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 Top Three Actions to Fix the Economy

by Rob Dietz

Fixing the economy will require more than tax code tweaks and stock market peaks.  Anyone who’s been paying attention knows that we need big changes to the way we run things on this planet. Even a partial list of today’s social and environmental problems sounds grim:

  • An unfathomable number of people (2.7 billion) live in poverty, scraping by on less than $2 per day.
  • Our penchant for burning fossil fuels has increased carbon dioxide in the atmosphere such that scientists are throwing around phrases like “runaway climate change.”
  • National governments are drowning in debt, while the global financial system teeters on the verge of ruin.
  • The health of forests, grasslands, marshes, oceans, and other wild places is declining, to the point that the planet is experiencing a species extinction crisis.

ResultEnoughIsEnough_Final_LoRess like these arise because the global economy has grown too big for the broader systems that contain it. We have too many people consuming too much stuff. Sure, the engine of economic growth has driven technological advances and provided a dizzying array of consumable goods. But it’s hard to argue that these material benefits outweigh the costs of social breakdown and environmental upheaval.

So we need a systemic change, but what are our options? We could try to increase the size of the planet, or try to find another one that’s habitable. But maybe it would be more prudent to focus on changing the economy. That means shrinking, and then stabilizing, the economy so that it can meet humanity’s needs while conserving and protecting the ecosystems that support life on Earth. The book I wrote with Dan O’Neill, Enough Is Enough, describes policies to do that, but as Peter Victor has noted:

The dilemma for policy makers is that the scope of change required for managing without growth is so great that no democratically elected government could implement the requisite policies without the broad-based consent of the electorate. Even talking about them could make a politician unelectable.

Victor’s statement rings true. For example, in the last U.S. Presidential election, the candidates sparred with each other over who could grow the economy faster and create the most jobs. Suppose that instead of trying to “outgrow” his opponent, President Obama had run on a platform of stabilizing the economy. You can almost hear President Romney’s inaugural address about more oil pipelines, more highways, more consumption, more, more, more. But to the climatologists, conservation biologists, and ecological economists (and even the butchers, bakers, and candlestick makers) who are tracking the limits to growth, it is becoming increasingly clear that we need to make room for our leaders to discuss economic stabilization. It’s time for them to begin working on an economy that aims for enough instead of always chasing more.

Victor_Managing_wo_GrowthFrom Victor’s quote, we can deduce the top three things we need to do to begin the transition to such an economy.

1. Achieve widespread recognition that our planet is finite and that our economy has to fit within ecological limits. Politicians can’t talk about the limits to growth because most of the electorate remains unaware of the limits. Even with increasing attention paid to climate change and other developing crises, the conversation rarely turns to overconsumption in the economy. Schools are not teaching ecological economics, and people are too distracted by the routines of daily life to pay much attention. We need compelling stories and broad public education to get people discussing critical topics  such as the relationship between environmental and social systems, humanity’s place within nature, and the benefits of a steady-state economy.

2. Provide a set of practical policies for achieving a steady-state economy. All citizens (even the politicians) need to understand what can replace the growth-obsessed policies in use today. As soon as people begin to get a feel for how a well-conceived set of steady-state policies can outperform the obsolete policies of endless growth, politicians will gain the broad-based support they need to overhaul the system. The heart of Enough Is Enough describes this set of policies, but even a quick glance at them confirms Victor’s point: the scope of change required is indeed great. That’s why we need more than just awareness of the problem and a set of policy proposals.

3. Cultivate the will to act. Economic changes won’t materialize on their own. People have to want out of the current system, and they have to demand the transition to a new one. Without such pressure, entrenched elites (in both politics and business) have no incentive to overturn the status quo. There’s an awful lot of networking and organizing to be done.

With these three actions, we can get the economy we want and the planet needs. The unelectable politicians will be the ones who cling to the wishful thinking of perpetual growth. It’s time to take a stand, to put aside the destructive mania for more, and let our lawmakers know that enough really is enough.

Today’s Irrational Policies Increase the Costs of Tomorrow’s Storms

by Brent Blackwelder

BlackwelderBoth the House and Senate have passed over $50 billion in emergency supplemental appropriations bills to deal with the disaster caused by Hurricane Sandy last fall. New Jersey, New York City, and Long Island were particularly hard hit by the giant storm that measured over one thousand miles in diameter. Who is going to pay for all this and how many extreme weather events will the federal government be expected to rectify through relief and reconstruction?

The Hurricane Sandy legislation (which President Obama is expected to sign) sets a bad precedent because it mixes emergency relief measures, which most people strongly favor, with longer-term reconstruction measures that will enrich developers and exempt coastal projects from key legal requirements. This approach is a formula for maximizing the amount of damage when the next coastal storm slams ashore.

The U.S. urgently needs to develop better storm disaster plans to replace the inadequate and misguided plans of the agencies that deal with disasters. The storm record, marked by a dramatic increase in violent weather events over the last half century, offers evidence to support the need for improved planning (see a graph of the data). From 1900 until 1970 the annual number of such events was below 100, but since 1970 the number has jumped to over 300 a year, and several times it has soared above 500.

Better planning can lessen the damage caused by storms like Hurricane Sandy.

Better planning can lessen the damage caused by storms like Hurricane Sandy.

Today’s damages along the coast are similar to the flood damages throughout inland portions of the U.S. fifty years ago. The special Task Force on Federal Flood Control Policy reported in 1966 to President Lyndon Johnson that the more the country spent on flood control projects, the worse damages became. An effective policy for flood control, the Task Force said, would result in flood damages (inflation-adjusted dollars) leveling off or declining. This report sparked activists, including me, to demand fundamental changes, and we obtained important reforms. But these lessons are being overlooked in the rush to secure and spend money on shoreline projects.

To give a green light and billions of dollars to the Army Corps of Engineers for coastal engineering and beach replenishment schemes turns a blind eye to the agency’s propensity for shoreline boondoggles. It is one thing to obtain emergency relief money, but another to expect taxpayers to fund the reconstruction of everything that was damaged. Some structures should be rebuilt and some should not. A good plan would make this determination. For example, on some level, it might make sense to armor-plate Lower Manhattan to protect dense urban development, but not to do the same along the Jersey Shore or the Long Island coast.

But then again, according to Duke University professor Orrin Pilkey, when the Army Corps of Engineers tries to abate flooding by constructing sea walls, the most common outcome is beach erosion and significant shore steepening. Plus a deeper offshore zone brings larger waves and the potential for more damage. At the time Hurricane Sandy struck, the Atlantic Ocean was a foot higher than its level in 1900 (see a graph of sea level rise). The rapidly melting ice sheet on Greenland could cause a rise of another 20 feet. The coast is becoming more susceptible over time, and the responses being proposed are inadequate.

A better approach, more in step with the scale of the problem, would be to run the economy based on true costs and the principles of sustainability. But Congress seems to be asleep. In the debate about the “fiscal cliff,” instead of attempting to enact 1.6% across-the-board spending cuts (an attempt that failed anyway), Congress could have proposed a carbon tax. Such a tax would have directly targeted greenhouse gas emissions, the systemic cause of this disaster and other extreme weather events around the world.

Even if a carbon tax is too bold for lawmakers to consider, they can at least take a sensible intermediate step: assemble a panel of experts with no conflicts of interest to recommend a long-term approach for protecting America’s coastlines and preserving beaches for both recreation and wildlife habitat. Sound policy calls for damage prevention and reduction in contrast to the Congressionally approved program of storm damage enhancement.

Confessions of a Closet Football Fan

by Brian Czech

BrianCzechIf you’re an American or just familiar with the American scene, you know what’s brewing. We’re not talking about the inauguration, sequestration, or Secretary of State nomination. No, something much bigger. We’re into the NFL playoffs and the biggest sporting event in the world is right around the corner: the Super Bowl!

I suppose those rabid European soccer fans would argue that the World Cup beats all, and in my ignorance of worldwide sports I’m probably missing a few rivals from other continents. Bully for them, but surely no other sporting event attracts the media coverage, the movie stars, and the tag lines of the Super Bowl, where the highest-paid athletes in the world compete to hoist the Lombardi Trophy.

As a kid growing up on the edge of Green Bay, Wisconsin, I was engrained with a culture defined by its professional football team, the Packers. Born in 1960, my first decade was spent while Coach Vince Lombardi’s Packers put their indelible stamp on American sports. Tiny Green Bay, the David among NFL Goliaths like the New York Giants and Chicago Bears, won an unprecedented five NFL championships in one decade, culminating with their dramatic victory in the “Ice Bowl.” On the frozen tundra of Lambeau Field, with the temperature plunging to -20°F, good ol’ Bart Starr snuck it in on the Dallas Cowboys with 15 seconds left.

Wouldn’t you know, I didn’t get interested in this stuff until the year after the Ice Bowl. At the football-fanaticizing age of 8, I was ready to add my voice to the collective howl of “Go Pack!” But the Pack wasn’t going anywhere except the loser column for the next 20 years.

Meanwhile television was spreading like the flu through the American household. Coverage of the NFL became the state of the art. Epic clashes were replayed in slow-motion, narrated by the best voices Hollywood had to offer, accompanied by orchestrated, adrenaline-pumping brass music.

Unknown to the NFL, during those same years books like The Limits to Growth, Small Is Beautiful, and Steady-State Economics appeared. My own research ended up focusing on the conflict between economic growth and biodiversity conservation. I got my Ph.D. in 1997, the year the Packers finally won another Super Bowl.

My interest in the Packers was rekindled, but I never started wearing a cheesehead. In fact, I hardly even mentioned the Packers in public. Instead, I became a closet football fan, and these are my confessions.

First, to my cultural kin back in the home state, as well as the general Wisconsin Diaspora, my confession is… well you read it above. I’m reduced to an abashed Packer fan, which is practically an oxymoron. But it’s not because of the embarrassment of the cheesehead phenomenon. And, I swear, it has nothing to do with the fact of the Packers being soundly defeated in this year’s playoffs (just last night, uncannily)! This piece has been on my mind for some time.

Now there’s nothing wrong with the sport of football, not in my opinion. The problem is the commercialization, industrialization, and non-stop growth of football. The NFL has a huge and growing ecological footprint. Players are routinely paid in the millions, and many drive Hummers and build mansions. Scouts, agents, and football reporters spend more time in the air than Hilary Clinton. And the owners; let’s not even get started on the owners!

We have to remember that the expenditure of a dollar is a solid measure of environmental impact, and the NFL sector exceeds the budgets of half the nations on the planet, the Environmental Protection Agency, and a bazillion school teachers. That’s why you won’t see me hollering “Go Pack.” I don’t want to be seen as supporting things like the Lambeau Field Atrium, which takes approximately 30 million dollars a year of air conditioning, much less the $1.4-billion Cowboys Stadium or the $1.7-billion Metlife Stadium. After all, I’m the same guy who called for an end to conspicuous consumption in Shoveling Fuel for a Runaway Train: Errant Economists, Shameful Spenders, and a Plan to Stop Them All. I don’t want to be the shameful spender and a hypocrite to boot.

Well, I said “confessions” (plural) so here is the other one. This one is even more difficult, but I write on a Sunday and what better time to confess? So… (gulp)… I confess that, albeit in the closet, I have been watching football. Quite a bit this year, in fact. And I don’t mean just a high school game here and there. In fact I don’t mean any of those, but rather full-bore NFL.

Yes, it feels hypocritical, but I can rationalize it ’til the cows come home. To wit:

  • If I’m watching a football game, I can’t be driving anywhere.
  • If I watch it at home on TV, I won’t be spending money in a sports bar.
  • I’m a fan of the Packers, the only community-owned team in the NFL.
  • The NFL does have a salary cap, which makes it one of the very first “cap-and-trade” precedents in the United States.
  • At least I’m not supporting NASCAR, by God.

I better stop there, before I burst from the confessional blurting “Go Pack!” But no, if you’re reading this, I’ve gone ahead and confessed, and perhaps you’re reading an epiphany as much as a confession.

Even a community-owned team huddles around the strategy of growth (photo credit: Elvis Kennedy)

Even a community-owned team huddles around the strategy of growth (photo credit: Elvis Kennedy)

Like many fellow fans, my habit may have started innocently, going to Lombardi Junior High, playing a bit of football (not very well either), selling coke at the Packer games, cheering on the Pack through thick and thin. But things have changed. More than me or any fan or any player, the world has changed and the NFL has changed. This isn’t the days of the Ice Bowl when folks wore their ice-fishing coveralls to the game and the players went back to work in a regular job during the off-season. No, the NFL has gotten way unsustainable, maybe not as much as with NASCAR, but way unsustainable nonetheless, and growing with no end in sight or in mind. Although the NFL has a salary cap, the NFL as a whole is rabidly pro-growth, constantly seeking expansion of teams, stadiums, and schedules.

The culture of professional sports illuminates a major challenge to achieving a steady state economy, namely the soul-searching task of curbing one’s own appetite for unnecessary or over-the-top goods and services. In this case we have an entertainment service that for many has deep cultural roots and may even invoke primal instincts to fight and to win. Perhaps the only way to curb such an appetite is to dwell for awhile on the fact that the level of unnecessary consumption associated with a perpetually growing NFL, NBA, MLB, NHL, and worst of all NASCAR no longer fits in the days of endangered species, climate change, and economic meltdown. The only way a professional sports league will fit, going forward, is with limits to its growth, all in the context of a steady state economy.

Limiting the growth of professional sports won’t happen if the owners and leagues can help it. This has to come from the consumer side of the ledger, perhaps with the help of some steady statesmanship. I remember writing a letter, published from afar in USA Today, exhorting Packer fans in Brown County to vote “no” on the Lambeau Field Atrium due to the gaudy air-conditioning bill and environmental impact. I must have seemed like a Martian to the cheeseheads. Winning that vote would have taken more leadership from state and county officials – that’s what I mean by steady statesmanship.

But for now it’s mostly up to us fans. We can’t keep letting the lure of these professional sports turn us into drunken fools at the Coliseum, fiddling while Rome burns. We’re the consumers, and if we watch fewer games the sports leagues will have to stop bloating.

I’ll do my penance in 2013. I’m taking the year off of professional football watching, Super Bowl and all. I have more important, fulfilling, and even enjoyable things to do Sundays.


Enough: the Central Concept in Economics

by Herman Daly

Foreword to Enough Is Enough: Building a Sustainable Economy in a World of Finite Resources, a book by Rob Dietz and Dan O’Neill (published by Berrett-Koehler in the U.S. and Earthscan in the U.K.)

Herman DalyI have long wanted to write a book on the subject of “enough” but never did. Now I don’t have to because Rob Dietz and Dan O’Neill have done it in a clearer and more accessible way than I could have. Therefore it is a special pleasure for me to write a foreword calling attention to their important contribution.

Enough should be the central concept in economics. Enough means “sufficient for a good life.” This raises the perennial philosophical question, “What is a good life?” That is not easy to answer, but at a minimum we can say that the current answer of “having ever more” is wrong. It is worth working hard and sacrificing some things to have enough; but it is stupid to work even harder to have more than enough. And to get more than enough not by hard work, but by exploitation of others, is immoral.

Living on enough is closely related to sharing, a virtue which today is often referred to as “class warfare.” Real class warfare, however, will not result from sharing, but from the greed of elites who promote growth because they capture nearly all of the benefits from it, while “sharing” only the costs.

Enough is the theme of the story of God’s gift of manna to the ancient Hebrews in the wilderness. Food in the form of manna arrived like dew on the grass every morning and was enough for the day. If people tried to gather more than enough and accumulate it, it would spoil and go to waste. So God’s gift was wrapped up in the condition of enough — sufficiency and sharing — an idea later amplified in the Lord’s Prayer, “give us this day our daily bread.” Not bread for the rest of our lives or excess bread with which to buy whatever luxuries we may covet, but enough bread to sustain and enjoy fully the gift of life itself.

EnoughIsEnough_Final_LoResThis story from Exodus has parallels in the thoughts of pioneer ecological economist and Nobel Prize-winning chemist, Frederick Soddy. Soddy observed that humanity lives off the revenue of current sunshine that is gathered each day by plants with the aid of soil and water. Unlike manna some of the sunshine was accumulated and stored by geologic processes, and we have consumed it lavishly with mixed results. Today we also try to accumulate surplus solar income and exchange it for a permanent lien on future solar income. We then expect this surplus, converted into debt in the bank, to grow at compound interest. But the future solar-based revenue, against which the debt is a lien, cannot keep up with the mathematics of exponential growth, giving rise to debt repudiation and depression.

For the Hebrews in the wilderness the manna economy was designed with “enough” as a built-in feature. Our economy does not have that automatic regulation. We have to recognize the value of enough and build it into our economic institutions and culture. Thanks to Dietz and O’Neill for helping us do that.

For more information about the book, including ordering information, please click here.

The Visible Hand: Manipulating Market Prices by Influencing Laws and Regulations

by Max Kummerow

Recently a member of a mailing list for resource economists asked how to value endangered species given that they are not bought and sold in markets. A common method is to infer prices (“existence values”) by indirect methods such as answers to surveys (e.g., “How much would you be willing to pay to keep tigers from going extinct?”). An issue raised in the online discussion was whether species grow more valuable as they become more scarce and their numbers fall toward zero. If prices keep changing, what is the “right” price?

Thought experiment: suppose a keystone species is about to go extinct, but few people know about the threat. Oh, heck, let’s be more realistic. Leading ecological authorities believe that the effects of climate change will drive 1/3 or more of the world’s species to extinction by 2100 with unpredictable system-wide effects. Meanwhile, the owners of $17 trillion of fossil-fuel reserves are spending hundreds of millions of dollars to convince the public that the threats from climate change are overstated or non-existent (See Bill McKibben’s Rolling Stone article or Oreskes and Conway’s Merchants of Doubt).

How can we have any idea about fundamental values (that is, “correct” utility-maximizing efficient market prices) with so much misinformation floating around? Advertising creates a set of consumption preferences tilted towards items sold by companies more concerned about profits than benefits to society.

Prices depend on preferences, and preferences depend on information. Knowledge of the unhealthy and even fatal effects of smoking changed preferences about and prices of tobacco. Such changes would also occur over time as people gain knowledge about the threats of extinction and climate change.

By similar means, misinformation and strategic uncertainty lead to mispricing. If such mispricing in the carbon market continues, the predicted result is a “tragedy of the commons” (collective irrationality, market failure) with features like Miami, Washington, DC, and Los Angeles ending up below sea level, mass species extinctions, crop failures, etc.

Economic systems are complex, and many external costs and benefits are not factored into prices or people’s decisions in the market. Time lags add to the complexity. What if it will take 2,000 years before climate change makes the planet too hot for human life? Such a time lag makes it harder to come to the best decision about whether to build a new coal-fired power plant.

Species extinctions may be portents of broader problems (e.g., climate change), akin to canaries in a coal mine. The same factors driving them extinct — various impacts of growing human populations and economies — may be driving us extinct in the longer run. Does it make sense to value threatened species without considering the linkage to these other related problems? An endangered species itself might be worth $1, yet the factors driving it toward extinction might cause $100,000 worth of damage over the long run, or maybe even infinite damage from our point of view if extinction extends to humans. We need a better benefit-cost picture — a larger, genuine, and more complete accounting.

Another major problem with prices is that they only reflect the preference of those who hold power in markets. Perhaps polar bears should have standing when it comes to determining prices. They are intelligent, sentient beings with the most at stake when ice melts, so maybe their preferences ought to be factored into decisions about the Keystone Pipeline and exploitation of tar sands oil. What about future generations? Nobel Prize winner Joseph Stiglitz called this problem “incomplete markets” leading to market failure and universal mispricing.

There are some things markets do very well, but only if the institutional framework (rules of the game) ensures that prices reflect all costs and benefits. Laws, lobbying, culture, taxes, regulations — all kinds of institutions collectively created by societies — have enormous influences on market prices or even the existence of markets. So, to some degree, through these institutions, we choose price levels through a “visible hand” of policies and institutions. Stiglitz points out that the deregulation policies that led to the Global Financial Crisis of 2008 did not come out of nowhere, but rather from intense lobbying by stakeholders at banks and other people whose profits were restricted by regulations — a situation in which prices were set by something like a visible-policy hand instead of the invisible hand of the market.

Because of the difficulty of getting prices right, we might do better to regard creation as sacred and take the conservative position of Aldo Leopold who said, “The first rule of intelligent tinkering is to save all the parts.”

Valuations always depend on preferences. Economists call prices “revealed preferences.” If we “prefer” to settle for a world without many wonderful creatures, then we won’t attach much worth to them. But if we value them for their intrinsic beauty and their relationship to us (we do share DNA with every living thing), then we’ll attach more worth to them. So rather than measuring values, perhaps we should be trying to create value by improving preferences.

Examples of worldwide mispricing and market failures that need institutional corrections include:

  • Energy — too cheap due to climate change, extinctions, and negative effects on future generations.
  • Having children — too cheap since growing population will raise real prices of land, food, and energy, and contribute to climate change and other global environmental problems.
  • Endangered species — too cheap because ecosystem interrelationships are poorly understood, and indirect effects could be enormous.
  • Economic growth — overvalued because growth negatively affects aggregate utility and public goods (“the commons” such as air, water, soil, species diversity, ecosystem health, and climate) once we begin to reach the limits to growth.

Most economics students are still taught that following market price signals leads to the best of all possible worlds (market efficiency and maximum aggregate utility). But the examples of under- and over-valuation contained in the short list above suggest that humanity is headed for trouble if we choose to let market prices and self-interested institutions’ manipulation of prices control outcomes. The markets we rely on fail to generate utility-maximizing prices for goods and services and for the future of humanity. Thinking of ourselves as an endangered species, what is it worth to keep us alive?

Max Kummerow has a Ph.D. in urban and real-estate economics.  He is currently studying population issues in Perth, Australia.

The Outlook for Steady State Economics in 2013

by Brian Czech

BrianCzechThe Center for the Advancement of the Steady State Economy (CASSE) has been the leading organization in advancing the steady state economy as a policy goal for nearly ten years. Maybe that’s not saying much, because CASSE has been the only organization focused on advancing the steady state economy. But times, they are a-changin’. Others are sure to come onboard as climate change, biodiversity loss, supplies shocks and other formidable problems are all traced back to too much economic growth. Too much production and consumption of goods and services in the aggregate. Too much population and per capita consumption. Too much GDP. Too much economic activity for the planet and its polities to take.

Predicting the future is risky business. It’s usually unnecessary and there’s a lot of credibility at stake. But it seems perfectly reasonable to predict that, soon, more organizations will start explicitly advocating the steady state economy as the sustainable alternative to economic growth.

For example, after decades of warning readers about the increasing human pressures on waning natural resources, why wouldn’t the Worldwatch Institute start advancing the steady state economy along with CASSE? The Institute’s flagship annual publication, the State of the World, can hardly avoid a focus on economic growth (as the problem) and the steady state economy (the solution) much longer. Avoiding the topic would be like the American Cancer Society avoiding the effects of smoking.

There are also signs that the Gund Institute for Ecological Economics, which graduates more ecological economics students than any other academic institution, will be taking an active role in advancing the steady state economy. There’s nothing wrong with academia weighing in on policy matters after abundant academic analysis has been performed. Who wouldn’t want the input of a medical school on the effects of tobacco, or the input of a physics department on nuclear power? Serious analysis of the alternatives to economic growth, such as occurs at graduate schools, should be brought into public circulation by those same graduate schools and other academic units qualified to do so.

How about political parties? Some Green parties already endorse the CASSE position on economic growth, and a few have adopted the steady state economy in their policy platforms, but surely they and other small parties will start emphasizing the steady state economy more in their campaigns. Only those policies that have substantial emphasis in small-party affairs will graduate to mainstream political affairs. I believe Green and other parties will unite increasingly around the steady state economy as the primary policy for environmental protection, economic sustainability, national security and international stability.

These organizations and many, many others will find social and political space to move, given CASSE’s long-running efforts to raise public awareness of the steady state economy as the sustainable alternative to growth. The nearly 10,000 signatures on the CASSE position on economic growth is ample evidence that people are ready to hear the message and respond affirmatively.

Sure, 10,000 is a tiny number relative to the global population. But savvy analysts will note that CASSE has been a tiny NGO with hardly any paid staff and yet has procured these signatures on a statement that packs a lot of depth, density and nuance into its 18 clauses. It’s not like the National Rifle Association, for example, with millions of dollars at its disposal to get millions of already onboard members to sign a shallow statement about opposing a simple gun control proposal. People have to take a few minutes to read and digest the CASSE position; many of them have never even heard the phrase “steady state economy” before. Some of the most prominent signatories took years to think about the CASSE position prior to signing.

The “CASSE 10,000” may not have the political clout of a million-member march, but given the details (tiny resources, thoughtfulness of position), 10,000 is an indicator that there is plenty of political support in the United States and worldwide for recognizing limits to growth and the need for a steady state economy. It’s safe now for the likes of Worldwatch, the Sierra Club, National Wildlife Federation, the Gund Institute, institutes for public policy, political parties, Tea parties, and thousands of other organizations to get explicit in advancing the steady state economy. There’s no partisanship in the way. They can move beyond simple microeconomic analysis, such as valuing ecosystem services, and get to the big policy picture of macroeconomics. Once there, they can speak in plain language about the conflict between economic growth and environmental protection, and they can call for a steady state economy instead of resorting to vague notions of a “green economy or some other type of “new economy.”

No one at CASSE ever thought the mission of advancing the steady state economy as a policy goal with widespread public support would be successful in a short amount of time. Indeed most of us at CASSE see it is a lifetime project. It’s a profound paradigm shift we’re pursuing and the lack of CASSE funding is not surprising. Meanwhile other organizations that have garnered funding for decades, for different purposes, may already have the connections to get support for advancing the steady state economy, too. Good! As long as they don’t resort to “green growth,” “dematerializing” the economy, or magically reconciling the fundamental conflict between economic growth and environmental protection with technological progress, they will find favor among the growing masses of supporters of steady state economics.

Aristotle in Connecticut

by Eric Zencey

Eric_ZenceyAs I tried to comprehend the tragedy in Newtown, Connecticut, my thoughts were with the victims and their families. The horror I feel is nothing compared to what they have been required to experience and absorb. Understanding what happened seems impossible — but attempt to understand it we must, if we are to reduce the occurrence of these devastating shooting tragedies in the future. As I wondered along with the rest of America how this could happen, my thoughts turned to ancient philosophy — specifically, to the teachings of Aristotle and what he said about causation.

Any act that has a cause, he said, actually has four different kinds of causes: material, efficient, final, formal.

The efficient cause of gun violence is a shooter who intends to kill. The material cause of gun violence is the gun. If you want to prevent school shootings, it makes sense to keep shooters and guns from coming together anywhere near a school. Focusing on these easy-to-see causes leads to calls for more thorough background checks before gun ownership, for other forms of gun control, for profiling of potential mass murderers, for pre-emptive arrests, metal detectors, and locked-down schools as prisons for kids — not to keep students in, but to keep violence out. And these are the kinds of solutions that some people are going to say — and are already saying — we need.

But we’re not going to solve the problem of gun violence until we get at the deeper causes that Aristotle called final and formal. The search for final causes leads us to ask questions like, “what was the shooter’s motivation? What could he possibly have hoped to accomplish?” The search for formal causes has us ask “what were the social dynamics, the social context, that shaped this event?”

The United States has the highest level of gun violence among supposedly developed nations in the world, a rate exceeded only by some impoverished countries and some that are host to rival factions that are at war. Mother Jones reports that “Since 1982, there have been at least 62 mass murders carried out with firearms across the country, with the killings unfolding in 30 states from Massachusetts to Hawaii.” (The report counts as mass murder incidents in which a shooter takes the lives of four or more people.) We need to ask why “going postal” and “school shooting” have become such common terms in America. What are the deeper causes that give our culture tragedy after tragedy of this kind?

The answer to that question will no doubt be complex; final and formal causes are many and varied and difficult to sort out. But one avenue of causation might be found in this correlation: besides having the highest rate of gun violence in the developed world, the United States also has the world’s fullest expression of free-market consumerist ideology. Thinking about Aristotle’s categories, I suspect that there may be a connection.

Free-market consumerist ideology, supported by billions of dollars of advertising, has given us a society in which people are too often disconnected individuals who think that their satisfactions and the means of obtaining them are completely their own. We’ve been encouraged to think of ourselves first and foremost as consumers — not as citizens, as neighbors, as family members — and to think that as consumers we deserve to be satisfied. It’s a fairly small step from there to thinking that if we aren’t satisfied then we must have a grievance against someone who’s preventing it. The U.S. has become the richest, most commodious, and most powerful nation the earth has ever seen. In such a bountiful place, it’s all too easy for someone who is unsatisfied with their life to think that the reason must be that someone else has done or is doing something to block the way.

Taking bold action to satisfy personal grievance is perfectly in keeping with our All-American emphasis on individual empowerment and responsibility. Guns symbolize both. Guns are literally empowering: historically, the invention and dissemination of cheap firearms played a significant role in the spread of egalitarian, democratic systems. In Shogunate Japan, rulers declined to adopt the firearms that Westerners offered them in trade precisely because they brought about an unacceptable equality: an untrained musketeer could kill a highly trained Samurai warrior, a result that made no cultural sense whatsoever to the Japanese.

Most Americans accept that with our right to keep and bear arms come certain civic responsibilities, including the responsibility to respect the rights and prerogatives of others. In the traditional version of the American Dream, people are led by their longings and dissatisfactions to work harder to get what they need and want, and that’s good, as long as “working harder” doesn’t also mean “cranking through the planet’s finite resources faster and faster in order to have more and more stuff.” Few Americans stop to reflect that their longings and dissatisfactions have been shaped by a private enterprise system in which corporations profit by creating unhappiness and then by offering us the chance to assuage that unhappiness through consumption — consumption that has to grow to survive, which means it has to use the finite resources of the planet at ever-increasing rates.

Some Americans are perpetually disheartened by the gap between what they’ve been encouraged to want and what they can actually have; they find solace wherever they can. Some get so enraged by that gap that they lose track of the civic responsibility part of the equation. They begin to see other people as impediments that stand in the way of achieving their ambitions — impediments that must be outmaneuvered, defeated, “neutralized” or removed. And if you’ve been raised on a steady diet of first-person-shooter video games and have had your neurological wiring affected by continual doses of violence-as-titillation in movies and sports, you just might fetch up on violent action as a way to deal with your problems.

Still, I think that these causal factors alone are not sufficient. Aristotle, were he alive today, might point to another underlying cause of gun violence in America: cheap gas and the automobile. Far more than other nations, America has been shaped by both. Together they’ve given us an atomized society that contributes to this tendency to solve individual dissatisfactions with outbursts of violence.

When you’re in a car, your fellow citizens aren’t fellow citizens anymore, they’re people who get in your way, annoying you and making it harder to do what you want to do. And when you live in a landscape that’s been shaped by car culture, the networks of family and neighborly connection that grow naturally among people in communities aren’t as strong as they could be; they’re weaker than they are in communities with historical roots that reach deeper than the Age of Oil. (Finland has a per-capita rate of gun ownership about half that of the U.S., but its rate of death by gun violence is far less than half of ours.) Neighborhood networks of trust, mutual aid and common courtesy help restrain individual actors, keeping them more thoroughly embedded in social reality (which includes the basic principles that other people deserve to live and breathe and that schools should be the safest of places).

People living in such neighborhoods are also better positioned to identify community members who are so disturbed that they would perpetrate a tragedy like the one in Newtown. That part of Connecticut retains a sense of village life — Newtown has a vestigial grazing commons, and at the main intersection in one of its village centers, cars make an awkward left turn around an aged flagpole. But like elsewhere in America, it hosts shopping centers and modern suburban sprawl. No place in America can remain aloof from the individualist culture of consumerism, a culture in which true community is increasingly difficult to find. If there’s no true community, there can be no sturdy web of community relations that functions to integrate estranged individuals and either guide them toward positive expression of their urges or toward getting the help they need to deal with their sorrows and grievances.

To prevent future Newtowns and Columbines, I personally think that yes, we’ll need to address the efficient and material causes of gun violence. We’ll need to make it harder for shooters to get hold of assault weapons and make it harder for them to walk unopposed into our civic and public spaces — our schools, our movie theaters and shopping malls. Others will of course disagree, but I think action on these fronts is long overdue.

But we also need to get at the final and formal causes. That means rebuilding the sustainable communities that once held Americans in their supportive embrace, communities that were spun apart by cheap energy and the ease of automotive transport. We can recover them by demanding walkable neighborhoods; by refusing to participate in the infinite-planet economy of Mall and Sprawl America with its big boxes and anonymous spaces; by choosing instead to live, think, breathe, laugh, love, shop, own, create, recreate, educate, and be politically active locally, with people we know and can see face to face. Ultimately it’s impossible to take care of each other, our public spaces, our landscapes and our children on any other scale.

Re-localizing our lives in these ways won’t solve every problem and it’s unlikely to eliminate gun violence completely. There are always going to be people whose mental imbalances make them a challenge to society and sometimes a danger to others. But regrounding our collective lives in post-petroleum, sustainable neighborhoods opens one avenue of positive change, a change we must make if we are to reduce our levels of interpersonal violence to those in other industrialized nations.

This much seems clear: cheap energy and a physical and social world designed for cars and consumers aren’t ecologically sustainable. Neither is the perpetual-growth economy that produced them. We seem to be discovering that they aren’t socially sustainable either.

Regular contributor Eric Zencey is the author, most recently, of The Other Road to Serfdom and the Path to Sustainable Democracy and Greening Vermont: The Search for a Sustainable State.

Elect More Women: Prerequisite for a Sustainable Economy

by Brent Blackwelder

In 1990 there were only two women in the U.S. Senate, but in 2013, twenty women will be serving in the Senate, and another 81 women will take office in the House of Representatives. With this record number of Congressional seats held by women, the U.S. is closing in on the global average (20%) for lawmaking bodies. This is good news because evidence suggests that governmental bodies with more women are more likely to tackle issues of social justice and environmental health (and they’ll be more likely to pass budgets that reflect these concerns).

Especially noteworthy in the U.S. election were the defeats in the Missouri and Indiana Senate races where Todd Akin and Richard Mourdock gained notoriety when they expounded their views on rape. Akin announced that in cases of “legitimate” rape a woman’s body had defenses to avoid pregnancy, and Mourdock asserted that a pregnancy from rape was something that “God willed.”

It’s worth celebrating U.S. electoral gains for women, but there is a long, long way to go. Iceland, for example, has a majority of women filling its university professor positions, and women comprise almost half the members of parliament.

Why is it so important to elect more women to positions of power? And is having 20% of seats enough to make a difference? Researchers Tali Mendelberg and Christopher Karpowitz found that when women make up 20% of a decision-making body that operates by majority rule, the average woman used only 60% of the floor time as the average man. But once women comprise 60 to 80% of such a group, “they spoke as much as men, raised the needs of the vulnerable and argued for redistribution.”

Mendelberg and Karpowitz conclude: “…when there are more women in legislatures, city councils and school boards, they speak more and voice the needs of the poor, the vulnerable, children and families — and men listen. At a time of soaring inequality, electing vastly more women might be the best hope for addressing the needs of the 99 percent.”

Empowerment of women is the centerpiece of the strategy to achieve a sustainable, ecologically sound economy. Here are two of the many reasons for this claim: first is the overarching problem of a growing population. The inexorable momentum of the global population has led to over 7 billion human beings on the earth today and more to come every day.

At dinner tonight on this planet there will be 220,000 mouths to feed that were not present yesterday. Such a figure should cause alarm because the quality of farmland on the planet is being significantly impaired by erosion, by overpumping of ground water, and by the flood/drought cycles being exacerbated by global climate disruption.

Most experts on population growth observe that when women achieve a higher degree of status, respect, and power, they tend to have fewer children. Thus, empowerment of women is a key progressive strategy to stabilize population. In addition, slowing population growth could help reduce future climate-destabilizing emissions.

A second area is government budget priorities. Lawmaking bodies dominated by men spend too much money on war and too little on conservation, protection, and restoration of vital ecosystems. If the majority of members of legislative bodies were women, budget priorities would be influenced by more discussion and debate of sound economic policy.

In contrast to most policy discussions, which spend 90% of the time on the problem and 10% on solutions, I will conclude with two suggestions for continuing the trend of empowering women. First, enact a law that mandates a gender analysis before deploying U.S. foreign assistance in the form of projects, loans, or grants.

It surprises some people to hear that U.S. foreign assistance may be making women worse off. Most aid worldwide is not accompanied by any gender analysis that would answer the basic question: will women be better or worse off as a result of this grant, loan, or matching fund? The nonprofit organization Gender Action offers information and resources for tracking the effects of international financial flows on women.

Second, conduct more robust campaigns to fund family planning services worldwide. Population Action International points out that 215 million women who want to avoid pregnancy lack access to contraception and family planning.

The difference between a world reaching a population of 8 billion people in 2050 as opposed to 9.2 billion is huge. A world of 8 billion would emit roughly two billion fewer tons of carbon – an amount that is equivalent to what would be saved by eliminating all deforestation.

Economics as “Unusual” in Australian Politics

by Robert Lawrence

An important event has been hardly noticed in Australian politics. But it could be the start of a trend to recognize and address causes of social and environmental problems rather than merely to struggle with the symptoms. Until recently economic growth, as measured by gross domestic product (GDP), has been the primary indicator of governmental performance, with alternatives virtually absent from the political discourse. At last one brave member of Parliament is changing that, unafraid to lead the way toward a steady state economy.

To understand the significance of this event, we need to get some perspective on the Australian political situation. There are two rival sides that differ mainly in rhetoric and in their strategies for winning support from voters. More than 90% of elected politicians belong to these two sides.

There are two houses of Parliament. One is the House of Representatives, which does the main business of government. The other is the Senate, which reviews the decisions of the House of Representatives. A group of Senators is elected to represent each of the six Australian states.

Voting is compulsory in Australia for citizens over 18 years of age. There is a preferential voting system in which every candidate must be ranked for a vote to be counted at all. Effectively this has meant that Australians ultimately had to choose between two political parties. In voting for the House of Representatives, votes for independent candidates and minor parties have rarely made an impact. The electoral system is built around the two parties. There is a review of electoral boundaries every seven years. Boundaries of electorates are redrawn so that there is a more even competition between the two major parties. The parties distribute leaflets on how to vote for their candidate, and these suggest an order of preferences for the other candidates.

The situation is different for the Senate, in which each of the six Australian states has its own set of candidates. This setup has given the minor parties and independent senators an opportunity to wrest some power away from the two main parties. This happened during the last national election when the Australian Greens and a small number of independents were able to cast deciding votes. This meant that citizens who voted for a minor party actually had a voice at last. A tax on carbon emissions commenced on July first as a consequence.

Australia has a free press. A common approach in the media has been to strive for a “balanced” view, which has generally been achieved by presenting extreme viewpoints on any given issue to contribute a public “debate.” The effect of this is to polarize the public, rather than to seek well-reasoned, informed decisions.

Another major factor in the political landscape is the opinion poll. Although polls can help politicians be more responsive to the electorate, they can produce undesirable consequences. Politicians become concerned about managing perceptions rather than governing from the best advice of their departments. Another consequence is that both the major political parties tend to become almost indistinguishable. One gives lip service to workers’ rights and the environment, while the other to business. In practice it is impossible to tell which is better in any aspect. Both major parties express disdain for each other and struggle to find ways to differentiate themselves for voters. Often “debate” deteriorates into personal attacks.

But one issue on which both major parties agree, as is the case throughout the western world, is the imperative of economic growth. Rising GDP is the unquestioned prime measure of success.

Conservationists have been dealing with the consequences of the growth-is-good dogma. They have taken the approach of running campaigns on specific, strategic issues that tend to address the symptoms of too much economic growth. One could argue that they have been afraid of being further marginalized as a lunatic fringe with no grasp of reality. At least population growth has recently made it onto the political agenda, but there has been near silence on economic growth.

Christine Milne understands the link between economic growth and environmental deterioration.

Christine Milne has been a Senator for Tasmania since the middle of 2005, and she became the leader of the Australian Green Party in April this year. There are currently nine Australian Greens in a house with 76 members.

Milne delivered a speech in late September in which she made some astute observations. She said that we can build an economic system that serves the needs of people and nature, both for today and for tomorrow. She quoted from a report of the World Economic Forum, “More with Less: Scaling Sustainable Consumption and Resource Efficiency”:

“Current trends clearly show that business as usual no longer works. Unless the present link between growth and the consumption of scarce resources is severed, our resource base, governance and policy structures are unlikely to sustain the standard of living societies have grown accustomed to or indeed aspire to. Action to decouple business and economic growth from resource intensity and environmental impact, has never been more critical to the long term success of business.”

Milne continued by suggesting that we reconsider who belongs to the lunatic fringe in our 21st-century economy:

“Surely it’s time that those who advocate economic growth derived from resource extraction and pollution as the major path be the ones labeled wacky, loopy, irresponsible, divorced from reality or connected to the CIA.”

She went on to question who actually benefits from pandering to mining companies while ordinary people are struggling to make ends meet. Her full speech is worth reading.

Where is this likely to lead? The media and politicians are completely out of their depth in considering an alternative to the perpetual growth paradigm. Such a change even seems to be beyond the scope of thinking of conservationists. Even members of the Australian Greens may have underestimated the significance of this speech. Almost everyone seems content to ignore this speech and go on as they have.

But now that a prominent politician has publicly questioned the dogma of growth, we’ve moved a little closer to a much-needed turning point in Australian politics. Thanks to Christine Milne for saying what needed to be said. How refreshing to see true leadership taking root within the barren fields of the Australian political landscape.

Robert Lawrence runs Heritage Bushcare, a small business that removes weeds to improve the condition of areas of remnant vegetation. He is also secretary of the Nature Conservation Society of South Australia and the Native Orchid Society of South Australia. He is the author of Start with the Leaves: A Simple Guide to Common Orchids and Lilies of the Adelaide Hills.

The Daly-Correa Tax: Background and Explanation

by Herman Daly

Under the heading, “Oil nations asked to consider carbon tax on exports,” John Vidal writes in The Guardian:

The Ecuadorean president, Rafael Correa, proposed a carbon tax at a summit of Arab and South American countries in October in Peru which included the heads of state and energy ministers of nine of Opec’s 12 countries. The Guardian understands the proposal was taken seriously and not dismissed out of hand. The idea was first mooted in 2001 by former World Bank senior economist Herman Daly — leading it to be dubbed the “Daly-Correa tax” — and will be further discussed by Opec countries at the UN climate talks which open on Monday in Doha.

Whether or not it will be discussed at Doha, I think it is worthwhile to explain the idea as it was presented to an OPEC Conference in Vienna in 2001. It elicited little interest on that occasion, but in 2007 was in large part adopted by President Rafael Correa of Ecuador, after being presented to him and his minister of planning, Fander Falconi, by ecological economist Professor Joan Martinez-Alier. Below is the relevant part of my speech at the OPEC conference.*

How might OPEC fit into the emerging vision of sustainable development? Permit me to speculate.

Sources of petroleum throughput derive from private or public (national) property; sinks are in an open access regime and treated as a free good. Therefore, rents are collected on source scarcity, but not on sink scarcity. Different countries or jurisdictions collect scarcity rents in different ways. In the U.S., for example, Alaska has a social collection and sharing of source rents, institutionalized in the Alaska Permanent Fund whose annual earnings are distributed equally to all citizens of Alaska. Other states in the U.S. allow private ownership of sources and private appropriation of source rents.

New institutions are being designed to take the sink function out of the open access regime and recognize its scarcity (Kyoto). Tradable rights to emit carbon dioxide, requiring first the collective fixing of scale and distribution of total emission rights, are actively being discussed. Ownership of the new scarce asset (emission rights) could be distributed in the first instance to the state, which would then redistribute the asset by gift or auctioned lease.

Ideally sink capacity would be defined as a separate asset with its own market. This would require a big change in institutions. Assuming it were done, the source and sink markets for petroleum throughput, though separate, would be highly interdependent. Sink limits would certainly reduce the demand for the source, and vice versa. The distribution of total scarcity rent on the petroleum throughput between source and sink functions would seem to be determined by the relative scarcity of these two functions, even with separate markets. Alternatively, sink scarcity rent could also be captured by a monopoly on the source side, or source scarcity rent could also be captured by a monopoly on the sink side.

To give an analogy, municipal governments, in charging for water, frequently price the source function (water supply) separately from the sink function (sewerage), thus charging different prices for inflow and outflow services related to the same throughput of water. In deciding their water usage, consumers take both prices into account. To them it is as if there were one price for water, the sum of the input and output charges. Likewise the petroleum throughput charge would be the sum of the price of a barrel of crude oil input from the source and the price of carbon dioxide output to the sink from burning a barrel of petroleum. One could consolidate the two charges and levy them at either end, since they are but two ends of the same throughput. This would be a matter of convenience. Since depletion of sources is a much more spatially concentrated activity than pollution of sinks, it would seem that the advantage lies with levying the total source and sink charge at the source end. This is especially so since the sink has traditionally been treated as an open access free good, and changing that requires larger institutional rearrangements than would a sink-based surcharge on the source price. OPEC, given sufficient monopoly power over the source, would be well positioned to function as an efficient collector of sink rents for the world community.

Could it also serve as a global fiduciary for ethically distributing those rents in the interests of sustainable development, especially for the poor? OPEC, assuming it could increase its degree of monopoly of the source, may be in a position to preempt the function of the failing Kyoto accord by incorporating sink rents (and even externalities) into prices at the source end of the petroleum throughput.

Of course OPEC does not have a monopoly on petroleum, much less on fossil fuels. It does not, even indirectly, control non-petroleum sources of carbon dioxide. So it would be easy to overestimate OPEC’s monopoly power, and the scheme suggested here does require an increase in its monopoly power. However, modern mass consumption nations such as the U.S. apparently do not have the discipline to internalize either externalities or scarcity rents into the price of petroleum. Exclusion of developing countries from the Kyoto accord, while understandable on grounds of historical fairness, undermines the prospects for accomplishing the goal of the treaty, namely limitation of global greenhouse gas emissions to a sustainable level. OPEC, assuming it had sufficient monopoly power, might be able to provide this discipline for both North and South.

The South, as well as the North, would have to face the discipline of higher petroleum prices in the name of efficiency, but would, in the name of fairness receive a disproportionate share of the sink rents. There would be a net flow of sink rents from North to South. The size of those rents would depend on OPEC’s degree of monopoly power. The distribution of the rents would be in large part decided by OPEC — a large ethical responsibility which many would be unwilling to cede to OPEC, and which OPEC itself may not want. The obvious alternative to such a global fiduciary authority, however, has already failed. The inability to reach an agreement on international distribution of carbon dioxide emission rights was the rock on which Kyoto foundered. It is hard to see how such an agreement could be reached, either as a first step toward emissions trading, or as a fixed non-tradable allocation.

It is in OPEC’s self-interest to preempt the emergence of a separate market for sink capacity, which could surely lower source demand and prices. While this gives OPEC a motivation, it also calls into question the legitimacy of the motivation as pure monopolistic exploitation. A legitimating compromise, as indicated above, would be for OPEC to behave as a self-interested monopolist on the source side, but as a global fiduciary on the sink side — that is, as an efficient collector and ethical distributor of scarcity rents from pricing the sink function. OPEC countries own petroleum deposits, but not the atmosphere. OPEC has a right to its source rents, but no exclusive right to sink rents. However, it may well have the power to charge and redistribute sink rents as a global fiduciary — exactly what Kyoto wants to do, but lacks the power to do. In addition to effecting this transfer, the expanded role of OPEC as global fiduciary might increase the willingness of other petroleum producers (e.g., Norway) to join OPEC, thus increasing its monopoly power and ability to function as here envisioned. In addition, the fiduciary role might provide ethical reasons for OPEC members to adhere to the cartel, when tempted by short-term profit opportunities to cheat.

Actually the existing OPEC Development Fund is already a step in this direction. Expansion of this fund into a global fiduciary institution for collecting and distributing sink rents, as well as the existing source rent contributions generously made by OPEC countries, is what is envisaged in this suggestion.

Just how total rents are determined and divided between source scarcity and sink scarcity is a technical problem that economists have not tackled because they have not framed the problem this way. Economists have focused on capturing source rents through property rights, and then internalizing the external sink costs of pollution through taxes. Only recently has there emerged a theoretical discussion of property rights in atmospheric sink capacity — whether these should be public or private, the extent to which trade in such rights should be allowed, and so on. As an initial rule of thumb we might assume that, since the sink side is now the more limiting function, it should be accorded half or more of the total throughput scarcity rents. In other words, sink rents should be at least as much as source rents.

Sink rents would go to an expanded OPEC Development Fund dedicated entirely to global sustainable development in poor countries (especially investments in renewable energy and energy efficiency). Source rents would continue to accrue to the country that owns the deposits, and presumably be devoted to national sustainable development. The focus here is on a new public service function for OPEC of efficiently collecting and ethically distributing sink rents in the interest of global sustainable development. Where Kyoto has failed, OPEC might succeed as a stronger power base on which to build the fiduciary role — a power base that sidesteps the inability of nations to agree on the distribution of carbon dioxide emission rights among themselves.

Although any exercise of monopoly power is frequently lamented by economists, the early American economist John Ise had a different view in the case of natural resources: “Preposterous as it may seem at first blush, it is probably true that, even if all the timber in the United States, or all the oil, or gas, or anthracite, were owned by an absolute monopoly, entirely free of public control, prices to consumers would be fixed lower than the long-run interests of the public would justify.” Ise was referring only to the source function. The emerging scarcity of the sinks adds strength to his view. The reasonableness of Ise’s view is enhanced when we remember that for a market to reflect the true price, all interested parties must be allowed to bid. In the case of natural resources the largest interested party, future generations, cannot bid. Neither can our fellow non-human creatures, with whom we also share God’s creation, now and in the future, bid in markets to preserve their habitats. Therefore resource prices are almost certainly going to be too low, and anything that would raise the price, including monopoly, can claim some justification. Nor did Ise believe that the resource monopolist had a right to keep the entire rent, even though the rent should be charged in the interest of the future.

The measurement of the two different rents presents conceptual problems. The source rents are in the nature of user cost — the opportunity cost of non-availability in the future of a non-renewable resource used up today. Assuming that atmospheric absorptive capacity is a renewable resource, the sink rent would be the price of the previously free service when the supply of that service is limited to a sustainable level. If we assume separate markets in both source and sink functions we would theoretically have a market price determined for each function. Since the functions are related as the two ends of the same throughput, the source and sink markets would be quite closely interdependent. The separate markets could be competitive or monopolistic, and differing market power would largely determine the division of total throughput rent between the source and sink functions. For example, if, following a Kyoto agreement, the total supply of sink permits were to be determined by a global monopoly, that monopoly would be in a stronger position to capture total throughput rent on petroleum than would a weak cartel that controls the source. OPEC is surely aware of this.

What might the WTO and the World Bank think of such a suggestion? Since these two institutions are well represented at this conference, this question is more than just rhetorical. So far the WTO and the World Bank have been dedicated to the ideology of globalization — free trade, free capital mobility, and maximum cheapness of resources in the interest of GDP growth for the world as a whole, including mass-consumption societies. In their view maximum competition among oil-exporting countries resulting in a low price for petroleum is the goal. Trickle down from growth for the rich will, it is hoped, someday reach the poor. I suspect the free-trading globalizers consider themselves morally superior to the OPEC monopolists. But which alternative is worse:

  1. Price- and standards-lowering competition in the interest of maximizing mass consumption by oil-importing countries by minimizing the internalization of environmental and social costs with consequent destruction of the atmosphere, and ruination of local self-reliance by a cheap-energy transport subsidy to the forces of global economic integration, or
  2. Monopoly restraints on the global overuse of both a basic resource and a basic life-support service of the environment, with automatic protection of local production and self-reliance provided by higher (full-cost) energy and transport prices, and with sink rents redistributed to the poor?

Monopoly restraint results not only in conservation and reduced pollution, but also in a price incentive to develop new petroleum-saving, and sink-enhancing, technologies, as well as renewable energy substitutes. Unfortunately there would also be an incentive to use non-petroleum fossil fuels such as coal, which would be a very negative effect from the point of view of controlling carbon dioxide. Independent national legislation limiting emissions from coal (and natural gas) may well be a necessary complement.

Ideally most of us would prefer a genuine international agreement to limit fossil fuel throughput, rather than a monopoly-based restriction imposed as a discipline by a minority of countries only on petroleum. But the Western high consumers, especially the U.S. as resoundingly reconfirmed in its recent election, have conclusively demonstrated their inability to accept any restrictions that might reduce their GDP growth rates, even in the likely event that GDP growth has itself become uneconomic. The conceptual clarity and moral resources are simply lacking in the leadership of these countries. Perhaps the leadership reflects the citizenry. But perhaps not. The global corporate “growth forever” ideology is pushed by the corporate-owned media, and rehearsed by corporate-financed candidates in quadrennial television-dominated elections.

A lack of moral clarity and leadership in the mass-consumption societies does not necessarily imply the presence of these virtues in the OPEC countries. Do there exist sufficient clarity, morality, restraint, and leadership in the OPEC countries to undertake this fiduciary function of being an efficient collector and an ethical distributor of sink scarcity rents? As argued above, there is surely an element of self-interest for OPEC, but to gain general support OPEC would have to take on a fiduciary trusteeship role that would go far beyond its interests as a profit-maximizing cartel. But a strong moral position might be just what OPEC needs to gain the legitimacy necessary to increase and solidify its power as a cartel. Could such a plan, put forward by OPEC, provide a stronger power base for the goals that Kyoto tried and failed to institutionalize? Might the WTO and World Bank recognize that sustainable development is a more basic value than free trade, and lend their support? I do not know. Maybe the whole idea is just a utopian speculation. But given the post-Kyoto state of disarray and the paucity of policy suggestions, I do believe that it is worth initiating a discussion of this possibility.

If sustainability is to be more than an empty word we have to evolve mechanisms for constraining throughput flows within environmental source and sink capacities. Petroleum is the logical place to begin. And OPEC is the major institution in a position to influence the global throughput of petroleum.

* “Sustainable Development and OPEC,” Chapter 15 in Herman E. Daly, Ecological Economics and Sustainable Development, Edward Elgar Publishers, Cheltenham, UK, 2007.