Economics without Ecocide

Guiding the global economy now is apparently in the
hands of the G20. In September, at their meeting in Pittsburgh (their
third in a year), the G20 leaders adopted what they called a "Framework
for Strong, Sustainable and Balanced Growth."

The framework is
cast as "a process for economic co-operation and coordination to help
ensure that post-crisis policies avoid a return to dangerous imbalances
that undermine long-term economic growth."

Unfortunately, with
the ecological base of the economy falling apart, the Pittsburgh
framework will be looked back on as part of the fiddling going on as
Rome burned - or, more aptly, as the planet heated up.

Its
fundamental flaw? It falls hopelessly short of addressing - or even
recognizing - the real crisis facing the economy: The global ecological
crisis, and the unwillingness of the global community to steer the
economy away from ecological collapse.

This flaw becomes starkly
clear when the G20's program for the economy is examined through the
lens of five simple questions: What is the economy for? How does it
work? How big should it be? What is fair? and How should it be governed?

Fortunately,
an alternative is possible that provides better answers to those
questions. It would move the economy toward a mutually enhancing
relationship with a flourishing and prospering Earth - if the political
will is found to seek a new way. We start by looking at the first two
questions. Under the G20 framework, what is the economy for, and how
does it work? And what are some better answers to those questions?

The economy is for enhancing ecological and human integrity.

The
G20 framework: A key agreement among the G20 was to continue economic
stimulus efforts until "recovery is secured" and then to responsibly
wind down stimulus programs. But this whole program defines "recovery"
in terms of Gross Domestic Product, with sustained growth in GDP as the
overarching solution to all of the world's economic problems - and, by
implication, its other woes.

A whole Earth perspective: GDP is
not a good in itself - we value growth in GDP because we see it as the
means for assuring stability in employment, security of income, and
access to what we need to be healthy and happy. But the great threat
that now hangs over the world is massive ecological instability in
climate, food supply, clean water, biodiversity, ocean health and much
more. Rising numbers of environmental refugees are already tragic human
emblems of the current degrading of the Earth. These instabilities are
the result in large part of the global explosion in economic growth in
the last century.

In short, the G20 has it backward. The
overarching goal of the economy should be to ensure the Earth's
ecological integrity and resilience so as to prevent the collapse of
Earth's life support systems. Essential for achieving this goal will be
either a strategy for decoupling growth from climate change and other
ecological degradation (a virtually impossible prospect given trends) -
or de-growth and steady state strategies, such as those developed by
ecological economists like Peter Victor
(https://www.managingwithoutgrowth.com/About_the_Book.html) of York
University and promoted by groups like the Centre for Advancement of a
Steady State Economy, or CASSE (https://www.steadystate.org).

The economy works according to the laws of science.

The
G-20 framework: The G20 agreed to review at an international level the
efforts by countries such as the U.S. to increase savings and by others
like China and Japan to increase domestic spending and shift away from
export-driven economies. This includes mechanisms for "mutual
assessment" of each other's performance on these matters, as well as
review by the IMF.

A whole Earth perspective: The G20 approach to
balance of payments shows no concern for the health of the biosphere on
which the economy, and all of life, ultimately depends. Seeking more
balance is a start, but trade policies should drive countries away from
not hyperactive dependence on an import-export market that enhances
carbon emissions and other ecological harms. Urgent action is needed to
monitor the current behaviour and past record of nations with respect
to their impact on the integrity and resilience of the Earth's
interconnected ecosystems. The monitoring must be connected to positive
and negative incentives or sanctions to move the world's nations toward
responsible stewardship, with an emphasis on over consumers like Canada
and the United States.

The economy must stay within the Earth's ecological limits

The
G-20 framework: The G20 agreed on "specific commitments to increase
access to food, fuel and finance among the world's poorest, with a new
World Bank Trust Fund to finance investments in food security, a
commitment to fund programs that expand access to renewable energy and
a call to identify new ideas to strengthen the poor's access to
financial system." This is done in the spirit of "making the policy and
institutional changes needed to accelerate the convergence of living
standards and productivity in developing and emerging economies to the
levels of the advanced economies."

A whole Earth perspective:
Addressing poverty and working toward the United Nation's Millennium
Development Goals is laudable, but raising developing world consumption
without contracting "the levels of advanced economies" is a nightmare
scenario. It ignores completely the Earth's ecological capacity and the
massive destabilization the of the Earth's life support systems the
economy is already causing. The G20 needs urgently commit resources and
brainpower to a more rigorous evaluation of the Earth's capacity to
withstand climate change and other ecological impacts of the economy,
and then to develop policies that ensure that the global economy
respects those limits.

In the Sept. 24, 2009, issue of Nature, a
team of researchers led by Johan Rockstrom of the Stockholm Resilience
Centre proposed a series of "planetary boundaries" for ensuring the
ecological stability of the planet. This is the kind of work the G20
should explicitly and urgently support and expedite.

The economy must be fair to people and other living things, now and in the future

The
G20 framework: The G20's disastrous goal of bringing developing world
consumption levels up to developed world levels at least reflects a
notion of fairness. The G20 also agreed to rein in compensation of
bankers; yet took no action on a French proposal for a .005-per-cent
tax on the $800-trillion global foreign currency market, which could
yield $33 billion annually just covering the dollar, yen, euro and
pound.

A whole Earth perspective: Fairness is about providing
both human and non-human communities of life, and both present and
future generations, equitable access to the Earth's life support
systems. Money gives people this access, along with the ability to lay
down an ecological footprint. The G20's timid gesture on banker
compensation shows starkly the enduring power of the global financial
elite to keep in place the current grossly inequitable system of access
to the fruits of the Earth. The failure to rein in - or at least tax -
rampant speculation in the global currency market, and to use the
proceeds toward the Millennium Development Goals, is likewise a missed
opportunity for fairer sharing.

Keeping in mind the millions of
other species with which humans share the Earth, equitable access means
not allowing people individually or collectively to take too much. The
policy of bringing the world's poor to developed world levels of
consumption is a disaster if it does not address patterns of
overconsumption in rich countries. Contraction and convergence,
informed with rigorous information on the Earth's ecological capacity,
is fundamental to a fair approach to the economy.

Governance reform is essential for a human economy that lives within its means

The
G20 framework: The G20 agreed that the G20 forum will now be the main
venue for discussing global economic issues from now on. But the
criteria for admission are based on GDP (the G20 represent 85 per cent
of world output). The G20 also agreed to give greater shares at the IMF
and World Bank to China and other Asian countries - several of which
want explosive growth in GDP at the expense of the environment. They
also agreed vaguely "to phase out fossil fuel subsidies over the
medium-term while providing targeted support to help the poorest."

A
whole Earth perspective: Including more countries in the G20 is
welcome. But, just as world leaders should include ecological
economists and scientists among their top economic advisers, the G20
and global financial institutions would do well to give a strong voice
to countries, like Costa Rica, with relatively low per capita
ecological impact along with relatively high levels of well being. As
to fuel subsidies, in a world facing catastrophic climate change,
nothing less than urgent, expedited action to eliminate fossil fuel
subsidies and to support rapid transition to low or zero carbon
alternatives is acceptable.

But the real
global governance problem is the lack of strong global institutions to
oversee the security of Earth's life support systems. Increasingly,
global environmental problems require a fully functioning global system
of environmental rulemaking and enforcement, supported with greatly
expanded research into the Earth's ecological capacity and ways for the
human economy to stay within it. Global rules and institutions also
must recognize and respond to local needs and circumstances, and
empower rather than overly constrain local efforts to maintain
ecologically enhancing economies.

The G20 leaders pledged to do
their utmost to achieve agreement on climate change at Copenhagen. A
new climate treaty could serve as a starting point for the structural
changes to global governance needed to face up to the stark reality
that for the first time in the millennia of human history, the human
economy is now running down the Earth's ecological capacity faster than
it can regenerate. We will find out in Copenhagen whether the G20 will
provide leadership in that direction. But the Pittsburgh summit was not
promising.