Building a Whole Earth Economy, Peter G. Brown

See also Moral Economy Project,  The sustainable economy  and Peter G. Brown
With an impending strike at the Gazette, we decided  to reprint the entire article below, adding a few links, rather than relying on a potentially useless link to this story on our much-admired friend, Professor Peter G. Brown

Time for a green bottom line
The sun streams down as a light breeze rustles the yellow and brown leaves carpeting the grass. “Energy is almost all sunlight,” remarks Peter Brown, a professor of environmental studies at McGill University.
Plants, like the grass, still bright green in the first week of November, convert the sun’s energy into sugar, creating the food that supports nearly all life on Earth. Fossil fuels like oil and coal are also a form of sunlight. Stored in the Earth’s crust, they formed millions of years ago from decayed plants and animals.
“What industrial civilizations run on is the stocks of old sunlight,” Brown notes.
A walk in the park, a lesson in science and economics – and in the connections between them.
Brown is a philosopher, a Quaker and co-author of a new book that argues that humans have made the tragic mistake of separating economics from the laws that govern the natural environment.
With the global economy spiralling into recession, governments around the world are slashing borrowing costs and flooding credit markets with billions in emergency loans. The recession is rooted in trillions of dollars worth of toxic assets based on failed mortgages in the U.S.
But ecological economists say that rather than patching up the current economic system, we should take the crisis as a wakeup call that endless growth just isn’t possible on a finite planet.
“That is the main insight of ecological economics,” says Brown.
“It’s that the Earth is a limited system.” Dubbed the dismal science by 19th-century historian Thomas Carlyle, economics is often defined as the study of how to allocate scarce resources in a world of unlimited human needs.
For Brown, the financial crisis that has sent stock markets tumbling and toppled venerable investment banks is an opportunity to rethink an economic system that has lost touch with the real world.
“In one sense, an economic downturn is a great development,” he says.
“There will be a celebration among the polar bears and all other threatened species.” This week, the International Monetary Fund projected the world economy will grow only 2.2 per cent next year, while advanced nations in Western Europe and North America will see their economies shrink by 0.3 per cent.
That marks the first contraction in advanced economies like the U.S., Britain, France and Germany since the Second World War. The IMF projects Canada’s economy will grow only 0.3 per cent next year.
For investors watching their savings shrivel, companies facing losses and workers worried about layoffs, the news is grim.
But ecological economists like Herman Daly of the University of Maryland, Robert Costanza of the University of Vermont and Peter Victor of Toronto’s York University see the crisis as a teaching moment for a world hooked on unsustainable growth.
“Debt has gone up enormously relative to real, physical wealth,” says Daly, a former World Bank economist and founding father of the ecological economics movement.
Excessive leveraging (borrowing money to increase the potential return of an investment) and complex investment vehicles have created a financial system that is disconnected from reality, he says.
Brown’s book, Right Relationship: Building a Whole Earth Economy (Berret-Koehler), is due out next month. His four co-authors, including environmental law consultant Geoffrey Garver, are all members of the Moral Economy Project, a Quaker initiative to promote a new vision of economics, that promotes environmental stewardship.
The words economics and ecology are both derived from the Greek word “oikos,” or house. The ancient Greek conception of economics related to thrifty household management.
Ecological economists argue that mainstream economics excludes the true environmental costs of economic activity.
For instance, a factory that spews air pollution causes acid rain many miles away; synthetic fertilizers sprayed on a midwestern cornfield contribute to a dead zone in the Gulf of Mexico. Sugar maples and syrup producers, fish and fishermen are affected, yet since those third parties are external to the original transaction (manufacturing goods, growing corn), the effects are known in economics as externalities.
Daly charges cheap oil has facilitated a global economy where advanced economies have exported manufacturing jobs to low-wage countries. This has flooded western countries with cheap goods at an enormous cost to the environment, he says.
The failure to account for such consequences points up the failings of traditional economics, suggests Victor, author of Managing Without Growth: Slower by Design, Not Disaster (Edward Elgar Publishing).
“The real economy lives in the environment,” he says.
Picture a set of brightly painted Russian matryoshka nesting dolls.
The universe is the biggest doll. The Earth nests inside it. The economy fits inside that.
But neoclassical economists like Ben Bernanke, chairman of the U.S. Federal Reserve, have long behaved as if the economy were itself an immutable law of nature, charges Brown.
“These guys don’t know they’re on planet Earth.” The financial crisis has swept aside economic assumptions that have held sway since the Reagan revolution of the 1980s, says Harold Chorney, a professor of political economy at Concordia University.
“Unrestricted and unregulated greed almost led to the destruction of the capitalist system,” Chorney comments.
“The notion that business was first was the prevalent ideology for the past 30 years. The neoliberal age has ended with a bang.” Economic activity is using up the Earth’s resources much faster than they can regenerate, running up an enormous ecological debt for future generations, Brown and his co-authors charge in Right Relationship.
“The problem is, this ecological debt cannot be paid off with the kind of hard-cash bailouts that have become the typical response to the collapse of a financial bubble,” they write. “It will be collected in the form of unthinkable losses of human and other life. Indeed, the bill collector is already at the door.” –Destruction of half of the world’s tropical and temperate forests.
–Loss of half of the world’s wetlands.
–Seventy per cent of marine fisheries over-fished or fished to capacity.
–Species disappearing at a rate 1,000 times faster than normal.
–Deterioration or desertification of half the world’s agricultural land.
–Dead zones in the oceans.
–Melting polar ice caps.
James Gustave Speth, dean of environmental studies at Yale University, cited those examples in a recent lecture at McGill.
The world economy has quadrupled since 1960 and is expected to double again in the next 17 years, said Speth, author of The Bridge at the Edge of the World: Capitalism, the Environment, and Crossing from Crisis to Sustainability (Yale University Press).
“Right now, one can only conclude that growth and the environment are at loggerheads,” he told a rapt audience last month.
“We’ve created a huge economic machine that is profoundly committed to profits and to growth, and almost totally indifferent to nature and society.” The idea that economic growth is a bad thing – indeed, that it’s even possible to do without it – is almost unthinkable in mainstream economics today.
Growth makes it possible for governments to finance the services they provide, for companies to stay competitive and for citizens to improve their standard of living. It creates jobs and encourages innovation.
Even environmental protection depends on growth, since it costs money to develop new technologies and set up programs to help the environment.
“It’s hard to see how you achieve those goals without increasing the dollar value of goods and services produced in the economy,” says James K. Galbraith, an economist at the University of Texas and son of the famed Canadian economist John Kenneth Galbraith.
The risk of voluntary curbs on growth, says Chorney, is that those at the bottom of the socio-economic heap suffer the most.
“We must make sure the poor are not frozen out,” he says.
“I’d rather find technological fixes that reduce fuel consumption and improve public transit without imposing a cost that means significantly slowing the economy.
But Brown argues such measures are insufficient.
“People think we’ll get more efficient cars and we’ll put up some windmills and we’ll take public transit and we’ll recycle more. Are they going to add up to enough to stop destroying the biosphere? Not likely.” Ecological economists also suggest the benefits of growth have been overrated.
“All of our social problems are supposed to be solved by growth,” says Daly.
But surveys show subjective happiness in developed countries has not increased since the 1970s, despite the increase in GDP, according to Costanza.
Canada’s GDP in constant dollars increased by 93 per cent from 1981 to 2005, reported Statistics Canada, while the production of goods rose by 75 per cent and of services by 103 per cent.
But such numbers do not reflect the true environmental cost of growth, says Daly. “Global warming, peak oil, depletion of resources, loss of biodiversity, pollution – they’re just being left out of the equation.” Canadians are drowning in stuff, as evidenced by the $8 billion they spent in 2006 on self-storage lockers. There was an average of 2.5 square feet of space in storage warehouses for each Canadian that year, compared to six square feet per capita in the U.S., with up to 12 square feet per capita in some states, like Nevada.
Yet studies have shown that once people’s basic needs are provided for, an increase in wealth does not make them happier.
Stable state, or no-growth, economies are nothing new in the history of economic thought, says Chorney.
John Stuart Mill, the great 19th-century political economist, considered economic growth to be a temporary goal. He worried that the unbridled pursuit of growth would not promote happiness or the greater good, but rather cause the Earth to “lose that great portion of its pleasantness which it owes to things that the unlimited increase of wealth and population would extirpate from it.” John Maynard Keynes also conceived of a stable economy once unemployment and poverty had been solved.
But the post-Second World War period gave rise to neoclassical economists who regarded growth as a must, Chorney says.
“They were scarred by the Depression. They were handmaidens of the Cold War.” Brown favours national limits on use of natural resources regulated by a world body inspired by the Bretton Woods conference, which founded the International Bank for Reconstruction and Development, the General Agreement on Tariffs and Trade, and the International Monetary Fund at the close of the Second World War.
But a no-growth economy is a hard sell, he concedes. Canadians trounced Liberal leader Stéphane Dion and his Green Shift carbon-tax proposal in last month’s election, despite an open letter by 230 economists in Canadian universities who endorsed the carbon tax.
Brown blames the failure of Dion’s Green Shift on the “free rider problem” – a syndrome where people don’t want to pay for something that benefits everybody.
Victor warns a move to a slow- or low-growth economy requires concerted planning and must be spread over as many as 30 years.
The first step is public awareness, says Brown. He takes inspiration from a dozen reformers, mostly Quakers, who founded the abolitionist movement in 1787. It so galvanized public opinion that the British Empire banned slavery in 1833.
“If we don’t think very hard, very radically and very fast,” says Brown, “we’re doomed.”
THE GOOD: some eco-friendly initiatives that are part of A sustainable solution
Farmers’ Markets
Farmers’ markets support family farms and local economies. By buying directly from a farmer, consumers can reduce the distance travelled by ingredients in a typical meal to 150 kilometres from between 2,400 and 4,000, according to the environmental organization Équiterre. Farm markets and community-supported agriculture programs, where consumers subscribe to a weekly basket from a farmer, helped fuel a 60-per-cent increase in the number of certified organic farms from 2001 to 2006, reports Statistics Canada.
High-speed rail link
A high-speed rail link in the busy Quebec City-Windsor corridor would reduce greenhouse-gas emissions by providing a convenient alternative to far more polluting air and car travel, says York University ecological economist Peter Victor.
Ecological industrial park
In the medieval Danish town of Kalundborg, several industries operate in ecological symbiosis where by-products of one company provide raw material for another firm. For example, a manufacturer of Gyproc plasterboard runs on waste gas from a nearby refinery. Ash from a coal-fired power plant is used to make cement.
THE BAD: ‘We’ve hitched the whole national bandwagon to the tar sands and that’s not smart’
Tar Sands
Environmental groups rallied this week against a plan to ship the oil from Alberta’s tar sands projects through Quebec to the U.S. east coast and on to Texas – with some possibly being refined in Montreal’s east end. And with good reason, says Andrew Nikiforuk, author of Tar Sands: Dirty Oil and the Future of a Continent (Greystone Books). The world’s dirtiest oil is killing Canada’s hopes of meeting climate-change commitments and could lead to catastrophic water shortages, he says. “We’ve hitched the whole national bandwagon to the tar sands and that’s not smart.”
Overfishing
Worldwide fishing fleets are two to three times as large as warranted by current fish stocks, warn environmentalists, and fishing methods, like bottom trawling, are causing damage that can be seen from space.
Built-in obsolescence
Fact: a fire station in Livermore, California, has a light bulb that has been burning since 1901 – proof that everyday objects don’t have to wear out constantly. Planned obsolescence is “the systematic attempt of business to make us wasteful, debt-ridden, permanently discontented individuals,” cultural critic Vance Packard said in 1960. And the journey from factory to landfill has been speeding up as consumers snap up cheap, manufactured goods from low-wage countries.
Unsustainable suburbs (“End of suburbia“)
The economic downturn has slowed residential construction in the U.S., where foreclosure signs dot many housing developments, and now in Canada. And that’s a good thing, says environmentalists critical of the heavy ecological footprint of most new, single-family homes. The ideal housing model, says Mathis Wackernagel, executive director of the Global Footprint Network in Oakland, California, is Paris: dense neighbourhoods of four- to six-storey buildings.

© The Gazette (Montreal) 2008