Creating global prosperity without economic growth

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Plenitude: The New Economics of True Wealth

by Joshua Nelson on 27th May 2010

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True Wealth & New Economics

The virtual omnipresence of the internet (no pun intended) has altered the way humanity interacts in absolutely unbelievable ways. Two years ago I was working hard in my nine-to-five job, trying to pay down my school debt and keep up with the grind, when I started writing on a virtually unheard of topic in mainstream media: the problems with economic growth.

Since then my blog has connected me to so many people it’s impossible to keep track (it lead to creating this blog). Recently a reader contacted me about meeting at an event at Town Hall Seattle a few days ago. There I met Tom Walker, a fan of our work here, writer and campaigner at the Work Less Institute in Vancouver, BC. The minute I walked in the door, Tom and his friends introduced me to Juliet Schor.

Juliet Schor is a co-founder of the Center for a New American Dream and a well-resumed author. She has partnered in the past with the likes of Tim Jackson and Bill McKibben on various tasks. A personable, well-spoken women from Boston College, Juliet has a new vision for the economy: plenitude. Her new book, Plenitude: The Economics of True Wealth, provided the topic for her Town Hall Seattle talk: How do we create a society that provides prosperity to us all without relying on continued economic expansion?

Schor opened the night as she opens her book: with the economic crash of 2008, that has spurred the Great Recession from which we are now trying to recover.  Schor believes this moment in our history provides us a real opportunity for “changing the conversation in this country about economics and ecology.” The defining moment in late 2008 when our economy shattered was an awaking to many, Juliet included.

The Beginning From The End

In January 2007 the official unemployment rate (which tends to be about half of the actual unemployment) was at 4.6% average. By January 2010 it was near 10% – when the pundits are telling us that the economy is back on track – that we’ve solved our problems and back on the track to growth. The real unemployment figure (including unemployed, underemployed and marginally employed) numbers near 26 million people. We’ve had two months of good job growth since then: around 100,000 new jobs each of those months. But if you compare this to the number before the crash, we need 500,000 a month for about 21 months!

We essentially need 11 million jobs and that level of job creation is not going to happen through the “trickle down” principle. The idea that economic growth will provide the jobs we need is unrealistic. The jobs that are created by economic growth are outpaced by the need, the amount of jobs outsourced and the gains in productivity (that make less jobs produce the same or more, thus going against adding more jobs).

Juliet makes quite the argument against the business as usual (BAU) approach to the economy (see her article in The Nation here). Meanwhile, the economic and political pundits would like you to believe that we can rely on Corporation America to generate these jobs through more consumption and production. The idea of the corporate section as the source for wealth generation is misguided (at best), as Schor says, “we are in for a period… that is going to be harder for the average person to get a job, to get a steady income.”

Adding to the battalion in opposition of job creation is globalization, climate destabilization and population growth. Ultimately we need to look outside of the corporate, market economy for sources of job and wealth. But this is just the first of two major issues occurring now: the other being the ecological crisis, or climate change. Together these two issues push us to question the viability of the BAU economy, and a BAU society in general. To make an incredibly predictable, yet apt, quotation – Einstein once said, “The problems that exist in the world today cannot be solved by the level of thinking that created them.”

A Two-Pronged Problem

In 1961 we used about 50% of the Earth’s capacity, yet by 2001 we had exceeded the bio-capacity of our planet by 20% and today we are using 140% of the Earth’s bio-capacity, which means we are degrading the natural capital of the planet 40% quicker than it can regenerate. Today we’re in overshoot: we’re using more than the Earth can maintain.

We need a new system in order to drastically reduce our ecologic footprint, solve the unemployment crisis and accomplish both of these tasks in a way that is fair, improving the distribution of wealth. As Schor says,

“We need to create wealth and well-being. That’s really important. We’re not going to be able to move forward with a new kind of economy unless if actually makes people better off, unless it creates, what I call, ‘true wealth.’ This is part of why I said at the beginning we can’t rely on the corporate sector to create wealth and think that that’s going to be sufficient.”

Plenitude offers not only a great argument against economic growth as we’ve known it, but a vision for a rethinking productivity and innovation for our future. It is uses an integrated approach to set out a vision to work on all these fronts to see a new way of living that is low-footprint and puts people back to work that creates new forms of wealth and well-being.

She defies the conventional wisdom of the dematerialization, or decoupling, which is the mainstream rebuttal to the breakthrough ideas presented in Limits To Growth in the 1970s. Since that time people have put together quite a bit of data that shows that decoupling is, basically, a bunch of bullshit (excuse my French). Even though we might have some relative decoupling, in absolute terms we have almost 50% more resource use than we did 50 years ago (upwards of 66% in the US).

The idea that we can solve our ecological problem by technology or productivity is false. We cannot decouple environmental impact from economic growth. Therefore, we need to break away from that growth imperative. More importantly, we need to do something about the growth in demand. Luckily for us, we can both the ecological and economic problems at once with plenitude. Schor approaches this on both a macro level and an individual level in her book.

Changing Focus From Bigger To Better

The first step is to change people’s time allocation. From 1870 to 1973 we came down from a 60 hour work week, 3000 hours a year, to a mid-30 hour work week. A lot of our productivity gains went to reducing hours of work, not just increasing output. This change was essential in absorbing all the displaced workers during the industrial revolution, and similarly in the great depression. As the numbers of hour per job fell, any given level of growth in demand meant more jobs were created. So we employed more people by spreading some of the work around and by reducing hours.

After the 1970s most of Europe kept this trend up, but the US reversed: pushing for more work hours to produce more. This means for every job created, we now needed upwards of 10-20% more work. The barrier in creating a job in the US is that everyone has so much more work hours. This means it is much harder for us than European countries to create jobs for any level of demand.

There are too many jobs that need to be created in order for us to get back on that path of recovery without reducing work hours. By reducing work hours we would also make large gains in reducing the ecological crisis. Schor uses a great example, highlighting productivity growth as one of the main drivers in the economy: with increasing productivity fixed working hours directly correlates to rising output and consumption. Thus, changing technology to cope with this increase would be a “end of pipe solution” to mitigating ecological impact. If, instead, we were to change the demand by pulling out of some of the hours of work, we could produce the same or less output and consumption. Ultimately the result is a much lower ecological impact than relying on the technological change to make up for production and consumption after the fact.

But, you might ask, “if we’re working less, what do we do with all that time?”

Resiliency And Free Time

There will be less work time, but not less well-being or less productivity. We need to think about the time allocation; think about moving labor out of the market economy into another sphere. We will move from buying to creating, from working to living. There are high productivity, highly creative ways of using our time outside of the nine-to-five. We can return to a more “do-it-yourself-ism” but in a drastically different way than pre-industrial times: today we have the benefit of vast amounts of skill and knowledge.

Today we can create things and processes that improve out lives simply, without the need of a highly centralized, incredibly complex market economy.  We can utilize renewable, natural materials to build our homes more efficiently and ecologically. We can build advanced farm equipment and take advantage of farming practices that are organic and natural, yet improve the overall yield. This is not a Luddite vision, but one that uses high levels of knowledge and high tech skills to produce for ourselves in place of relying on an unstable market.

A new economy emerges: one of the self-employed, the co-operatives and the independent workers making products and services efficiently, distributed amongst local communities, and without being tied to a central market. This is especially important as we move into the decline of larger corporations and the ecological crisis’s brought on by climate change.

Plenitude builds self-reliance and local resilience through low-impact, small-scale sectors, enhancing community and equality. These things are already happening around us. From the internet open-source culture to the community-built straw bale homes. From micro-manufacturing to backyard beekeeping. From permaculture and urban agriculture to small-scale renewable energy and self-sufficiency. From backyard gardens and urban chicken farms to farmer’s markets and community clothing exchanges. Craigslist on its own has dramatically re-shaped the way many people buy and exchange goods: shifting away from new to re-used.

Overtime the BAU economy full of large corporations would shrink as we de-link from it. Soon enough those free of the BAU economy begin to interact together and create an entirely separate, more resilient economy. Eventually this could overpower the BAU economy entirely. (Schor offers some really amazing examples, like Factor E Farms)

“We’re in a world where the advantages of big-scale are shrinking, where the possibilities of small-scale because of all the benefits our modern technology and advanced knowledge bring us, I think we’re going into a period where small will more truly be beautiful than it has been. And that’s really important in terms of thinking of how we need to change the structures of the economy.”

Watch the video of her Town Hall talk on Vimeo here and be sure to read her new book, Plenitude.

(I’m the one asking the silly debt question at the end, I was hoping to ask more of a COW-related question, but couldn’t phrase it correctly.) My thanks to Tom Walker and Juliet Schor for a great evening!

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avatar Joshua's life goal is leave this world better than when he came in – similar to the campsite rule. He started writing about sustainable economics with his blog Steady State Revolution, acted as Washington Chapter Director for the Center for the Advancement of the Steady State Economy (CASSE) for a few years and is a co-founder of the Post Growth Institute. An avid reader, cyclist and hobbyist mead maker, Joshua lives Seattle, WA USA with his wife and son.

Joshua has written 22 posts on Post Growth Institute. Contact Joshua

{ 3 comments }

avatar Scott May 31, 2010 at 22:45

Joshua,

Really cool you had a chance to meet Juliet Schor. I wish I’d tagged along! Thanks for posting the video; it’s long, but I’m looking forward to popping a beer and watching.

This bit is really key: “There are too many jobs that need to be created in order for us to get back on that path of recovery without reducing work hours. By reducing work hours we would also make large gains in reducing the ecological crisis…with increasing productivity, fixed working hours directly correlates to rising output and consumption.”

I like that there’s a job proposition here — that relieving the enormous pain of unemployment could come through vacation time for the rest of us. Sounds like a win/win, doesn’t it?

The two sticking points I see are: 1) What’s the mechanism that’ll encourage employers to reduce employee hours, and 2) would people with jobs even take the time off if it was offered? Or would they be worried some other guy — willing to put in even more hours — would steal his job? I know anecdotally that many people *with* jobs are worried there’s not much separating them from the 10% *without* jobs. Those folks, for the most part, figure working less hard would be the worst thing they could do at the moment.

So, I guess taken together, those two related questions are part of a collective action problem: In a competitive economy, who’ll actually make the first commitment to reduced working hours? What Schor suggests — and what clearly is the sane way to operate an economy and live a life — is what works ecologically. But how do we make the leap? What’s the policy prescription? What’s the business case? The cultural rallying point?

Interested to hear thoughts from readers…

avatar Joshua June 2, 2010 at 14:23

Scott,

Thanks! I too am interested in the questions you raise. Readers, ideas?

I know there are systematic things we could do to alter the standard work week. For instance, employers must provide overtime for more than a certain amount of work per week (unless salaried, but I believe there are laws similar to this there as well – does anyone know this?). We could change our work laws to indicate that overtime must be paid for more than X hours per week, or Y hours per day. I would say we start with X = 32 hours, and Y = 8 hours. Then we could reduce this eventually to X = 15 or 21 hours, Y = 6 hours.

Governmental action on this would be key, but nothing is stopping any employer from enacting this without the government. And keep in mind, that “working less hard” and working less hours would be different. Most of us are only truly productive for 4-6 hours at a time, so the final 2-4 hours of the typical 8 hour day are less productive. Decreasing work hours will increase productivity, actually.

Cheers,
Joshua

avatar James R. Martin March 23, 2011 at 19:13

My worry at the moment is simply this.: Our monetary/economic system systemically depends on debt-based “fiat” currency production. Some folks have begun producing other, alternate/local, currencies — but … really? Fast enough, enough enough? I’m feeling what Richard Heinberg warns us about — the end of growth — very soon, very sudden, very not-prepared-for. How far into collapse must we go before installing an “ecology of currencies” which allow major shocks to be borne? (Resilient ecosystems are diverse, right?)

Help, please!

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