No More Business As Usual

No more business-as-usual By Angela Tam The recession is officially over in a number of countries and economists who have repeatedly said this is all part of the typical boom-bust cycle are eagerly anticipating a return to business-as-usual. Some stock markets are already soaring, but will there be a return to business-as-usual? The answer is a simple no, and this article explains why. Ever since the start of the Industrial Revolution in the 19th century, politicians and economists have trained us to see the economy and Earth's ecosystem as related but separate entities (see diagram 1). The former is seen to obtain its raw materials for industrial production from the latter, and to use the latter as a sink for its waste.

Viewed this way, the economy can expand indefinitely (say from the size of the solid line to the size of the dotted line); more raw materials will be drawn from the ecosystem and more waste dumped in it, but the only concern is that this will create more pollution and we may run out of some non-renewable resources, such as oil. Out of this view, therefore, has arisen the idea of 'sustainable development', which really is about managing the flow of materials from the ecosystem to support continued expansion of the economy rather than protecting the environment from further harm.

This, however, is not possible because the whole perspective is actually wrong. In reality, the economy is a subsystem of the ecosystem, as diagram 2 shows. As the economy expands, therefore, it will fill more and more of the ecosystem. This means that, however carefully we try to manage natural resources, less and less of them will become available for as long as the economy continues to grow, because the ecosystem cannot expand in the same way. In fact, the size of the economy today, relative to the ecosystem, is more like diagram 3.

While diagram 2 may illustrate the size of the world's economy back in, say, the Great Depression of the 1920s-30s, diagram 3 shows its size as it is today. That is why economic growth is so damaging to our planet. More importantly, it shows why there is no going back to “business as usual” this time. Analysts like to draw on historical precedents to support their claim that the current downturn is typical of the boom-bust cycles the economy inevitably experiences and that, with appropriate financial stimuli to kickstart growth, all will be well again. That might well be true in the 1920s-30s, when the world's economy was small, but this is no longer the

case: it has now grown to such a size that it will soon completely overwhelm the ecosystem. Diagram 3 is not just an alarmist depiction of the state of affairs; all the news coming out of the scientific community confirms its reality. We are not only past, or approaching, peak oil, we are also rapidly running out of what ought to be renewable resources but which, due to the rate of exploitation, no longer are. Overfishing, for example, means that fish stock is not recovering, and we are producing so much greenhouse gases that the ocean, once considered a reliable carbon sink, is now approaching saturation. The resulting increase in the sea's acidity is also proving to be devastating for marine life. The only way to save our planet is to change the economic growth mantra and spread the call for a 'steadystate' economy. Adopted from the field of physics, 'steady state' refers to a condition in which input and output are evenly balanced. That is very different from the current situation, where we are constantly drawing natural resources from the ecosystem and loading it with waste without giving anything back. Advocating a steady state rather than economic growth does not mean the world's economy becoming stagnant. Quite the contrary. The existing model is predicated on stimulating consumption, which in turn is met by increasing production of goods that drain natural resources, even though we don't need most of these products. It's a model that sets us on a treadmill that goes ever faster until we collapse with exhaustion. A steady-state economy, on the other hand, will be one in which economic development is focused on cultivating our human potential and care for the ecosystem that nurtures us. It means a shift from the production of consumer goods that boost corporate profits but not the welfare of workers to activities that benefit communities. Think about the greenhouse gas emissions generated and amount of raw materials exploited in order to manufacture, package and transport any consumer goods from a factory in one part of the world to a sales counter in another. And then there's the waste packaging to be disposed of, as well as the consumer goods themselves when they break – easily, due to built-in obsolescence – or cease to amuse us. It's a model politicians like, because increases in this type of investment pushes up the gross domestic product (GDP) figure, even though it does nothing to increase the GNH – Gross National Happiness – score that Bhutan pioneered. In a steady-state economy, on the other hand, we could have thriving communities growing and trading locally produced food that is healthier for us and need not be transported long distances to reach its market. We could have more teachers to educate the young, the disabled and those who, because of their learning styles, do not benefit from conventional schooling. We could have more truly 'healthcare' workers to look after the aged and help us maintain a healthy way of life rather than care for us only when we've been struck down by disease. We could have more jobs in small, locally-based enterprises engaged in import substitution businesses, offering goods and services for their communities. Much hope rests on the climate change deal that can be struck in Copenhagen in December 2009, but there is no point seeking a new agreement to replace the Kyoto Protocol if governments are to pursue economic growth in parallel. One scarcely needs further illustration of the conflict between efforts to protect mother Earth and economic growth, than the news of Australian Prime Minister Kevin Rudd's decision to suspend plans to introduce emissions trading in order to tackle the recession. More than a replacement for the Kyoto Protocol, the world needs a change in the prevailing economic paradigm. Find out more about the steady-state economy by visiting www.steadystate.org. ©Angela Tam 2009