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Looking Beyond Rio, Towards Degrowth

by Charles Eistenstein on 1st July 2012

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Rio's statue of Christ the Redeemer reflected in the sunglasses of a young woman

You know folks, I’m a bit worried about my 16-year-old son, Jimi. When he was 13, he grew three inches. When he was 14, he grew five inches. When he was 15 his growth slowed to three inches, and no matter how much I feed him, now he isn’t growing at all past his current six-one. Could someone please tell me how to achieve sustainable growth for my son, so that he can keep getting bigger forever?

The insanity of my plan is no less than the insanity of the explicit goal of the Rio environmental summit: sustainable development. That phrase could mean a lot of things in theory; in practice, what it means is, in the words of U.S. Assistant Secretary of State Dr. Kerri-Ann Jones, to “maintain economic growth and protect the environment.”

In our current system, economic growth means the conversion of nature into product and human relationships into services. It is widely recognized, at least among environmentalists, that Earth cannot sustain much more of the former. Less understood is that the expansion of services bears a limit as well, that we witness today as the atomization of community, the disintegration of civic culture, the enclosure of the cultural commons, and the deskilling and helplessness of nearly the entire population. There is little left that we do not already pay for.

To be sure, it is possible to squeeze a little more growth out of our old planet, just as I could, with the judicious use of growth hormone injections and force-feeding tubes, add a few more inches to my son’s height. But in either case growth comes at a grievous cost. In the case of Earth, there is still some natural wealth that we could commodify. Perhaps we can drill in the Arctic, pump a few more billion tons of CO2 into the atmosphere, log the remaining rainforests. Surely if we try hard enough we can wring a few more years of growth from this planet.

Advocates of “sustainable growth” hope to expand the realm of goods and services — that is, increase consumption — without doing all of these things. In other words, they hope we can consume more and less at the same time. That is impossible, when growth means more purchasing power, more production, more automobiles, bigger houses, more electronics, more roads, more air travel… all of these contribute to economic growth as we define it today.

Transferring growth from these areas onto “green” industries is not a long-term way to sustain eternal growth either, although that transition is important in its own right. Certainly, we should get energy from sunlight rather than fossil fuels and nukes — but can we increase the number of solar panels forever? Certainly, we should stop clearcutting, mining, and ranching the Amazon and tap rubber trees and collect brazil nuts instead — but can we increase the production of those things forever? Obviously not. Furthermore, the most effective green technologies involve simply using less: conserving energy, living in smaller houses, biking instead of driving, couchsurfing instead of building new hotels, sharing and borrowing instead of owning a personal copy of every good, and so on. All of these involve economic degrowth.

In aspiring toward sustainable growth, then, the Rio participants carried an irreconcilable contradiction with them into the conference. Its failure was assured — not because of the commonly cited reason that it is impossible to gather 50,000 bureaucrats for a week and get anything done. Well, OK, because of that, yes, but the contradictions run deeper. Given the way that growth is defined in our current system, sustainable growth is impossible.

This should not be a perplexing proposition. What being or system in nature grows forever without reaching a steady state? Most animals go through a growth phase (in humans we call it childhood) and then cease growing larger in size. Immature ecosystems likewise: they rapidly gain in biomass for a while before reaching a steady state. In both cases, development continues. The ecosystem grows in complexity and interconnectedness. The human being continues to grow emotionally and psychologically well after adolescence ends. Could the same dynamic apply to humanity as a species?

If so, then it is time for economic growth as we have known it to end. The differences at Rio were irreconcilable, because in the current system, generally speaking, policies that foster economic growth harm the environment, and policies that heal the environment hurt economic growth. There are exceptions to this rule, but the essential contradiction is unavoidable. To address it, change on a very deep level is needed, change to the very nature of the economy, money, and capitalism. It is not to end capitalism, but to change the nature of capital.

The nature of capital today is aligned with the increasing expropriation of natural resources and the cultural commons. There are two reasons for that. First, because money is created as interest-bearing debt, there is always systemic growth pressure. As soon as growth slows, debt rises faster than income and the intensifying debt pressure fuels increasingly desperate attempts to extract more money from somewhere (other people, nature, etc.) Politically, this translates into the very growth-friendly policies that are destroying the planet. Second, the social and environmental costs of this extraction are off the balance sheet, externalized onto other people, nature, and future generations. This is how the destruction of a forest to create 100,000 board feet of lumber is, preposterously, counted as an increase in wealth. The forest no longer contributes to soil stability, oxygen production, climate stability, biodiversity protection, and so on, but those losses are not included in the price of a plank of lumber. Together, these two factors drive the conversion of the natural commons everywhere into money.

Unless we are prepared to address the situation at this level, meetings like Rio will be futile. The sense of futility was palpable in the writings of frustrated attendees. Hopefully, this frustration will open them up to deeper solutions, even as the urgency of finding solutions grows with each new ecological and financial crisis.

Solutions at this level exist, but they are for the most part off of the political radar. They are at odds with the (short-term) financial interests of the people who run the world; nor can our governing ideologies, which reflect these interests, countenance them. Hope lies in the crumbling of these ideologies (for example, of progress, of growth, of the primacy of competition in life and nature, of the efficacy of control) and in the breakdown of the financial system. This is inevitable, because no matter how much we try, no matter how great a cost we are willing to bear, growth as we have known it cannot continue forever.

Of the two contributors to runaway growth, the second — the externalization of costs — is slightly less paradigm-shattering to resolve. Proposals such as pollution taxes, taxes on resource extraction, and payments to ecologically pristine regions for ecosystem services are part of the political dialogue, albeit on the fringes. It isn’t just a matter of “counting” ecosystem services in an alternative to GDP, as proponents of Gross National Happiness and the Genuine Progress Index sometimes seem to believe. Such measures are a step in the right direction, but they need to be incorporated directly into the financial system if anything is to change. In other words, we need to change the very definition of what a “product” is. If economic growth means the growth in, for example, the things that contribute to “ecosystem services,” things like biodiversity and carbon sequestration, then it isn’t a bad thing at all. In this regard, the Group of 77 (the poorest nations on the planet in terms of GDP) have the right idea: rich nations should pay them to conserve their resources and develop differently from our own industrial model.

Internalizing social and environmental costs would be a huge step forward, but ultimately I don’t think it is enough. The growth imperative itself needs to be addressed as well, simply because we need a money system consistent with reduced consumption. Part of the transition we must make is to more energy-efficiency (less consumption of energy), more reuse and sharing of durable goods (less extraction and production), more gardening (less commodity food), and an expanded cultural commons (less purchasing of digital content). In other words, not only do we need to be paying for different things, we also need to be paying for fewer things.

To remove the systemic growth pressure that exists today goes to the very heart of the money system. Already, as growth stagnates and wealth concentrates in fewer and fewer hands, we see the need for a financial system that discourages hoarding and allows money and credit to circulate in a context of low growth. There are many ways to do this; my favorite is to breach the “zero lower bound” of monetary policy and allow interest rates to go negative. I discuss the economics of this idea at length in Sacred Economics.

Humanity is coming of age, and the old growth paradigm is becoming obsolete. Any attempts to maintain it past its time will fail as dismally as Rio failed. If anything good came out of the summit, it was in the smaller-scale side agreements involving individual nations and corporations that in various ways embody a post-growth sensibility. The time has come to interrogate our basic notions of growth, development, and economy. Like it or not, our relationship to Earth is changing. Indeed, our consciousness has changed already — probably no one at the Summit advocates the continued wanton despoliation of the planet. We all want ecological healing. We all want to enter into a new relationship to Earth. Our consciousness has shifted from the early-20th century ideal of conquering nature. However, our institutions, whether money or politics, are not yet in accordance with our changed consciousness. They trap us into behavior that no one really chooses and render us helpless to avert our collision course with catastrophe. That is why it is so important to question the blind ideological assumptions — particularly that of sustainable growth — that underlie those institutions.

This article was originally published as ‘Why Rio+20 Failed’ at www.charleseisenstein.net

This post was written by

avatar Charles Eisenstein is the author of The Ascent of Humanity and Sacred Economics. He teaches and speaks worldwide on issues of money, transition, consciousness, and cultural evolution.

Charles has written 3 posts on Post Growth Institute.

{ 19 comments }

avatar Nick Palmer July 4, 2012 at 06:22

We need to keep defining/emphasising that economic growth requires increasing amounts of material resources/energy and importantly that economic development requires no additional (or reducing) requirements of energy/resources.

One is clearly, logically, unsustainable, the other just might work to continue increasing the sum total of human wellbeing.

avatar James River Martin July 4, 2012 at 11:40

This article needs to be published in the New York Times … and other popular media sources … or somehow read by millions or billions of people. But this is very unlikely to happen. Because Charles is DANGEROUS. And people like Charles — e.g., Richard Heinberg — are DANGEROUS. And they are dangerous because they are informed, intelligent, honest, and capable of rational thought. They endanger (Oh, if only they COULD!) the regime of utter stupidity and ignorance which the popular media serve up to the brainwashed masses.

avatar Gunnar Rundgren July 4, 2012 at 13:31

Good post,
in particular the idea of letting interest rates go negative. Already Rudolf Steiner had the idea that we should retire money instead of letting it grow.
I do disagree with the statement: “It is not to end capitalism, but to change the nature of capital.”
Having worked in business and with business most of my life I have observed that unfettered competition actually is a prime driver of growth. And unfettered competition and profit (accumulation) are the two hallmarks of capitalism. Take them away and you don’t have capitalism. Green Economy or internalisation of costs will not change this at all. In the end I also don’t think capitalism is compatible with your ideas of retiring money, it seems to be contrary to the definition of capitalism?

avatar Riversong July 6, 2012 at 18:22

I agree with Gunnar Rundgren that Charles is soft-peddling his transformative blueprint to make it more palatable or less frightening, but what he describes would require the end of capitalism (and the Ayn Rand ideology on which it’s based – “rational selfishness”).

His critique of the “green” development model, however, misses the most salient fantasies that true believers in progress through human cleverness and “advanced” technologies often tout as pathways around the destructiveness of conventional production.

These are that we can continue economic growth and feed the world by literally verticalizing production (in high-rise facilities that have small geographical footprints in urban areas, ignoring the energy requirements to move things against gravity), that we can rely on genetic modifications to force more value from less biological material, that we can engage in geo-engineering to counteract climate change, that we can digitalize much of the economy to minimize physical locomotion, and that we are about to tap into the quantum field or other fantastic and unlimited energy sources (the perpetual motion myth to circumvent the Second Law of Thermodynamics).

avatar Jim-el July 7, 2012 at 22:03

Dear Charles —

Conversion of the commons and human relationships into products and services is, indeed, the industrial-age means of assuring economic growth, and I’m in full agreement that we must modify capitalism to preserve ecology and restore trust. But in making your good points, please don’t abandon fairness and balance, honesty and wholeness, and contribution to healing the “us versus them” fixation of our “dominator” paradigm. I want to point out that your statement: “Hope lies in the crumbling of these ideologies…” may do more to reinforce polarities than to heal differences and restore “the 99%” to unity.

An example of economic growth that refutes your generalizations is software: Consider the price-per-pound Microsoft gets for their products. Consider the dollars-generated versus the environmental impact of interactive games. As I see it, economic growth is slowing in buggy whips and butter churns, moving toward virtual reality, which produces phenomenal returns while minimizing the environmental and social costs of traditional industry.

It will take a generation or more to transform the debt and scarcity paradigm and its resulting isolation and distrust, but in the meantime economic growth can flourish in the virtual realms. Consider the potentials (once the kinks get worked out) of futures, options and derivatives — products that generate high revenues with no physical form whatsoever! And what new marketable dimensions lie ahead, not yet imagined?

Hope lies not in “the breakdown of the financial system,” but in the healing of trust, the willingness to cooperate, and faith that Life will prevail.

avatar Rob Wheeler July 9, 2012 at 04:28

Dear Charles and friends,

Thank you for this very valuable and insightful article. Unfortunately, I think that there are a couple of things that you have said that are just plain wrong; and the article is too important to just let this go. First off, I doubt that it is insane to believe that we can “maintain economic growth and protect the environment.” The developing countries, along with developed, are likely to continue to insist on trying to do this because it is economic growth that has been helping them to lift billions of people out of poverty and improve life very dramatically for an expanding middle class.

Of course this is leading to the rapid depletion of our natural resource base and assorted other major global challenges; but why shouldn’t these people want and get what those of us in the developed world have?

The answer lies in focusing on making a complete transition to full sustainability as rapidly as possible. You have identified two incredibly important elements of the solution, quit issuing money as interest-bearing debt and internalizing social and environmental costs, but there are many others that are equally important as well. ie designing our economic systems and processes to eliminate waste and phase out toxic pollution; transitioning to 100% renewable energy; restoring the natural environment – the natural capital on which all of life is based; taxing the ownership and use of land and natural resources not only to internalize costs but also so that these resources benefit all people and not just the wealthy elite; and fixing other elements of our economic system – concentration of wealth, stock market, monetary value and exchange, media ownership, political influence and control, etc.

We are not likely to know whether and to what extent we can continue with economic growth, if at all, until we have actually created a truly sustainable system – which has to be our primary goal – after all it is the most fundamental requirement for life – to create the conditions and systems needed to be able to sustain oneself.

And unfortunately, we are so far from living sustainably in almost all communities and places on the planet that we have no idea what may be possible. Personally, I think that we could probably continue economic growth (at some level) without any problems – if the system was designed so that it was truly sustainably based. Humans are wonderfully adept at creating enormous value and wealth from very little natural resources by comparison – if we do not destroy the natural environment in the process.

Finally, you say that it is impossible to gather 50,000 bureaucrats for a week and get anything done. This is I believe a most unfortunate statement; and a serious problem because we have to fix our global governance problems and systems if we want to get anything done right. So, first of all let’s recognize that 50,000 bureaucrats were not gathered in Rio. This number, if there were that many people, included civil society and the media as well. I doubt that there were more than a couple thousand government representatives, and most of them were not bureaucrats.

The bigger problem though is not that government bureaucrats cannot get anything done. It is how the process is structured and run; there is no reason that government bureaucracies should not run just as well as any other institution or gathering of humanity. It all depends upon how well things are structured, organized, and what one is trying to achieve.

In the case of Rio+20 both the goals and the process were all wrong. The primary focus should have been on putting in place the programs, means, mechanisms and funding needed to achieve all of the sustainable development agreements that have already been adopted over the past 20 – 40 years while agreeing to do what is required to achieve full sustainability as rapidly as possible. These would have been worthy goals to start from and to focus upon.

Second, the process needs to be opened up so that civil society is fully included in the actual decision making processes. Our governments have shown repeatedly that they are not able or willing to make the commitments and decisions needed to actually solve our global challenges, while civil society has shown that most of us are. So, let’s put us in the driver’s seat too so that our governments will finally have to do what we want as well.

Ok, enough for now. I would be happy to consult and work with you on articles that you write in the future Charles. Your contributions are too important to miss a few things like this.

Rob Wheeler
formerly an Occupy Cafe Steward
UN Representative, Global Ecovillage Network and Commons Action for the UN
Chair, World Alliance to Transform the UN
skype: robineagle333
robwheeler22@gmail.com

avatar Charles Eisenstein July 9, 2012 at 06:44

Thank you all for these intelligent comments. Some of them would take an entire book chapter to address, so I’ll just offer a basic skeleton of an answer.

1. Capitalism: When the nature of capital changes, capitalism becomes something unrecognizable to us today.
2. Verticalization of production. Riversong is writing about something akin to what I call “technological utopianism,” which comes from one of the defining myths of civilization: that humans are separate from nature, that our potential to master and control nature is unlimited, and that our destiny is to become nature’s lords and masters. This is a deep paradigm underlying the ideology of endless growth.
3. Software and the virtualization of economic growth: To answer this requires a pretty sophisticated argument. It is in my book. The basic question is, “Is software creating new services that didn’t exist before, or is it replacing already existing, non-monetized functions of human life?” A lot of software, and technology-mediated services in general, bring functions such as play, imagination, communication, and so on into the realm of services, whereas once they were the product of non-monetized relationships. I think the commenter was mostly pointing to the possibility of growth that doesn’t exact an environmental cost. This is a tricky claim as well (there are those who point to the vast amount of energy it takes to run the internet and provide “virtual” goods), but I think that the main limit to growth for virtual goods is the limit of the number of relationships and life functions that can be monetized.
4. Lifting the masses out of poverty: Here I would just point to the fact that “poverty” means something different to an economist than it does to a human being. Helena Norberg-Hodge describes it beautifully in her book and film, Ancient Futures. She observes the wealth of the subsistence peasants, who had almost zero cash income, but lived in beautiful houses, had lots of leisure, etc. Then development came, and millions ended up in concrete apartment buildings earning a cash income. Once they are there, then certainly rising to the middle class is an improvement, but we have to ask why “poverty” (in the sense of lack of money) is so horrible to begin with. It is because we have created a system in which money = life. This leads to the question of how we can improve people’s lives without growing the money economy. We need to explore other modes of development.
Charles

avatar Josh Mitteldorf July 9, 2012 at 08:16

This is right on the money. The idea that our money system is a problem, however, needs a whole lot more explication before people will get it. (Maybe that’s why Charles has written Sacred Economics.) Most people don’t get that we even have a money system, or that economics could conceivably be on a different basis than the present system. It’s a radical and subversive fact that governments could just print money instead of printing bonds and selling them to private banks, and that the result of this would not be explicitly inflationary.

One more taboo topic that goes beyond this article: population control. The world’s expanding population is a big motivator for economic growth, and collective action to discourage reproduction is fraught with issues of Big Brother and personal choice, as well as a need to confront fundamentalist religions.

avatar Nick Palmer July 9, 2012 at 09:15

Jim-el and Rob Wheeler.

I don’t think the meaning of the article was that no further economic growth should take place in the undeveloped areas of the world where too many people lead a “subsistence existence.” It seemed clear that the end of growth refers to those rich developed consumer areas whose demands have almost single handedly pushed the world towards its ecological and material resources limits.

The mistaken point about Microsoft decoupling economic “growth” from material use is exactly the point I tried to make on July 4, 2012 at 06:22. It would help if we defined what software does as development not growth.

While GDP regards, and measures, both types of development as the same we need to be a lot more precise about terminology to avoid misleading or alienating the wider world outside who naively regard any type of economic growth as wholly good.

avatar Robert Riversong July 9, 2012 at 13:21

Charles,

Excellent rejoinder to Rob Wheeler’s old-paradigm fantasies (Rob banished me from Occupy Cafe for challenging ideas like his too forcefully), but there was one more of his absurd points which should have been countered:

“why shouldn’t these people want and get what those of us in the developed world have?”

And just what is it that the great American (quickly degrading) middle class has earned that everyone else should want? More “stuff” than anyone can find a place to store, enough poor-quality food to create an obesity epidemic and the chronic diseases of affluence, and more use of anti-depressants per capita than any other people on earth.

avatar Rob Wheeler July 10, 2012 at 09:09

Dear Charles, Robert and all,
First, I agree that there are many different ways of defining poverty and of trying to get rid of it as well. All that I was saying in my comment was that most of the political representatives coming from the developing world support efforts to continue to seek economic growth because they see it as the best means to try to overcome poverty in their regions of the world. And though I think it has many drawbacks, I can also see that it has worked in many regions of the developing world – most particularly in China, India and parts of Latin America.
Still, my preference is similar to yours Charles; and I would and do encourage people, especially at the UN, to consider how we can improve people’s lives without having to grow the money economy. In particular, as a representative of the Global Ecovillage Network I have called for the development of a global program to support community based approaches to sustainable rural and impoverished urban development that would be sufficient to ensure that all people’s basic human rights to food, security, education, healthcare, shelter, and good jobs etc. can be met.
In addition, I am a strong advocate for restructuring our money supply, currency exchanges and how money is created, etc.
However, it is not poverty in and of itself that is so terrible; but the fact that some billion people do not have enough food to eat, access to clean water and electricity, etc and 2.6 billion people do not even have basic sanitation. In this day and age this is an outrage and there is no reason on earth that it ought to be allowed to continue.
Now in regards to Robert’s comments, the idea that I banned him from Occupy Cafe is ridiculous. I did not do this and did not have the power to do this even if I had wanted to. If it occurred, which would not surprise me, it would probably have been done by either Ben or Jitendra the primary organizers of Occupy Cafe.
As to challenging my ideas too forcefully, I would have no problem with that Robert; however what I witnessed was that you were also often rude and dismissive rather than showing an interest in real dialogue to try to learn from each other. And I see the same thing here again. So, rather than banning you I just quit responding to your messages and didn’t pay it much attention when others took steps to remove you from the discussions.
Now in regards to labeling my thoughts, “old-paradigm fantasies” I would appreciate it if you would not say such things if you are not going to explain how what I said is either old-paradigm or a fantasy. Also I fail to see what is so absurd about pointing out that people in the developing world want and why shouldn’t they be able to “get what those of us in the developed world have?”
I am under no illusions that the “great American way of life” is so great or sacrosanct. I would personally prefer and think we would all be better off with much less. But that was not my point. My point was why should those in the developing world have any less right to what they want than anyone else. And that it makes more sense to focus on the need to live sustainably than to focus on curtailing economic growth, which so many of these people currently want.
If we would focus on this it would soon become apparent that the current “American way of life” is far from sustainable or healthy. Growth, per se, is not the problem; the problem is whether we are living in such a way that we using up more resources than can be sustained (living beyond the carrying capacity of the earth) or not.
We can grow indefinitely if we can live in such a way that it restores rather than depletes the natural environment and our natural resource base. Of course I am aware of the malthusian challenge and what can and to some extent already is happening with exponential growth; but that is another matter – that will take care of itself if we focus primarily on what is required to live in a fully sustainable manner.
That’s all for now,
Rob
————-
Charles wrote:
Lifting the masses out of poverty: Here I would just point to the fact that “poverty” means something different to an economist than it does to a human being. Helena Norberg-Hodge describes it beautifully in her book and film, Ancient Futures. She observes the wealth of the subsistence peasants, who had almost zero cash income, but lived in beautiful houses, had lots of leisure, etc. Then development came, and millions ended up in concrete apartment buildings earning a cash income. Once they are there, then certainly rising to the middle class is an improvement, but we have to ask why “poverty” (in the sense of lack of money) is so horrible to begin with. It is because we have created a system in which money = life. This leads to the question of how we can improve people’s lives without growing the money economy. We need to explore other modes of development.
Charles
==================
Robert wrote: Charles,
Excellent rejoinder to Rob Wheeler’s old-paradigm fantasies (Rob banished me from Occupy Cafe for challenging ideas like his too forcefully), but there was one more of his absurd points which should have been countered:
“why shouldn’t these people want and get what those of us in the developed world have?”
And just what is it that the great American (quickly degrading) middle class has earned that everyone else should want? More “stuff” than anyone can find a place to store, enough poor-quality food to create an obesity epidemic and the chronic diseases of affluence, and more use of anti-depressants per capita than any other people on earth.

avatar James River Martin July 12, 2012 at 14:52

Rob Wheeler said:

“I doubt that it is insane to believe that we can “maintain economic growth and protect the environment.” The developing countries, along with developed, are likely to continue to insist on trying to do this because it is economic growth that has been helping them to lift billions of people out of poverty and improve life very dramatically for an expanding middle class.”

My response:

I take issue with the conception of “poverty” in use here. I doubt that billions of people in such places as China and India have in actuality been [paraphrase] “lifted out of poverty” in recent time as a result of economic growth. I doubt this premise because I doubt the nearly ubiquitous conception of “wealth” which frames the nearly ubiquitous conception of “poverty” which I think is at play here.

Most people think of poverty and wealth in terms which allow us to go on sweeping “externalities” under the rug. And this is a disastrous error. So it may be that billions of people who might have gone hungry or homeless have
had basic shelter and sufficient food as a result of this growth, but this growth itself has also had myriad costs which the conventional ledger doesn’t take into account. Were we to construct a rational, commensurable and true model of wealth (which could not be an economistic model), it would have to take *all* goods and all true value into itself … and would have to map itself to the present and the future — and not just this business quarter, year, century. In other words, there can be no robbing the whole future of our planet so the poor can eat and have basic shelter today. Or so the rich can have their fancy cars and backyard swimming pools and vacations in Tahiti. True wealth, among other things, has to be sustainable — in order that it may be true. And the “developing” world’s economic growth is clearly and emphatically not sustainable. The rich and the poor alike go down in the sinking ship — which is another version of the theory in which all boats are supposed to rise or sink together.

The word “wealth” comes from an Old English word which means “well being”,
and this fact ought to be the pivot and/or fulcrum applied in the construction of a model of commensurablity (in value, good) in the emergent discipline which may or may not be called “econonomics”. And surely a new discipline is called for, whatever name it may take. For “economics” has in no way ever achieved it’s ostensible objective of being a science concerning itself with wealth. What it has done, instead, is scratch over the crucial questions and fill in their lacunae with ideology and propaganda. “Economics” today is a science of propaganda, not of truth. Nor is it much interested in truth — or value.

Only the emerging ecological economics, which remains far from perfected, begins to address what the “economists” [“proper”] refuse to consider — and sweep under the rug. But even these folks have too often felt too comfortable with phrases like “social capital” and “natural capital”. They are too near to the economistic error which supposedly undergirds establishment economics. And that error is to suppose that units of currency must be our measure of good, value, progress, success, development, etc. This is why some “economists” have wanted to measure, in dollars (etc.), the value of suchlike as “ecosystem services,” while others would like to measure — in dollars — the “costs” attributable to anthropogenic climate change.

When we pull out that which has been swept under the rug, which we call “externalities,” we shall see that we require a whole new system of valuation.

avatar Robert Riversong July 13, 2012 at 07:04

James River Martin, I agree with your analysis, if not with a few specifics that are worth consideration.

Economics is not simply about wealth, but about transactions of “goods” and “services” – or, literally, the rules of household management. Hence, the problem lies not just in defining “wealth” but (as Eisenstein tells us) about the definitions of “goods” and “services” and their valuation by price.

The term “externalities” is not a useful one for describing those parts of nature and life that are either not valued or undervalued within the market calculus, because it is an economic and not a moral term. Externalities are those distributed effects of an economic transaction that are not included in the exchange price but can still be quantified in market terms and may or may not be included in the macro-economic ledger sheet. They can be beneficial as well as detrimental to the broader society.

It’s true that it’s forgotten that the word “wealth” derives from “weal” or well-being, just as we ignore that the similar word “health” derives from a root meaning “whole”.

In determining economic (household) value, we would do well to consider the way Native Americans (and other indigenous peoples) discerned between that which heals and that which injures. “Good medicine” (unlike the drugs we mistake for medicine in our culture) is anything – tangible or intangible – which tends to make whole. “Bad medicine” is anything which tends to disrupt wholeness or integrity – whether of the individual, the tribe or the encompassing ecology (since the three are inseparable).

If we re-learned to value wholeness or ecological integrity, then we would cease to value what is extracted from the whole to be arrogated and accumulated as artificial personal “wealth”, and we would appreciate that the only real poverty is a diminution of community integrity and the human and more-than-human relationships that comprise it.

avatar Robert Riversong July 13, 2012 at 08:40

I just received this link to a short video about the Karma Kitchen, an experiment in what and how we value such things as food, service and an experience in empathy and generosity – a “pay it forward” approach to transactions.

http://www.globalonenessproject.org/videos/karma_kitchen

avatar Riversong July 16, 2012 at 08:29

Rob Wheeler’s (thoroughly old-paradigm) rejoinder:

“in regards to labeling my thoughts, “old-paradigm fantasies” I would appreciate it if you would not say such things if you are not going to explain how what I said is either old-paradigm or a fantasy.”

I “say such things” for the sake of others who may have a more open mind. From your response, it’s clear that trying to explain to you that you are so thoroughly immersed in a putrefying ideological atmosphere as to be unable to see beyond it, or even comprehend that there is a beyond, would be like trying to explain to a fish why it should consider growing lungs and walking on dry land or growing wings and taking to the air (“But there is nothing outside of the great ocean! You’re asking me to fall off the end of the world.”), while simply stating the obvious will be seen, once again, as “rude and dismissive” to those who choose to take offense rather than receive a greater truth (offense is, almost always, in the mind of the beholder).

Some stark examples of old-paradigm thinking:

“people’s basic human rights to food, security, education, healthcare, shelter, and good jobs”

Even the enlightenment Founders of the United States understood that “natural” or “unalienable” rights were limited to “life, liberty, and the pursuit of happiness” (with happiness then defined broadly as well-being rather than the selfish satisfaction of wants).

Education, beyond the oral transmission of one’s culture, is not either a “right” or a necessity (particularly if it comes in the form of compulsory state indoctrination, initially fostered by industrialists to create a worker bee class). Similarly, institutionalized “healthcare” is not a right, though health is necessary to happiness. And, perhaps most saliently to this discussion. “good jobs” are an artificial need only in a market-based, capitalist, wage-slavery economic system. What people need is dignified work, not jobs.

“it is not poverty in and of itself that is so terrible; but the fact that some billion people do not have enough food to eat, access to clean water and electricity, etc and 2.6 billion people do not even have basic sanitation.”

As Charles and others have tried to explain, “poverty” is a rather artificial, narrow and subjective (or comparative) term that is used to describe the inability to purchase subsistence goods and services in a market economy or to maintain the lifestyle of one’s co-nationalists. Those who can grow their own food and make, or trade for, clothing and shelter are not poor (whether or not they “enjoy” such luxuries as electricity or modern sanitation). It is a money-based market economy that creates poverty, and which makes such earth-toxic amenities as electricity and water treatment systems an apparent necessity.

I was supervising an affordable home-building program on Tennessee’s first community land trust in 1982 and went to an annual church “homecoming” or reunion, where I met a middle-aged man who asked me what I was “doin’ down hea”, while looking at me somewhat askance. When I explained, he said, “I remember when you northerners came down during LBJ’s Great Society days to lift us out of poverty. Funny thing was that I didn’t know we was poor until they told us we was poor. We had a rich community here and a good life before that.”

A colleague of mine was part of that “war on poverty” and helped erect mobile-home health clinics in the Appalachian hollows where no one had ever been to a doctor. Circuit-riding physicians and nurses had visiting hours once a week. Ten years later, a follow-up study on the general level of health in the hills indicated a marked decline. It appeared that, with “advanced” medicine available, most hill people had given up using and teaching the home remedies which kept them whole for generations. “Progress” had resulted in a decline in one of the most fundamental measures of well-being (as it has globally) and in the richness and integrity of the way of life.

“My point was why should those in the developing world have any less right to what they want than anyone else.”

There is no natural “right” to satisfy artificial wants for unnecessary things that are commodified by a money-based market economy. And, when those artificial wants actually undermine real wealth and value, then they are toxic to both people and the earth. America and the Western nations have, quite deliberately, globalized a desire for material affluence and technological wizardry in order to expand its markets and to control the resources of other nations in a form of economic colonialism in some ways worse than the earlier colonial regimes and the direct cause of “developing world” poverty. As Henry George noted in his most-read-in-America 1879 book, Progress and Poverty, the creation of monetary wealth requires the concomitant creation of material poverty.

“it makes more sense to focus on the need to live sustainably than to focus on curtailing economic growth”

Since economic growth is the engine of a thoroughly unsustainable way of life (and the engine of population overshoot), and is at the heart of a dysfunctional and self-destructive paradigm, then the two cannot be isolated. Sustainability requires a steady-state economy, as is the case in all mature natural ecologies.

“Growth, per se, is not the problem; the problem is whether we are living in such a way that we using up more resources than can be sustained (living beyond the carrying capacity of the earth) or not.”

Here is where your fantasy ideology becomes most evident. The only “natural” process which is based on an unrestrained and exponential growth paradigm is cancer. The human cultural and economic paradigm of continual growth yields deleterious impacts according to the formula population x consumption. Every region on earth is beyond ecological carrying capacity, either because of high consumption or large population, and unrestrained population growth in “poor” countries is a direct result of colonial impoverishment of the native cultures or the imposition or acceptance of “advanced” farming technologies (the first “Green Revolution”).

Every nation that has adopted a market-based economy, whether by imposition at the muzzle of a gun, or by IMF “restructuring” mandate, or by choice (as in Russia and China) have discovered that it comes with corruption, crime and generalized social breakdown because it undermines integrated community relationships.

“We can grow indefinitely if we can live in such a way that it restores rather than depletes the natural environment and our natural resource base.”

Not only do such statements defy basic laws of human economics, they also violate the most fundamental physical law of the universe – the law of entropy (second law of thermodynamics). Human society can create (in Jeremy Rifkin’s language) “islands of order” only in the midst of “seas of disorder”. The more we attempt to “improve” and grow society, the more chaos we export to our environment, and the planet cannot absorb any more anthropogenic chaos.

avatar James River Martin July 17, 2012 at 09:32

Robert Riversong,

You said, “The term “externalities” is not a useful one for describing those parts of nature and life that are either not valued or undervalued within the market calculus, because it is an economic and not a moral term.”

I agree that economists, generally, have carved out a conceptual space in which so called “descriptive” concerns can (ostensibly) be treated in isolation from so called “normative” (i.e., ethical) concerns. And this results in us talking about “externalities” as “an economic and not a moral term.” But I can’t help thinking that the segregation of moral-ethical concerns (from the whole cloth) here tends toward aiding those who would prefer not having to address the elephant in the room: externalities.

You say, “Economics is not simply about wealth, but about transactions of “goods” and ‘services’.” I say we cannot possibly (if thorough and honest) segregate “goods” and “services” from so-called normative concerns. There is that troublesome word “good” right there! And who and what is served in the provision of a service? And who and what is provided a disservice?

Economics today may not be about wealth as well-being, but it should be! And should, of course, is a normative term. It means: another world is possible. It means, we’re in this together.

It’s becoming more and more apparent to me that the familiar, conventional concepts undergirding “economics” (as we know it) are structured by early modern scientific thought, which was “Newtonian-Cartesian”. The Newtonian-Cartesian world emphasized substance, things, objects — which appeared to be independently self-existing, and which could be understood in relative isolation. In this shape-of-thought, process and relation, if acknowledged at all, was held to be an epiphenomenon of nature’s basic “substance/s”.

But contemporary philosophy and science is trending toward what could be called a “process-relational ontology,” in which the universe (nature, the world) appear at base as comprised of … well, process and relations. Things and substances exist in this emergent world-view, but it is these which are the
epiphenomenon, and not without the perceptual and conceptual processes of the “observer” as part of the mix. Even the atom, once “the indivisible” is comprised of “particles” which themselves are comprised of … energetic pixie dust? Factors of probability swimming in vast regions of empty space?

If any science should have the “field” (and complexity) rather than the simple geometry of billiard ball dynamics as its informing core, it should be economics. Indeed, economics today should be reframed as a healing art — the purpose of which being the service of well-being for all of life. Is not “healing” simply “whole-making”? In a process-relational world, there are ONLY wholes — only integrity (sometimes called the Tao or the Dharma; but it has other names). This whole, like any whole, is indivisible, and so there can be no simple and tidy segregation of theory and practice, means and ends, description and normativity…. Nothing is external to the whole; and nothing should be externalized from it. There is no simple “in here” and “out there”. Nowhere to throw out our trash. No one who is not us, we ourselves! Present people cannot “benefit” from exploiting (stealing from!) future people. No division which isn’t epiphenomenal and — taken as a whole — delusional.

avatar James River Martin July 17, 2012 at 09:55

P.S. –

“Externalities are those distributed effects of an economic transaction that are not included in the exchange price but can still be quantified in market terms and may or may not be included in the macro-economic ledger sheet.”

===

I very much doubt that they “can still be quantified in market terms”. Or–more to the point–I doubt the usefulness of all familiar and conventional attempts to do so. How does one monetize the cost of asthma in children? Cancer in young adults? Mature forests vs square miles of stumps? Climate destabilization? Mass extinction events?

Using the definition available here (Wikipedia) – http://en.wikipedia.org/wiki/Externality – , pollution, desertification, climate destabilization, social breakdown, plagues and pestilences of nearly every kind, are treated by our economy as externalities. One might even conclude that conventional economic “thinking” is the process of emplacing the necessary conceptual blinders (delusions) which allow a people to go on amassing “wealth” by destroying everything that allows for well-being. That is, by “externalizing” the costs of “wealth production” from the glass or plastic bubble of “me, mine”. (To mine is to extract a limited resource until which point it is no longer economically viable to do so, thus creating a succession of ghost towns.)

avatar Riversong July 17, 2012 at 20:54

James River Martin wrote: “I very much doubt that [externalities] “can still be quantified in market terms”. Or–more to the point–I doubt the usefulness of all familiar and conventional attempts to do so. How does one monetize the cost of asthma in children? Cancer in young adults? Mature forests vs square miles of stumps? Climate destabilization? Mass extinction events?”

That they can be quantified is not in doubt – economists are doing that all the time – but that is different from the question of whether they should be quantified. Even wondering about the “usefulness” of such quantification leaves the conversation within the realm of utility rather than innate value.

“If you can’t measure it, you can’t improve it.” – Lord Kelvin

Disease and disability is monetized in terms of health care costs and lost productivity. Ecosystem services (or the loss thereof) is quantified in dollars: “For the entire biosphere, the value is estimated to be in the range of US$16–54 trillion per year, with an average of US$33 trillion per year.” (Nature, Vol 387, 15 May 1997). In Natural Capitalism (1999), Paul Hawken, Amory Lovins and Hunter Lovins advanced an argument to assign the value of Earth in current currency.

That such “market” valuations are possible, suggests that we are using the wrong approach to assigning value, ignoring the priceless values that nature’s wonders and the web-of-life community offer. That is why I proposed that the term “externality”, which is an economometric term, is inappropriate in describing the true value of the things we cherish and cannot live in wholeness without.

avatar James River Martin July 19, 2012 at 11:26

Riversong,

Firstly, we’re in basic agreement about most things, and I’m only taking a contrary position on some things for the sake of what I hope to be useful or illuminating conversation.

You said: “That they can be quantified is not in doubt – economists are doing that all the time – but that is different from the question of whether they should be quantified.”

The word “can” (” … can be quantified … “) is interesting in this context. From my point of view, to say that X can be done is to say that X can be done to a reasonable standard of adequacy. And, to my way of thinking, there is no way to adequately measure the full cost or value of a majority of so-called economic externalities because their value and costs cannot be captured in an economistic container. The easiest examples of the impossibility of assigning currency value to such externalites are those in which no available amount of currency could fix, solve or heal the situation at hand: e.g., anthropogenic climate destabilization (ACD) caused by the externality of pollution. The species extinctions (for example) which are likely to result from this pollution/externality cannot be repaired by spending any quantity of cash on it.
If the sum of the GWP (gross world product) of all times present and future were expended to repair the damage/costs caused by ACD, no amount of currency could do so. So we’re clearly dealing with apples and oranges.

Can the value of externalities be measured? The answer must be that they can only be measured very partially, and inadequately. Some may call that a “yes” answer. But I’m just as happy to call it “no”.

Ultimately, I suppose all I’m saying is that mainstream and conventional economic discourse is itself inadequate, and misleading. Pointing out the ways
in which current popular economic discourse is inadequate and misleading seems to me a worthwhile thing to do.

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