How Fear Led World Leaders to Betray Green Economy

Professor Tim Jackson is not in the mood to mince words. Not only did Rio+20 fail to offer new hope to humanity but the author of the influential book Prosperity Without Growth believes the 190 heads of state and ministers who signed the final document have betrayed the vision of a green economy.

Rather than questioning the existing economic model, which is leading us to environmental and social disaster, Jackson believes the final text showed that politicians have let fear rather than courage gain the upper hand, which will result in us being driven even further into the arms of a bankrupt belief system.

The University of Surrey professor, who was in Rio to present the initial findings of his modelling work aimed at showing an innovative green investment led economic system is possible, says: “The most staggering linguistic turnabout for me is the one that equates green economy with ‘sustained economic growth’.

“There are 15 mentions of this term, occasionally with inclusive and once or twice with equitable added as a qualifier. But sustained rather than sustainable.

“This is hidebound recidivism at its very best. We’re no longer even using the terminology of green growth or sustainable growth. Instead of accepting the responsibility of the richest to develop a new economic model, this language has set back by a decade any attempt to question the model that led us to the brink of financial disaster, perpetuates huge consumption inequalities and is driving us towards ecological collapse.

“Disappointment doesn’t quite cover it. It’s a staggering failure of responsibility. I signed the NGOs’ Future We Don’t Want article out of sheer frustration and will now have to redouble my efforts to show that another economy is possible.”

Traditional thinking will lead us to destruction

While there was an acknowledgement at Rio+20 of the need to move beyond measuring success purely on the basis of gross domestic product (GDP), Jackson believes this is merely a distraction from the changes that are needed.

“I’ve spent fair chunks of my own time over the last two decades working on alternative measures to GDP,” he says “but I’ve come to regard the measurement debate as, in some ways being, another distraction.

[quote quote=”Politicians are terrified that if they don’t continue to support the current Ponzi scheme on which our wealth and stability are based, then the whole of the western world will end up looking like Greece and that is not the foundation on which to keep in power.” author=”” type=”text” ]

“All these economists coming late to the table talking about better measures, without questioning the underlying model isn’t really advancing things. It may even be holding them up, particularly if the same economists then spend years arguing that it’s impossible to agree on the right measure.”

The reason for the politicians’ lack of courage is simple, says Jackson. They are terrified that if they do not continue to support the current Ponzi scheme on which our wealth and stability are based, then the whole of the western world will end up looking like Greece and that is not the foundation on which to keep in power.

But like any other Ponzi scheme, the pretence cannot last forever and Jackson warns that traditional thinking will push us even further towards ecological disaster, and then the game really will be up.

Green growth is the emperor’s new clothes

Jackson says it is important to recognise the importance of language: “The ‘G’ word is a very powerful word, when you look at the language with which politicians, business leaders and academics describe the economy. It is like seeing religious writing in practice as every single presentation, or article or statement contains the word growth.

[quote quote=”The ‘G’ word is a signifier for not changing the system. It is synonymous with western consumerism which we are locked into. Green growth is the emperor’s new clothes, it is an empty concept.” type=”text” ]

“It is like a credo, the allegiance to the concept of growth and this will be good for growth, that growth is the foundation for stability, that growth means jobs and so it is about the power of words.

“If you put the ‘G’ word in there then it is immediately the existing growth based model. But if you talk about economy you can have a much broader conversation.

“The ‘G’ word is a signifier for not changing the system. It is synonymous with western consumerism which we are locked into. Green growth is the emperor’s new clothes, it is an empty concept. There is nothing there apart from aspiration and some of the modelling is vaguely supportive of getting a growth based economy more efficient in resource terms but there is no single piece of modelling anywhere really that shows you can have sustained growth, even in the richest economies, and get the poorest up to the level of the west and meet you CO2 targets.”

The sense of fear

Jackson points to recent comments from the environment secretary Caroline Spelman that there is no conflict between growth and being green: “This is the blindness of a religious fanatic, not one of a reasoned politician,” says Jackson before saying that he does not wholly blame politicians because their fear of economic collapse and social turmoil is very real.

Greece is a perfect expression of this. If the economy stagnates, people stop spending on the high street, so there is a lower demand for goods. Production has to fall, so unemployment rises, which further reduces spending. With less tax going to government and rising public expenditure for benefits, debt rises and either destabilises the currency or it becomes unserviceable.

Jackson says: “At that point you are Greece, the runt of the litter searching for financial support and that is exactly what motivates this sense of fear.”

With this scenario, politicians see it as their public duty to defend growth and Jackson points out that Keynes once said the purpose of the economy is to maintain social stability.

Jackson remembers when the now defunct Sustainable Development Commission, on which he sat, opened an inquiry into the relationship between sustainability and growth, they were accused of wanting to send people back to live in caves.

Looking beyond a consumer society

So what is the roadmap to get us to this new economic paradigm? “It starts from the point of accepting that growth does not equal jobs and incomes do not mean prosperity,” says Jackson.

“One is a mathematical equation and one is more philosophical. The philosophical point is that our happiness and wellbeing is not based on incomes rising. This is not just the wisdom of sages but of ordinary people. Prosperity is more social and psychological, it’s about identification, affiliation, participation in society and a sense of purpose.

“On the mathematical side you could in principle build a society in which people were fulfilling their needs and flourishing as human beings in a higher way than in a consumer society, provided you had the right investments in the opportunity to flourish in less materialistic ways.

“It’s fundamental to question labour productivity, which seems pretty perverse thing to say, especially when you consider that it seems to have delivered us from drudgery and the horrible jobs like mixing concrete and tilling the land by hand and it has been the foundation for a material productivity.

“But if you ask what is the kind of economy we want at this point, particularly in the developed economies, it makes sense to expand in the services that improve our lives, like health, education, social care, recreation, culture and crafts.

“This offers satisfying work and improves the quality of peoples’ lives. This has a lower footprint than industrial production and it is labour intensive and has less prospect of labour productivity growth.

“The value of health professionals is largely in the time they spend with their patients, teachers is largely the time they spend with their students, the value of the musician is the time he or she spends practicing and rehearsing and playing a piece of music. It makes no sense to get the London Philharmonic Orchestra to play Beethoven’s ninth symphony faster and faster each year.”

Key to his current research with colleague Peter Victor, from York University, Toronto, is to show whether the capital markets could get behind an alternative investment route.

A disconnect between the real economy and the monetary economy

Jackson says the mistake many have made is to come up with ideas for how the real economy could be transformed without recognising the power behind the throne.

“What current thinking doesn’t do is show how the money markets work, whether you can afford to shift the balance of the markets towards investment rather than consumption growth,” he says. “What would happen to employment, public spending, public debt and household net worth under these circumstances.

“What is fascinating is how we fail to connect the real economy with the money economy. What happened with the current economic and financial crisis is that the balance sheets were slowly going under water but the governments were only looking at GDP and employment and were not looking at the money indicators.

“What is also true is that most of the studies that look for potential for green growth do exactly the same thing, they look at the real economy and neglect the parameters around the balance sheet, the transfer of funds, the national accounting identity, which are the rules of the game in terms of money and investment.”

[quote quote=”By shifting this kind of institutional structure you make money available in a different way, primarily to those who are undertaking social and environmental investments — this is a softer and more equal way of providing money.” type=”text” author=”Tim Jackson” ]

Jackson and Victor are building a simulation tool to connect material impacts and environmental impacts alongside a model of the monetary economy to see how it’s possible to transition to a low carbon society with sufficient investment and how that would affect the balance sheet of households, the debt of government, the viability of firms, and banks.

So what are the results showing? “It’s a little early to say but I think what our work is showing is that the roadblocks are mostly ideological,” says Jackson. “If you have a particular assumption about how money is created, and this idea depends on allegiance to the markets to the extent that money is 97 percent created by commercial banks, even for social investment, then this is a very difficult place to get the level of social investment you need to create social justice and stay within environmental limits, without incurring an unsustainable level of sovereign debt.

“The suggestion is not by any means proved but it is in the land of possibilities that by shifting this kind of institutional structure you make money available in a different way, primarily to those who are undertaking social and environmental investments — this is a softer and more equal way of providing money, it does not distribute the losses to the poorest and the gains to the richest in the way the financial system does at the moment and it makes the money available for the investments you want without destabilising the balance sheets.”

Proving there is an alternative path

Tim Jackson is both exhilarated by the search for an alternative economic model but also feels the weight of the world on his shoulders, he feels that if he is unable to show that another route is possible, then he will have failed those who are counting on finding a positive way forward.

This is becoming all the more urgent, given that many NGOs and sustainability professionals are giving up hope, and believing that change will happen only when the world is hit by a catastrophe of epic proportions.

“We are told continually there is no alternative,” says Jackson. “We are saying another world is possible. We have stood up and said continuing growth in the Western world is unjust, inappropriate and potentially destabilising. Having said that, we understand why governments do it, so there is an onus on us to show there are other stories and to identify the institutional innovations you might need in order to arrive at this other place.”

This article appeared on on 25 June 2012.

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Jo Confino

Executive EditorThe Guardian

Jo Confino is an executive editor of the Guardian and chairman and editorial director of Guardian Sustainable Business. He also advises Guardian News & Media and Guardian Media Group on their sustainability strategies.