarkar points out three flaws with Daly’s plan.

“1) The contraction of the economies of the world must occur in an orderly way. Otherwise there will be unbearable breakdowns of whole societies. An orderly contraction can only take place in a planned economy, not in a capitalist market economy. 2) Only a socialist political order can achieve, by means of egalitarian distribution of the costs and benefits, a broad acceptance of the necessary contraction, 3) Only in a planned socialist economy can the problem of unemployment be solved, which would otherwise become more and more acute in a contracting economy. To this end, a planned economy can consciously use labor-intensive technologies and methods, which, in addition, result in less use of resources.” (Sarkar, 2012, 325)

Let me just briefly elaborate on the first reason given by Sarkar (for greater detail see Sarkar 1999) – the idea that contracting the economy within a capitalist market system would result in chaotic breakdown. Sarkar points out that the famed ‘efficiency’ of the market system only works well (if at all) when there is a buyers’ market, leading to strong competition between suppliers to meet customer demand. But in a contractionary scenario, most markets would be ‘suppliers’ markets, as there would be, in general, a shortage of supply relative to demand. This would mean even poorly run, high cost firms would be able to survive. And, as with any market economy, you would still have a situation where increasingly scarce resources were tended to be allocated to meeting the money backed demands of the already wealthy, rather than to meeting the vital needs for all – a recipe for social chaos in a context of heightened scarcity.

For these reasons, and as unfashionable as it is today, Sarkar argues that a socialist economic framework will be necessary if we are to contract the economy in an orderly, peaceful and socially just way. This would involve a process in which the state nationalises and/or shuts down most large-scale firms in the economy and actively plans the process of contraction via mechanisms such as quantitative controls, price controls, a quota system etc. But what about smaller firms and co-ops, operating at the local level? Here, it is plausible that a quasi-market economy – albeit operating within a very different no-growth culture and firmly under social control –  would be viable. Another eco-socialist Richard Smith elaborates:

“In arguing for large-scale industrial planning, I’m not saying that we should nationalize family farms, farmers’ markets, artisans, groceries, bakeries, local restaurants, repair shops, workers’ cooperatives, and so on. Small producers aren’t destroying the world. But large-scale corporations are. If we want to save the planet, the corporations would have to be nationalized, socialized, and completely reorganized. Many will need to be closed down, others scaled back, others repurposed. But I don’t see any reason why small-scale, local, independent producers cannot carry on more or less as they are, within the framework of a larger planned economy.”

Eventually the goal will be to move to a situation in which most (if not all) people live and work within highly localised economies, using local resources to meet local needs. As Ted Trainer argues, this is not optional if we want to reduce our ecological footprint to sustainable one planet levels that all can share. Gladly, there is a case that the quality of life could be very high within such communities.

But herein lies a problem for the eco-socialist, and wider degrowth movement. Trainer points out that these new local communities will not work well unless they are based on the active participation and cooperation of most, if not all, ordinary citizens in the locality. This will be necessary to ensure that all are provided for and the economy works within local eco-system limits. Active and inclusive participation by all (or at least most), Trainer argues, is ‘the crucial prerequisite… that will be needed if ordinary citizens are to eventually run highly self-sufficient local communities well.’ Widespread civic participation and cooperation simply cannot be imposed ‘top-down’ via states, even if they wanted to. In any case, Trainer argues, only if movements for localism and simpler living emerge first, is there any chance of building the eventual political will that will make a process of societal degrowth at the national and global levels possible.

For this reason, we ‘Simpler Way’ advocates tend to see the eco-socialist state directed process described above as ‘only’ a final, albeit necessary, step in a long multi phased transition towards sustainability. The first (and hardest) phase of the revolution happens when ordinary citizens, not states or corporations, take it upon themselves to start building today, even in small ways, the new self-reliant economies in the towns and suburbs where they live.

Having said that, the above sets a parallel challenge for participants within existing localist movements such as Transition Towns, eco-village, permaculture, simpler living etc. For it is equally true that we will not make a successful transition to sustainability – and the new local communities and economies will not function well – unless participants within these movements become aware of, and begin advocating for, the eventual need for an orderly process of ‘de-growth’ – a process that, for reasons mentioned briefly above, is only likely to go well within an eco-socialist framework. Ultimately, unless both these local and national-global processors occur, will not make a successful transition to a sustainable society.

Of course, today, across the world we are miles away from the necessary political and cultural awareness needed for such a transition. It is likely that the coming oil crunch and global financial contraction will aid our cause and encourage more people to see the sense in localism and de-growth – but, until then, activists must doggedly go on raising awareness wherever they can. Even if it does not feel like it, every conversation counts!

Reference:

Saral Sarkar, Eco-Socialism or Eco-Capitalism? – A Critical Analysis of Humanity’s Fundamental Choices. London: Zed Books. 1999.

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The lies of happiness: living with affluenza but without fulfilment

23 06 2015

Clive Hamilton

This article is the first in a new series, On Happiness, examining what it means and how it might be achieved in the 21st century.


In a short story, Grief, Anton Chekhov tells of a wood-turner named Grigory Petrov, a drunkard and bully who for 40 years regularly beat his wife. One night he arrives home drunk and brandishing his fists. This time, instead of shrinking from him, his wife gazes at him sternly, “as saints do from their icons”, wrote Chekhov.

It was her first and last act of defiance.

Now driving a sled through a blizzard, Petrov is taking his dying wife to the doctor. He curses and whips the horse. He is seized by grief for a life wasted, and wonders how he will live without this woman who has sustained him for so long.

I may have been a drunkard and ne’er-do-well, he mutters to himself, but that was never the true man, and now my wife is dying on me, she will never know my better nature. I beat her, it’s true, but never out of spite. Am I not rushing her to the doctor because I feel sorry for her?

In Chekhov’s story, Petrov engages in grotesque rationalisations. His dignity will not allow him to face the truth of the sort of man he is. He engages in a litany of self-deceptions, even though the truth threatens to overwhelm him.

The myriad ways humans lie to themselves is a recurring theme of literature. Because we all engage in self-deception, we recognise ourselves in the characters. We are forever composing stories about ourselves and our world so as to smooth a path through life.

Benign fictions and the loss of freedom

The psychologist Shelley Taylor calls them “benign fictions”: the lies we deploy to defend our happiness. For a long time I have believed that if we deceive ourselves about our strengths and weaknesses, creating a veil that distorts our vision of the world so as to render it more agreeable, we may actually be sacrificing the opportunity to find a more authentic self from which to live.

But is that chasing a phantom? Does it really matter if we find contentment by deploying benign fictions?

The philosophers have always told us that happiness should be discounted if it floats on a mirage of lies. But maybe the thinkers are deceiving themselves, rationalising away their melancholy and inflating the value of their solemnity.

Perhaps. Yet there is another reason to question happiness built on self-deception. It opens us up to manipulation.

When we are not truthful with ourselves, we are driven by forces of which we are unconscious, but our real motives and desires can be discerned by others – advertisers, for instance. They can smell weaknesses to be exploited.

So, I am willing to argue, those whose happiness rests on fabrications risk surrendering their freedom. Happiness at the price of freedom is not worth it, unless the limits to one’s freedom are freely chosen after careful reflection.

But is the truth always to be preferred?

The Trade Practices Act outlaws deceptive and misleading conduct by companies making claims about their products. But what if we want to believe the lies? The essence of branding is that by identifying ourselves deeply with a brand – an Apple computer, Diesel clothing, a Volvo car – we take on the image associated with it.

We accept these commercially provided identities because our societies no longer offer other means of creating a sense of self that satisfies. And we are bored.

Increasingly, our attention is seen as a scarce commodity. As always, anything that is scarce has a value, and some are willing to pay for it.

There is even a new branch of economics called “attention economics”. When others thrust information upon us it can be regarded as a form of pollution. We sometimes try to stop this pollution harming us with devices like spam blockers, television mute buttons, “Do not call” registers and “No junk mail” stickers.

However, I think many of us watch television and listen to iPods to avoid paying attention to aspects of our lives that are uncomfortable. And we want our attention to be captured because we have developed a strong aversion to boredom.

It seems to me that the flight from boredom means our society as a whole is suffering from a form of Attention Deficit Hyperactivity Disorder. Movies and television programs have shorter scenes and more action to keep us “glued to the set”. Yet in order to transcend boredom it is necessary to get beneath the superficial self that is entertained by television and a thousand other distractions.

Is a more authentic life possible?

It is one thing to recognise that money and the consumer life are in some way shallow; it is quite another to find out what a more “authentic” life would be. Sometimes I doubt whether there can be such a thing in our secular societies. Are we destined to live out selves wholly given to us by the social conditions in which we find ourselves?

Still, there must be some identity more authentic than those constructed for us by the clever manipulators who make brands and produce popular culture. At a minimum, we must fight hard against those influences, for if we do not we will end up as mere cyphers.

Creating the illusion of independence is the most potent tool of the contemporary advertisers’ trade, but the irony is generally lost because most people are too busy congratulating themselves on “being their own person”. The essential ideology of modern consumerism is that we can all live freely and independently.

This is an idea that emerged from the marriage of modern consumerism and the ideology of the liberation movements of the 1960s and 1970s. We now hear it expressed in inane phrases such as “be true to yourself” and “you are responsible for your own happiness”. So instead of pledging allegiance to God, nowadays a Girl Guide promises to be “true to myself”, a vapid pledge that nevertheless resonates with the inherent nihilism of individualised societies.

In Australia over the past 13 or 14 years we have engaged in a national conversation about happiness and how to get it. This was in large part stimulated by the work of my former colleagues and I at the Australia Institute, building on the work of Richard Eckersley.

When parents spend more time in traffic than playing with their children, is it worth it?
Shutterstock/gemphoto

From the early 2000s we asked whether national wellbeing was rising along with rates of economic growth. We found that the answer was “no”. We built the Genuine Progress Indicator as a substitute for GDP.

We showed how advertisers were persuading us to go into debt and how they were increasingly targeting children. We pointed to an epidemic of overwork and estimated that one-third of Sydney fathers spend more time in their cars commuting than at home playing with their children. We measured the value of stuff that we buy and then throw out unused (billions of dollars worth).

We discovered a deep vein of discontent, with oppressive levels of debt, marriages under stress, overwork leading to illness and depression, children being neglected and a pervasive anomie. And then we uncovered the reaction against it all by describing the remarkably large numbers who had decided to downshift – that is, to voluntarily reduce their incomes and consumption in order to take back some control over their lives.

For a time we had some success, but then something happened. The 2008 global financial crisis brought to a sudden end the zeitgeist and the happiness debate that was part of it. The crash was the direct result of excessive consumption, unsustainable debt and the industries that made them possible; in other words, everything we had criticised.

I always saw the happiness debate we triggered as no more than a prelude to the real task of opening people to an examination of some deeper sense of meaning in their lives, and to precipitate reflection on the moral basis and behavioural structure of our society.

Yet here we are, in the embryonic stages of the next consumer boom, with no collective lessons learned from the last one.


This article is based on an essay in the collection On Happiness: New Ideas for the Twenty-First Century (UWA Publishing, June 2015).

The Conversation

Clive Hamilton is Professor of Public Ethics, Centre For Applied Philosophy & Public Ethics (CAPPE) at Charles Sturt University.

This article was originally published on The Conversation.
Read the original article.





Enough is enough…..

30 07 2014

This little video came past me during a heated disussion over at The Conversation.  I have to say, it’s one of the very best things I’ve seen in a long time, it almost gives me hopium!  It originated from http://steadystate.org/enough-is-enough

The standout statement for me, who submerges himself in all this stuff and finds it harder and harder to learn something new was this:

“Growth is a substitute for equality of income.  So long as there is growth there is hope, and that makes large income differentials tolerable”

And who said this?  Henry Wallich, former Governor of the Federal Reserve…..  of course as the film reveals, equality of income is also a substitute for growth…  This film also deals with the predicament of debt well.  Tim Jackson, whose lecture on growth is featured elsewhere on DTM makes an appearance also.

Also making an appearance in this film is the idea of Guaranteed Minimum Income, a notion first introduced to me by my own son!

Also of interest, to me at least as a former member of the Australian Greens, is the appearance of a woman by the name of Natalie Bennett from the Green Party of England and Wales.  I really really wish the Australian Greens would explain their economic policies better.  Or at all.  I cannot ever remember either Bob Brown or Christine Milne doing anywhere near as good a job as Natalie Bennett does…..

All in all, I can’t recommend viewing this enough….  and it should be shared widely.





What It Means To Be A Modern Day Slave

3 10 2013

Reblogged from what-it-means-to-be-a-modern-day-slave/

enslaved

Do you ever wonder about the purpose of life? Why are we all here and what are we doing with our lives? We live in an unprecedented time full of amazing opportunities on the one hand and terrible catastrophes on the other. But for the typical person working a 9-to-5 job (or more likely a 12 hour shift these days), it is likely that neither of these possibilities even registers on their mind. So many people are simply concerned with the business of surviving: finding a job, paying the mortgage, raising their children, and finding what little time there is left to de-stress from it all. Despite all of the labor-saving devices that were supposed to usher in an Age of Leisure, people seem to be working harder today than ever before.

Economist Richard Wolff points to the decoupling of productivity gains from income gains that began in the late 1970s and has accelerated ever since. The world has never been more productive, yet the average worker is getting poorer as most of the income gains in the economy flow directly to the top.  It is obvious that something is seriously wrong on a systemic level, which beg the questions: Why are the majority of people on the planet focused on getting a job and – when or if they do – then find themselves working longer hours to receive less and less reward? If the average person isn’t really benefiting from their hard work, who is?

To answer these questions, we need to understand that there are really only two ways people can derive an income from society. Martin Adams, author of Sharing the Earth: A Proposal for a Tax Free and Prosperous World, describes these ways:

“Broadly speaking, there are only two ways a human being can make an income: he can either make an income by contributing to society, or he can extract an income from society. A person can contribute to society by providing valuable goods and services. When a person contributes a valuable service and gets paid for it, he collects a wage; and when he gets paid for providing a valuable product, he collects what economists call a capital yield or capital return. When a mechanic gets paid for repairing a car, he collects a wage. But when a company receives money for leasing out a car, a capital good, the company receives a capital return. Each entity contributed a useful good or service.

The only other way people can make an income is by receiving what economists call economic rent. They do this not by adding wealth to society, but by extracting an income from society without providing any real wealth in return. When a person owns a natural resource such as land and charges other people for their use of it, he receives economic rent because the money he gets does not pay for any man-made goods or services.”  (Source: http://sharingtheearth.com/the-production-of-wealth)

On the most basic economic level, there are two distinct classes of people – a select few have the ability to live truly free lives with absolute sovereignty over their time while most other people must trade their labor or time – which can also be called their life – for the means to survive. Isn’t your labor nothing more than your life’s energy? Isn’t it the same life from which you hope to fulfill your dreams, raise your family, and explore the fantastic experience of being alive? When we trade our life, what we get in return ought to be worth something.

There is another name for a person who doesn’t have sovereignty over his own time. We call them slaves. Up until just a few centuries ago, the elite were actually allowed to legally own other people. For example, in ancient Rome it was estimated that 35 to 40 percent of the population were slaves. Today, involuntary slavery has, for the most part, been legally abolished, but life on earth may actually be worse for the vast majority of the working class: they are subject to voluntary slavery.

In a recent post on the Sustainable Man Facebook page, I asked the following question:

What is the difference between the following two scenarios?

  1. Being in a situation where you’ve been kicked off the land that sustained your family for generations and the only options for providing any sustenance is by taking a job making iPhones at 10 cents an hour; or
  2. Slavery

One of the top responses was: “Slaves have an investment by their owners and are generally provided with at least minimal care, housing and food. In general, they are slightly better off.” Indeed, this is true. Today, workers are generally interchangeable. If they get sick or injured, they can be immediately let go, replaced, and forgotten. If that means that they can no longer pay the mortgage on their home loan, the banks will repossess their home and sell it to the replacement worker, leaving the former in a situation where they must beg for resources to keep them alive.

Johann Wolfgang von Goethe, a famous German writer, once said “none are more hopelessly enslaved than those who falsely believe they are free.” Even though most people today believe they are free, is this really true? You are certainly not free to “trespass” on land owned by others or free to take food produced on privately owned land. In some cities, you aren’t even free to sleep on the street. The entire world is now fully owned. The truth is that people are free only insofar as they have money to buy a limited amount of freedom on an ongoing basis. Without money and without the ability to provide for themselves in nature, people don’t have any other choice but to submit their labor in exchange for the “market” wage.  We have to trade in our time (and our life) in order to survive.

This brings us back to the first question posed in this article. What is all of this for? Is the purpose of our lives simply to submit to working at a job that helps fulfill the goals of the elite while our wages deteriorate? What about our desires for our own life? What do each of us have to give to the world? Sadly, many people still do not have a realistic ability to entertain this question.

Lest I be accused of being a spoiled “hippie” that doesn’t want to “get a job”, let me say that I don’t believe that there is a human being alive that is not interested in performing work that is meaningful to them. The reason why most people hate their jobs is because the jobs generally don’t represent their true desires for what they wish to create in the world. People really don’t want to spend the majority of their waking hours selling chemical dispersants or mining coal or taking orders at McDonalds. Those select few people that derive their income by extracting an income from society are not the ones who must submit to such dispiriting work. Shouldn’t the purpose of our economy be to make it possible for every human being to be truly free to find and discover their true calling?

Martin Adams offers one potential solution. From Sharing the Earth:

What would happen to us if our entire tax system were replaced with public revenues exclusively generated from natural resource values?  We already know that all profits from natural resources are unearned. We also know that anyone who profits from natural resources takes wealth that belongs to society. Given these considerations alone, doesn’t it make sense to stop taxing wages, capital gains, incomes, and sales, and start charging people for their uses of land and of other natural resources?

The United States has a landmass of approximately 2.3 billion acres, of which nearly 60 percent, or 1.35 billion acres, is privately owned. The sheer value of this land is nearly incomprehensible: according to one study, in the United States the value of residential land alone was estimated at more than $6 trillion in 2010 and this figure does not account for lucrative commercial land….the total potential revenues of land fees alone would provide about 60 percent of current U.S. federal, state, and local government revenue – 60 percent of an arguably bloated government budget is substantial.

We need to rethink our current economic model from the ground up, and find within ourselves the tremendous willpower necessary to implement this change. The hurdles we have to overcome are immense, yet we must share the Earth with one another if we are to ever create a world that works for everyone – which is only possible if we create a world that works for anyone.”  (http://sharingtheearth.com/keep-what-you-earn-pay-for-what-you-use)

Whether it is reforming our tax system, developing alternative interest-free currencies and exchangescreating local and sustainable economiesjoining the emerging sharing and gift economies, or just bringing more kindness, compassion, and awareness to our everyday lives, we must begin to challenge the outdated and seriously flawed economic, cultural and social systems that make it literally impossible for us to share the earth. We owe it not only to ourselves, but also to our children and our children’s children to leave behind a world that is stronger, safer, more sustainable, and more beautiful than we found it.