Is prosperity possible without growth?

thestarphoenix.com – business
April 19, 2011.   By Paul Hanley, Special to The StarPheonix

The planet can’t handle perpetual economic growth and the economy can’t work without it. It’s a major conundrum, but one that must be resolved if we hope to sustain an ever-advancing civilization.

Tim Jackson, economics commissioner at the U.K.’s Sustainable Development Commission, has studied this problem in depth. He can’t say a fully formed alternative economic model is readily available, but he does provide an outline for it in his book Prosperity Without Growth, Economics for a Finite Planet. A sustainable economy would include these measures:

Resource and emission caps – Carbon caps have already been established in some jurisdictions.

These should be applied globally, with similar caps established on waste emissions, on the use of scarce non-renewable resources and on the harvest of renewable resources.

Fiscal reform – Taxes should be shifted from good things like income to “bad” things like pollution and GHG emissions.

Support for ecological transitions in poor countries – It pays for richer countries to invest in sustainable development in poorer countries. Such mechanism as the Global Environment Facility, part of the UN Framework Convention on Climate Change, can be expanded and replicated. Funding can come from a carbon levy paid by rich countries on imports or a tax on currency transfers.

Developing an ecological macroeconomics – Key areas here include: Engaging in a structural transition toward low-carbon, labour intensive activities and sectors instead of the continued pursuit of labour productivity; emphasis on long-term ecological investments, with lower interest rates and longer periods of return on capital investments; and placing value on natural capital and ecosystem services in accounts of capital stocks.

Investing in jobs, assets and infrastructure – Key areas of investment in a stable, sustainable economy will be retrofitting existing buildings; renewable energy; smart energy grids; public transport; public spaces; and ecosystem maintenance and protection.

Increasing financial and fiscal prudence – Moving away from debt-driven consumption is a key. This can be achieved through reforming the regulation of financial markets, outlawing unscrupulous and destabilizing market practices reducing executive remuneration and encouraging consumer saving over debt.

Revising national accounts – We need to develop economic accounts that are more holistic than measures like GDP, which fail to account for things like the depletion of natural capital, the costs of pollution or the social costs of crime, accidents, or poverty. The OECD’s Beyond GDP initiative has attempted to collate alternative approaches. Better accounts would support a sustainable approach.

Working time policy – In a sustainable economy, where labour productivity increases but output is capped for ecological reasons, the only way to maintain economic stability is by sharing available work. Work sharing and job flexibility can have social benefits by improving work-life balance. More life enjoyment is possible with less consumption.

Tackling systemic inequality – Systemic inequality drives positional consumption (i.e. keeping up with the Joneses), contributing to a material “ratchet” that drives resource consumption. Improving equality through improved taxation, better access to education and other means has been shown to lessen environmental impacts.

Measuring capabilities and flourishing – This involves a reappraisal of the meaning of prosperity to capture factors that go beyond income, such as healthy life expectancy, educational participation, and community trust, resilience and participation. Ultimately, measures of these things can also be included in national accounting systems.

Strengthening social capital – Community resilience will be import in what could be a bumpy transition to a stable state economy. Measures to enhance resilience can include things like enhancing public spaces, access to lifelong learning, training for green jobs and supporting local culture.

Dismantling the culture of consumerism – Unraveling the culture and changing the social logic of the consumerism that drives an unsustainable economy will require the kind of sustained and systematic effort it took to create it in the first place. Offering people viable alternatives to the consumer approach to life is essential, so that people can flourish in less materialistic ways.

As Jackson points out, a sustainable economy won’t be a utopia, it will have its own set of problems. But establishing it will be necessary if we want to maintain and expand true prosperity.

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