Sunday, October 24, 2010

Steady-state economy and de-growth models of development.

Since last few years I was wondering how many people this world can sustain. Obviously the answer depends on how we define sustainability and what quality of life we like to have to calculate that number. Initially we used to think that this world can sustain 4 billion people. Later we revised that data to 6 billion. Now we know that world can (rather “have to”) support more than that. One report suggests that we already need 1.2 earth to sustain just our current population (1). 

Now think that majority of world population (including those in rapidly developing countries like India, China, Brazil etc are nowhere near the desired living standard that people in very few affluent, first world countries enjoy. The same question is intimately related to many other questions related to 'sustainability' and 'growth', two favorite terms for many, if not majority, corporate, government and even non-profit organizations worldwide. These terms are highly misused or used very vaguely as an advertising tool.

I was also wondering what type of model of development we should have, to sustain this world and our quality of life. It becomes more important for developing countries like India where we almost constantly hear about "development" and conflicts arising from that. In one hand, we hear the conservation and global warming experts and enthusiasts like Al Gore who tell us to consume less, create less carbon footprints in our daily lives. On the other hand, we are constantly hearing many economists and policy makers that we need “growth”, that we need to spend more (i.e consume more). National governments, corporate houses, even NGOs; all are talking about this "growth". From our childhood we had an impression that low or zero “growth” is very bad! I was confused like many other general citizens, who want to behave responsibly. Then I came across an interesting article in a reputed research journal, “EMBO Reports” (Sep 2010 issue, Vol. 11, No. 9, pp. 659-663) (2). Basically the article is about consequences and desirability of a second green revolution to feed ever increasing global population (and eventually turning the world into a giant farmhouse).

The article emphasizes on alternative economic models that recognize ecological limits of human development and emphasize social equality. It described two alternative economic models. The first one proposes a steady-state economy: one that has stopped growing in terms of GDP, but continues to improve quality of life and is maintained by an ecologically sustainable rate of resource throughput and a constant human population. The second one is a sustainable de-growth model that has been defined as “an equitable down-scaling of production and consumption that increases human well-being and enhances ecological conditions at the local and global level, in the short and long term”. The paradigm is that human progress without economic growth is possible. It has been shown repeatedly that GDP per capita does not correlate with overall happiness above a certain level of satisfying people’s basic needs. According to a recent article, earning more than a threshold level does not translate into increasing overall happiness and satisfaction of life, while may have negative impact on quality of life. That cut-off value is ~ $ 75,000 per annum per family in USA (as of 2010) (3).

The defenders of de-growth emphasize that this process is “not the same as recession or depression— there should be no social or quality of life deterioration—nor does it promote a return to a fictitious pre-industrial pastoral past”. 

It is almost impossible to tame greed of people (for both power and money), mainly the ambitious and intelligent ones that influence public policies and run private industries through the way current “growth” based economic model is practiced. That's one of the reasons why many, including national governments, prefer GDP type macro-economic parameters despite loud demands to adondon GDP as the overriding measure to indicate social and economical development (4). In 1972, the tiny Himalayan nation of Bhutan opted to base its policy-making on indicators of 'gross national happiness', with King Jigme Singye Wangchuck declaring that this measure was more important than more conventional indicators such as gross domestic product (GDP). Today, after three decades and the biggest financial crisis since the Great Depression, his remarks seem prescient. A consensus among economists and policy-makers is growing that governments' reliance on GDP as the main proxy for social well-being and progress is leading the world in wrong and unsustainable directions (5).

It raises a serious question that if I have talent and ambition, how much right (both ethical and legal) do I have to get what I want! How beneficial or harmful is the typical “winners take it all” mentality for overall development of any society? Let me re-phrase the question. If powerful countries have the economical, technological and military might, does that give it the right to mow down other countries that does not agree with it OR for expanding its economic and/or political strength at the cost of many other people around the world? And more importantly, how will that affect our own social and economic prosperity? 

Anyone can extend the logic at any level- starting from within a family, or an organization, or a city, or a state or a country.

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