A STEADY STATE ECONOMY
On 19th June 2010 in Leeds, UK, the Center
for the Advancement of the Steady State Economy (CASSE) and Economic
Justice for All organised a conference with the title Enough is Enough.
The conference and the report that followed was highly relevant to
the philosophy of FIOH and not only outlined the failings of the current
economic growth approach to development, but also presented implemental
policies for an alternative Steady State Economy.
Keynote speakers at the conference included:
· Peter Victor - Professor in Environmental Studies, York University
(Canada)
· Tim Jackson - Professor of Sustainable Development, University
of Surrey
· Andrew Simms - Policy Director, NEF (the New Economics Foundation)
· Dan O'Neill - European Director, CASSE
The main proposals in this report come from the conference's ten interactive
workshops, which explored specific areas where change is needed to
achieve a steady state economy. Workshop speakers included Kate Pickett
(co-author of The Spirit Level), Franny Armstrong (Director of The
Age of Stupid), Roger Martin (Chair of the Optimum Population Trust),
Molly Scott Cato (Economics Speaker for the Green Party), David Fell
(Director at Brook Lyndhurst), and many others.
The need for steady state economies (no economic growth) is based
on the premise that unlimited economic growth is not possible on a
finite planet. All of the inputs to the economy come from the environment
and all of the wastes produced by it return to the environment. As
the economy grows it requires more resources and discharges more wastes.
The accelerating scale of growth is illustrated by the fact that between
1900 and 2005, world economic output increased by a factor of 24,
from $2 trillion to $47 trillion and yet 2.7 billion people live on
less than $2 per day. Someone is profiting from global economic growth,
but it's not the world's poor.
Resources like forests and fish are being harvested faster than they
can regenerate and wastes like carbon dioxide are produced faster
than they can be absorbed. The result is the steady erosion of the
stock of natural resources and the supply of ecosystem services upon
which our economies and societies ultimately depend.
Even in a rich country like the UK it is becoming clear that continuously
increasing consumption of goods and services is (a) not environmentally
sustainable and (b) not improving peoples lives. However, although
the limits to growth may be increasingly accepted by the general public
they may not be able to support the idea of steady state economies
unless there are clear policies in place defining the implications
of a change from the present system. A detailed system will be required
to measure not only the material throughput of the economy, but also
its the social and environmental consequences.
Any new resource use policy would need to apply reducing caps on essential
ecological resources and life support systems so that all members
of society receive a fair share of the available supplies. This approach
should also apply to the essential need to reduce carbon emissions.
One such scheme named Cap and
Share offers a simple way of achieving both of these objectives
and is described in the campaigns section of this web site.
One of the workshops at the conference presented this scheme and the
general feeling was that such schemes were likely to be the most effective
policy tool for many natural resources.
Each individual in the scheme effectively owns a share of the given
resource and receives payment from the sale of permits to producers
wishing to generate value from the resource. This shared income compensates
individuals for the increased prices that result from limiting the
supply of the resource. Although cap and share schemes have many benefits,
they would still need to be accompanied by "citizen level"
indicators and public education if they are to generate increased
understanding of material throughput and the sustainable consumption
of natural resources.
The Diminishing Social Returns of Economic Growth
While economic output per capita has more than tripled in countries
like the UK and U.S. since 1950, data from surveys of life satisfaction
reveal that people have not become any happier. Data compiled across
multiple countries suggest that once people's basic needs are met
and they have enough goods and services, economic growth fails to
improve people's well-being.
The Desirable Alternative to Economic Growth
The challenge then is to figure out how to sustain economies that
already have enough goods and services, without relying on consumption
growth.
A steady state economy represents a positive alternative. It is an
economy that aims to maintain a stable level of resource consumption
and a stable population. It is an economy where energy and resource
use are reduced to levels that are within ecological limits, and where
the goal of maximising economic output is replaced by the goal of
maximising quality of life.
Population
All else being equal, the total resource use of a country will increase
when either the number of people living in the country increases,
or the amount that each of these people consumes increases. To achieve
a steady state economy, it is therefore necessary to stabilise - not
just per capita resource use - but also population numbers. We need
smaller footprints, but we also need fewer feet. Government should
promote incentives to limit family size to two or fewer children.
To stabilise population globally, the UK should support policies that
provide education, access to birth control, and equal rights for women
everywhere. There are roughly 80 million unplanned pregnancies per
year worldwide - a number that is almost equal to annual global population
growth. If access to family planning could be provided to all women
worldwide, this single step would go a long way towards stabilising
global population.
Inequality
The richest tenth of the UK population
now earns 14 times more than the poorest tenth. Such high levels of
income inequality are associated with a variety of health and social
problems, including decreased trust, increased mental illness, and
higher crime rates. Policies that directly address inequality are
required to alleviate these problems, especially in a non-growing
economy.
Policies that promote employee ownership, co-operatives, and other
models of democratic control should be pursued to reduce inequality
over the long term. Such models allow people to determine wages and
salary differentials for themselves, and thus move towards a steady
state democracy.
Progressive taxation and generous social programmes may also help
to reduce inequality and eliminate poverty, particularly in the short
term. A citizen's income would fight poverty by providing an unconditional,
automatic payment to every individual as a right of citizenship. A
maximum pay differential would reduce
inequality by limiting the income of the highest paid employee in
an organisation to a certain multiple of the lowest paid employee.
Monetary reform
Almost all of the money in circulation in the UK is created by private
banks in the form of interest-bearing loans. Banks are able to create
money because they can issue loans far in excess of their deposits.
This debt-based monetary system drives four things: (1) economic growth,
as the need to pay back an increasing amount of debt requires an increasing
amount of economic activity, (2) inflation, as the money supply tends
to increase faster than the volume of goods and services produced,
(3) instability, because if the banks stop lending, the economic system
collapses, and (4) inequality between countries, as the currencies
of a small number of nations have become the dominant "reserve
currencies" around the world. If the economy is to be stabilised,
then the money supply must be as well.
Private banks should be prohibited from creating money out of thin
air, and control of the money supply - a public resource - should
be transferred to a public authority such as the Bank of England.
This public authority should decide the amount of money necessary
to facilitate exchange in the economy, create it debt- free, and transfer
it to the government to spend into existence. To prevent inflation,
government taxation and expenditure should be linked to the system
of money creation. At the same time, communities should be encouraged
to create their own currencies to support local economic activity,
and the UK should promote and participate in a global negotiation
to create a neutral international currency to replace the reserve
currencies in use today.
Measuring progress
The main economic indicator in use today is gross domestic product
(GDP). GDP is a good measure of economic activity - of money changing
hands - but a poor measure of progress or well-being. It lumps desirable
expenditures (e.g. spending on food, entertainment, or investment
in education) with undesirable expenditures (e.g. the costs of war,
crime, pollution, and family breakdown). New indicators that do a
better job of tracking what we truly care about are required.
A new system of indicators should be created that separates ends (i.e.
goals) from means (i.e. the way to achieve these goals). The key goal
to strive towards in a steady state economy would be sustainable and
equitable human well-being, instead of GDP growth.
Employment
In a steady state economy, it would not be possible to increase production
and consumption if this resulted in an increase in resource use and
waste emissions. All else being equal, with less production, there
would be less work to be done in the economy, which would result in
rising unemployment unless new policies were adopted to prevent this
from happening.
Instead of using technological progress to produce more goods and
services (as we tend to do today) we should use it to increase leisure
time by gradually shortening the paid working day, week, year, and
career. Individuals should be given the freedom to adjust their working
patterns to their preferences, while support and incentives should
be offered to encourage an overall reduction in working time. The
gradual reduction of working time would help keep unemployment low
by distributing available work more equally.
If unemployment were still a concern
the government could act as "employer of last resort", and
guarantee jobs in the same way that it guarantees primary education
and medical care. A guaranteed jobs policy would provide incomes to
those unable to find employment, allow useful public works to be completed
at relatively low cost, and relieve the social and psychological problems
that arise when people want to work but are unable to find a job.
New forms of business and production
Conventional businesses strive to increase financial profits by reducing
costs and competing for market share. The pursuit of ever-increasing
profits drives firms to boost production, which increases resource
use. Investors tend to put their money into expanding sectors of the
economy, encouraging even more growth. This business-as-usual approach
cannot continue. Firms, with the support of government, must adapt
in order to operate within ecological limits.
Instead of attempting to maximise and continually grow profits, firms
should aim to achieve "right-size profits". A firm's total
revenue should be large enough to allow it to be financially viable
(i.e. to meet capital costs), but not so large as to
cause environmental damage. An individual firm would require two new
pieces of information to determine whether it was achieving right-size
profits: (1) a measure of its total ecological impact, and (2) an
ecological allowance to compare this impact to. This information would
help businesses rescale their level of economic activity to be sustainable.
A steady state economy will also require a shift towards alternative
forms of business organisation such as co-operatives, foundations,
and community interest companies. These organisational forms are not
pre-occupied by growth in the same way as profit-maximising shareholder
corporations. The primary goal of community interest companies, for
example, is to achieve a socially beneficial aim; financial profit
is a secondary motive. Policy makers should encourage these alternative
forms of business by (1) making it simpler to set up (or change to)
these forms, and (2) by taxing away excess profits in shareholder
corporations.
Global cooperation
Global resource use is already at an unsustainably high level. Yet
many nations need to increase their consumption of resources to alleviate
poverty and allow people to meet their basic needs. These nations
stand in stark contrast to wealthy countries like the UK where the
benefits of growth have already been realised. The UK and other wealthy
countries must stabilise, or reduce, their economies in order to provide
the ecological space needed for poorer nations to grow.
Problems could arise if some nations make the transition to a steady
state economy, while others are still pursuing growth. Wealthy, non-growing
economies and developing, expanding economies must therefore work
together on the specific mechanisms that will allow them to co-exist
and co-develop in a mutually supportive, fair, and flourishing manner.
International organisations such as the United Nations, World Bank,
International Monetary Fund, and World Trade Organisation should be
democratised so that they represent the interests of the majority
of people on the planet. Wealthy nations should promote technology
transfers to developing nations, to eliminate the harmful dependency
of the South on the North.
Where practical, goods and services should be produced locally. Tariffs
should be used to protect industries in steady state economies from
competition with industries in countries where environmental and social
costs are not being internalised. The revenue from these tariffs could
be used for international aid to developing countries, in particular
to help them develop in less materially intensive ways. Capital controls,
and minimum residency times for foreign investment, could be used
to prevent capital flight if this were a problem.
Consumer behaviour
The social norm of consumerism, which values "consuming"
over "doing", "being", or "producing",
dominates society. This dominance is problematic for several reasons:
(1) consumerism requires that people forever consume more, which is
not possible on a finite planet; (2) happiness derived from consumption
is transitory; no matter how much individuals consume, they never
achieve fulfilment; and (3) consumerism creates and reinforces systemic
inequalities. The challenge for a steady state economy is to create
a new social norm in which the vast majority of citizens routinely
choose enough instead of more.
The shift towards a "mass behaviour
of enoughness" will require the rapid diffusion of new values
through the multiple networks that make up society. Some actions that
could help change behaviours include: recruiting influential individuals
as agents of change, supporting organisations with objectives that
challenge or contradict consumerism, promoting the benefits of non-materialistic
lifestyles, creating the infrastructure to allow new forms of corporate
and civic entities to emerge, and overcoming resistance from large
corporations and the state.
There is an implied acceptance across most of society that the self-seeking,
individualistic values that form the backdrop to consumerism are reasonable
and necessary. This acceptance needs to be reversed. Ordinary people
can set a positive example by living values that reject consumerism.
Motivation is also key to achieving behavioural change. Consumerism
only appeals to some of the core human motivations (i.e. hedonism,
status, and achievement). Values such as sharing, cooperation, fellowship
and compassion are also powerful sources of motivation, and it is
crucial to tap into these.
Engaging Politicians
and the Media
Substantial academic research indicates that economic growth cannot
and should not remain the policy goal of wealthy nations, and yet
politicians and the media rarely discuss this viewpoint or the potential
of the steady state alternative. In order to build an inspiring movement
aimed at achieving a steady state economy, politicians and the media
must end their silence on the alternative to perpetual economic growth.
New forums should be identified (or created) to engage decision makers
and opinion influencers in an active debate about the problems of
growth and potential economic solutions. There are many places where
limits to growth are already recognised or discussed in policy (e.g.
green belts, rejection of "predict and provide" road policy,
carbon budgets, etc.). Expanding the dialogue in these forums could
help bring steady state economics into the mainstream.
There is also a need for more rigorous modelling and elaboration of
how a steady state economy would work in practice, and how ecological
limits can be reflected and respected in policy. Agreement should
be sought among leading business schools and economics departments
to include compulsory coverage, within degree courses, of the different
views concerning sustainability and the limits to growth.
Finally, steady state economics needs a more public and accessible
image, as well as a new name that resonates with the public.
The production of an independent film that takes people on an emotional
journey could be a powerful way to break into the public consciousness.
The above notes are a summary of some of the lectures presented at
the Leeds conference, but in order to gain a full understanding of
all the issues it is necessary to read the full report.
Please read the full
report, and watch the keynote presentations
