Sunday, April 24, 2011

What transition? Part 4: Renewing the framework (Installment #1: "De-growth" and an economic Kyoto protocol)

Now that we have seen how flawed the current mainstream responses to global imbalances are (in Part 2), and what alternative vision might guide citizens and decision-makers towards a new horizon (in Part 3), we're ready to spell out the framework conditions -- at least some of them, and if possible the most strategic ones -- which could ensure that the "muddling-through" process will lead to a real and effective, durable and viable, pluralization of modes of production, patterns of consumption, conceptions of work and work practices, monetary systems, and ways of social life more generally.

Given what I said in the previous post about my own libertarian take on progressive politics, I believe that we ought to promote nothing but these framework conditions, because in a democracy the public sphere, where debates take place and binding decisions are made and justified, should never be a place where doctrines are imposed at the level of personal lives. If what we are after is the "integral" liberation of persons -- and this, I believe, is what genuine liberalism is all about -- the conditions we do accept to be binding on us ought to be conditions that ensure radical equality of opportunity. As we saw, this means the possibility for each citizen to choose, and to modify over his or her lifetime, the sort of economic mechanisms she accepts to submit to. Such a choice is never completely unconstrained, and the way of life one chooses is never free from encroachment from other ways of life -- but this fact of democratic life is not an argument for upholding, and even reinforcing, the power relations currently prevailing within capitalist social democracies.

As a result, the framework conditions we are going to be studying over the next few posts should
  • be implemented by deconstructing the ongoing power relations -- which is, of course, the hardest political task in any transition, and requires the framework conditions to be designed in such a way that people become able to sidestep power relations with as little sanctions as possible
  • contain mechanisms and tools (especially cultural and political tools and, more prominently still, legal and legislative ones) that will make it possible not to build up new, post-transition power relations which would cancel the pluralizing dynamic that was initiated


1. Global footprint reduction, "de-growth," and an economic Kyoto protocol

I have repeatedly spoken of the fact that today's globalized, industrial-financial capitalism, with its highly non-selective trade flows and its clear tendency to view human labor as one more raw material, generates (as its forebears have been generating at least since the mid-19th century) both (a) bio-environmental externalities which mean that all economic actors taken together are busy, each in his own way, making the natural environment unbreathable and less and less hospitable for life; and (b) anthropo-environmental internalities which mean that, within economic organizations, actors are busy (also each in his own way, depending on the place he occupies in the functional distribution of roles within capitalist social democracy) making the human environment less and less bearable for each other. Not all externalities are internalized by capitalist markets -- in fact, with the help of various pieces of legislation, there might well be a tendency for the reverse, with less and less externalities needing to be internalized because of sacrosanct competitiveness imperatives. And not all internalities are externalized within capitalist organizations (including profit-financed public services and nonprofit organizations) because, again, capitalistic bottom lines make it costly to do so, implying an increased pressure for the costs of "humanizing the economy" to be shoved onto the victims themselves. (A paradigmatic case is the trend towards denying the validity of claims concerning suffering at the workplace, and attempting to make all moral harassment legislation inoperative, with the complicity of the judicial system itself, so that individual sufferers have the choice between passive but illegal protest and uncomplaining adaptation.)

Greenhouse gas emissions are just one aspect of the negative effects of our current economic model. More generally, there is the issue of humanity as a whole having a much too large ecological footprint -- you know, all those estimates that say that, were all inhabitants of the earth to produce and consume like those of the so-called developed world, anything between three and nine planets Earth would be necessary. The resource overshoot day (i.e., the day on which humanity starts going into ecological overdraft given the planet's regeneration capacity) comes earlier and earlier each year.

The world-famous US environmentalist Bill McKibben (see his website in the sidebar) is known for having said that before we run out of oil and other non-renewables, we're likely to run out of planet: Pollution and climate change might well reach catastrophic tipping points soon. McKibben has coined a new term for the kind of planet which our earth is in the process of becoming: he calls it Eaarth (the title of his latest book), to emphasize the reflexes of disgust and alarm -- as in "Aargh!" -- evoked by the recent developments on the bio-environmental front. McKibben's militancy within the group (a group set on acting and encouraging collective action so that the density of greenhouse particles in the atmosphere is kept below 350 parts per million, or ppm; see [Note: 1 ppm = .0001 percent of the atmosphere's volume] has led him to advocate drastic reduction measures, focusing especially on the richer countries, and even though he is certainly no technophobe he does realize that the state of today's transportation and manufacturing industries cannot be upheld. This is essentially the same message as the one circulated by most climate-change experts within the IPCC. The massive and drastic CO2 emission reductions these people and organizations call for (the figure gets updated constantly, ranging anywhere from minus 85 percent within ten years to minus 120 percent within five years) is utterly frightening to most traditional economic elites in our part of the world, but it's also utterly exciting for those techno-geeks who want to use this sad opportunity to experiment with new combinations of old, traditional technical lore and frontline, cutting-edge innovations. (Juliet B. Schor's new book Plenitude contains many stimulating vistas in this area.) And clearly, the Kyoto protocol and whatever successor accord the world's leaders may be able -- or grudgingly willing, as the case may be -- to agree on is paramount if we're not to run out of planet even faster than we run out of oil.

A frequent topic for contention in debates on climate-change and footprint-reduction issues is whether "market forces," left to themselves, can generate the appropriate motivations in individuals, firms, and countries. Free-market zealots like Wilfred Beckerman have long claimed that price changes for raw materials and cost-driven price hikes for energy-intensive manufactured goods will eventually shift supply and demand into more environmentally sound niches. Those who, like Beckerman (and many others), want to remain inside the capitalistic logic and who place their full trust in private-profit-driven bottom lines believe that what must prevail first and foremost is the individual freedom to exchange and transact. The two main tools to coordinate people's voluntary self-restraint are the market and technological innovation. The underlying vision relies on the self-regulation of the profit-cum-research pair, via the mechanism of market competition. As non-renewable resources become scarcer and/or renewable ones are discovered, private firms' search for profitable outlets for accumulated capital (including the private financing of academic research) is assumed to push them into investing in innovation in order to safeguard their market shares by reducing costs. (Fossil-fuel-extracting firms, in their turn, are assumed to play a specific role -- that of carrying out profit-maximizing R&D so as to substitute renewables for non-renewables.)

As a result, thanks to the market's automatic mechanisms (and provided all resources are private property), "green capitalism" will supposedly generate productivity increases in "clean" sectors, which will usher in a new era of "green growth." The underlying hope is that, thanks to endless human ingenuity, we might collectively be able to produce more and more by consuming less and less energy -- more precisely, by perpetually reducing the second-degree energy incorporated into products plus the first-degree energy needed to extract the second-degree one. And what can only be produced with large quantities of resources will be rendered wasteful through the market-price mechanism: too expensive, hence not profitable enough, hence abandoned.

This purely market-based vision of green growth has been challenged by many social democrats who are skeptical of the market's ability to induce, on its own, the required reorientations (a) quickly enough and (b) in an equitable fashion. On the one hand, market mechanisms are not capable of integrating long-term effects because the horizon of actors' profit seeking is relatively short compared to what is required to address most intergenerational as well as minority-protection issues (i.e., taking into account the interests of future human generations as well as the present "interests" of nature). On the other hand, the market registers only the aspirations and desires of people who have the monetary means to buy, so that whatever market-driven re-adaptations might occur through a globalized, "green" capitalism, they are likely to be responses to the preferences of the relatively rich citizens of the planet. That's why the role of the State and of collective decision-making in general cannot be simply to draw up a juridical and regulatory framework that will permit green capitalism to work optimally. We need ecological priorities to be integrated into prices, in particular through taxation schemes that force polluters to pay the full and complete price for their long-run impact on the environment.

In a nutshell, according to many skeptics of the free market, green growth needs to be decoupled from mere green capitalism and has to be integrated into a much more demanding "green social democracy." It is up to the State, not the market, to guarantee the conditions of economic growth in such a way that, though R&D and through re-orientations prompted by the change in the structure of prices, investment and trade decisions fully integrate the economic reality of resource scarcity and the political imperative of doing more than maximize short-run financial surpluses. But can a social democracy that remains anchored in capitalist wealth creation -- albeit, now, "green" wealth -- actually deliver on this ambition? I doubt it. This is so especially because, beyond McKibben's claim that we may run out of planet before we run out of fossil fuels, there's another claim that sounds equally alarming, having to do more with what I called anthropo-environmental internalities: Way before we came to realize we might run out of planet, we have been running out of humanity -- in the sense of human lives that have deep meaning and a deeper sense of purpose. And while I'm not a Marxist, I do believe that the young Karl Marx in the 1840s had already seen this very clearly. So had those whom he derogatorily called the "utopian Socialists." Our economic system isn't just about resource depletion, even though that issue is paramount; it's equally much about human alienation, or human-content depletion. And it's actually our alienation -- this deep-seated and nagging feeling that we might be missing something, that we always need to have more individually, that we are responsible for not doing what it takes to contribute to the collective effort of wealth creation -- which accounts for much of the environmental damage we inflict, often quite unwittingly, on our biosphere.

A reluctance to squarely face the issues of human alienation is, to my eyes, one of the main reasons why pure green capitalism is found to be so attractive by many economists. That attraction is not completely illegitimate, either. I mean, who wouldn't dream of being able to solve the planet's ecological problems without so much as tweaking the "crooked timber of humanity," as Isiah Berlin called it, taking his cue from Immanuel Kant? And indeed, free-market green capitalism postulates that human mentality need not change. More precisely, it postulates that it should not change: In the eyes of free-market defenders of green capitalism, the condition for market self-regulation to work optimally -- in the form of the proverbial invisible hand -- is that the timber of humanity remain adequately crooked... Green social democracy, on the other hand, is more schizophrenic and, in that sense, actually somewhat less credible. It postulates that in their economic lives, citizens need to remain homo economicus but that they have a moral duty to agree with stricter rules and regulations imposed in the name of the common good by public servants and public-minded actors (administrators, public lawyers, and political decision-makers) who do not reason as homo economicus does. If one were to follow this strange scenario, one would obtain green growth and new green jobs (presumably, at least as long as productivity-enhancing competition hasn't eroded the need for workers), but the raison d'ĂȘtre of these new jobs would continue to be the maximization of profits -- not of completely free-market, unencumbered firms, but of capitalist firms disciplined by an environmentalist State. (A discipline whose stringency would, in classical fashion, depend on the latitudes left to the State by the globalized character of the corresponding trade and capital flows.)

Unsurprisingly, the promoters of ecological and economic transition are very skeptical about the coherence of such a "green social democracy" scenario, even though they clearly share with the social democrats a rejection of free-market green capitalism. Firstly, they observe that the central engine of the economy would remain capital accumulation and, therefore, classically construed economic growth. Now, to what renewed horizon would this green growth be referring us? Whether or not it's green, whether or not it's mitigated by fiscal measures, it remains the same open-ended, non-selective, and downright anarchic economic growth and will sooner or later enter into collision with the biosphere's finiteness. Secondly, the "transitionists" underscore the fact that the fundamental problems of alienation linked to the denial of human finiteness are not addressed at all in a green social democracy: The State may seek to impose macro-level norms of "sustainability," but we still don't know what kinds of human life are supposed to thereby be made sustainable. It is myopic to want to organize the interdependency between human beings through a mixture of market and State without ever leaving any room for serious reflection on the questions, "What variety of human lives? What models of human beings?" True enough (and I've already emphasized this repeatedly in previous posts because I find it crucial not to be misunderstood in this area), you cannot "re-educate" citizens and force upon them ways of life they haven't themselves chosen consciously. Therefore, thirdly, it is very important that the monolithic character of the industrial-financial capitalist structure of our society be questioned via the creation of participatory spaces of reflection and action in which citizens can clarify their ideas on the purpose of life and the economy. This sounds grand and unrealistic, but it actually isn't. Those spaces need not, and probably shouldn't be, officially sponsored or privately engineered forums; they can emerge relatively spontaneously if more and more citizens become aware of the depth of the crisis and of the depth of their own alienation (somewhat along the lines of point (1) as raised in the quotation by Ivan Illich in the previous post).

What matters ultimately is that the growth imperative, as a structural and "genetic" necessity of capitalist social democracy, stop being seen as the foremost imperative guiding political decisions. But this, of course, means that the hegemony of capitalistic bottom lines has to be broken down -- and it's a classical chicken-and-egg question that can never be settled once and for all: Do we need to deconstruct the current system as a whole before we can usher in sufficiently momentous change, or will preexisting, necessarily partial and incomplete, small-step changes suffice to destabilize the system? In part 5 on the Next-Step Economy, we will of course need to give priority to this second assumption, because according to the transition model -- and in opposition to the revolutionary model -- it's the only one that can allow for initial steps right here and now. The whole issue will be how to calibrate those initial, first steps so that the larger-scale systemic issues beckoning on the horizon don't vanish in the quicksands of immediacy.

Questioning the growth imperative in the name of a general reduction in "toxic economic emissions" is very much akin to questioning the industrial practices of the day in the name of reducing toxic gas emissions. Toxic economic emissions include the alienating effects of consumerism on consumers as well as on workers, the alienating effects of productivism on workers and on managers, and the culturally destructive effects of growth-driven world trade. Most of these toxic effects are internalities, i.e., they are effects experienced "on the inside" by individuals and groups who have a hard time expressing them because they lack both the words and the legitimacy, as well as the public forums in many cases, to express them. That's why, just as in Kyoto world leaders, climate experts, and NGOs set up global norms for the reduction of greenhouse gas emissions, we also need a kind of "economic Kyoto protocol" that will allow for a wholesale reduction of those internalities.

Now it's not as if nothing at all existed in this area. The advances are somewhat timid, and mostly inserted into an economic worldview that remains pro-trade because it remains pro-growth. But there have been, and there still are, debates within the WTO on social and cultural norms to tweak some of the detrimental effects of uniformization through trade. The ongoing debates are strongly limited in scope by the fact that virtually no connection is made between the reduction of alienation-related human nuisances and the across-the-board growth imperative to which all parties to the negotiations accept to -- or feel they have to -- submit. In fact, given the prevalence of a system-dictated growth obsession made into a political goal, even socially or culturally motivated trade regulations may be used (and even advocated) by strong economic actors as additional ways to strengthen their domination. As
international trade-law specialist Krista Nadakavukaren puts it in her recent book, Social Regulation in the WTO:

"It is impossible to state in the abstract which of the possible solutions to the pursuance of social goals through the use of trade regulations is the 'correct' one. Not every use of social trade regulations is going to be either good (in the sense of minimizing the harmful impacts of the panoply of values to be balanced in the search for human dignity and sustainable development) or legitimate (in the sense of promoting an idea which every individual could accept as life-enhancing). And while I have argued that protectionism ought not to be the ultimate factor in determining whether a trade measure should stand or fall under WTO rules, certainly the implementation of an overwhelmingly rent-seeking measure [i.e., protectionism to shelter the strong and powerful] would be undesirable. (...)

Social trade regulations are not appealing political instruments. The denial of economic opportunities is seldom the most effective way to achieve political goals and the haphazardness of trade restrictions' use threatens to overshadow the particular achievements of any specific program. Moreover, in all but the most restrictive contexts they are illegal under the rules of the World Trade Organization agreements -- agreements which were voluntarily accepted by the Membership as comprehensively binding on their use of trade measures. Yet, economic measures are sometimes politically necessary instruments of remedying violations of the international legal system or of beginning a process of legal development. While not often the most 'efficient' tool of foreign policy, social trade regulations may be the optimal tool of foreign policy in a particular context. (...) While sceptics are right to criticize senders' inconsistency in applying social trade regulations, perhaps some attempt at improving the life of the international community is better than the politically-achievable alternative of no attempt. (...)
[U]nilateral actions may sometimes work more towards a community goal than multilateral inaction would. Until the members of the international system internalize the rules necessary for a recognizable society, social trade regulations will remain a necessary element of shaping that community." (Krista Nadakavukaren, Social Regulation in the WTO: Trade Policy and International Legal Development, p. 307 and pp. 314-315 passim, © 2010, Edward Elgar)

A trade lawyer's perspective on the legal and political difficulties of even a modest transition from socially unregulated to partially socially regulated world trade is invaluable to those head-in-the-clouds transitioners among us. What Nadakavukaren shows very clearly is that under the general worldview that rules the day among members of the WTO, often either social regulations will be introduced at home and/or promoted abroad as covert ways of securing rents for powerful domestic actors, or they will be opposed as politically unfeasible. The same is true for cultural protection (which she studies on pp. 213-240). The role of good working conditions and of culture in people's lives is, she argues, seen by the Appellate Body as something "left for others to worry about" (p. 220). This is, of course, only normal in the context of an economy that functions hegemonically on an unquestioned growth imperative, in the framework of which both cultural specificities and social norms or values are viewed mostly as obstacles to the creation of a level playing field for the most powerful members of the transnational capitalist class.

In fact, within that context the refusal of many developing and emerging countries to yield to the rhetoric of social protection (pushed by rich countries that have previously profited from its absence during the centuries of their own development) and of sacrosanct cultural protection (promoted by countries that have a powerful cultural-production and marketing sector) is more than understandable. In a world economy such as ours, where economic growth is totally uncoordinated politically -- and left to private forces linked to transnational capital accumulation -- and where there is no other way to attract international investors than to offer them powerful and short-term growth-boosting opportunities, it is only normal that many countries feel they cannot afford to adopt what are perceived as growth-impairing measures. So collective immobility ensues logically, such as has now virtually led the Doha round to a complete halt. In such a context of growth-necessity dictatorship, no "upward" norms might ever be forthcoming. And so, as Nadakavukaren rightly argues, unilateral departures from an international treaty or a multilateral status quo may be productive in the end, even if they are unbalanced to begin with: Pushing for tariffs or other barriers so as to stave off imports from low-wage, low-working-conditions countries may create short-term advantages -- perhaps even abusive, downright "protectionist" ones -- for powerful countries and their domestic firms, but it may still in the end generate a positive dynamic towards a worldwide upgrade in social standards or, for that matter, in culture-protection or environmental ones -- those she eloquently calls "
the rules necessary for a recognizable society," for a genuine community of nations or regions.

Now the crucial issue here is to what extent such a pragmatic, ultimate-value-oriented defense of even seemingly protectionist social (as well as cultural or environmental)
trade regulations might benefit from the existence of a more internationally coordinated, differentiated, and regulated economic-growth policy. I believe it would, in fact. I think it would go quite some in the direction of what Nadakavukaren calls "a recognizable society" at world level. Here's the idea: Low-wage, low-social-condition countries are likely to agree more spontaneously (at least, most of their citizens, apart from their own international economic elite) to more demanding social and cultural norms being pushed for worldwide if they don't feel these norms are a way for stronger countries of "kicking away the ladder" from under their attempts at attracting FDI and multinational capital with the feeble means at their disposal -- namely, a deregulated, unprotected labor market, no environmental obligations, no cultural barriers to Western products, etc.

One effective way of ensuring this is to build up an economic-growth "Kyoto protocol" in which (a) the world growth rate is calculated so as to be a cap on humanity's ecological footprint, (b) that world growth rate is furthermore adapted downward (if necessary) or upward (if at all possible) according to what is required for social and cultural protection norms to be practiced by all countries on an equal footing, and (c) most importantly, poorer countries get a growth credit while richer countries are asked to settle for the lowest possible (negative, if really necessary) growth rate. This would mean that as the planetary growth rate gets gradually reduced for ecological and/or alienation-related reasons, differentiated treatment would be given to the few already superlatively opulent and to those innumerable human beings whose communities and countries still need to achieve positive real growth per capita. This is precisely what economist Peter A. Victor emphasizes when, in his landmark book Managing Without Growth, he writes that "rich countries that have benefited most from economic growth should manage without growth to make room for the poorer countries where the case for growth is much stronger" (p. 21). He explicitly presents this as a matter of communicating vessels: less growth for the rich "makes room for" more growth for the poor. And this, of course, requires a macroeconomic framework which Victor is currently developing and which Tim Jackson is calling for under the label of an "ecological macroeconomics."

We need
  • planet-wide "de-growth," that is, an aggregate reduction in material throughput and output -- whereas the current trends all point in the opposite direction, despite all the technological progress and all the increased energy efficiency (because so much more less energy-intensive units of goods get produced, so that the per-item effect is more than offset by an explosion in the number items produced -- a phenomenon well known as the "rebound effect")
  • de-growth in the richest part of the planet so that there can be massive "re-growth" in the many maimed and all but destroyed economies of Africa, Asia, and South America (and, since there is to be net de-growth at the world level, this means a much more than proportional reduction in throughput and output in richer countries)
  • selective de-growth within richer countries, too, since there is no reason why even with a negative macroeconomic growth rate, countries such as the US or Germany should not have positive growth in certain selected sectors (Education and health? Public services? "Love-miles" or human-relations-related transport? etc.)
The domestic growth objective for poor countries would most likely not be achievable through FDI from richer countries now slowing down their own economies. Thus, within a global de-growth compact to be institutionalized (see the next post on new governance structures), the transition of poorer countries towards a high-growth regime will most probably have to occur by a high premium being given to the buildup of domestic, local human, social, and economic capital. This is truly a huge task for the elites as well as the citizens of such countries, but some of the most frontline development economists of our time (such as Jeffrey Sachs and, in a very different vein, Esther Duflo) are confident that with the right mixture of top-down steering, citizen-oriented (rather than elite-oriented) expertise, and bottom-up citizens' participation, significant progress can be made towards experimenting with culturally differentiated as well as locally adequate incentive schemes and governance structures.

To be sure, a global de-growth compact in which the rich countries stand to lose a great deal of prima facie comfort and know they will have to abandon time-honored reflexes of extraction and accumulation is a tall order. With an environmental Kyoto protocol, every political leader could still come home and try to argue that reducing emissions could still be made into a new growth engine. This proved to be very difficult in most cases, and that's why virtually no progress (beyond bouts of rhetoric) was made in Copenhagen in 2009 and in Cancun in 2010. Still, with the continuation of the Kyoto protocol looming in 2012, climate experts and environmentalists (not all of whom come across as neo-Luddites) are convinced that there is no other solution but to push greenhouse gas reductions further down. But while a post-carbon economy can be presented as a growth-boosting opportunity, a de-growth economy leading the developed world to have to rely on the long-lost virtues of stationarity, on increased social justice in the distribution of current stocks of resources and flows of goods, and on reasoned relocalization as well as selective deglobalization, is by definition not a very attractive prospect for growth as classically construed... We therefore need to create new accounting tools, new legal frameworks, and a new worldview in which anthropologically oriented, "human," relational, qualitative growth can be institutionalized into measurements and in which a materially stationary, less trade-intensive, and less hyper-productive economy can actually be seen to generate positive value and to "grow" in dimensions where today's growth-obsessed economies are faltering dismally. Herman Daly, Douglas E. Booth, and Peter A. Victor have, for quite some years (in the wake of the pioneering work of Nicholas Georgescu-Roegen), been busy trying to work out a credible framework for such a balanced, realistic global de-growth and first-world de-growth scenario, one in which third-world re-growth is included as a crucial aspect. There will be other posts in the future about this scenario and about various aspects of de-growth, since it is so crucial to the overall success of a genuine transition.

Global de-growth and first-world de-growth combined with third-world re-growth is the objective which an "economic Kyoto protocol" should aim for. With such a protocol as a major, frontline framework condition binding all nations of the planet, huge progress would already have been made towards a new logic and the possibility of justifying the need for, and action towards, a genuinely plural economy. Of course, such a protocol has no chance of ever seeing the light of day without intensive citizen advocacy and, perhaps even more so, without a set of national and supranational institutions to implement and monitor it.

The next post will argue that a fair global de-growth compact would require, among other things, the setting-up of a World Transition Organization in which the world's poorer countries have a predominant say. How such a new regulatory body might be constructed, what legal principles might make it easier for it to emerge, and what types of positive duties could be defined for the richer countries to assist the poorer countries by foregoing opportunities for economic growth -- all these procedural and substantive questions will loom large in the reflection on a politically coordinated, planet-wide growth policy.

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This post from the "Eco-Transitions" blog by Christian Arnsperger is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

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