New Internationalist

Building A Green Economy

April 1996

Building a green economy. The global economy is going from bad to worse and the old solutions don’t seem to work any more. Is there a better way? Wayne Ellwood reports.

More and more these days I get the feeling that something is wrong. It's an odd sense of unease, a dim registering that the world is 'out-of-joint' as Shakespeare might have put it. It happened most recently on a trip to my local corner store in Toronto, a family-owned greengrocer where the signora always gives me a welcome smile and her husband invariably drops cigarette ash onto the check-out counter as I pay for my milk or cold-cuts.

Today, when I ask him if the local strawberries have come in yet, he gives me a shrug and mumbles: 'Too expensive. California strawberries are cheaper and they last longer.' This seems odd to me but I let it pass and don't really start to put the pieces together until I'm fumbling around for a few cloves of garlic and notice the words 'Product of China' on the side of the box. China. This gives me pause: from where I'm standing China is approximately 15,000 miles away. These little, white bulbs have been harvested, transported overland, packed and shipped across the Pacific Ocean, then freighted three-quarters of the way across North America. It's at moments like these that the spectacular lunacy of the global economy comes crashing in on me.

California strawberries and Chinese garlic have muscled local produce out of the market for one reason only: they're cheaper. And in terms of actual cash out of my pocket here-and-now that's true. Economists argue that consumers like me are simply maximizing self-interest by buying from more efficient - ie cheaper - producers. That's the reason Chilean grapes fill supermarket shelves in Minneapolis and Dutch butter is half the price of local butter in Kenya.

Cartoon by Ted Rall

But this word 'efficiency' is a double-edged sword. In fact, what's efficient in market terms is almost always damaging and costly in other ways - to employment, to social cohesion and to the environment. That's because the real costs of getting those mutant California berries onto breakfast tables in Montreal and Philadelphia are hidden. Or as economists would say, 'externalized'.

Modern industrial agriculture is based on cheap, non-renewable fossil fuel: to run tractors and harvesters, to produce pesticides and fertilizers and to transport produce to market. That massive subsidy is not factored into final food costs any more than are the environmental costs of this high-tech approach to farming. Increased output per hectare over the last 50 years has come with a steep price: soil erosion, groundwater pollution, salinization of soils and diminished genetic diversity, to say nothing of the carbon dioxide and other greenhouse gases vented into the atmosphere. And this is a vicious circle. When soil fertility declines more fertilizer has to be dumped onto fields just to maintain yields. At the moment half the fertilizer used on US farmland is to replace nutrients lost to soil erosion.

So much for the hoopla about the 'efficiency' of the market. Ecologist and business consultant Paul Hawken argues that markets are good at setting prices but lousy at recognizing costs because they give us the wrong information. 'Whenever an organism gets wrong information, it is a form of toxicity,' writes Hawken. 'A herbicide kills because it is a hormone that tells the plant to grow faster than its capacity to absorb nutrients allows. It literally grows itself to death... Our daily doses of toxicity are the prices in the marketplace.'1 Hawken's metaphor is apt: industrial society, too, is literally growing itself to death.

Cartoon by Ted Rall

That's because there is a basic, potentially lethal, flaw at the heart of today's market-based economics. The varied and complex natural ecosystems, on which all life depends and on which the human economy is based, are treated as both limitless and, for the most part, free. The more oil we pump from the ground, the more forests we clear-cut, the more land we till, the more minerals we blast from the earth, the more the economy grows - and the richer we become. At least that's the theory. Except that as every economist knows, treating capital as current income is a recipe for disaster. Any business that operated along those lines would soon be bankrupt. For production to be sustainable, capital that is consumed (depreciated) must be replaced by investing some of the production. It's only what's left after this investment that can be counted as income.

A century ago this destruction of natural capital wasn't such a problem. The earth's bounty seemed infinite and its natural systems resilient enough to absorb whatever waste we could throw at them. That situation has changed dramatically over the last four decades. Since 1950 global economic output has jumped from $3.8 trillion to $18.9 trillion, a nearly five-fold increase. 2 We have consumed more of the world's natural wealth in this brief period than in the entire history of humankind.

And the great god growth continues to hold sway at the centre of economic policy. Every year at the World Economic Forum in Davos, Switzerland, the world's financial leaders, in a spasm of myopic optimism, close ranks in their quest for renewed economic growth. This year Renato Ruggiero, Director-General of the new World Trade Organization, stressed the need for a 'universal system of free trade' which would be an 'unprecedented force for economic growth, for both rich industrial countries and the developing world'

Cartoon by Ted Rall

What's so depressing about this view is that it is widely shared by the power élite. There are few politicians, trade-union leaders or business bosses advocating anything other than growth as the key to prosperity and the solution to global poverty. Yet there is irrefutable evidence that growth is not the solution but the core of the problem. A central assumption of economists on both the Left and the Right has been that the 'carrying capacity' of the earth is infinitely expandable. A combination of human ingenuity and advanced technology will allow us all, eventually, to live like middle-class Americans - if only we can control our impatience and keep the economy growing.

Unfortunately, reality shows otherwise. It's clear there are limits to growth - and there is startling evidence that we've already breached them. According to University of British Columbia ecologist William Rees: 'Total consumption by the human economy already exceeds natural income; humankind is both liquidating natural capital and destroying our real wealth-creating potential. In this light, efforts to expand our way to sustainability through deregulation and trade can only accelerate global decline.' 3

It is now estimated that 40 per cent of what ecologists call the 'net primary production' (NPP) of the earth's natural ecosystems is diverted to human activities. If global economic growth continues at the current rate and the earth's population doubles in the next 35 years (as would happen at the current pace) human beings, one species out of millions, would corral 80 per cent of NPP for their own use. Of course in some ways that's pure speculation. For the simple reason that a combination of environmental and social collapse will almost certainly kick in before we ever reach that point.

The iconoclastic American economist Herman Daly argues that we have moved from an 'empty world' to a 'full' one in what amounts to an historical eye-blink. But it is politically convenient, Daly says, not to admit to problems of carrying capacity because that would imply a limit to growth. And if growth is limited, Daly continues, 'then poverty must be dealt with, either by redistribution or by population control, both of which are taboo'.4

Cartoon by Ted Rall

In his pioneering work on what he calls our 'ecological footprint', William Rees estimates that four-to-six hectares of land are needed to maintain the consumption of the average person in the West. Yet in 1990 the total available productive land in the world was an estimated 1.7 hectares per person. The difference Rees calls 'appropriated carrying capacity'. The Netherlands, for example, consumes the output of a productive land mass 14 times its size. Most Northern countries and many urban regions in the South already consume more than their fair share, depending on trade or natural capital depletion for their survival. Such regions, Rees says, 'run an unaccounted ecological deficit - their populations either appropriating carrying capacity from elsewhere or from future generations'.5 There are other more resonant names for this process, imperialism being the most obvious.

We don't have to search far for proof that growth-centred economics is pushing the regenerative capacities of the earth's ecosystems to the brink. The worry is not the one raised by the Club of Rome's Limits to Growth report of 20 years ago. There is no immediate shortage of basic non-renewable resources. Even at current rates of consumption there is enough copper, iron and fossil fuels to last centuries. More pressing is the concern that those basic life-support systems which we take for granted - the water cycle, the composition of the atmosphere, the changing seasons, the assimilation of waste and the recycling of nutrients, the pollination of crops, the delicate interplay of species - are everywhere on the verge of disintegration.

There is a now a large, unimpeachable body of research documenting this precipitous decline. Deserts are spreading, forests being hacked down, fertile soils ruined by erosion and salinization, fisheries exhausted and ground-water reserves pumped dry. Carbon dioxide levels in the atmosphere due to our extravagant burning of fossil fuels continue to rise. On average we deposit 5.6 pounds of pure carbon into the atmosphere with every gallon of gasoline we burn - nearly six billion tons a year in total. And that doesn't include the estimated one to two tons released into the atmosphere every year from burning forests and grasslands. In September 1995 the Intergovernmental Panel on Climate Change, a select group of nearly 2,500 climate scientists, stated baldly that climate change is unstoppable and will lead to 'widespread economic, social and environmental dislocation over the next century'. Meanwhile, oceanographers examining deep ocean sediments have confirmed that rapid, unpredictable shifts in climate can take place in as little as three or four decades.

So it seems the production of goods and services in the human economy cannot be detached easily from biophysical reality. Yet the powerful myth that more production and greater consumption equals progress remains firmly entrenched. But 'progress' measured in this way is both relative and narrowly economistic. At the beginning of the industrial revolution in Britain the poet Oliver Goldsmith made an observation in verse that might just as easily apply today:

[image, unknown]
'Ill fares the land, to hast'ning ills
a prey,
Where wealth accumulates and
men decay.'

We have a growth that impoverishes rather than enriches. The dominance of the business perspective and an addiction to the 'bottom line' as the defining goal of human society have twisted the concept of community and perverted the notion of the public good. Thus in our modern economy the central purpose of life is shopping; the purpose of the family is to raise compliant future workers and consumers; the purpose of schools to teach marketable job skills; the purpose of government to boost business; and the purpose of Third World nations to provide cheap labour, raw materials and new markets.

Instead of an economy in service of community we have the reverse. In the original Greek, economics (oikonomia) means 'good housekeeping' and it is that broader humanitarian vision that has vanished. 'True economics,' writes Herman Daly, 'studies the community as a whole and locates market activity within it' in a quest for 'the long-term welfare of the whole community'.
Nor is our modern economy capable any longer of providing jobs and improving living standards for the majority. The evidence - and it's there for any who care to look - is unequivocal. The gap between rich and poor is widening in nation after nation. Real wages are declining as employment growth sputters. There are now more than 30 million unemployed in the West with no sign of the oft-promised outpouring of new jobs. Mainstream economists say this wrenching transformation to the new information age (what some have labelled the 'creative destruction' of the marketplace) will be worth it in the end. Don't count on it.

The truth is corporations are in the business of cutting jobs, not creating them. Witness the recent announcement by telecommunications giant AT&T that it would cut 40,000 jobs over the next three years. (The company's stock on the New York Exchange immediately rose $2.62 a share.) Or data that shows the top 500 companies in the US cut their workforces by 4.4 million between 1980 and 1993; this at a time when corporate assets more than doubled and the salaries of corporate executives increased more than six-fold. 6

In the Third World, employment in the modern sector continues to grow in a few isolated enclaves. Chinese and Indonesian factories churn out an unending stream of Nike running shoes and Barbie dolls from non-unionized workers, often women, working 50-hour weeks for a few dollars a day. In Mexico - the lab test for economic globalization - it's been all downhill since the North American Free Trade Agreement (NAFTA) was signed three years ago. Over two million Mexicans lost their jobs after the 1994 peso devaluation and another two million peasants have been forced off their land since NAFTA.

Meanwhile, urban slums in the Third World proliferate, the total number of poor grows and overall living standards plummet. According to the World Health Organization a fifth of the world's nearly six billion people live in extreme poverty, almost a third of all children are undernourished and half the planet's population lacks access to basic essential drugs.

The global economy is not a total balls-up of course. It is working perfectly fine for some people. Like the world's 358 billionaires whose combined wealth now exceeds that of the world's poorest 2.5 billion people. And Forbes magazine tells us the number of non-Japanese, Asian multi-millionaires will double to 800,000 this year. The same article neglects to mention that 675 million Asians will continue to live in absolute poverty.

Orthodox economics and its seers have a lot to answer for in all this. As Canadian social critic John Ralston Saul notes: 'If economists were doctors, they would be mired in malpractice suits.'7 He's right of course. The advice of economists has been treated as gospel when it should have been dismissed as self-serving cant.

And today's standard free-market prescription for economic health - deregulated markets, lower taxes for the wealthy, privatization and government cut-backs - is simply more of the same. It's a bit like re-arranging the deck chairs on the Titanic. Instead of this stale dogma we need a new vision of economics which puts people back at the centre of the human economy and subsumes economics to the interests of the public good.

I don't want to be naive about this; it's not going to be a stroll in the park. Those profiting from the current set-up will not cede power voluntarily. Thankfully, there are hundreds of organizations and millions of people around the planet who share my deep sense of unease about the direction in which we're heading. And many of them are working hard to sow seeds of change, to develop a practical, realistic strategy for forging a new economy. You'll read about some of their efforts in the following pages.

There's even a new discipline called 'ecological economics' which is attempting to challenge mainstream growth-centred economics from within academia. Though you may not have got wind of it yet, there is a movement brewing - a movement which is attempting to turn conventional economics on its head by redirecting its focus from the narrow concerns of growth and efficiency to the broader concerns of community solidarity, democratic governance and environmental sustainability. The movement doesn't have a name or a leader or a headquarters. But it does have momentum. And more importantly it has a vision of a new green economy.

1 The Ecology of Commerce, Paul Hawken, HarperCollins, New York, NY, 1993.
2 When Corporations Rule the World, David C Korten, Kumarian Press, West Hartford, CT, 1995.
3 Alternatives Magazine, Vol 21, No 4, Oct/Nov 1995, University of Waterloo, Waterloo, ON.
4 For the Common Good, Herman E Daly and John B Cobb Jr, Beacon Press, Boston, MA, 1989.
5 'Ecological Footprints and Appropriated Carrying Capacity', William Rees and Mathis Wackernagel, from Investing in Natural Capital, Eds. Jansson, Hammer, Folke and Costanza, Island Press, Washington, DC, 1994.
6 From 'An agenda to tame corporations, reclaim citizen sovereignty and restore economic sanity', a speech by David Korten of the People Centred Development Forum, 3 Sept 1995.
7 The Unconscious Civilization, John Ralston Saul, Anansi Press, Concord, ON, 1995.

This special report appeared in the seeds of change - how to build a green economy issue of New Internationalist. You can buy this magazine or, to get stories like this one through your door every month, subscribe.

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