The Economy: A Natural Disaster?

This post was written by Guest Post on January 27, 2010
Posted Under: Economy,Environment

Guest post by Richard. B

On Monday the New Economics Foundation, a trendy lefty think tank with a penchant for all things green, released a report titled ‘Growth Isn’t Possible: Why We Needs a New Economic Direction’. Building on previous reports on how to transition to a sustainable economy, this report fills out the ‘why’ we need to. Andrew Simms, the policy director of NEF (who I’ve written about before) had an article in the Guardian, summing up the report.

While I’m all for rethinking our economics (see Marx, etc.), it’s good to put on the critical goggles with NEF reports. So, here goes: first off, let’s take the big claim in the report – that you can’t have infinite economic growth on a finite planet:

“Even at a growth rate of 3 per cent (low for many developing countries), the global economy would need to reduce its carbon intensity by 71 per cent by 2050 (compared to 2002) or 2.7 per cent per year. This would mean achieving more than double the yearly average improvement between 1965 and 2002. But even this would result in a level of carbon dioxide (CO2) in the atmosphere of 500 parts per million (ppm). Whereas the latest climate science shows that such a level would push temperature rises far passed the 2 °C threshold.”

Basically, if the economy continues to grow at 3% every year, we spew enough carbon into the atmosphere to bring on the monster of runaway climate change. What struck me was the one sided of this idea of what economic growth means. Here’s David Harvey (the celebrity of radical geography) on that same 3% figure:

“So what will happen this time around [after the financial crisis]? If we are to get back to three percent growth, then this means finding new and profitable global investment opportunities for $1.6 trillion in 2010 rising to closer to $3 trillion by 2030. This contrasts with the $0.15 trillion new investment needed in 1950 and the $0.42 trillion needed in 1973 (the dollar figures are inflation adjusted)… The difficulties were in part resolved by creation of fictitious markets where speculation in asset values could take off unhindered. Where will all this investment go now?”

In other words, the made-up markets of the financial crisis were creating the appearance of 3% growth in the economy: if we take away these markets (sub-prime, derivatives and all those other strange creations we’ve come to know and hate), then capital needs to be created elsewhere. And as has been seen well in the creation of carbon markets and eco-businesses, the Green fad is doing well to provide capitalists with an excuse to rebuild the economy, but this time round an ‘environmentally friendly’ version.

For the NEF, change happens through economists and policy makers. Except for the dodgy analysis of John Stuart Mill’s workers’ politics, normal citizens don’t really make an appearance in the report. The implications is that the ‘why we need something new’ is divorced from an age old struggle. Economics which push us towards suffering seems to be a new phenomenon for the NEF, but I seem to recall that the civil rights movement, radical trade unionism and anti-slavery movement all predated the counting of Carbon Footprints.

The point is, we already do ‘one planet living’: it’s the majority of people who lose out. And of course, the prime example of this now is Haiti. The Natural Disaster which has no meaning or cause, except for a rupture in the earth’s surface – but as has been point out over and over and over again, the situation in Haiti is very much man-made, and the rising death toll should hang heavy on our consciences.

As the NEF report points out, ‘natural’ can mean all sorts of things. In economics, the idea of ‘survival of the fittest’ has become the main way of thinking of the economy as ‘natural’. The NEF sways between saying that we can have a different ‘natural’ metaphor (e.g. co-evolution) and saying that economists need to understand that economics isn’t bound by the laws of physics at all.

But if the earthquake, or the results of it, are the man-made disaster, then perhaps the Natural disaster was the Haitian revolution. This was the point where it wasn’t about economic growth or de-growth, but about people setting themselves free. For a moment at the end of the 19th century, the idea of ‘black’ as political was born, slavery was abolished by the slaves themselves, and a new economic order was instituted. A moment in history where freedom breaks out – now that’s what I want ‘natural’ to mean.

If we’re going to use metaphors of Nature, how about we stop trying to make our economy seem like a natural occurrence, but instead make the way we change society for the better part of our ‘natural’ disposition. I prefer that to policy documents. It comes more naturally to me.

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Reader Comments


I too get quite miffed with very ambiguous use of the term ‘natural’ by those feindish non-scientists.

Though on the subject of re-tooling the economy (yeah NEF, see, you’re not the only ones who can mis-use words), I would like to see some sort of system set in place, so that actions that have negative environmental externalities (i.e., clear cutting forests)suffer financial penalties, and actions with positive environmental externalities (i.e. sustainable logging in managed, bio-diverse forests), has financial rewards. particularly in terms of direct physical benefits, i.e. carbon sequestration, water filtration, soil maintenance.

I suspect the best way to do this would be to make everybody able to directly financially benefit from maintaining their environment. I don’t know how one would set about doing this, but if anyone wants to figure it out, here’s a seeding idea: phantom shares.

Because if you do not ascribe any value to these things, they appear on the accounts page as 0.

Written By Owain on January 28th, 2010 @ 1:55 am

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