Transition to an Economy for a Thriving Humanity

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In 2017, Earth Overshoot Day was already reached on August 2, 2017.

A Growth-Addicted Economy and Unsustainability

For more than 200 years, almost all interactions of humans with the ELSS are controlled by economic models that disregard the wealth of the non-human environment. Adam Smith (1776) defined the purpose of economy to be the creation of human wealth, with no regard for the impact this creation of wealth might have on the ELSS. As John M. Greer (2011) states, “it would be by no means inappropriate to define all of modern economic thoughts as footnotes to Smith.” One of those footnotes is the work of Milton Friedman, who redefined in 1970 the purpose of business as maximizing profit for the shareholders. Focusing totally on making money, and forgetting about any concerns for employees, customers, society or the ELSS, amplified the impact of Adam Smith’s original idea. In connection with the easy access to energy and new technologies it accelerated the degradation of the ELSS.

Only recently have we started to realize that the disregard of non-human wealth actually threatens not only our survival as a species but also endangers our economies (Heal, 2017; Korten, 2015). As summarized by Costanza et al. (2013) “the current mainstream model of the global economy is based on a number of assumptions about the way the world works, what the economy is, and what the economy is for.” These assumptions originate in an earlier period, when human wealth and capital was very limited, extreme poverty was a wide-spread problem, and human impacts on the planetary system were minor and at local scales. Planetary non-human capital was abundant, and there was little reason for Adam Smith and others to consider any limitations of the non-human capital in developing the economic model that became the origin of today's global economy and society. With less than a billion people on the planet with limited access to energy and means to change the environment, with most of them in extreme poverty, often exposed to famine, epidemics, and wars, it made sense to see the sole purpose of economy in increasing human wealth and to focus on the growth of the market economy. By thinking of the economy as only marketed goods and services, the means for growing the market became increasing the amount of the products and services that were produced and consumed. Thus, increasing the flows in the ELSS became synonymous to increasing the growth of human wealth.

The current mainstream economic system leads to basically unconstrained use of natural resources and their depletion. Long-term impacts and the resulting unsustainability are largely ignored and the hope is that lost ELSS functions can be replaced by technology, generating the requirement for continuous innovation. More is always better. Degradation of non-human capital and the loss of functional value of the ELSS are not considered in the measure of growth being the Gross Domestic Product (GDP, Costanza et al., 2014). Although attempts are made to establish improved methods for measuring wealth growth, the full functional value of components for the health of the ELSS is not considered in these concepts.

The current trajectory of the ELSS points to major shifts in the system state with unknown and uncontrollable outcomes for humanity and existential threats for our global civilization. The ACV is causing massive degradations of the ELSS. Changing the trajectory of the ELSS to more desirable and less threatening futures requires disturbances that exceed the resilience of our society and challenge our basic paradigms (Figure 2). Only a transition to a fundamentally new economic practice, an E4H that inherently safeguards the ELSS can divert the system trajectory towards more desirable futures. To guide our communities and economy towards this transition, it is essential to (1) provide information on the ELSS and its core functions, processes and vulnerabilities and how it connects to human livelihood; (2) develop economic practices that consider safeguarding the ELSS as congenital to economy; (3) develop criteria and a system that measures the degree to which we adopt these practices.

As a consequence of our unparalleled but unsustainable success, there is a need to reconceptualize the purpose of economy. Considering that at any time the flows between human and non-human components of the ELSS take place in the context of the prevailing economic model, we postulate that “a sustainable economy is one that safeguards the Earth's life support system while satisfying the needs of the present and ensuring the well-being of human communities.” This definition implies that economy can only be sustainable if it takes responsibility for the health of the ELSS and makes safeguarding the health of ELSS and ensuring the well-being of human communities a dual purpose of economy. Aligned to the definition of sustainable development given in Griggs et al. (2013) we define a sustainable community as one that satisfies the needs of the present while safeguarding the ELSS on which the welfare of current and future generations depends.

Figure 2: The iterative nature of bending system trajectories towards desirable futures. Achieving the transformation from the current state and trend to a desired future requires an iterative process of disturbances exceeding the system's resilience and corrections to bring the system's trajectory closer to the desired future.

The impacts of ethical, social, and economic rules on the ELSS physiology result from governance decisions. Although normative ethics demand otherwise, the current descriptive ethics are focused on growths of human wealth measured by inappropriate metrics favoring the acceleration of all flows between human and non-human components and between these components. Rieder (2015) identifies three normative ethical principles that are relevant to sustainability:

  • Duty not to contribute to massive, systemic harms;
  • Duty not to act unjustly;
  • Duty not to have children who would have bad lives.

Based on the notion that the “climate change crisis” is actually a “population crisis” the author uses these principles to conclude that in the current situation of a rapidly growing population having a severe degrading impact on the sustainability of the global society the number of children a family can reasonably have is limited to zero or one, and any larger number would need thorough justification. Applying the same ethical principles to the current economic practices shows that there is what could be termed a “production crisis,” in which much of the current economy violates at least the first and second principle by causing massive harms and severe injustice due to the degrading ELSS, climate change, and the distribution of wealth.

A number of alternative economies have been proposed. For example, Jackson (2009) discusses ways to prosperity without growth. Utting (2016) argues that for the implementation of the Sustainable Development Goals (SDGs) a “Social and Solidarity Economy” (SSE) has a potentially important role to play and can lead to a reorientation of economies and societies toward greater social and ecological sustainability. The principles and practices of SSE aim to reintroduce justice and to humanize economy with innovations grounded in people's agency. The transformative potential of SSE is considered crucial for achieving the SDGs. The current mainstream economy and its wealth creation seem no longer to serve humanity (Ruggie, 2003). Those benefiting from the discounting of natural capital of the current economic model, which allows individuals and companies to gather seemingly unlimited (virtual) human wealth, are likely to resist any transition to a novel economy consistent with the ethical principles. Any transition from the current infinite-growth economy to one that safeguards the ELSS will be resisted by both, individuals, companies, and to some extent governments. However, increasingly people across the planet understand that the current development is unsustainable and threatening the wellbeing of current and future generations. Many of those who realize that we are taking away the future of our children are engaging in the global unrest. From the perspective of sustainability, including poverty eradication and equality, humanizing the economy is perhaps the greatest challenge facing the international development community (Restakis, 2010). The efforts focusing on innovations and practices related to public-private partnerships, philanthropy, corporate social responsibility, social impact investment, the promotion of small- and medium-sized enterprises, and integrating small producers in the supply chains of global corporations often result in piecemeal or incremental reforms (Utting, 2013). Exploring ways to implement fundamental transitions is therefore a necessity.