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Saving our Environment from Washington and Wall Street: Switching to a Steady State Economy

Over the past century, total world production has increased an incredible twenty-fold, placing increased pressure on the ecology of our planet. Everywhere we look — in the atmosphere, oceans, watersheds, forests, and the soil — it is now clear that rapid ecological decline is setting in and threatens to extinguish all economic activity if something is not done soon.

This fact, however, seems to be completely lost on Wall Street analyses and the federal government who assure us that continual economic growth will lead to prosperity for all and a cleaner environment.

But is this the case? Even if those in power believe our economic system can grow forever without destroying the planet, is there evidence that continual growth is increasing prosperity for all?

Or are we simply liquidating the natural resource base for the prosperity of a few?

Several statistics from the World Trade Organizations own web site would suggest it is in fact the few who are reaping the benefits from our continually expanding economy. For example during this era of the great expansion in global foreign trade:

  • The number of people living on less than $2 per day has risen by almost 50% since 1980, to 2.8 billion - almost half the world's population.
  • The richest fifth of the world's population now have 80% of the world's wealth while the poorest fifth have 1% - this gap between rich and poor has doubled between 1960 and 2000.
  • World wide wages for unskilled labor declined by ~25% between 1984 and 1995, while in the US unskilled wages have fallen by 20% since the 1970s.
  • The ratio of per capital income between the world's richest and poorest countries is now 60 to one. At the start of the 19th Century, it was only three to one.
  • 51 of the 100 largest economies in the world are corporations. The Top 500 multinational corporations account for nearly 70% of all worldwide trade.

The Treadmill of Production

The central organizing force that makes possible the immense growth in global economic activity is what ecologist John Bellamy Foster calls the "treadmill of production." The logic of this treadmill is that it must continually expand production forever to keep the economic system from going extinct.

To facilitate expansion, the treadmill manufactures "wants" in a manner that creates an insatiable hunger for more, forces workers away from self-employment and into low wage jobs, makes governments subservient to the production of national economic development over the needs of their citizens, and gives rise to an educational system that serves to reinforce the treadmill's priorities and values.

The end result is an ever increasing accumulation of wealth by a relatively small group of elites at the top of the social pyramid, accompanied by an ever increasing rate of depletion of our natural resources.

In essence, the growth gurus in Washington and on Wall Street are pushing us down an economic path that will eventually liquidate our planet's resources for the benefit of a relative few, while providing little benefit for the majority of the world's population or future generations.

Environmental Protection Requires a Steady State Economy

The world's economy has grown so large that its demands are overwhelming our planet's ability to generate resources and absorb waste. If you consider that our economy grows at about 3% per year then it is predicted to double in size every 23 years, grow 16 times in size in 100 year, 250 times in size in 200 years, and 4000 times in size in 300 years.

It is unlikely therefore that the world can sustain many more doublings of industrial output under the present system without experiencing a complete ecological catastrophe. Indeed, we are already overshooting certain critical ecological thresholds.

For us to persist and to preserve our environment, we must realize that economic growth, as gauged by increasing Gross Domestic Product (GDP), is a dangerous and obsolete American goal. The most viable and sustainable alternative is a steady-state economy, in which the path of economic progress must shift away from quantitative expansion (growth) to qualitative improvements (sustainable development).

In a steady state economy, factors other than just production and consumption become important measures of the health of the economy.

For instance, measures of economic health would include the assessed value of non-monetary goods and services, the rate of infant mortality, life expectancy, the quality of public education, the state of the environment, and the level of health care provided to all citizens.

Another important measure of economic health is the gap between the most fortunate and the least fortunate in our society, which tells us how well or how poorly we are doing in creating an economy that does not benefit some at the expense of others.

For many devolving nations with widespread poverty, increasing economic growth remains an appropriate goal. Ultimately, however, the global ecosystem will not be able to support further economic growth. Therefore, an equitable distribution of wealth among nations is required, if we are to remain in balance with the earth’s ecosystem and maintain a sustainable society.

A global economy with inequitable wealth distribution will be subject to continual international strife and conflict. Such strife and conflict, in turn, ensures greater economic un-sustainability for poorer nations, a greater chance of terrorist attacks aimed at wealthier nations, and increased environmental destruction for all nations.

We must start to act now

Many of the countries in the world have acknowledged that there is a major problem and are moving forward quickly to address it. Countries such as Germany and Japan are moving forward with innovative legislation and comprehensive awareness and education programs to educate their populace to the existence of a global environmental problem and the need to reduce growth.

The U.S. however, does not seem to be aware of the problem or it feels that it does not exist. Perhaps our government officials feel it is not proven "scientifically", that environmental destruction is merely a natural course of events and there is nothing to worry about. We must be careful to understand the difference between what we "know" and what we "think" we know. This is a very dangerous method of analysis and it often leads to failing to see the forest from the trees.

What America needs NOW are fewer Democrats and Republicans who put growth at any cost ahead of societal needs and more Americans who will put corporate politics second and the future of our planet, our children and our grandchildren first.

What America needs NOW is a viable, consistent, "long term" economic plan to ensure the ecological future of America and the entire world! The expanding world treadmill is totally dependent on fossil fuels, water, minerals, forests and a host of other resources which are limited in supply and are rapidly being depleted.

If we don't act soon it may be too late.

We must find a way to implement a steady state economy that puts people first in order to protect the environment. There are many ways of reducing the economic stakes in environmental destruction, but this means taking seriously issues of social and economic inequality as well as environmental destruction.

Given the increase in resource usage and pollution resulting from our ever expanding economy, America needs leadership NOW that is willing to tackle our environmental problems head-on and will work to balance economic concerns with the need for creating sustainable communities.

For more information visit the Center for the Advancement of the Steady State Economy

Posted by Forrest Hill at August 23, 2006 10:27 PM
Comments
Comment #177158

Forrest,
Great article.

But you cannot play to tie.

Strictly speaking, steady state economics will not work for the same reasons balanced budgets fail.

Everywhere we look, everywhere, we see cycles: orbits, rotations, seasons, day and night, respiration, down to the quantum level and the persistence of life itself from moment to moment, pratiyasamutpada, co-dependent origination, birth and death and rebirth.

We can do everything possible to moderate these natural cycles of precession, warming & cooling, hyperventilation, and so on, but cyclical waves continue to permeate any system we care to name, no matter how much awareness is focused.

It leaves us with no choice. Steady state is not an option, because if we forgo the part of the cycle which brings growth, we can only lose when the other part follows. Boom and bust can be modulated, inhalation and exhalation can be controlled, but we cannot hold our breath.

In economics, growth and recession are inevitable. For this reason, a balanced budget is doomed to fail. Aiming for balance and eshewing growth means shrinkage will surely follow.

Growth can be planned to some extent. What cannot be planned is perhaps the best part of growth, innovation. Managed growth can lead to a relatively steady state, a steady increase, but finding a way to lock in the status quo of today is undesirable. I am sure we agree on this.

Also agreed, we need new leadership in this country. Replacing oil should be our priority. It requires an enormous government investment, beginning with research, right through to implementation. We cannot afford to let markets and impersonal cycles determine outcomes for us. There will be an efficient outcome eventually, but it may take too long, cause too much pain, and ultimately work very much against our national interest. Focusing our awareness and our resources today will bring about the desire result of slow, steady, innovative growth tomorrow.

Posted by: phx8 at August 23, 2006 11:56 PM
Comment #177179

Well said, Forrest. Tough sell, though. Even phx8 reveals a bias toward “more is better”.

That said, there is a simpler political solution. Vote Out Incumbents until government is found to be solving more problems than it creates. Because today, the opposite is true. Racking up ever greater debts, trying to grow the economy on the back of illegal immigration and ever growing population densities, and expecting a diminishing educational product to produce the problem solvers in the next generation, is a prescription for disaster.

Posted by: David R. Remer at August 24, 2006 3:06 AM
Comment #177201

Forrest,

I think this is a perfect example of how ideology operates in a culture. I love what you wrote, but in my own head I have a deep assumption that capitalism presumes either continual growth or stagnation and decline. But that logic seems to lead to ever-greater consumption of resources and that long-term suvival depends on reaching a relative steady state, at least in terms of resource-consumption, land management, etc. I guess I’ve been telling myself that transitioning to an information-based economy can at least take the heat off exploitation of physical resources.

I’m pretty ignorant about this. What are good places to start in learning more about steady-state economics?

Posted by: Trent at August 24, 2006 10:09 AM
Comment #177202

Oh. Duh. You linked to a place to start. Nevermind.

Posted by: Trent at August 24, 2006 10:12 AM
Comment #177243

What about private property rights and the right to produce as much as you can to better oneself?

I’ll take a capitalistic society.

Posted by: tomd at August 24, 2006 2:15 PM
Comment #177251

tomd, produce all the oil you want from your private land. Just don’t let a drop of it spill onto someone else’s land or travel down other’s waterways, or seep into anyone else’s water supply, or you may have to sell your property to pay for the mandated cleanup and damages.

Simple enough. No problem.

Posted by: David R. Remer at August 24, 2006 3:33 PM
Comment #177312

A Steady State Economy does not imply we won’t have a market economy. The problem with our infinite growth model of capitalism is not only that we have reached the state where we are completely liquidating our natural recourses, but that the wealth from that liquidation is flowing into fewer and fewer hands.

In America today the riches 1% of the population controls over 50% of the wealth. This distribution is almost medieval in proportion and is primarily the results of the economic policies of the past 25-30 years.

Under our current system growth refers to an increase in profit, production and/or services per unit labor. The best way to increase earnings (and therefore GDP) is to reduce the cost of labor or eliminate it all together (i.e. downsize, bust unions, and decrease wages).

Under a Steady State System, companies must include the cost of using and/or destroying the natural resource base as part of the cost of doing business. They must look at the affect their production has on the quality of community life. Under this system, companies that can maximize their profit per unit resource will out perform those that waste resources, pollute our environment, and/or rob our communities.

For instance, under a Steady State System organic farming could become more profitable than agri-business, even though it is much more labor intensive (which means jobs). Since agri-business would have to pay the true cost of their use of pesticides, runoff from cattle lots, and energy consumption (instead of having laborers pay, i.e. taxpayers) large agri-businesses would be considered less efficient, and investments would flow to locally run organic farms.

Thus, we still have a “market economy”, but now instead of the taxpayers picking up the tab so companies can continue to grow unimpeded, companies themselves must pay for the effects of their own activities thus favoring those that have the smallest impacts.

The real insanity is to believe that our economy can grow forever and that the earth is an infinite sink for our waste. We need to create incentives for businesses to work within the bounds of the ecosystem. We need to create incentives for companies to act as good corporate citizens so that the environmental movement and the social justice movement are one in the same thing.

There are already well developed theories in the area of Steady State economics (I would suggest Brain Czech’s book “Shoveling fuel for a run away train” as a good start and then anything by Herman Daly). It just takes the political will (and ending the corporate funding of our elections) to implement a more rational economic system.

Posted by: Forrst Hill at August 24, 2006 10:52 PM
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