Creating global prosperity without economic growth

avatar

An Economy That Serves People and Nature

by Christine Milne on 7th October 2012

Print Friendly

On 26 September 2012, Christine Milne, the leader of The Australian Greens political party stepped out ahead of the flock. With a rousing speech she critiqued the current economic system, the growth paradigm, and spoke out about the challenges that Australia, and the world is facing. Here is an excerpt from that speech, which can be found in full here.

How do we build an economic system that serves the needs of people and nature, both for today and for tomorrow?

Greens Leader Senator Christine Milne addresses the National Press Club of Australia in Canberra on Wednesday 26 September 2012 Greens Leader Senator Christine Milne addresses the National Press Club of Australia in Canberra on Wednesday 26 September 2012. Photo: Alex Ellinghausen

That our economic system is broken and needs fixing is not just the view of the Greens. It is the view of the World Economic Forum, which in its report “More with Less: Scaling Sustainable Consumption and Resource Efficiency” of January this year said:

“Current trends clearly show that business as usual no longer works. Unless the present link between growth and the consumption of scarce resources is severed, our resource base, governance and policy structures are unlikely to sustain the standard of living societies have grown accustomed to or indeed aspire to. Action to decouple business and economic growth from resource intensity and environmental impact, has never been more critical to the long term success of business.”

In Australia, this is heresy. Witness state and federal governments massively expanding coal mining and coal ports, approving the destruction of the Tarkine and Great Barrier Reef seagrass beds.

Surely it’s time that those who advocate economic growth derived from resource extraction and pollution as the major path be the ones labelled “wacky”, “loopy”, irresponsible, divorced from reality or connected to the CIA.

Australia’s economy is strong. The unemployment rate is low, inflation under control, and Australia is one of only seven countries in the world to have maintained its AAA credit rating.

And yet, millions of Australians feel uncertain about the future, uncomfortable, under pressure. There are many reasons for this. The two speed economy is frequently cited as is the GFC.

But I want to focus today on the underlying reason. Our much envied economy is on borrowed time.

The economy is a tool; a tool we humans invented – like democracy and politics – to help govern our relationships between each other, and between ourselves and the world we live in. If our economic tools are not getting the outcomes we want, making us happy, safe, healthy, better educated and fulfilled and protecting and preparing our country for an increasingly uncertain future in a world on track to be 4 degrees warming, then it is time our economic tools changed.

It’s clear that, whilst the economy is growing, our quality of life is stagnating, our environment is suffering, and we are failing as a country to invest seriously in the things that we value, the things we need now if we are to have a better future: a fair education system where you can get a good start in life regardless of how much money you have or where you live; a zero emissions energy network that doesn’t pollute the air and drive global warming; a health system which takes care of all of us, from the state of our teeth to our state of mind.

It is time to change, to diversify our economy, clean it up, and invest in a future that doesn’t rely on digging up, cutting down and shipping overseas.

The old parties are grounded in a belief that the economy is an end in itself, and that we have to ‘balance’ the need to care for people and the need to protect the environment against the needs of the economy.

When you think about this, it simply makes no sense. Tasmanians recognised that as early as 1972 and established the world’s first Green Party. The idea reached mainstream by 1987, when the Brundtland Report of the World Commission on Environment and Development, Our Common Future was published.

The Brundtland Report revealed that world leaders were able to think rationally and caringly about the present and the future. It’s probably most famous for articulating the concept of ecologically sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.

One of the Brundtland Report’s most forgotten insights is that there are only two real things in the world: people and nature. The economy is not a physical thing; it is not something that exists in its own right. Rather it is a tool we invented for governing the relationship between people, and between people and nature.

When the Brundtland Report went to the World Bank, tragically, the insight that the economy is a tool for people and nature all of a sudden turned into a triangle where the three – people, nature and economy – were all real and equal. And we were plunged back into the old view of the world where nature lost every time, traded off against people’s short-term benefits and “the economy”.

Most of the battles of political philosophy over the last two centuries have been about competing views of how to run an economy. Where the old economic right, broadly speaking, has sought to create a ‘strong’ economy and the old left sought to create a ‘fair’ economy, neither has grappled with how an economy can be strong or fair when ecological limits are being reached: “without environment there is no economy”.

The Greens are calling on the Government to either work with us to find savings and revenue in a forward-thinking, caring manner.

So where does this lead us? Einstein said “You don’t solve problems with the same thinking that created them”.

To set us on our new path, a path to an economy which serves the needs of people and nature, both for today and for tomorrow:

  • We will need new economic tools;
  • We will need to learn to do more with less;
  • We will need to re-prioritise our investments; and
  • We will need sensible management of taxation and revenue to fund these investments.

It is a case of rethink, reduce, reuse and recycle.

For most of us going about our daily lives, the new, caring and ecologically sustainable society will look very similar in most ways to the old one. Yes, it will be powered entirely by clean, renewable energy – including electric cars, buses, trains and trams – and there will be more cycleways and better designed homes and offices.

But in most ways, it will look the same but perform better. Any job can be a green job, with a slight shift in focus.

What will be different is that we will have replaced the idea that Australia’s wealth is dependent on digging-it-up, cutting-it-down and shipping-it-overseas with the knowledge that our prosperity depends at a personal and collective level on our brains, on our health, on our creativity and on a healthy environment.

Of course, that challenges those who have gone unchallenged for generations, those at the heart of current power. For that reason, our vision is labelled unrealistic or whacky by people who cannot or will not imagine a world different from the one in which they are currently powerful or comfortably making a profit.

This isn’t surprising. I often quote Nicolo Machiavelli, who wrote 500 years ago that:

There is nothing more difficult to carry out nor more doubtful of success nor more dangerous to handle than to initiate a new order of things; for the reformer has enemies in all those who profit by the old order.

So how would the Greens recalibrate the economic tools? How would we make them enhance our natural, human, social, manufactured or financial capital?

John Stuart Mill wrote in 1848:

There would be as much room for improving the Art of Living, and much more likelihood of its being improved, when minds ceased to be engrossed by the art of getting on.

The Greens want to see everyone given the opportunity to “practice the Art of Living”, we want to see people lifted out of poverty and we know that unless this is done while protecting the environment which sustains us it can only last a very short time. That is what growth is supposed to achieve. The problem is, we measure it with the wrong tools; tools which tell us we’re growing when in fact we’re not.

If economic growth as it is currently measured isn’t actually making us happier, healthier, cleverer or safer then it isn’t real growth.

We have to limit our use of GDP to those purposes it is suited to and measure our true progress as a nation with different tools. The Greens will redouble our efforts to support development of the best possible economic tools and work to see them adopted across government and society so we can build and measure the well being of people and nature for the long term.

In short, the Greens do want to see growth, but growth in quality of life, growth in equality of society, and growth that plans for the long term. Of all things that are precious, time is paramount. We long to have more of it to improve our lives.

The Greens’ vision is becoming mainstream globally, with Australian politics and commentariat playing catch-up. The ideas I’ve set out today are all from established economic theory, based on the early 20th century work of Arthur Pigou and John Maynard Keynes as well as more recent Nobel Prize winners from Joseph Stiglitz to Paul Krugman to Amartya Sen They also encompass vital scientific work being done by the CSIRO and others that we either need to grapple with or be left behind.

We can make this vision a reality, but only if we recognise that the economy needs to serve the needs of people and nature, not the other way around.

 

Listen

This post was written by

avatar Christine Milne is an Australian Senator and leader of the parliamentary caucus of the Australian Greens. From 1975 to 1984 Milne worked as a secondary school teacher, teaching English, history and social science.

Christine has written 1 posts on Post Growth Institute.

{ 13 comments }

avatar 1 Steven Liaros October 8, 2012 at 14:52

Beautifully said, articulate, precise and honest … and finally we have a politician willing to explicitly challenge the status quo. Christine… until today I had believed that the political system is entirely irrelevant and that the only solutions would be local solutions… ecovillages, transition towns, cooperative housing and intentional communities.
Perhaps I will be proven wrong.

avatar 2 Lindsay A October 11, 2012 at 09:49

I agree with Steven Liaros, I did not believe in the political systems desire to change and felt it was up to individual citizens. I hope that this view spreads from Australia to other nations. This gives me hope, thank you. Let’s use this as a jumping off point to change.

avatar 3 Jeff Mowatt October 15, 2012 at 08:51

Economics in Transition:

A presentation by Terry Hallman, founder of People-Centered Economic Development for the Economics for Ecology conference at Sumy 2009

The “Triple-Bottom Line” of financial, social benefit, and environmental benefits

Outline:

1. A brief history of economic thinking over the past 90 years

2. Recent trends in new economic thinking

3. The ‘Bottom Line’, the ‘Double Bottom Line’ and the ‘Triple Bottom Line’

4. Social aspects of emerging economics thinking

5. Environmental aspects of emerging economic thinking

6. Global warming, indicating the dangers of environmental neglect in prior economic thinking

7. Global dimming, indicating the danger of drastically speeding up global warming by removing atmospheric pollution that was largely ignored in previous economic thinking

8. At issue: how can we create an economy based on people, to achieve financial profit, social benefit, and a safer, cleaner environment.

9. What would such an economy look like? How can it work? What can be done in Ukraine to achieve it?

avatar 4 Jen Hinton October 17, 2012 at 03:13

Hi Jeff,

Thank you for the interesting comment! First, I would like to mention that I feel the concept of the Triple Bottom Line is outdated, because it is based on a vision of sustainability that is supported by three “pillars” (economy, environment, and society), all placed as if they are of equal magnitude and importance. However, it is obvious that the economy is a subset of human society which is a subset of ecology (i.e.- nature, natural resources, etc.), so they should not be treated as equals. The environment is more fundamental than the economy, for sure. Christine did an excellent job of highlighting this in her speech.

Secondly, I think that # 8 in your comment is extremely important. We must have an economy that serves the people, not the other way around. We must also maintain a clean and safe environment and use our resources in a balanced way so that we won’t run out of the things that are essential for our wellbeing. And so I would like to question why financial profit is mentioned there. Does it really deserve a place on that list? Is financial profit as important a priority as ecological and human wellbeing? Is it essential? Or is this idea that “profit is the top priority” perhaps pitting economic concerns against ecological concerns? Are we shooting ourselves in the foot for the idea that profit is essential? What role does profit play in today’s system? Should profit play a role in an economy that seeks to function within the ecological limits of this planet?

These are questions that we all need to be asking ourselves, as this “profit motive” seems to be one of the key factors that keeps us from doing a better job of conserving resources, protecting endangered species, creating more equality in society, eradicating poverty, etc.

Thanks again for your insights.

Jen

avatar 5 Jeff Mowatt October 17, 2012 at 03:55

Thanks Jen,

That presentation was followed up in 2010 with the treatise from our 1996 paper on a people-centered form of economics.

Where we began with this, in suggesting a redefinition of profit in an alternative to capitalism, it’s argued that money imagined into existence as debt places the existence of many at risk. An economic system which can be measured in human terms is proposed: .

” Enterprise profitability and economic success cannot be fairly measured in terms of gains of money capital alone. Profit is redefined in human terms rather than pure quantitative analyses that remove human and social concerns in the name of profit.”

From a white paper in 1996, we see an evolution in the perception of production and profit maximisation of the late 20th century.

In 2009, for example, Miguel D’Escoto Brockmann, the President of the United Nations General Assembly offered this in a speech:

“The anti-values of greed, individualism and exclusion should be replaced by solidarity, common good and inclusion. The objective of our economic and social activity should not be the limitless, endless, mindless accumulation of wealth in a profit-centred economy but rather a people-centred economy that guarantees human needs, human rights, and human security, as well as conserves life on earth. These should be universal values that underpin our ethical and moral responsibility.”

According to the UK Green Party “Capitalism should exist for the good of the people, not the other way around”. What we’ve been advocating and practising since 1996:

You. we, me, ethics and people-centered economics

avatar 6 Jen Hinton October 18, 2012 at 02:03

Hi Jeff,

Great! So, it seems that we both agree that “financial profit” should not be among the top priorities of the economy. The semantics of terminology are always tricky and, of course, that’s one of the reasons a concept of “sustainability” in a holistic sense is so often difficult to grasp and is frequently misunderstood. I’ve actually heard and read many times that “sustainability” is just a matter of branding and good PR, and this was in the context of corporate social responsibility. So, of course, just like we need to clarify “the sustainability of what?”, we also need to be clear about the what’s, why’s, who’s and how’s of profit. In fact, it’s such a problematic term, so automatically related to monetary gain, that I much prefer talking about economics in terms of delivering human wellbeing. Financial profit is often equated with human wellbeing and, from what I’ve seen, that’s been a large part of why we aim for sustainability, but end up further and further away. I think it’s difficult to use the word “profit” in ways that actually help envision a human-centered economics. And maybe some people are afraid to exclude the word “profit” in papers and discussions about sustainability, because they fear alienating people whose number one priority is profit. Rather than accommodating this mindset, I feel it is important to confront the pathology of our society’s tendency to place financial gains above (or even on the same level with) such essential aspects of sustainability as nature and human wellbeing.

However, I am very happy to see that all of this is quickly evolving. The fact that these business leaders are open to redefining profit is interesting and I look forward to seeing the day when they actually place human wellbeing above profit.

Thanks again!

Jen

avatar 7 Steven Liaros October 18, 2012 at 03:39

Jeff and Jen,
There is only one accurate definition of sustainability. Something that is sustainable sits at the opposite end of the spectrum from a consumable. Consumable, something that is used once only; Durable, something that is used numerous times, Sustainable, something that, with regular maintenance can be sustained for an extended time or indefinitely.

Economic growth demands continuous and increasing consumption. Whereas only food should be considered a consumable, now everything we build is a consumable. Everything is built to be discarded, to break down or to become obsolete so that we can build more things to support the economy.
Sustainability, by contrast, demands that we focus on the maintenance, work together, negotiate responsibilities, cooperate for mutual benefit, share our things and our spaces, collaborate. All these things not only build community but also reduce our need for the economy.

It is impossible to see this definition if you start with the assumption that economic growth is essential. The economy, the growth in private interests, is an opposing force to community growth, the growth in the public interest.

avatar 8 Jeff Mowatt October 19, 2012 at 10:57

Indeed Steven, a continuous production process for profit maximisation which fails to “trickle down” those in greatest need.

The concept of post growth people-centered local economies is presented in an ongoing initiative to identify business which operates for world benefit. Would you like to support us by approving it?

Post growth people-centered local economies

avatar 9 Jen Hinton October 21, 2012 at 07:13

Hi Steven,

Well said! I would just also like to add that it’s really important to look at what has helped construct this growth-based system and why the majority of people still very much believe that economic growth is the only way to develop. These questions have led me into all sorts of interesting research about human psychology and the evolution of human consciousness over the ages. In this research, I’ve found that it’s a complex combination of many different factors. However, much of it basically boils down to our perceptions, beliefs and narratives, as a society. After all, the economy is not some natural force; we co-create and interact with it every day. And of course, our perceptions co-evolve with the economic system, each constantly influencing the other.

Here are some key factors that I’ve found at the root of it all.

- We humans tend to think very linearly, not allowing much room to understand the complexities of human nature and the world in which we live.

- We have embraced a one-sided narrative of human nature (reflective of our linear thinking) which assumes that our nature is, above all else, greedy and competitive; thus the profit motive and the assumption that all “rational” people act in their own immediate self-interest.

- We underestimate or all together dismiss the notion that human nature is also benevolent, generous and cooperative.

- Due to our linear thinking, we see ourselves as separate and discrete beings, despite the fact that we are all extremely interconnected as parts of a complex living system. It’s clear how differently “self-interest” is defined in the context of completely separate individuals versus deeply connected people within a shared living system.

It’s upon these assumptions and perceptions that we’ve built and continue to co-create the current regimes.

This is what I was hinting at in the response above. In seeking to move beyond the growth-based economic system, it is essential that we acknowledge and address these underlying assumptions and beliefs. Fortunately, this kind of self-reflection, both on the individual level and on the societal level, is happening more and more, and faster and faster.

Thanks for your thoughts and clear way of framing sustainability and consumption!

Jen

avatar 10 Jen Hinton October 21, 2012 at 07:15

Hi again Jeff,

I think that this model of the Community Funding Enterprise and the Credit Union working together is really interesting. My only concern would be that, in the way it’s framed in the link you provided, it seems to deliberately not distinguish between enriching a community and enriching a few individuals, which, as Steven points out, are two very different things. And, again, it seems to define this “enrichment” in terms of financial profit. With these terms defined clearly and with the explicit goal of zero-waste and decreased consumption, I think this model could be quite effective!

Thanks!

Jen

avatar 11 Jeff Mowatt October 21, 2012 at 09:45

Hi Jen,

To put the CFI + CDFI concept into context, here’s an extract from the proposal it come from, <a href="http://economics4humanity.wordpress.com/2012/09/22/creating-shared-value-mk1/"<a plan to support an at risk community in Crimea. As you may see, it makes that point about the enrichment of community rather than a minority. I used the term ‘Creating Shared Value’ to get the attention of mainstream business.

From the impression you’ve gained, I should perhaps expand my description to include more information about community primacy, i.e. that no dividends are distributed to shareholders, with at least 50% of profit invested in a CDFI.

In 2004 the same approach is proposed to tackle poverty in the UK.

P-CED then continues as an operational example focussing on a national scale strategy for poverty eradication and childcare reform in Ukraine.

avatar 12 Steven Liaros October 21, 2012 at 13:55

Thanks Jen, I appreciate your comments and agree with the factors you have set out … I have come to very similar conclusions in my research.
Jeff,
I have had a look at your link and agree with the important notions of being ‘people-centred’ and also your advocacy for the free sharing of knowledge, which I believe is a central element to a post-growth economy. Just like private property, private knowledge, secrets, intellectual property rights and so on a are significant barrier to human development. We need to support the free sharing of knowledge in the same way that we encourage the sharing of property.

The element that I have difficulty is the creation of complex instruments and ideas that need a high level of education and technical understanding.
The change to a post growth economy needs to be broadly accessible, including to the majority of the world’s population that have not enjoyed the benefits of a ‘growth economy’.

For me it needs to be framed as a simple shift from competition to collaboration, from a ‘trade and consume’ society to a ‘share and maintain’ society.

avatar 13 Jeff Mowatt October 21, 2012 at 23:17

Steven, There’s an aspect of IP which is worth considering. P-CED was conceived and distributed as “free to use” with the aim of seeding a new way of doing business/
There is a difficulty from this point onwards in that to move things forward requires investment, time and or money to develop strategies and business plans.
It was our experience after the success in Russia to find ourselves having to protect the copyright of our work in Crimea from a corrupt politician who wanted to derive personal benefit from giving himself a role in the project at a higher cost. Since the project was intended to benefit the poor rather than the already wealthy it was necessary to block our own project to protect against corruption.

The same kind of thing would happen later after 12 man years effort. Without income and with no means to pay for medical treatment, our founder would die just over a year ago after his work was hijacked by government and corporations.

I ask the question – Do we need ethics in social investment.

{ 1 trackback }

Previous post:

Next post: