Center for the Advancement of the Steady State Economy
Regular Contributors:  Herman Daly, Brian Czech, Brent Blackwelder, James Magnus-Johnston, and Eric Zencey. Guest authors by invitation.

The Triumph of Fantasy over Science, Part 2

Restoring Science as the Basis for Economic Policy

by Rob Dietz

Right now “economics” means “neoclassical economics,” especially in the halls of government and business boardrooms.  At the same time, ecological economics remains an under-appreciated and under-utilized sub-discipline of economics. To reverse this situation, such that when people talk about economics, they’re talking about ecological economics, we need to address the three factors described in Part 1 of The Triumph of Fantasy over Science:

  1. The psychology of inclusion drives people to follow the dominant economic philosophy (neoclassical), even if it comes straight out of Fantasy Camp.
  2. Neoclassical economics has become entrenched in the culture.
  3. The fanciful stories that support neoclassical theories are more emotionally compelling than the logic (straight out of Science Camp) that underlies ecological economics.

Overcoming these three factors requires three countermeasures.

Countermeasure 1. Frame the limits to growth and ecological economics in a way that prevents people from feeling threatened.

For decades, the denizens of Science Camp have been broadcasting messages about the shortcomings of neoclassical economics and the problems posed by its obsession with growth. To a lesser degree, they have also been promoting ecological economics (and its focus on well-being) as a positive alternative. But to bypass protective cognition — the defense mechanism that allows people to accept faulty premises — Science Campers need to frame their ideas differently.

Many people, when confronted with the possibility that the economic paradigm they’ve embraced may be harming society and causing significant environmental damage, react defensively. I know that I’ve been called all sorts of names (even the “C” word — communist) for presenting an alternative economic view. The key to disarming the defensiveness that comes along with protective cognition is to focus the conversation on needs that all people share (e.g., subsistence, security, and participation) and how an ecological economy can meet these needs without growth. Such framing can dampen denial and open minds.

For example, one time I was part of an “economic vitality” team tasked with providing ideas to a city council about how to achieve a prosperous local economy. The team included a sustainability guru, a business owner, a representative of the Chamber of Commerce, and a banker, among others. In one of our first meetings, I gave my standard spiel about the difference between a prosperous economy and a growing one. Since it was a small group seated around a table, I could see right away the misgivings some of my teammates had about my ideas. The banker must have set the world record for quantity of disapproving head shakes. We ended up butting heads for the next several meetings until I tried a different approach. I drafted a short document about our “areas of agreement,” which focused on the city’s needs. By steering the conversation toward things we all hoped to achieve in the city’s economy, such as available jobs, meaningful work, sufficient infrastructure, healthy ecosystems, and local production and consumption, we were able to have a constructive discussion and develop useful strategies for the city.  Once the walls of protective cognition have been toppled, people can access their considerable capacity for logic when assessing policy options.

Countermeasure 2. Use student demand to supplant neoclassical economics in universities.

Since this countermeasure focuses on university economics, let’s use a couple of standard economic graphs. First let’s consider the production possibility frontier for teaching in economics departments (see graph). An economics department can offer only a certain amount of economics courses, defined by the production possibility frontier. If it is spending that “certain amount” on neoclassical economics, then it can teach very little ecological economics. The goal is to move along the curve from point A (where we currently reside) to point B where we want to be.

Now let’s use supply and demand to see how to move from A to B. The quantity (and price) of neoclassical economics offered by universities is determined by student demand and departmental supply (see graph). To lessen the quantity of neoclassical economics supplied, students need to lower their demand for it. This is a natural place to start, since neoclassical economics offers students very little in the way of long-term prospects for healthy and happy lives. Student uproar over the downsides of neoclassical economics is already percolating, and activists have begun organizing efforts to increase demand for ecological economics.

If students decrease their demand for neoclassical economics, then the quantity supplied will decrease.

For example, Adbusters started a campaign called Kick It Over that invites students around the world to join the fight to revamp Econ 101 curricula and challenge the myopic views of neoclassical professors. Another outstanding effort is Kate Raworth’s work with Oxfam on the “doughnut economy.” Raworth is trying to unseat neoclassical orthodoxy and replace it with an economic framework based on meeting society’s needs within nature’s limits. Besides offering a sound premise for structuring the economy, she suggests that students engage in a guerilla campaign to rewrite economics textbooks.

As students decrease their demand for neoclassical economics, casting it into the dustbin of obsolescence, economics departments will move along their production possibility frontier to point B where their core will become ecological economics. At that point professors will focus their research on how to achieve sustainable and equitable well-being, and new generations of students will be grounded in the principles of Science Camp.

Countermeasure 3. Tell a better story.

Rob Hopkins, the founder of the Transition Towns movement has poked fun at the standard Science Camp story. He says, “Environmentalists have often been guilty of presenting people with a mental image of the world’s least desirable holiday destination — some seedy bed and breakfast… with nylon sheets, cold tea and soggy toast — and expecting them to get excited about the prospect of NOT going there. The logic and the psychology are all wrong.” We need to tell a more inspiring story about the transition to a steady-state economy.

That’s exactly what CASSE authors have been up to, and two new books will be available in early 2013.  Enough Is Enough (by Dan O’Neill and me) and Supply Shock (by Brian Czech) will serve as a one-two punch to knock out the neoclassical obsession with growth. These two books can accompany the ecological economics textbook by Herman Daly and Joshua Farley to provide options for new economics courses along the path from point A to point B on the production possibility frontier.  As more such books and resources come out of Science Camp, professors, politicians, and pundits will have fewer excuses for remaining in Fantasy Camp.

From reframing to organizing, from protesting to storytelling, there’s a lot of work to do to get past the collective mental block and start walking a sustainable economic path. For decades, we’ve shown ourselves to be incapable of accepting facts, unable to modify failing social institutions, and unwilling to adjust our lifestyles. But now is the time to overthrow the academic programs and economic institutions that got us into this mess in which we undervalue our most important assets. Now is the time to tell the story of ecological economics — the hopeful story of long-term prosperity on a healthy planet. Now is the time to demand the economy that we want and that the planet needs.

Eight Fallacies about Growth

by Herman Daly

Herman DalyOne thing the Democrats and Republicans will agree on in the current U.S. presidential campaign is that economic growth is our number one goal and is the basic solution to all problems. The idea that growth could conceivably cost more than it is worth at the margin, and therefore become uneconomic in the literal sense, will not be considered. But, aside from political denial, why do people (frequently economists) not understand that continuous growth of the economy (measured by either real GDP or resource throughput) could in theory, and probably has in fact, become uneconomic? What is it that confuses them?

Here are eight likely reasons for confusion.

1. One can nearly always find something whose growth would be both desirable and possible. For example, we need more bicycles and can produce more bicycles. More bicycles means growth. Therefore growth is both good and possible. QED.

However, this confuses aggregate growth with reallocation. Aggregate growth refers to growth in everything: bicycles, cars, houses, ships, cell phones, and so on. Aggregate growth is growth in scale of the economy, the size of real GDP, which is a value-based index of aggregate production and consequently of the total resource throughput required by that production. In the simplest case of aggregate growth everything produced goes up by the same percentage. Reallocation, by contrast, means that some things go up while others go down, the freed-up resources from the latter are transferred to the former. The fact that reallocation remains possible and desirable does not mean that aggregate growth is possible and desirable. The fact that you can reallocate the weight in a boat more efficiently does not mean that there is no Plimsoll Line. Too much weight will sink a boat even if it is optimally allocated. Efficient reallocation is good; the problem is aggregate growth.

Reallocation of production away from more resource-intensive goods to less resource-intensive goods (“decoupling”) is possible to some degree and often advocated, but is limited by two basic facts. First, the economy grows as an integrated whole, not as a loose aggregate of independently changeable sectors. A glance at the input-output table of an economy makes it clear that to increase output of any sector requires an increase in all the inputs to that sector from other sectors, and then increases of the inputs to those inputs, etc. Second, in addition to the input-output or supply interdependence of sectors there are demand constraints — people are just not interested in information services unless they first have enough food and shelter. So trying to cut the resource-intensive food and shelter part of GDP to reallocate to less resource-intensive information services in the name of decoupling GDP from resources, will simply result in a shortage of food and shelter, and a glut of information services.

Aggregate growth was no problem back when the world was relatively empty. But now the world is full, and aggregate growth likely costs more than it is worth, even though more bicycles (and less of something else) might still be possible and desirable. That should not be too hard to understand.

2. Another confusion is to argue that since GDP is measured in value terms, it is therefore not subject to physical limits. This is another argument given for easy “decoupling” of GDP from resource throughput. But growth refers to real GDP, which eliminates price level changes. Real GDP is a value-based index of aggregate quantitative change in real physical production. It is the best index we have of total resource throughput. The unit of measure of real GDP is not dollars, but rather “dollar’s worth.” A dollar’s worth of gasoline is a physical quantity, currently about one-fourth of a gallon. The annual aggregate of all such dollar’s worth amounts of all final commodities is real GDP, and even though not expressible in a simple physical unit, it remains a physical aggregate and subject to physical limits. The price level and nominal GDP might grow forever (inflation), but not real GDP, and the latter is the accepted measure of aggregate growth. Most people can grasp this, and do not conceive of real GDP as trillions of dollar bills, or as ethereal, abstract, psychic, aggregated utility.

3. A more subtle confusion results from looking at past totals rather than present margins. Just look at the huge net benefits of past growth! How can anyone oppose growth when it has led to such enormous benefits? Well, there is a good reason: the net benefits of past growth reach a maximum precisely at the point where the rising marginal costs of growth equal the declining marginal benefits — that is to say, at precisely the point at which further growth ceases to be economic and becomes uneconomic! Before that point wealth grew faster than illth; beyond that point illth grows faster than wealth, making us poorer, not richer. No one is against being richer. No one denies that growth used to make us richer. The question is, does growth any longer make us richer, or is it now making us poorer?

To understand the question requires that we recognize that real GDP has a cost, that illth is a negative joint product with wealth. Examples of illth are everywhere and include: nuclear wastes, climate change from excess carbon in the atmosphere, biodiversity loss, depleted mines, eroded topsoil, dry wells and rivers, the dead zone in the Gulf of Mexico, gyres of plastic trash in the oceans, the ozone hole, exhausting and dangerous labor, and the exploding un-repayable debt from trying to push growth in the symbolic financial sector beyond what is possible in the real sector. Since no one buys these annually produced bads (that accumulate into illth), they have no market prices, and since their implicit negative shadow values are hard to estimate in a way comparable to positive market prices, they are usually ignored, or mentioned and quickly forgotten.

The logic of maximization embodied in equating marginal cost with marginal benefit requires a moment’s thought for the average citizen to understand clearly, but surely it is familiar to anyone who has taken Econ 101.

4. Even if it is theoretically possible that the marginal cost of growth has become greater than the marginal benefit, there is no empirical evidence that this is so.  On the contrary, there is plenty of empirical evidence for anyone who has not been anesthetized by the official party line of Madison Avenue and Wall Street. As for empirical evidence of the statistical type, there are two independent sources that give the same basic answer. First are the objective measures that separate GDP sub-accounts into costs and benefits and then subtract the costs from GDP to approximate net benefits of growth. The Index of Sustainable Economic Welfare (ISEW) and its later modifications into the General Progress Indicator (GPI) both indicate that, for the US and some other wealthy countries, GDP and GPI were positively correlated up until around 1980, after which GPI leveled off and GDP continued to rise. In other words, increasing throughput as measured by real GDP no longer increased welfare as measured by GPI. A similar disconnect is confirmed using the different measure of self-evaluated happiness. Self-reported happiness increases with per capita GDP up to a level of around $20,000 per year, and then stops rising. The interpretation given is that while absolute real income is important for happiness up to some sufficient point, beyond that point happiness is overwhelmingly a function of the quality of relationships by which our very identity is constituted. Friendships, marriage and family, social stability, trust, fairness, etc. — not per capita GDP — are the overwhelming determinants of happiness at the present margin, especially in high-income countries. If we sacrifice friendships, social stability, family time, environmental services, and trust for the sake of labor mobility, a second job, and quarterly financial returns, we often reduce happiness while increasing GDP. Relative income gains may still increase individual happiness even when increases in absolute income no longer do, but aggregate growth is powerless to increase everyone’s relative income because we cannot all be above average. Beyond some sufficiency, growth in GDP no longer increases either self-evaluated happiness or measured economic welfare, but it continues to increase costs of depletion, pollution, congestion, stress, etc. Why do most economists resist the very idea that we might have reached this point? Why do they resist measuring the costs of growth, and then claim that “there is no empirical evidence” for what is common experience? Read on.

5. Many believe that the way we measure GDP automatically makes its growth a trustworthy guide to economic policy.  To be counted in GDP, there must be a market transaction, and that implies a willing buyer and seller, neither of whom would have made the transaction if it did not make them better off in their own judgment. Ergo, growth in GDP must be good or it would not have happened. The problem here is that there are many third parties who are affected by many transactions, but did not agree to them. These external costs (or sometimes benefits) are not counted in GDP. Who are these third parties? The public in general, but more specifically the poor who lack the money to express their preferences in the market, future generations who cannot bid in present markets, and other species who have no influence on markets at all.

In addition, GDP, the largest component of which is National Income, counts consumption of natural capital as income. Counting capital consumption as income is the cardinal sin of accounting. Cut down the entire forest this year and sell it, and the entire amount is treated as this year’s income. Pump all the petroleum and sell it, and add that to this year’s income. But income in economics is by definition the maximum amount that a community can produce and consume this year, and still be able to produce and consume the same amount next year. In other words income is the maximum consumption that still leaves intact the capacity to produce the same amount next year. Only the sustainable yield of forests, fisheries, croplands, and livestock herds is this year’s income — the rest is capital needed to reproduce the same yield next year. Consuming capital means reduced production and consumption in the future. Income is by definition sustainable; capital consumption is not. The whole historical reason for income accounting is to avoid impoverishment by inadvertent consumption of capital. By contrast our national accounting tends to encourage capital consumption (at least consumption of natural capital), first by counting it in GDP, and then claiming that whatever increases GDP is good!

As already noted we fail to subtract negative by-products (external costs) from GDP on the grounds that they have no market price since obviously no one wants to buy bads. But people do buy anti-bads, and we count those expenditures. For example, the costs of pollution (a bad) are not subtracted, but the expenditures on pollution clean-up (an anti-bad) are added. This is asymmetric accounting — adding anti-bads without having subtracted the bads that made the anti-bads necessary in the first place. The more bads, the more anti-bads, and the greater is GDP — wheel spinning registered as forward motion.

There are other problems with GDP but these should be enough to refute the mistaken idea that if something is not a net benefit it would not have been counted in GDP, so therefore GDP growth must always be good. Lots of people have for a long time been making these criticisms of GDP. They have not been refuted — just ignored!

6. Knowledge is the ultimate resource and since knowledge growth is infinite it can fuel economic growth without limit.  I am eager for knowledge to substitute physical resources to the extent possible, and consequently advocate both taxes to make resources expensive and patent reform to make knowledge cheap. But if I am hungry I want real food on the plate, not the knowledge of a thousand recipes on the Internet. Furthermore, the basic renewability of ignorance makes me doubt that knowledge can save the growth economy. Ignorance is renewable mainly because ignorant babies replace learned elders every generation. In addition, vast amounts of recorded knowledge are destroyed by fires, floods, and bookworms. Modern digital storage does not seem to be immune to these teeth of time, or to that new bookworm, the computer virus. To be effective in the world, knowledge must exist in someone’s mind (not just in the library or on the Internet) — otherwise it is inert. And even when knowledge increases, it does not grow exponentially like money in the bank. Some old knowledge is disproved or cancelled out by new knowledge, and some new knowledge is discovery of new biophysical or social limits to growth.

New knowledge must always be something of a surprise — if we could predict its content then we would have to know it already, and it would not really be new. Contrary to common expectation, new knowledge is not always a pleasant surprise for the growth economy — frequently it is bad news. For example, climate change from greenhouse gases was recently new knowledge, as was discovery of the ozone hole. How can one appeal to new knowledge as the panacea when the content of new knowledge must of necessity be a surprise? Of course we may get lucky with new knowledge, but should we borrow against that uncertainty? Why not count the chickens after they hatch?

7. Without growth we are condemned to unemployment. The Full Employment Act of 1946 declared full employment to be a major goal of U.S. policy. Economic growth was then seen as the means to attain full employment. Today that relation has been inverted — economic growth has become the end.  If the means to attain that end — automation, off-shoring, excessive immigration — result in unemployment, well that is the price “we” just have to pay for the supreme goal of growth. If we really want full employment we must reverse this inversion of ends and means. We can serve the goal of full employment by restricting automation, off-shoring, and immigration work permits to periods of true domestic labor shortage as indicated by high and rising wages. Real wages have been falling for decades, yet our corporations, hungry for cheaper labor, keep bleating about a labor shortage. They mean a shortage of cheap labor in the service of growing profits. Actually a labor shortage in a capitalist economy with 80% of the population earning wages is not a bad thing. How else will wages and standard of living for that 80% ever increase unless there is a shortage of labor? What the corporations really want is a surplus of labor, and falling wages. With surplus labor wages cannot rise and therefore all the gains from productivity increases will go to profit, not wages. Hence the elitist support for uncontrolled automation, off-shoring, and immigration.

8. We live in a globalized economy and have no choice but to compete in the global growth race. Not so! Globalization was a policy choice of our elites, not an imposed necessity. Free trade agreements had to be negotiated. Who negotiated and signed the treaties? Who has pushed for free capital mobility and signed on to the World Trade Organization? Who wants to enforce trade-related intellectual property rights with trade sanctions? The Bretton Woods system was a major achievement aimed at facilitating international trade after WWII. It fostered trade for mutual advantage among separate countries. Free capital mobility and global integration were not part of the deal. That came with the WTO and the effective abandonment by the World Bank and IMF of their Bretton Woods charter. Globalization is the engineered integration of many formerly relatively independent national economies into a single tightly bound global economy organized around absolute, not comparative, advantage. Once a country has been sold on free trade and free capital mobility it has effectively been integrated into the global economy and is no longer free not to specialize and trade. Yet all of the theorems in economics about the gains from trade assume that trade is voluntary. How can trade be voluntary if you are so specialized as to be no longer free not to trade? Countries can no longer account for social and environmental costs and internalize them in their prices unless all other countries do so, and to the same degree. To integrate the global omelet you must disintegrate the national eggs. While nations have many sins to atone for, they remain the main locus of community and policy-making authority. It will not do to disintegrate them in the name of abstract “globalism,” even though we certainly require some global federation of national communities. But when nations disintegrate there will be nothing left to federate in the interest of legitimately global purposes. “Globalization” (national disintegration) was an actively pursued policy, not an inertial force of nature. It was done to increase the power and growth of transnational corporations by moving them out from under the authority of nation states and into a non-existent “global community.” It can be undone, as is currently being contemplated by some in the European Union, often heralded as the forerunner of more inclusive globalization.

If the growth boosters will make a sincere effort to overcome these eight fallacies, then maybe we can have a productive dialogue about whether or not what used to be economic growth has now become uneconomic growth, and what to do about it. Until these eight fallacies have been addressed, it is probably not worth extending the list. It is too much to hope that the issue of uneconomic growth will make it into the 2012 election, but maybe 2016, or 2020, …or sometime? One can hope. But hope must embrace not just a better understanding regarding these confusions, but also more love and care for our fellow humans, and for all of Creation. Our decision-making elites may tacitly understand that growth has become uneconomic. But they have also figured out how to keep the dwindling extra benefits for themselves, while “sharing” the exploding extra costs with the poor, the future, and other species. The elite-owned media, the corporate-funded think tanks, the kept economists of high academia, and the World Bank — not to mention GoldSacks and Wall Street — all sing hymns to growth in harmony with class interest and greed. The public is bamboozled by technical obfuscation, and by the false promise that, thanks to growth, they too will one day be rich. Intellectual confusion is real, but moral corruption fogs the discussion even more.

Failure and Hope from Rio+20

By Jules Peck

Editor’s note: Jules Peck originally posted this as a two-part essay on the blog of the New Economics Foundation. Peck’s views on what happened at the Rio+20 Earth Summit and his conclusions about what needs to happen dovetail with Brian Czech’s observations from the Summit.

A failure of epic proportions?

Commentators are fairly unanimous that the Rio+20 talks have been a failure. Expectations had of course been low. And because of this most developed country leaders stayed away. In opening the summit Ban Ki-Moon admitted the draft outcome was “disappointing” due to the conflicting interests of member states. China’s Sha Zukang, the UN’s lead on the conference agreed, calling the statement “an outcome that makes nobody happy.”

NGOs were unanimous in their disgust with the conference outcome statement, The Future We Want and Greenpeace’s Kumi Naidoo spoke of “…the longest suicide note in history…the last will and testament of a destructive twentieth century development model…a failure of epic proportions.”

So what was missing from the talks? What hope might there be coming from outside official negotiating rooms?

The end of an era of global diplomacy?

There seemed to be some consensus that the era of global treaties might be over, at least for the time being. George Monbiot concluded his roll call of Rio failures by calling for us to give up on global agreements. Barbara Stocking, head of Oxfam, urged civil society to “pick up and move on… take action.” Lasse Gustavasson, the World Wildlife Fund’s Executive Director of Conservation agreed that there had been a fundamental failure of “sophisticated UN diplomacy.”

UN Environment Programme Director Achim Steiner said the conference was evidence of “a world at a loss what to do” and that “we can’t legislate sustainable development in the current state of international relations.” Of course it is not just on sustainable development that global agreement is failing — the same is true of solutions to the financial system and issues such as Syria.

US Delegation Lead Todd Stern seemed to agree that global multi-state solutions no longer hold out much hope. Todd joined others in suggesting that the failures of Copenhagen and now Rio+20 signal the end of the post-Cold War global treaty era.

Both Stern and WWF’s Gustavasson noted that far more commitment and leadership had been shown at Rio+20 by civil society, city mayors, and the private sector. Indeed, Stern spoke of the early stages of a new era of new forms of global cooperation linking nations with business and civil society that is now flourishing in the shadow of the hollowing-out of formal processes. Some commentated that there was far more of a meeting of minds between some business and civil society folk in the 3,000 fringe events at Rio+20 than in the negotiating rooms.

It is perhaps hard to see how such one-off, informal cooperation between the private sector and civil society will replace binding global treaties, but perhaps there is some small reason to be hopeful still? For the time being, we may have to give up hope for action from governments. After all, the best our political “leaders” were able to come up with at Rio+20 was “green growth” and its love-child “sustained growth.” How many more moronic oxymorons can they think up?

Thankfully, there are signs that civil society and the private sector might take up some of the slack.

To read more, please see Jules Peck’s original Part 1 and his follow-up in Part 2, which call for sustainable development rather than sustained growth. Also see Brian Czech’s previous Daly News article about the role of CASSE and steady state economics.

The Triumph of Fantasy over Science, Part 1

The Rise of Fantasy as the Basis for Economic Policy

by Rob Dietz

Two competing camps attract people from all over the world. One is Science Camp, and the other is Fantasy Camp.

At Science Camp, the counselors teach campers that we live on a single blue-green planet with finite resources. The curriculum at Science Camp focuses on figuring out how to conserve and share those resources. There’s a strong undercurrent of appreciation (maybe even reverence) for nature and humanity’s place in it — a desire to learn about and safeguard life on this planet.

At Fantasy Camp, the counselors educate campers to believe that humanity can circumvent natural limits. Campers are taught that our unstoppable ingenuity can overcome any resource shortages or manage any amount of waste generation. There’s a strong undercurrent of consumption — a desire to accumulate ever more power and stuff in an attempt to gain complete control over life (and even death).

This division of the world’s people into two camps is a bit crude. After all, some people can’t attend either camp, since they’re engaged in a struggle to get by on the meager resources available to them. Other people are so taken up by their jobs, ideology, or religion that they don’t pay attention to either camp. Still others may be in transit from one camp to another. For example, people learning the ins and outs of climate change, planetary overshoot, biodiversity loss, etc., might begin to disentangle themselves from Fantasy Camp and start leaning toward Science Camp.

Counselors and campers at Science Camp put a lot of stock in observations and facts. Facts like these:

  • When we extract and burn fossil fuels, carbon dioxide accumulates in the atmosphere. A higher concentration of carbon dioxide produces side effects (e.g., increasing temperatures and acidifying oceans) that threaten global climate stability.
  • When we convert forests, grasslands, and wetlands to farms, cities, and suburban sprawl, we decrease the amount of habitat available to non-human species, and we reduce the ecological richness of the landscape.
  • When we extract fish, trees, or other natural resources faster than Mother Nature can replace them, we collapse populations and sometimes cause long-term ecological damage.

Grappling with such facts can lead to clear-headed thinking about limits — recognition that we need to limit the burning of fossil fuels, limit the conversion of natural habitat, and limit the rate of resource extraction. Ecological economists are some of the most clear-thinking enrollees at Science Camp. They approach economic growth and ecological limits with practicality, seeking policies and institutions that enhance human well-being without overwhelming the capacity of planetary life-support systems.

In contrast, the people registered at Fantasy Camp, especially the neoclassical economists, tend to ignore, deny, or dispute facts that conflict with their pre-existing ideas about infinite economic growth. At the same time, they cling to tidbits of conventional wisdom that support their current worldview. Their refusal to incorporate facts into their thinking about how to operate the economy is especially dangerous because it feeds the consumptive frenzy that pushes ecosystems and societies to the brink.

When you compare the foundational principles of ecological economics to those of mainstream/neoclassical economics (see table), it becomes ever clearer that one has a strong basis in reality. The principles of ecological economics stem from the laws of physics and ecology instead of “truthy” assumptions about human behavior and markets. The logic behind ecological economics suggests a different policy path than the theories behind neoclassical economics.

Foundational Principles of Fantasy Camp and Science Camp

Neoclassical Economics (Fantasy Camp) Ecological Economics (Science Camp)
People are rational utility maximizers. They make decisions rationally (at the margin) with the explicit goal of improving their own lives and maximizing their well-being. Sometimes people behave rationally, and other times irrationally. Behavior is influenced by emotion, culture, circumstance, and many factors beyond rational self interest.
People consume goods and services to meet needs. Since meeting needs increases people’s utility (satisfaction with life), more consumption is better. Consuming enough is preferable to continuous pursuit of more, given the diminishing returns of additional consumption and the social and environmental consequences of overconsumption.
The goal for an economy is growth — continuously increasing production and consumption. Growth means more jobs, more consumer utility, more purchasing power. The goal for an economy is optimal scale — the size at which the rising marginal costs of growth equal the diminishing marginal benefits. Growing the economy past this point is counterproductive.
Value is determined by prices in the market. If something of value does not have a price, we should find a way to bring it into the market. Some things that have value are not priced in markets. We need to establish mechanisms beyond the market to recognize this value.

There’s one other big difference between Science Camp and Fantasy Camp. Science Camp draws many fewer supporters than Fantasy Camp. To make a positive economic transition, we need to orchestrate a reversal of this situation, and to do so requires us to address two questions:

  1. Why do so many people pitch their tents in Fantasy Camp?
  2. After decades of failing to attract people to Science Camp, what should we do?

Why People Favor Fantasy

As Bill Rees has noted, “If intelligence and logic were the principal determinants of economic policy, the primary goal would be to ensure that growth slows as we reach the optimal scale and that the economy not exceed this optimal size.” But given the struggle of ecological economics to gain ground on neoclassical economics, we can mostly eliminate “intelligence and logic” as driving forces that motivate people to decide which camp to enter. Indeed, three factors that have little to do with intelligence and logic are behind this.

1. The psychology of inclusion drives people to follow the in-vogue philosophy. Dan Kahan, a legal scholar at Yale University, defines the term “protective cognition” as a sort of automatic defense mechanism that people employ to dismiss scientifically sound evidence that poses a threat to their worldview. Like an immune system fighting off invading viruses, protective cognition works in people’s minds to repel invading facts that would require them to rethink their dearest beliefs. Kahan writes, “Because accepting such [facts] could drive a wedge between them and their peers, they have a strong emotional predisposition to reject it.” With so many people having internalized the concepts of unlimited economic growth and the triumph of technology over nature, protective cognition puts up a formidable obstacle to widespread adoption of ecological economics. It can take years of fact bombardment to begin chipping away at this obstacle.

Fantasy Camp counselors shouldn’t be setting economic policy.

2. Neoclassical economics has become entrenched in the culture. The way people approach daily living and interactions within the economy has become aligned with the neoclassical tenet of self interest (mostly by seeking high-paying jobs and adopting lifestyles of materialism). Neoclassical ideology permeates universities. With so many business and economics students, universities are churning out graduates who buy into the neoclassical approach. The degree of entrenchment came about because neoclassical prescriptions worked at a time when increasing material goods meant increasing well-being. As Herman Daly has pointed out, this was the case when the Earth was relatively empty of people and our stuff. We could extract resources and dump wastes without worrying about running out of supplies (of either inputs or waste absorption capacity). But that logic has become faulty, and even dangerous, as we have filled the planet with ourselves and our things.

3. They spin a real good story over at Fantasy Camp. The message of unending growth is enticing, as long as we disregard the Icarus-like consequences of being seduced by it. This message makes regular appearances in fantasy movies. For example, in The Matrix, Neo (the hero) says, “I’m going to show these people what you don’t want them to see. I’m going to show them… a world without rules and controls, without borders or boundaries, a world where anything is possible.” Although this sort of message belongs in a movie theater, it seems to pop up even more often in the political theater. After Ronald Reagan cruised to Presidential victory over Jimmy Carter (whose message of conservation failed to resonate), he said, “There are no limits to growth and human progress when men and women are free to follow their dreams.” This quote, which makes it seem like Reagan employed Disney’s top talent to write his speeches, is literally set in stone in a Washington, DC monument. Reagan’s message is far more compelling than something like, “Individual freedom is a cornerstone of society, but freedom of choice may be constrained by social and environmental limits to growth. Men and women need to take such constraints into account when deciding which dreams to follow.”

These three factors won’t go away on their own. To increase the prominence of Science Camp, we have to take concerted action. Part 2 will explore how to enroll more people in Science Camp and supplant fantasy as the basis for economic policy.

The Higgs Boson and the Steady State Economy

By Brent Blackwelder

What does the Higgs boson have to do with the establishment of a sustainable economy? The discovery of this subatomic particle required a Herculean effort, involving billions of dollars, over 1,000 physicists, and thousands of craftsmen to construct and operate an almost incomprehensibly complex machine — the Large Hadron Collider. The same kind of diligent, prodigious effort is needed to construct and operate a new economic system for all nations of the world.

Physicist Lawrence Krauss, author of A Universe from Nothing, described the effort on the Higgs boson in ebullient terms:

…a triumph of technical and computational wizardry of unprecedented magnitude…

…cathedrals and colliders are both works of incomparable grandeur that celebrate the beauty of being alive…

…the discovery will change our view of ourselves and our place in the universe. Surely that is the hallmark of great music, great literature, great art… and great science.

Amid such extraordinary hype, it’s worth asking what we have to show for finding the so-called God particle? Will this momentous discovery help solve any crucial economic, social, environmental, or political problems besetting societies today and even threatening the livability of the planet? Will we possess the “key to the universe” and still wreck the planet we depend on?

If we can build the LHC, there’s hope for the SSE.

The most urgent task for humanity is the focus of the Center for the Advancement of the Steady State Economy: a transformation of the existing world economy. Today’s global economy rewards the depletion of natural resources, promotes overuse of fossil fuels, drives huge numbers of species to extinction, and turns a blind eye on the destruction of the very ecosystems that make life possible.

The transformation required in this emergency situation was described by economist Kenneth Boulding roughly half a century ago — the same period when physicists were formulating hypotheses about mystery particles. The essential change, Boulding said, was a move from “cowboy economics” (the unsustainable economics of continuous growth and resource overexploitation) to “spaceship economics” (the sustainable economics of the steady state).

Scientists specializing in ecosystem health warn that Earth is like a patient in the emergency room needing CPR — conservation, preservation, and restoration. The latest climate science reveals alarming physical changes to the planet — changes that are even more disturbing than the warnings issued in the big 2007 report of the Intergovernmental Panel on Climate Change (IPCC). Here are a few such changes:

  • The oceans are warming 50% faster than predicted;
  • Greenhouse gas emissions are tracking the worst-case scenario;
  • Oceans are acidifying at the fastest rate in 300 million years;
  • Sea levels are projected to be over 3 times as high, and the melting of the Greenland Ice Sheet would raise ocean levels 20 feet;
  • The earth is on track for an average warming of 7 degrees centigrade by 2100 — enough to produce massive agricultural failures.

We need a Herculean effort on both economic and ecological fronts to deal with climate destabilization. How many ecological economists are at work on a redesign of the global economy? What about the paucity of scientists who study the variety of life and the functioning of ecosystems? We do not know if there are 10 million species on Earth or 50 million.

In contrast, consider the stupendous volume of data being gathered by the supercollider. Dr. Krauss reports that this collider generates more data every second than the information in all the world’s libraries. The physicists got the billions they needed, but only a little progress has been made in developing spaceship economics. In fact, mainstream economics is reinforcing both the cowboy and casino thinking that is gripping most economies on Earth.

Physicists did not face a slick disinformation campaign funded by oil companies. Surely the job of rescuing our planet from an untimely demise should rank high in the funding priorities. Lester Brown estimates that $200 billion a year — less than a fifth of the world’s defense department budgets — is needed to shift to a clean-energy economy and do the CPR that planet Earth desperately needs.

“Steady State Economy” — a Positive Vision in International Affairs

by Brian Czech

Before we think about the steady state economy, let’s think for a moment about economic growth. Economic growth still has such positive connotations in domestic politics, especially American politics, that the vast majority of citizens simply assume that whoever can do more for economic growth is the better statesman (man or woman), better Federal Reserve chair, better economic advisor, etc. That’s why the definition of economic growth bears repeating over and over again, to pull the magic cloak from a purely material process. Economic growth simply means increasing production and consumption of goods and services in the aggregate.

In other words, economic growth means increasing population, increasing per capita consumption, or both. There’s nothing magical about it. Economic growth means more and more “stuff” – green stuff, brown stuff, pink stuff — and it takes more “stuff” to make it happen. That’s pretty obvious for the agricultural, extractive, and manufacturing sectors. But service sectors, even the information sector, take more stuff to grow, too.

And stuff tends to run out. Peak Oil, Peak Water, Peak Everything as Richard Heinberg called it; Earth has only so much to go around. Earth is big, but so is 7 billion — the number of people in the global economy. More importantly, guess which one is still growing.

Economic growth is indicated by increasing GDP. In nations with big ecological footprints — the United States, Japan, Germany, China, Brazil — economic growth has long been maxed out within the borders. Huge economies have to reach across their borders for natural resources, and their pollutants go international too. Economic growth is increasingly questioned as a positive vision in international affairs.

Many if not most nations recognize that economic growth has become more of a problem than a solution from a global perspective. That’s why Herman Daly calls it “uneconomic growth.” Resource shortages, pollution, climate change, congestion, and biodiversity loss are all results and indicators of economic (or uneconomic) growth.

In other words economic growth, indicated by increasing GDP, has become a bad deal, at least at the global level. It was a good deal some decades ago when it cost us little in clean air, clean water, fish and wildlife, and peace and quiet. But now it’s a bad deal and we need to recognize it as bad.

Calling economic growth a bad thing doesn’t make the steady state economy a negative vision. Far from it. In fact, when economic growth is a bad thing, only an alternative to growth can be a good thing, right?

So what are the alternatives to economic growth? This is where sticking to the standard, textbook, policy-relevant definition of economic growth comes in handy. Again, economic growth is increasing production and consumption of goods and services in the aggregate, indicated by growing GDP. So we have only two basic alternatives: decreasing production and consumption of goods and services in the aggregate, or stabilized production and consumption of goods and services in the aggregate. The former results in declining GDP and the latter in stabilized GDP. The former is called “recession.” The latter is called a “steady state economy.”

Of these, which one sounds like the better deal? Which one evokes the more positive image? Which one should be advocated as the solution to the problem of economic growth?

I’ll go out on a limb and say it’s the steady state economy.

Fortunately, I had the opportunity to test this hypothesis at the 20th anniversary of the Earth Summit, otherwise known as “Rio+20,” from June 20-22. There in Rio de Janeiro I talked with dozens of delegates from countries ranging in GDP from the gargantuan United States to the diminutive Comoros. Here’s what I found: nearly all favored the steady state economy as the positive solution to the problem of economic growth. Nearly all saw continuous economic growth as bad and the steady state economy as good.

That’s right, nearly all!

Doubt it? Think again. These diplomats ain’t no dummies. They know full well the planet is filling up with people and stuff, and that many national economies are beyond their sustainable levels.

Of course, there are exceptions. Some diplomats have the intellectual disadvantage of a background in neoclassical economics, leading them to believe there is no limit to economic growth. They can’t defend such a fallacious hypothesis, but they still believe it.

Then again, not all diplomats who agree about limits to economic growth will formally acknowledge such agreement. A distinct tendency was clear in Rio: wealthy-nation delegates were afraid to buck the party line of economic growth except in private conversation. The reasons should be obvious. In the United States, for example, we have Wall Street, the Federal Reserve System, and the Department of Commerce pushing hard for economic growth. No one should underestimate the power of these players to influence the language of statesmen, political appointees, and bureaucrats.

In small nations with widespread poverty, on the other hand, the general public, professional diplomats, and elected politicians have one thing in common: they’ve all experienced the unfairness of global economic growth and pro-growth policies. When it comes to natural resources, smaller countries tend to be deal takers, not deal makers, and the terms of trade are harsh.

That’s why the CASSE position on economic growth has garnered signatures from numerous small-country diplomats, ministers, and other delegates in international affairs. In Rio, I found delegate after delegate supportive of steady state economics for international diplomacy. Many were from African, South American, and Asian countries far removed from Wall Street and wary of international pro-growth institutions such as the World Bank, International Monetary Fund, and World Trade Organization. I got the succinct impression that, if only we had the time and access to all diplomats of the world, and even to heads of state, we would find the vast majority of them calling for steady state economics just as the CASSE position describes. That means starting in large, wealthy countries and gradually expanding to other nations after an opportunity to catch up in per capita consumption, at least to a reasonable degree.

Yet many activists, scholars, and ‘think-tankers’ are afraid to talk openly in public about the steady state economy, much less to go on record as supporting it. They think the phrase “steady state economy” has negative connotations. They think this makes the steady state economy too difficult to promote.

The fact is that any macroeconomic goal (growth, steady state, recession) has negative connotations. It’s time to pick your negative connotations!

Some may think that negative connotations can be avoided by the use of feel-good rhetoric such as “green,” “blue,” or “new” economics. I hate to burst the bluegreen bubblegum, but these too have plenty of negative connotations. This was evident in Rio. “Green,” “blue,” and “new” are seen by diplomats for what they are: rhetorical ploys to skirt the tough issues we face in the real world.

Long-time explicit advocates of the steady state economy could, I suppose, be accused of a biased opinion. But I know what I saw in Rio: delegates almost invariably connected quickly with the phrase “steady state economy.” Although it’s a phrase that requires some thought for translation to other languages, it makes so much common sense that the translation occurs alright. For example, the CASSE position on economic growth is already posted in 19 languages. After all the followups from Rio+20, it will also be posted in Chinese, Turkish, Hindi, Bangladeshi, Japanese, and Hungarian.

In political science, a central principle is name recognition. All else equal, the name recognized is the name favored. This applies to politicians, policies, and platforms. That’s why it matters when a professor, activist, diplomat, minister, or head of state chooses a label for a particular economic goal. “Green” has name recognition, but its meaning is fuzzy. “New” has little recognition or meaning, at least as applied to economics. “Steady state economy” has modest recognition, so far, but it clearly expresses the primary principle; a stabilized economy that is neither growing nor shrinking, but fluctuating around a sustainable level.

“Steady state economy” is a positive, proactive phrase that’s productive in international affairs. It has decades of academic reputation from the work of Herman Daly and others. It speaks clearly of the need to stabilize the size of the human economy. It has plenty of backing by dignitaries in sustainability science, policy, and diplomacy, and the list of dignitaries (not yet updated from Rio) is growing fast. We should encourage the purveyors of “green,” “blue”, and “new” economics to adopt it.

Aren’t there reasons enough?

The Canutist State

by Herman Daly

Herman DalyIn one version of the legend of King Canute’s failed attempt to stem the rising tide by lashing the sea, he told the assembled crowd of flatterers: “Let all men know how empty and worthless is the power of kings, for there is none worthy of the name, but He whom heaven, earth and sea obey by eternal laws.”

In this version, Canute staged the attempt to control the tide in order to discredit the lying sycophants who kept telling him that he was all-powerful and therefore could do anything that they wanted him to do. But popular history, immune to subtlety, has portrayed Canute as really believing that the sea would obey him. Hence the term “Canutist State” has been used to refer to governments that try to mandate climate stability without burning less carbon, to grow forever in a finite and entropic world, and to abolish poverty without sharing. It would be more just to Canute if the term “Canutist State” referred to a wise government that constrained the ignorant attempts of its businessmen and economists to grow forever. With apologies to the wise King, I will perpetuate this injustice because the image of a stupid government serving business interests by trying to countermand nature’s laws is such an apt description of what is happening today that we need a name for it.

The Canutist State wants, in the words of one of its big boosters, IBM, to “build a smarter planet” — one that is “smart” enough to obey our mindless command to keep growing. The real Canute would not try to build a smarter planet (by geo-engineering, genetic engineering, globalization, quantitative easing, etc.), any more than he really tried to command the tide. He would have tried to build a smarter kingdom populated by wiser subjects, and thrown his growth-manic economic advisors into the dungeon. He would have said, “Let’s make a smarter adaptation to the wonderful gift of the Earth, out of which we were created and with which we have evolved.”

It would be tempting to emulate Canute’s strategy by putting the growth-manic advice to the test and watching it publicly fail. That would be very costly, but in a way it is exactly what is happening, although not by design. Unfortunately, the failures are attributed to insufficient growth rather than to the stupidity of the priestly economic advisors who inhabit palaces rather than dungeons. Their policy is to lash nature even harder with the whip of mega-technology until it gives us what we want — usually accompanied by a lot of “unforeseen consequences” that we certainly do not want.

To Change the Global Economy, Start by Changing the Olympics

by Rob Dietz

At the 1980 Winter Olympics in Lake Placid, New York, the Soviet hockey team took the ice as overwhelming favorites — they were a juggernaut, having won the gold medal in 1956, 1964, 1968, 1972, and 1976. In fact, the Soviets were on a 21-game Olympic winning streak, posting lopsided victories along the way, including a 16-0 shutout of Japan and a 17-4 drubbing of the Netherlands during the 1980 tournament. Team USA, featuring a collection of unknown college players, couldn’t possibly win. But the unthinkable happened, and the team’s scrappy play carried the day. Announcer Al Michaels’s captured the emotion with his famous play-by-play call:

Eleven seconds, you’ve got ten seconds, the countdown going on right now! Morrow, up to Silk. Five seconds left in the game. DO YOU BELIEVE IN MIRACLES? YES!

It’s hard to find someone who appreciates competition as much as a sports fan (or a frenzied sports announcer), unless you happen to be in a college economics department. Every student who has suffered through Econ 101 knows the theory of perfect competition: perfectly competitive markets produce the most efficient allocation of goods and services. Never mind that you’re more likely to meet the Easter Bunny than a perfectly competitive market. So for years, economists have been pushing for unregulated markets, and business leaders and policy makers have followed suit.

To some degree the economists are on the right track. Competition can drive people (and companies) to the peak of performance. We like it when companies compete with each other to see who can produce the highest-quality products and provide them at the lowest prices. But as much as there is to admire about competition, there are limits to its usefulness. You probably know someone who’s hyper-competitive, one of those people who has to turn everything into a competition. Just like most things in life, we need to find the balance — the amount of competition that achieves positive results without overdoing it. It’s the equilibrium between competition and cooperation.

Teamwork (or cooperation) is how Team USA pulled off the “Miracle on Ice.” Sure, there were commendable individual performances. In goal, Jim Craig kept 36 of 39 Soviet shots out of the net. Mark Johnson, with grit and hustle, scored two goals. Team captain and emotional leader Mike Eruzione, whose name in Italian means “eruption” knocked in the winning goal. And coach Herb Brooks found the right tactics and motivation to put his team in a position to win. But all of these people have acknowledged that it was a true team effort – some participants have even expressed the feeling that all of America was skating together for that game.

The need for a balance between competition and cooperation exists within the economy. You can see it at the microeconomic scale. Within a company, the employees need to cooperate in order to achieve their goals. A company must figure out how to cooperate, not only internally, but also with other companies, with customers, and with government agencies in order to succeed.

You can also see the need for this competition/cooperation balance at the macroeconomic scale. In a world of finite resources, overly competitive nations can be dangerous. Aggressive competition for control of critical resources like land, water, and oil leads to serious conflicts and degraded social conditions. The last thing we need is an amped-up competition to wring the final drops of growth out of an already overgrown global economy. But in order for nations to find peaceful ways of sharing resources, they need to improve their track record for cooperating with one another. We’ve witnessed so many failures of international cooperation (look to the negotiations on climate change for a recent example), that it’s hard not to be cynical about humanity’s ability to collaborate at this scale. We’ve got to do something to change this track record, and the Olympics provide a venue for getting started.

It is difficult to argue with the ideals of the Olympic Movement. According to the Olympic Charter, “Olympism seeks to create a way of life based on the joy of effort, the educational value of good example, social responsibility and respect for universal fundamental ethical principles.” Although the charter expresses many lofty ideals, and the Olympics provide astounding examples of sportsmanship, the Games are, at the simplest level, a global competition among countries seeking glory through athletic achievement. And most of the world is eager to watch and cheer their teams. Sometimes the cheering can have overtones of nationalistic fanaticism, as in Germany during the 1936 Berlin Games. Other times the Olympics showcase political games as prominently as athletic ones, like the 1980 Moscow Games (boycotted by the United States) and the 1984 Los Angeles Games (boycotted by the Soviet Union). And the transition from amateur to professional athletes in the Games has eroded the Olympic spirit a little more. You’d never see something like the Miracle on Ice today.

At the same time, success at the Olympics has become predictable, maybe not for individual athletes, but for nations. As Andrew Bernard and Meghan Busse have described, the nations with the highest medal counts tend to have both a large population and a high per capita GDP. This means that the most economically overgrown countries have an advantage at the Olympics, just like they have an advantage in the scramble for world resources.

But there’s an unconventional (yet practical) way to rekindle Olympic ideals, encourage greater international cooperation, and mitigate the unfair advantage of “economic bigness” in the Games — all without taking away the spirit of competition or squashing the joy of rooting for your home nation.

What if we paired two nations as a unified team for each cycle of the summer and winter Games? Instead of Team USA, we could have Team Zimbabwe and USA (or Team Zimbusa). The teams in all sports, from gymnastics to skiing to water polo would consist of a mix of Zimbabwean and American athletes. Think of how much more knowledge and understanding would be shared between Zimbabweans and Americans. Medal counts would be totaled for both nations as if they were a single country, making the medals race more competitive and interesting. The paired countries could host joint training sessions in their respective homelands. Imagine the good will that could be generated around the globe as fans root for the athletes of their partner countries just as earnestly as their homegrown athletes — it’s enough to reduce Al Michaels to tears of joy!

Of course the International Olympic Committee (IOC) would have many new rules to establish, such as how teams are paired. Pairings could be random. Picture the United States with Iran, or India with Pakistan. Four years of athletic cooperation could lead to cooperation on more important fronts. Willingness to accept politically or culturally incongruous pairings by all countries would be part of the deal. Another possibility for forming pairs is to rank all nations by GDP and match the highest with the lowest, the second highest with the second lowest, and so on. The IOC would have to work out other details as well, such as the minimum percentage of athletes competing in a given sport that must come from one of the two countries.

The idea to pair nations may seem like an idealistic non-starter, but the Olympics are just a bunch of people getting together to play sports. Would the athletes feel like they represented themselves and their countries any less convincingly if they did so in teamwork with athletes from another country? Would fans support their teams less enthusiastically if they were engaged in such a partnership?

The proposed change in Olympic format could serve as a prominent step toward building the global cooperative spirit that is symbolized by the colorful interlocking rings of the Olympic flag. Such a step could help create balance between competition and cooperation not just in sports arenas, but also in policy arenas where decisions profoundly affect humanity’s prospects.

Besides, who could resist cheering for another miracle as Team Zimbusa takes the ice?

If you like this idea, feel free to pass it along to Jacques Rogge, President of the International Olympic Committee, in one of these ways:

Write a letter…
Château de Vidy
Case postale 356
1001 Lausanne
Switzerland

Make a phone call…
+41 21 621 61 11

Post a comment on the Facebook page for the Olympic Games.

Finding Real Economic Leadership in the Wake of Rio+20

by Brent Blackwelder

Twenty years after the seminal “Earth Summit” on sustainable development in Rio de Janeiro, Brazil once again has hosted a “fate-of-the-earth” meeting (Rio+20) focused on the themes of a green economy and institutional change.  In the aftermath of the 1992 meeting, too many nations, including the United States in particular, failed to reverse the downward trend in planetary ecosystem health. Today, with a global population of 7 billion consuming resources beyond the ability of the earth to replenish itself, we’d better hope there’s a better attempt at the transition to a sustainable economy after this meeting.

Change must begin with the structure of the economy because a nation’s economic policy is also its social and environmental policy. National economies all over the world are failing — failing to provide economic stability, failing to secure resources for future generations, failing to protect ecosystems and non-human species, and failing to achieve social justice.

In anticipation of the Rio+20 summit, Foundation Earth published a report called “The Economic Rethink: Who Does It Well?.” It challenges leaders to adopt big changes and gives them examples to follow from a variety of nations.  In preparing the report, Randy Hayes, founder of the Rainforest Action Network, and I reviewed over a dozen scorecards that grade nations on their performance — some focus on corruption, others on empowerment of women, still others on environmental protection.

In our 16-category analysis, Brazil, the host of the Rio+20 meeting, receives a failing grade, missing the boat in 13 categories of action toward a sustainable economy. Brazil’s political leadership is intending to make the nation a global powerhouse in agricultural exports, an intention that would mean sacrificing the world’s greatest tropical rainforest, the Amazon, to accommodate industrial plantations for food and biofuel exports.

But the report goes beyond the question of accountability for Brazil. It highlights significant positive steps that some nations are taking to shift to a new economy. In most of the 16 categories, at least a few nations are taking leadership roles. The twin goals of an environmentally restored earth and a socially just civilization are not part of a utopian fantasy: people have adopted inspiring policies and taken forward-looking actions in real places around the globe. The challenge is to make sure that the following examples become the rule rather than the exception:

  • Bhutan is leading the way in development of new indicators of progress. The “gross national happiness” measures deeper values that cannot be captured by GDP.
  • The Dominican Republic, which shares the island of Hispaniola with deforested Haiti, is demonstrating leadership forest restoration. Since 2003, forest cover in the Dominican Republic has increased from 32% to almost 40%.
  • In the energy sector, several leaders are stepping forward. Sweden, Costa Rica, and British Columbia (Canada) have instituted carbon taxes to include the ecological cost of energy use in its price. And Germany has blazed a clean energy trail with outstanding results in solar and wind power.
  • Cuba is an innovator in organic community agriculture. Havana grows 50% of its fresh produce within the city limits.
  • In a world awash with financial scandals and offshore tax havens, New Zealand has become the “least corrupt nation” because of its effective legal framework, fiscal transparency, and accountability.
  • Bolivia and Ecuador have put a rights-of-nature provision in their legal codes as have several cities and towns in the United States.
  • Iceland, number one on the Global Gender Gap rankings, is a nation of empowered women. Women in the Land of Fire and Ice hold the majority of jobs in university education and have nearly equal representation in parliament.
  • In contrast to Brazil’s determination to fill the Amazon with massive dams, the United States has led the world in one category: restoration and protection of rivers. Over 1,000 dams have now been removed in the U.S. to restore fisheries and water quality. Furthermore, more than 250 rivers have been safeguarded in the National Wild and Scenic Rivers System.
  • In the Netherlands, “repair cafes” are beginning to address the problem of over-consumption. Such cafes encourage reuse of broken and weathered possessions, providing free repair services.

These examples of leadership are well worth celebrating, but many challenges remain along the path to a sustainable economy. The biggest challenge is that no nation adequately addresses carrying capacity, planetary limits to growth, or sustainable economic scale. All nations must overcome this challenge to ensure a healthy planet and flourishing civilization for future generations.

It remains to be seen what progress will flow out of the Rio+20 meeting, but examples of real leadership in “The Economic Rethink” offer hope that we can dispose of the “disposable economy.”   There’s no longer room for an economy that treats the earth like it’s the site of a liquidation sale.

Real Dichotomies Are Not Made “False” by Soft Science or Political Pandering

 by Brian Czech

It’s a good thing, the proliferating discussion about economic growth and environmental protection among ecologists. Such discussion was sorely lacking just ten years ago. Without addressing the subject of economic growth, the ecological professions would be but marginally relevant to society and doomed to extinction. Money is running out for research that appears benign at best and wasteful at worst in the days of fiscal austerity, otherwise known as the 21st century.

Much of the discussion about economic growth may be attributed to scientific, professional societies that got the ball rolling by developing technical reviews and position statements over the past decade. Some of these positions are scientifically sound, while others stop short. None are perfect, of course, yet some of the professional societies have described in rigorous detail the “fundamental conflict” between economic growth and environmental protection with the fortitude of their scientific convictions. A short list would include The Wildlife Society, U.S. Society for Ecological Economics, and American Society of Mammalogists. The leadership provided by these societies has been invaluable and is finally reaping rewards for students, faculty, programs and universities.

How about an ice-cold glass of "sustainable growth?"

A few other professional societies haven’t yet run out of green Koolaid. The Ecological Society of America, for example, still calls for the supremely oxymoronic “sustainable growth.” Many ESA members who get it about limits to growth have been, to put it perhaps too frankly, victimized and embarrassed by a vocal and influential minority that refuses to shed their political training wheels on the racetrack of economic policy matters.

And so it came as no surprise to see the recent exchange (February and March, 2012) on the “Value of Nature” between Bernd Blossey and Michelle Marvier in Frontiers in Ecology and the Environment. The fact that they carried out this discourse in Frontiers suggests exposure to ESA deliberations, publications, and politics. An ESA background can make an author susceptible to muddling the message on the relationship between economic growth and environmental protection. Consider Marvier’s second-from-last paragraph:

“I have found that many conservationists view striving for material gains and the prioritization of people above non-human nature as societal pathologies that need to be cured. This is an unproductive and misanthropic attitude…”

So far so good, for the most part. Her first sentence would be hard to argue with. Her second one has a large dose of truth as well. On the other hand, “liquidator syndrome” is every bit as misanthropic, as I described in Shoveling Fuel for a Runaway Train. Liquidator syndrome occurs when a conspicuous consumer gets psychologically mired down in Maslow’s fourth level (the pursuit of self-esteem) rather than progressing to the fifth (self-actualization). Liquidator syndrome manifests in such behaviors as Hummer driving, McMansion building, fur-coat wearing, etc. Let’s face it: it’s bad for the environment, biodiversity, and the grandkids.

But neither Marvier nor I are psychologists. We shouldn’t quibble about which end of the spectrum – extreme conservation or extreme consumption – is more misanthropic. We’re ecologists and, therefore, economists of nature. Therefore the bigger bone to pick starts with the next sentence:

“… Setting up dichotomies between economic growth versus protection of nature is a dead-end for conservation. In a separate survey of 800 American voters… 76% felt that ‘we can protect land and water and have a strong economy with good jobs for Americans at the same time, without having to choose one over the other.’ Only 19% felt that ‘sometimes protections for land and water and a strong economy are in conflict and we must choose one over the other.’ However, when the question is framed such that people are forced to choose, the economy wins handily.”

There is enough wrong in these sentences to fill a small textbook, but let’s start with the most obvious. “Setting up dichotomies” sounds too close to “making up dichotomies” or “inventing dichotomies” for comfort. It reminds me of the time some colleagues and I were attacked for supposedly “assuming” there was a conflict between economic growth and biodiversity conservation, when in fact our group had concluded, after many years of study, that indeed there was such a conflict. Meanwhile the accusers had virtually no background in the subject of economic growth.

In ecological terms, due to the tremendous breadth of the human niche, the human economy grows at the competitive exclusion of nonhuman species in the aggregate. That’s sound, peer-reviewed science. Those individuals and organizations that have conducted due diligence on the topic have invariably concluded as much.

We can’t make a dichotomy a false one by wishing it away and ignoring the ecological and physical sciences. But we can sure confuse readers by conflating economic growth with a “strong economy.” Unfortunately, that is exactly what Marvier does.

An economy can be strong, with low unemployment, fiscal soundness, and a stable currency, regardless of whether it is growing or non-growing. Ultimately, in fact, the only sustainable alternative is a steady state economy; neither growth nor recession may continue perpetually. More importantly, long before a growing economy breaches its long-run carrying capacity, economic growth starts causing more problems than it solves. In that sense it is “uneconomic growth” and not worthy of the label “strong.”

It behooves ecologists who want to weigh in on economic growth to stop and think about precisely what it is. Of course you can always try to reinvent the phrase when your argument is failing. But that’s unproductive because economic growth is what it is, and the policy maker knows what it is. Economic growth is increasing production and consumption of goods and services in the aggregate. (It’s not the growth of the bicycle sector while the SUV sector crashes.) Economic growth absolutely entails a growing human population and/or per capita production and consumption. It is indicated by increasing GDP, or gross domestic product. It’s a policy goal with clear-cut fiscal, monetary, and trade policy levers and buttons. It’s also a policy goal with widespread public support.

Which brings us to the final flaw (for our brief purposes) of Marvier’s editorial. Her argument seems to be: “The public is enamored with economic growth. Therefore, we should not talk about the trade-off between economic growth and environmental protection.” But that slope is so slippery that we should expect someone further down to chime in, “Yup, in fact we should say that there is no conflict between economic growth and environmental protection.”

Now that’s a dead-end for conservation. Yet that is exactly what many ecologists — not to mention economists and politicians — have said for decades. It is a fallacy of epic proportions and, in my opinion, the single biggest failure of the ecological professions and the environmental community thus far.

It’s also a failure that is being rectified as one professional organization after another puts its scientific integrity where its mouth is, clarifying the fundamental conflict between economic growth and environmental protection.

Let’s not underestimate the public’s ability to deal with a conflict, once it’s been clarified. The American public eventually dealt strongly with the use of organochlorines, the deterioration of the ozone layer, and even with smoking. In each case, step 1 was coming clean on the science and refuting such revolting rhetoric as “I believe that nicotine is not addictive.”

In this case, step 1 is coming clean on economic growth, refuting the revolting rhetoric that “there is no conflict between growing the economy and protecting the environment.” Let’s tell it like it is, plainly but also with the nuance earned by studying the matter. By telling it like it is, we’ll have a message that resonates with the public’s common sense. That’s what produces respect, relevance, and ultimately effectiveness in the policy arena.