An Online Discussion of Ecological Economics Among Friends

(Note: I am not showing my friends’ surnames because I have not asked everyone’s consent. Still, it won’t be hard to figure out who they are.)

FROM METTA SPENCER:

Several of my friends (I’ve spoken with two of them today) are preoccupied with what they call “ecological economics,” a line of inquiry that seems to start from the assertion that “the economy cannot keep growing endlessly. So. . .”

I am not well educated in economic matters but I want to hear the rest of the sentence. Several sentences, in fact. Since nobody seems to clarify what the implications are, I have taken to speculating, and I want to ask my friends (and any likeminded others) to answer these questions.

When you say, “the economy cannot keep growing endlessly,” are you simply referring to the fact that material resources are finite and that we are bound to run out of raw materials eventually? If so, I would like to leave open the notion that the economy might keep growing without increasing any depletion of raw materials. For one thing, we can recycle stuff. For another thing, in a knowledge-based economy, what you are selling is not a physical product but a symbolic, intangible product — a story, a song, a mathematical equation, a psychotherapeutic insight, a lecture or article about Paleolithic tools or philosophy or black holes, etc. So long as people keep paying more each year for such products, the economy will grow, but without depleting natural resources. Please keep open that possibility. It may not fit reality, but don’t discount the prospect out of hand.

Now when you say you want to live in a society where the economy is not growing, please explain what that economy would be, using language that I understand. Are you calling for a non-market-based command economy? I have seen that sort of experiment in Russia and Eastern Europe. I don’t think it is to catch on as a popular movement, nor would I promote it.

So we have a limited number of other familiar models. One is Capitalism (which comes in various forms, ranging from mom and pop businesses all the way to corporate empires.)

Capitalism, for all its unpleasant features, has increased life expectancy, health, intelligence levels, freedom, and quite a few conditions that favor human wellbeing over any previous system. Nevertheless, we can all agree that it needs to be regulated and democratized. People are not benefiting equally enough. It is environmentally irresponsible unless controlled politically, so the question is: How can you make corporations and banks accountable to the citizenry? I like that question, but it is not the same as the question you folks are addressing, which is: How can we keep the economy from growing?

Your question worries me. I want to know what you intend to substitute for capitalism. I see two defining features of capitalism:

1. It is based on markets, which are driven by the seeking for profit. The market is extremely effective in getting the things produced and distributed that people want. However, there are some obvious flaws that are not necessarily immutable attributes of capitalism, such as (a) the tendency of producers, using advertising, to create unnatural wants that have little to do with real human needs; and (b) the potential for monopolies to arise and defeat the advantages inherent in a competitive market. Both of those tendencies need to be curbed, either by cultural changes or political regulation or both. I would not rule out the possibility of controlling these two problematic aspects of capitalism, as well as restraining greed and grossly unequal standards of living and opportunity.

2. Capitalism is based on financial institutions in which money is invested to earn more money. In fact, the main source of growth is not work but the interest on investments. Now here I cannot see any alternative if you want to keep a free, market-based economy. Christianity used to forbid the taking of interest on loans, and it was only when that rule declined in protestant countries that the industrial revolution became possible. (Okay, that’s a pretty simplistic summary of a huge economic transformation, but it’s largely true.)

In a capitalist economy if you want to start a business, you borrow money or issue stocks for the public to buy. You run your business and then you repay the bank loan or issue dividends on the stock. You had better have more money at the end of the year than at the start or you cannot pay the interest or dividends. The amount of difference between your money at the beginning of the year and the end equals your growth. If you don’t grow, you cannot be a successful capitalist. That’s why I want someone to explain to me how you’re going to run a capitalist economy without growth. I cannot see a logical answer to it.

Shall I then lie awake at night worrying about the inevitable depletion of the earth’s finite natural resources? Not necessarily. Instead, I sleep soundly, confident that as the knowledge economy grows, we are becoming more efficient and less wasteful in our production and transport of physical goods, and can also consume less stuff and emit less carbon because our activities and income can grow from creating and spreading ideas, not physical goods.

I invite your replies. The only ones I will take seriously, however, are those that explain how you can have a steady state, non-growth economy while allowing people to invest money and make money by doing so.

Thank you. The ball is now in your court.

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FROM JOANNA:

Hi Metta, Derek, Harriet and Francisco.

Metta, thanks for your excellent questions. I’m not ready to tackle them yet, but will keep your questions in my inbox with a signal on them that they must be attended to. A little sharpening of the questions – the problematic issue is growth in physical and energy throughput and degradation. It’s not economic growth per se. If it were possible to bring these to a level that is not drawing down natural capital, (forests, fisheries, climate stability etc.) at a theoretical level it’s conceivable that economic growth in intellectual and artistic property would be compatible with stability in climate and other ecosystem services. I think, however, that increasing the system of private ownership of intellectual property brings with it other problems, such as restricted use and underuse of intellectual advances. (I’m appalled at private ownership of new surgical techniques.)

You’ve listed some of the problems with growth-oriented capitalism, but not the one I regard as the most serious – its treatment of biophysical limits on natural resources as irrelevant.

I’ve attached a piece of work I’m currently reading, as it seems helpful to my efforts at self-education. One of the authors is Peter Victor at the University of York. (Metta, I know you don’t have time to read this at the moment.) The other book I’m reading is a textbook in ecological economics by Herman Daly and Josh Farley.

Derek, thanks for sending me your excellent paper on this issue. I thought you covered in summary form most of the areas needing reform. My own knowledge is insufficient to say whether it goes far enough. I was glad you covered population, which is so often left out. Perhaps you’d like to send it to the others in this group, if they don’t have it already.

Metta, your questions will act as a helpful goad to push me forward to the point where I hope to address your questions usefully.

Warmest wishes, dear friends, for an active New Year, as we push our respective governments towards acting on their words in Paris.

Joanna

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FROM METTA SPENCER:

On Dec 27, 2015, at 12:35 PM, Metta Spencer > wrote:

I did not completely answer Joanna’s complaint — that capitalism treats biophysical limits on natural resources as irrelevant — so let me add a thought now. It is related to my own concern about the democratization of capitalism. I really fear and loathe the power of corporations over human beings. I think they have to be made accountable. My preferred way of doing so (in a globalized world where corporations do not have boundaries but states do) is to create international NGOs devoted to particular human problems. Well, we don’t need to create them, we just need to recognize them politically. There are NGOs that deal with agriculture and food (Harriet is involved with them); NGOs that deal with human rights, with the harmful effects of mining, with the protection of oceans, with consumer’s rights, with labor relations, with forest protection, etc. etc. As new problem emerge, there will be new international groups formed as networks of people interacting and sharing information digitally.

I propose an improvement to capitalism that does not define the directors’ prime fiduciary responsibility as earning money for stockholders (though that will be part of their mandate) but also to protect the planet and human beings who are affected by the corporation’s actions. I would insist that the plans of the corporation be required to be transparent—published online for their competitors and the public to see — and voted on by a board of directors that must include one person they pick from panels representing eight or ten of the main public interests. So peace NGOs would elect a worldwide panel of peace and disarmament experts. Women’s rights groups would elect a worldwide panel of feminist activists. Climate change NGOs would elect a huge worldwide panel of climate change activists, etc. There would be maybe ten or so of these different panels, all staffed by persons elected by their own constituencies. And then each corporation would have to pick one person from each of these panels to serve on its board of directors. Such directors would be regularly accountable to their constituencies, reporting on their observations and recommendations every day online. They must be whistleblowers, as well as having a vote on the board. It is up to them to keep the corporation accountable. (Not small businesses, but ones with an annual flow of revenue exceeding, say, $10 million per year.)

This should do what I want most—democratize the economy — while helping to resolve the thing that Joanna worries about most— making industry mindful of the biophysical limits of the environment.

What do you think?

By the way, I had this discussion with Rabbi Michael Lerner, whose own preferred approach would be different. He would just issue five-year or ten-year licenses to corporations and review their behavior for every renewal. If they have behaved irresponsibly, the license would be transferred to a different company. I have my doubts about whether that would work. I prefer my own system, as described above.

Love

Metta

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FROM HARRIET:

Thank you very much, Joanna, for sending this report. Metta, I hope you read it. The authors are a dream team of thinkers on aspects of the problem.

Metta, two problems I note about your approach:

1. You haven’t considered the historical meaning, implementation, etc. of “growth” that has become what Cronon calls “second nature” to those of us who have experienced nothing else in our lifetimes and therefore have to recover it through history. That idea wasn’t part of capitalism until after WWII, and took its particular form in that period. Growth of individual capitals is intrinsic to capitalist economies but “growth” as measured by GDP and as it enters into politics is about national economic management. “Investment” took place before and will take place after that particular idea of growth is ditched or simply collapses (which it seems to be doing as “investment” shifts to speculation).

2. The idea of wellbeing is the one that implicitly underlies all defences of capitalism, including yours. The question is whether “growth” of national economies (not easily transferred to “world economy” though some stats try) as now practiced, defined, measured, is the best path to wellbeing.

Happy New Year to all. I am not sure I’ll continue this discussion but appreciate being included.

Harriet

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FROM HARRIET

(“Another paper”:

This is a very unusual paper arguing Metta’s position that capitalism can grow without breaching material/natural limits, this from a Marxist point of view, so not in favor of it, just observing in his way. This is rarely cited and most Marxists either don’t know about it or hate it.

Harriet

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FROM FRANCISCO:

Thank you Metta, for the great questions and ideas for debate. I don’t think this media is appropriate for a very academic treatment of any issue (that would slow down too much the exchange), so I will limit my contributions to making statements that sum up my current understanding/thinking on a very important topic, which has been one of the two defining concerns of my life, since adolescence.

I started reading about “no growth” economics (also called steady-state economics) as a young student of Economics at UofT, and have been very attracted to this idea throughout my professional life, which has been spent very much in the field of attempting to “guide” economic development towards greater sustainability. I do believe that capitalism in all its forms (from very primitive or “savage” to the more advanced forms that it has taken in liberal democracies of the North) suffers of what has been called an “addiction to growth”, which has been well documented. Unfortunately, I do not see a solution to this major problem, and I believe it will continue to be a recurrent cause of many crisis and collapses until the end of times.

The only consolation I have found in this regard is that I see a similar pattern of growth and collapse in Nature, so perhaps there is a mysterious way in which everything works out all right in the end (?). I do not believe that we can regulate away the problem of growth; at best, we can take provisions and create institutions that will help us get back on our feet after each collapse. I also do not believe that this problem could be avoided by shifting to some other economic model different from what we call capitalism. I am fairly confident in my belief that growth is in the essence of economic activity and vice-versa; the only way to stop growth is to stop economic activity, and we can only do that for short periods of time (perhaps a few decades) at the price of tremendous amounts of human suffering. Yet human suffering, it seems, will come to human beings with or without economic growth.

As long as we remain within the confines of Earth, the human specie will continue to bump against a hard ceiling of material well being, which will bring about collapse and re-engineering of our human endeavors until the planet is simply no longer capable of sustaining human life. Some of us feel that during this Century we will be coming pretty close to one such catastrophic scenario, although we may still have a few cards up our sleeves. We will see…

I do not like any of the proposals mentioned here to “democratize” capitalism. Some seem impracticable to me and all of them will fail to deliver the intended results. This does not mean we should not pursue them, for it has often been the case that we accidentally find a great solution while we were stubbornly attempting to achieve something else. And I am afraid I don not have any better proposals to put on the table. Sometimes it seems to me that I have reached my own limits in my understanding of the world as “an economist”.

I still love the conversation and I am happy to continue to contribute whatever I can if you still feel like involving me in it. I am not pessimistic about the topic (or the future of humanity) but I am not so sure that the answer we are seeking will come from the general realm of Economics.

Happy Holidays to all,

Fco.

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FROM DEREK:

Dear Metta, Joanna, . . .

Thank you Joanna for the pdf file, which is coauthored by most of the very prominent people in ecological economics. I shall of course study it.

Next I must address Metta’s concerns. The primary concern of an ecological economy is to run human affairs so we don’t ruin the planet, which the neoliberal economy has been doing as fast as possible. My very modest role in ecological economics is to list those properties of an ecological economy that will differ from a neoliberal economy, so as to permit people to start thinking creatively about how to get from here to there. In making my list, I assumed tacitly that the resource base is sufficient for whatever human population exists, though that assumption is in fact probably wrong, but nobody knows for sure. My conjecture is that the human race has already expanded its land requirements to displace too many animals and other creatures, so that it may not be possible to achieve a quasi-equilibrium of species such as seemed apparent in my youth, when the world population was two billion — and much of my childhood’s world already seemed very crowded. But an ecological economy would serve a planet with a declining population, so the question of reducing population voluntarily doesn’t interfere negatively with what I am trying to do in my current work (which has been in abeyance for some time for obvious reasons). What is important is that the neoliberal economy will have a much harder time in a declining population because of the theorem that economic growth is essential. The theorem, by the way, is invalid because of the assumptions made, even though the mathematics is good enough.

Returning to my list of properties of an ecological economy, Metta has seen it in one of the lectures I gave at UC (April 2013), though it wasn’t the bulk of the talk. A list I began 11 months ago is attached. It is a draft. Please don’t circulate it, but I think some of you might need to read it. And please feel free to write to me about items that need adding to the list.

To sum up, abandoning the growth paradigm isn’t the foremost aspect of the transition to an ecological economy. Peter Victor took up the question, because he wanted to show that it was economic policy, not growth that would determine our prosperity. Perhaps the most difficult step in establishing the new economy, mentally, will be abandoning the concept that money rules. The transition from the neolib. economy to the ecological really requires one to measure wealth in natural units. Good economic policies under such an economy will maximize wealth, and money will become the servant. Today money is the boss (god) and we are its slaves. We are nevertheless blessed in that very many people are working to enrich the planet, for example, organic farmers, whose occupations depend on first enriching the soil. You can’t value that nicely in dollars and you probably can’t describe the value of soil using a single variable.

Lastly I note that Joanna is reading Daley and Farley’s textbook on ecological economics. It’s very heavy, likely because at this early stage in EE, one has to satisfy people that one really understood the existing literature on economics, since almost all economists were brought up in the more traditional stuff. So Farley and Daley spend much effort in describing the differences. I hope that we shall see less heavy texts on ecological economics before long.

I recommend reading the first chapter at least of Philip Smith and Manfred Max-Neef’s Economics Unmasked. That first chapter (by Max-Neef) is a wonderful look at the history of the present economic system. Phil Smith was a nuclear physicist, working in Groningen, Netherlands, whom I knew well. He retired around 1990 and took up studying first-year economic textbooks, which he found unacceptable from the point of view of rigor, such as he was used to in first-year physics texts. He managed to find a collaborator in Max-Neef, a German émigré living and working in Chile. Smith died in 2005, making me despair that his work might never be published, but Max-Neef completed the work, and published it with Phil’s name first.

Blessings to all,

Derek

Attached document:

“Features of a new, ecological economy _ ”draft 18 January 2015

by Derek

List of features of the New Economy

  1. Resource accounting

  2. Minimum extraction of primary resources, including trees, and maximum recycling

  3. Distinguishing between wealth and money

  4. An end to fossil-fuel burning

  5. Adoption by industries of Extended Producer Responsibility

  6. An end to planned obsolescence

  7. Controls or understandings on advertising

  8. Encouragement and perhaps standardization of Benefit Corporations (a legal as well as political matter); and encouragement of other forms of benign enterprise

  9. funding ecologically important projects through publicly-owned banks or treasuries at nominal or zero interest. Such banks would cover single-currency areas

  10. Defining and restoring the commons

  11. Greatly reduced social inequities

  12. Not using GDP to measure wealth!

  13. Regional (and global) population policies

Notes on the above

Wealth

To distinguish between wealth and money, one needs first to measure wealth in terms of resources, in natural units. This was nicely done by NRTEE in Canada around 2000, when they came up with indices for government, for example to enable government to become aware of dangers, such as the disappearance of cod stocks, in order to be able to take preventive measures. NRTEE very nicely conducted their studies by measuring everything in natural units, for example, cubic metres of lumber, numbers of fish, etc. But they went further and distinguished between three types of capital: natural, built and human. Nothing in their study was measured in dollars, and I think this must become the case in the new, ecological economy.

Today there is an International Society of Ecological Economics, of which the Canadian Society of Ecological Economics (CANSEE) is a chapter. I have attended two of CANSEE’s meetings and regretted finding that almost everything is still being measured in terms of money. This is simply an ingrained bad habit.

For those who do not understand the difference between money and wealth, I recommend the biblical book of Job, in which Job’s wealth is measured in terms of cattle, etc., all in natural units. Money only comes in at the very end of the book, when his relatives contribute a few coins to celebrate his coming through his ordeals.

Extended Producer Responsibility

This is discussed briefly in Annie Leonard’s book The Story of Stuff pp.197-99, 233-34, 256), which goes far beyond simple-minded recycling.

Advertising

Most of my acquaintances feel that advertising must be controlled, and that understandings designed to reduce consumerism won’t work.

Benefit corporations

Benefit corporations are those whose legal standing requires them to do more than make profit for their shareholders, for example by being champions of the ecosphere. Legislation to establish such corporations had been established in six of the US States at the time of publication of James Gustave Speth’s book America the Possible. I have reviewed Speth’s book in the Science for Peace Bulletin, December 2013.

There are, however, other categories of B-corporations, as they are often called, which have no legal obligation to take care of the environment, but achieve their status of “B-“ through certification. This looser process nevertheless gives them some status as the good guys among corporations. We have examples of certification in Canada, for example among forest product corporations. Those who treat the forest relatively well can achieve certification, and the question then becomes, “Who certified them.” There are more and less stringent forms of certification.

My personal preference would be to establish the convention and only corporations having a legal basis as “Benefit” be allowed to call themselves Benefit corporations, and that other B-corporations be designated as “certified.” The current situation allows certified corps to be mistaken for legally incorporated Benefit Corporations.

Publicly owned banks

This topic is the most controversial in my list, because few economists recognize the advantage, perhaps a necessity, of having such a bank in every single-currency area. It boils down to who should be allowed to create new money and what for.

The banking system we have was founded over three hundred years ago, at a time when resources were generally thought to be inexhaustible in the sense that, if you ran out of tin in Cornwall, England (as actually happened), then one could find it elsewhere. Resources, or their substitutes were inexhaustible. Resource use can be looked at through the pollution that industrial processes and the human consumer cause. The land and ocean were large enough to absorb all pollution. This is clearly no longer true, so that industrial and other processes must somehow be limited.

When it comes to banking, loans were traditionally made when someone wanted to do something and didn’t have enough money. If it was a personal loan, for a house, for example, the borrower repaid the loan under a system of usury, which committed him to work for a salary or use his rents. If it were for an enterprise, the enterprise repaid the loan and interest out of its profits, making it highly profit-driven. Both types of result were or could be wealth-increasing. The loan for the house increased built capital; the loan to the enterprise could be partly increasing in built capital (industrial plant and human capital _ more skilled people). But measurement of the natural wealth lost (for example in field and forest, or fisheries) was never calculated.

Today we need activities that increase the natural wealth that has been lost, or that will increase natural wealth where there never was great wealth – for example converting fourth-grade or fifth-grade farmland to high grade. Processes such as those are urgent because of the overshoot of the human population and the extravagance of the style of living in some countries. Conventional banks are not used to doling out billions for such wealth-increasing activities, because there is no monetary profit to be made there in the short-medium term. A publicly owned bank can issue as much new money as is required for the necessary improvements, though it may need a regional anti-inflation policy to accompany such a strategy.

The Bank of Canada was authorized in 1939 to issue as much new money as was required to conduct the Second World War. The debt at the end of the war was large, but the debt burden was small because of the nominal or zero interest. The debt was easily reduced, perhaps because Canada was a country rich in natural resources. The justification for using the Bank of Canada (which was nationally owned) in this way is that the war was an emergency. Today’s global emergency is of a hugely greater dimension.

I do not claim that financing the restoration of the commons cannot be done under the present banking system, but it would be extremely difficult, because the focus of banking nowadays is entirely profit, not wealth increase. That was how the present system was designed.

Maintenance of full employment

It may not be necessary to sustain full employment in the long term, especially in a world of automation. But full employment is needed today a) to get essential things done that are not being done and b) to facilitate the transfer from the present neoliberal economy to an ecological economy.

Greatly reduced social inequities

This subject has been written about by several authors. I would recommend Joe Stiglitz’ book in the first instance.

Not using GDP to measure wealth or wealth increase

Much has been written and published on this topic, but nations go on using GDP on the basis that it is proportional to what you want. It isn’t. A good first start would be to use the Net Domestic Product, and then go forward and use other indices as well. How exactly to define Net Domestic Product would prove another difficult exercise.

Regional and global population policies

The present, roughly linear rate of population increase is leading the world to disaster, and it needn’t be so. At the roundtable on Food and Population of the Global Issues Project, in 2009, it was stated that the world’s population increase had been 75 million the previous year, but that the number of unwanted pregnancies leading to live births (pregnancies unwanted by the mothers) had been in excess of 80 million. If true, this means that already we would have a slowly declining global population if women had the means and the power to control conception. How to provide the means through women’s health centres and through available contraceptive methods has been known for years, but nobody knows how to protect women from having pregnancies their husbands want and they don’t.

Copyright©Derek Paul January 2015

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FROM DEREK:

Dear Metta,

Your proposal has been anticipated by years. Had you read my email addressed to you and Joanna, you would have found an attachment with numerous listed departures from the neoliberal economy that are needed in the new or ecological economy. One of these is the encouragement of Benefit Corporations, the accepted name of the kind of corporation you are suggesting. The legislative framework for establishing such a corporation already exists in at least six States of the United States. But it is not compulsory in these States to register a new corporation as a Benefit Corporation. What the ecological economy requires is the encouragement of such corporations, with the hope and intention eventually of phasing out the normal corporation we are familiar with. There are other aspects of this way forward that are far from solved: for example, will it be necessary to standardize the legislative status on Benefit corporations? If the legal framework of a benefit Corporation in one state is very different from another’s, then maybe one Benefit Corporation will have an advantage over a Benefit Corporation in another state because of the difference in legal set-up in the two jurisdictions. It might therefore be advisable to try to standardize the legal status of Benefit Corporations before they are all over the map. But I’ve seen no discussion of this, perhaps because there aren’t many such corporations at this time, and very few States that have provided the legal basis for them.

Best regards to all,

Derek

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FROM METTA SPENCER:

Thank you all, dear friends, for your helpful comments. I have spent yesterday and part of today reading t he three documents you sent me as attachments and thinking about their implications. I will answer passages from your letters sequentially, and then make some overall remarks about my impression of the whole “steady-state economics project.”

Conversation with Joanna:

Joanna’s remark: “The problematic issue is growth in physical and energy throughput and degradation. It’s not economic growth per se.”

Me: Good. That should make it easier to reach common ground, then, if we can find a way of allowing growth to continue (if it needs to for other reasons) without increasing the physical “throughput.”

Joanna remarks that she sees main problems with the system of private ownership of intellectual property.

Me: I agree completely. Ideas and knowledge are things that should grow and expand vastly.

Joanna asserts that I overlook growth-oriented capitalisms serious flaw: [its treatment of biophysical limits on natural resource.”

Me: No, that is precisely what I think we need to figure out: What can continue to grow without ruining or using up natural resources. I just don’t assume that it is inevitable that economic growth WILL use up or despoil the environment and natural resources. That is the key question to be investigated, not taken as given.

Joanna then recognizes that I’m busy and generously does not demand that I read the 83-page attachment that she sent. However, Harriet did urge me to read it, so I did so. I will comment on it later.

RE METTA’S CONVERSATION WITH HARRIET:

Harriet remarks that the measurement of growth by GDP began only after World War II.

Me: I didn’t know that. But I don’t think the aspect of capitalism that I consider essential does involve the notion of GDP anyway. I am only interested in the growth of investment money in this context. I would not call an economy “capitalist” if it did not involve some degree of investment of money for interest or future profit.

Harriet notes that I am concerned to continue the wellbeing that I believe comes from capitalism. She questions whether the growth of national economies is the best path to wellbeing.

Me: I want to ask that very question. Or, to be more specific, I want to identify the specific ASPECTS of capitalism that are essential for the ongoing progress of human wellbeing. It is empirically obvious that human wellbeing (e.g. longevity, cognitive development, physical comfort, health, and human capacity to move physical objects around) have improved under capitalism as under no other economic system in the history of humankind. However, we all see capitalism’s disadvantages too and realize that some changes are needed. I want to know what we have to KEEP in order to allow life expectancy and other aspects of wellbeing to continue improving rather than stagnating or even declining.

Harriet then attached an article by Blair Sandler, “Grow or Die: Marxist Theories of Capitalism and the Environment.”. This was apparently written about 20 years ago, and presents a convincing case for the same argument that I have been making—but (unlike myself) he frames his argument in Marxist terminology, presumably so as to maximize its persuasiveness to Marxist economists. He acknowledges that he will need to tweak Marx’s notions a little in order to make his case, but I myself would not have bothered doing that. (I have always thought of Marx’s notion of “value“ as simply a metaphysical construct with no pragmatic implications, We should just be talking about concrete costs, prices, etc. and omit any abstract notion of value.)

However, my objection to Marxist lingo is irrelevant. In other respects the Sandler paper is really brilliant. I am extremely glad that Harriet pointed it out to me, and I urge the rest of you to read it too, though it is not easy to read if you’re not a Marxist. In case you do not read it, I will give my own “executive summary” here of his argument, as I understand it. (Here we will see whether there is anything left of my previous skill in writing textbooks.)

Sandler addresses Marx’s view that sustainable capitalism is impossible because the system must either expand or contract, grow or shrink, “accumulate or die.” (This, by the way, is what Francisco also assumes, if I read his message correctly, though Francisco is not a Marxist. It is also what most of my peacenik friends assume.) He calls this the GOD theory — an acronym for the “Grow-Or-Die” thesis.

Next Sandler examines the notion of the “environmentally friendly commodity,” which he understands in terms of Marx’s labor theory of value, though of course he does not explain that theory himself but assumes that the reader understands it. I will try to summarize it here, mainly for Joanna and Derek.

The “value” of a product (as opposed to its “use-value” or practical utility or its actual monetary cost of production or its sales price) is an abstract concept. It is constituted by the amount of socially necessary labor that went into producing the average product of that type. Thus a high-quality violin has more value than a cheap plastic toy violin because it takes more work to manufacture it. Indeed, the value of any product represents the “congealed labor power“ that went into making it and bringing it to the point of sale.

There are two important qualifications to this theory. First, that “congealed labor” includes the labor that went into producing the workers themselves—giving birth to them, feeding them and arranging for their education, their dental care, and their apprenticeship as violin-makers, etc. up to the point where they put their own labor into the work of cutting down the trees, making the glue and varnish, carving the violin, etc. Producing the worker himself involved work that has to be included when estimating the value of the violin.

Second, we are only talking about the average amount of truly necessary labor that the violin embodies. Otherwise, Marx would have got his theory into trouble by suggesting that if a particular violin-maker wastes a lot of time doing things that are not necessary for the production of the violin, that inefficiently made violin would be more valuable than one that was made efficiently. So, it is not the ACTUAL amount of labor that went into any particular product (whether it’s a violin, a car, of a loaf of bread) but the theoretical amount of labor that is REQUIRED for producing a thing of that sort, given the current “state of the art” — the current level of technology. That’s an abstract quantity, not the amount of time and energy that can be measured empirically.

The distinction between this abstraction and the empirical amount of labor “congealed” in a given product gives you an estimate of how productive or non-productive the labor is that went into its manufacture. Non-productive labor is the work that does not add value, labor that was not actually necessary for its production— work that was wasted in making the product.

Now this distinction between productive and non-productive labor is implied in another related concept—namely the distinction between “environmentally friendly commodities” and ones that are “unfriendly” because wasteful of nature’s bounty.

Alongside the Grow-Or-Die theory, environmentalists have developed another theory: the “Grow-AND-Die” theory. According to this theory, whenever your economy grows, you use up the natural resources and so you die. So, either way, you die.

But of course Sandler seeks a way out of this accepting that we are doomed, and for that purpose he develops the notion of the “environmental regime” in which an economy is functioning. The environmental regime is the set of influences —natural, cultural, political, and economic — affecting the economy at a given time. Although Marx’s theory did not call attention to the variations among environmental regimes, there is always some variation when you’re comparing different historical circumstances, and these factors influence the extent to which a typical product contains “productive” or “unproductive labor.” I think he is suggesting (though not very clearly) that as technology advances, the proportion of the labor in each product can become progressively more productive. Likewise, if all goes well, commodities become progressively more “environmentally friendly.”

However, this beneficial trend does not occur just because people invent more efficient technological methods, but also occur when new laws regulate particular practices wisely, and because the culture changes and people start preferring lifestyle choices that are “environmentally friendly.” He is defending the notion that progress is possible, that the “environmental regime” can improve enough to disprove both the GOD theory and the “GAD” theory — that growth will inevitably kill us all, sooner or later.

Now admittedly, Sandler does not—cannot—tell us which new laws, cultural habits, and technological practices are going to be advances and which ones are not. That is always controversial and often we will be unable to determine whether an innovation is an improvement or not until much later. But for his own reasons (which I can respect but do not actually share) he simply wants to persuade fellow Marxists that they can justify their optimism theoretically while conforming to Marxist doctrine itself. They do so by recognizing that environmental regimes can make advances in the overall productivity of labor, and thus advance the environmental friendliness of commodities. Capitalism is compatible with a number of different environmental regimes and their improvement remains theoretically unlimited.

Indeed, he argues that environmentalism nowadays is helping to produce conditions that will permit continued capitalist exploitation under changing circumstances. “Whether capitalism grows by destroying trees, or by increasing the flow of digital signals over already placed cables or through the air, fundamentally depends on the environmental regime.” The false belief that increasing production necessarily increases ecological degradation comes from the erroneous assumption that the environmental regime is stable, precisely while it is changing dramatically.

“If green capitalism is possible,” writes Sandler, “it must be through the production of ‘environmentally friendly commodities.’ But whether a product is environmentally friendly is a highly political and cultural as well as natural problem.

Of course, Sandler is not guaranteeing or supplying empirical evidence that growth will continue without killing us all. It may. All he is doing is showing that there is no a priori reason (even for a Marxist theoretician) not to expect labor to become indefinitely more productive and for commodities to become indefinitely more environmentally friendly. For what it’s worth, I concur.

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METTA’S CONVERSATION WITH FRANCISCO:

Francisco remarks:

“I am fairly confident in my belief that growth is in the essence of economic activity and vice-versa; the only way to stop growth is to stop economic activity and we can only do that for short period of time…at the price of tremendous human suffering.. . .”

Francisco also believes that the human species will continue to “bump against a hard ceiling of material well being, which will bring about collapse…”

Me: I think I agree with the first part —the growth is the essence of economic activity — but I don’t see why you expect regular collapses. Even pessimists don’t believe in Malthus anymore. Population will level off, and the faster we provide for genuine material needs, the fast it will level off. (Derek seems to believe it will even decline, but I don’t have an opinion about that.)

I do have the opinion that occupations now primarily involve the manipulation of intangible symbols rather than materials, and that this is benefits both the quality of human wellbeing and the “environmental regime.” With nanotechnology, I see no limit to the potential for decreasing the production of “stuff.“ This cultural change can happen without coercion.

Examples: I have been producing Peace Magazine since 1986, and the amount of human labor and pollution involved has diminished by probably 500 percent. I used to drive all over town collecting photos and taking them to be “statted,” picking up texts and retyping them into a machine, pasting the text and imagines onto cardboard with hot wax, driving them out to Brampton, going out again to proofread the blues, going out again to pick up 12 boxes of magazines, carrying them up two flights of stairs myself to the Peace Magazine office, etc. etc. Now I do it all on the computer, email it to the printer, and it is delivered within one day.

And as for consumption? Well, the only gifts I have bought this Christmas consists of a case of olive oil to support the Palestinian producers. I hand each bottle of oil unwrapped to my friends. I understand that olive oil is beneficial to their health but it does not increase the total amount that anyone consumes. It is environmentally friendly too. How is that adding to the probability of a collapsing economy? Within ten years, I expect most meat and vegetables to be produced indoors in high-rise factories in vats of chemicals and stacked trays, under LED lights.

You call it “addiction to growth,” but I favor growth — so long as what we are paying most people for is their production and dissemination of knowledge and other symbolic products, not “stuff.” Of the people on this list — only Joanna is producing stuff, whereas she used to work with disturbed children. You, Harriet, Derek, and I all earn our incomes from creating and exchanging ideas, not producing or exchanging “stuff.” That trend will continue indefinitely, and it will be reflected in economic growth without increasing “throughput.”

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METTA’S CONVERSATION WITH DEREK:

Derek’s comments:

Derek is worried about “neoliberalism,” which he seems to equate to capitalism itself. I think neoliberalism is “market fundamentalism“ — the misguided attempt to manage ideas and knowledge through market forces, as if they were physical resources or commodities instead of intangible things that are not subject to the conservation of energy. Ideas and information are not subject to the first law of thermodynamics. Only matter, energy, space, and time are finite and conserved, hence ultimately scarce. If you want to make them marketable, you have to invent ways of making information scarce, which it inherently is not. This is the main evil of neoliberalism. Eliminate it with enlightened policies and we will be able to create an “environmental regime“ that lives with truly “environmentally friendly products.”

Derek also points out that my proposal for making corporations accountable was already anticipated by the development of the “Benefit Corporation.“ That is news to me, and I am glad to hear it. However, as he foresees, it will be necessary to create these panels of “Watchdogs,” on a global scale, since corporations are global and beyond the control of specific nation states or even transnational governance.

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NOW METTA’S TIME TO PONTIFICATE:

Now let me come back to address my basic concern: to identify the particular aspects of capitalism that have made it so immensely beneficial to human health and wellbeing. We need to make some changes, but we need to know what has to be kept if our reforms are not going to harm humankind.

Fortunately, on page 74 of the long publication that Joanna sent, “Building a Sustainable and Desirable Economy-in-Society-in-Nature” there is a list of twelve changes that ecological economists are proposing. I show the list in its entirety here:

  1. Investment: reduced net investment, a shift from investment in private to public goods through changes in taxation and expenditures.

  2. Labor Force: stabilization through changing age structure of the population and population stabilization.

  3. Population: stabilization through changes to immigration policy.

  4. Poverty: trickle down replace with focused anti-poverty programs that address the social determinants of illness and provide more direct income support.

  5. Technological change: slower, more discriminating, and preventative rather than end-of-pipe, through technology assessment and changes in the education of scientists and engineers.

  6. Government expenditures: a declining rate of increase

  7. Trade: a stable, positive net trade balance (and diversification of markets)

  8. Workweek: shorter and with more leisure, through changes in compensation, work organization and standard working hours and active market labor policies.

  9. Greenhouse gases: a revenue neutral carbon tax

  10. Consumption: more public goods and fewer positional (status) good, through changes in taxation and marketing

  11. Environment and resources: limits on throughput and use of space through better land use planning and habitat protection and ecological fiscal reform

  12. Localization: fiscal and trade policies to strengthen local economies.

Some of these 12 proposals seem reasonable and beneficial to me, but

(a) I note that the approach presupposes that a central group of planners acquire sufficient political power to impose these changes by law and other involuntary means. I deeply oppose a command economy on general principles, though I certainly agree that politics must intervene in economic affairs sometimes and regulate its workings. WE must think hard about HOW to do these interventions in a way that is accountable democratically to the people whose lives are being affected. Nothing in this document considers that this directed approach is problematic and needs to be constrained. Moreover:

(b) I believe that four of the 12 proposals would actively reverse the very things that have contributed most to human material wellbeing under capitalist rules. These four are:

  1. Investment;

  2. Population:

  3. Technological change; and

  4. Government expenditures.

This ecological economics apparently offers some “back-to-the-old-simple-small town-rural-life” proposals in modern dress. Notice the explicit opposition to technological change, to private investment, and to government expenditures in the search for knowledge. Moreover, the proponents of this system would erect barriers against immigrants and refugees so that the prosperous local people could continue to enjoy their insulated, survivalist lifestyle without taking responsibility for others.

This is a remarkably selfish approach that cannot succeed anyway. Human wellbeing had advanced through a series of risk-taking ventures that always create new problems that must then also be solved. All the gains in our health, life expectancy, and scientific knowledge have come from technological changes, and that will always be the case. We cannot go back to a simpler technology because our numbers are too great and the planet’s environment is changing. The only way out of our predicament is to go through it. We make progress in the same the way as we learned to walk. We throw ourselves forward and would surely fall except that we stick out our other foot and catch ourselves. Then we throw ourselves forward again and catch ourselves again. We invent an innovation, and then discover its disadvantages. So we solve them by inventing some new technological solution, only to find that it too has disadvantages that require us new solutions. That is the human condition in modern society, and thank God for it. The fun comes from working to solve the problems we have created. Otherwise, we would be limited to the boring old problems such as my grandfather had to address: walking back and forth across a field behind a plough for sixty years, What a privileged life we enjoy, with truly significant human problems to solve!

The list shown above explicitly proposes to reduce private investment, trade, and government support for innovations or discoveries. We are supposed to learn to want little and question less. But capitalism has contributed hugely to humankind, and primarily through investing time, money, energy, and material resources in technological innovation. I doubt that you really want to abolish those processes in favor of a command economy, directed by bureaucrats.

But yes, there are dangers in neoliberalism. The main danger is that corporations and universities are now teaming up to prevent the free sharing of knowledge. That is a terrible brake on discovery. We can run out of anything that is materially finite because it is conserved (matter, energy, space, and time) can usually be allocated freely by exchanges among people who have personal motivations. This is a market system. It is not always perfect. There can be monopolies and people can be persuaded to want things that are not good for themselves or for the rest of us. Powerful people can amass more resources than poor people, and this has to be rectified politically. Nevertheless, overall, if we exchange goods and services ourselves, we don’t need anybody running the economy or telling us what to do. I believe in and cherish freedom, and so I want considerable freedom in the market so I can choose for myself. I hope you do too.

The notion of “intellectual property” is becoming a real problem. Patents, copyrights, and trade secrets are ways of attempting to limit the spread of knowledge, when that knowledge is the most important asset we have in working out our own environmental salvation. What can we do instead?

In the coming knowledge economy, where almost everyone works with ideas more than physical materials, people can be paid salaries to do research, but that may not compensate outstanding knowledge-producers adequately, Instead of making their knowledge a trade secret, it should all be open source. But then there should be a large fund set aside to award prizes to especially productive innovators. Every knowledge worker should have a reasonable chance of getting a mini-Nobel prize, with honors and some monetary reward. That should solve the problem.

So, Francisco, I cannot be sure that these institutional changes will save humankind from collapse, but I do not see collapse as inevitable But if I believed it was inevitable, I’d give up and just try to “eat, drink, and be merry for tomorrow we die.” Instead, I believe in doing my best until the end. I think all of us also believe in, and practice, that faith.

Happy New Year, my dear ones.

Metta

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