Overcoming the crisis through ecological consciousness and civic virtues: A manifesto

This manifesto originated with a diverse group of French, Swiss, and Belgian academics and practitioners. A version in French on Change.org, entitled "Manifeste pour une sortie de crise par l'écologie et par le civisme", has already been signed by almost 2,000 citizens around the world. You can see the list of initial signatories below, after the text itself. We are now launching the text into the English-speaking world, in hopes that it might serve as a mobilizing platform as the Rio+20 summit gets underway.
Please support this manifesto by signing it on the official Change.org webpage and, equally importantly, please send this URL whizzing through your social hives and your Internetworks! Thank you so much! So here's the text:

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There is no doubt that what we are witnessing today is an economic and ecological debacle. It stems mainly from the fact that our political institutions have lost control over large-scale collective choices. The ideology largely dominating today’s political arena displays an almost religious faith in the self-regulation of markets, and it marginalizes the democratic sphere. Even as we speak, the consequences of the lack of local and global regulation are already starting to make themselves felt dramatically: Inequality is soaring and the limits on natural resources, as well as the vulnerability of the ecological equilibria that make our lives possible, are being consistently ignored. We are calling forcefully for consciousness and solidarity to awaken at a world level. We are calling for a deep ethical shift in every one of us.
On the occasion of the Rio Summit’s 20th anniversary,
– We are calling on everyone to recognize the deep connections between economic and ecological issues. A world market has been constructed and developed, with the objective of scaling down protections and regulations. This has only further deepened wealth disparities. The political, economic, and financial elites have captured almost all of the produced wealth, thus condemning peasants and farmers in the South to misery and many populations in the North to social decay. While the past three decades have been a time of substantial growth in produced wealth, they have also evidenced an unprecedented rise in inequalities.
At the same time, another catastrophe in the making might soon force badly degraded living conditions upon the majority of our planet’s population. If—according to a highly plausible scenario—temperatures rise by 4 degrees Celsius, the adaptive capacities of many regions of the world would be exceeded. This would lead, among other things, to a sharp drop in agricultural and foodstuff production worldwide. Scarcer resources, an increasingly hostile climate, and an unstoppable rise in sea levels will hardly facilitate economic activities.
– We are calling on everyone to act in order to counterbalance the short-term focus of globalized finance. It is high time to counteract our decision-makers’ short-termist approach to environmental and development issues. To do this, we need to reinforce the international community’s capacity to enforce regulation and, at the level of nations, we need to counteract political powerlessness. We cannot avoid noticing that on a planet where trade and commerce have become ultimate ends, priority is almost always given to the smallest common denominator when it comes to social and environmental problems. Goods circulate and are consumed without so much as a thought being given to the working conditions of those who produce them or to their global environmental impact.
– We are calling for a condemnation of cynical opportunism in matters of climate change. The increasingly precise regional data supplied by climate models make it possible to devise cynical adaptation and investment strategies. Thus a small number of market actors believe they can reap a profit—at least for a time—from ongoing environmental changes by shifting their investments as new ‘opportunities’ arise.
– We are calling for a decrease in physical flows and for an end to the unbalanced overexploitation of the South’s natural resources. North-South relations cannot boil down to having the middle classes in developing countries envy the lifestyles currently prevailing in rich countries. The physical limits we have reached—scarce land, falling supplies of other minerals as well as of conventional fossil fuels—impel us to open different horizons. It is imperative that we orchestrate quickly a reduction of the physical flows on which our economies rely, starting with the North and its expensive lifestyles. We have to put an end to the unbalanced overexploitation of natural resources in the South, which keeps the majority of the world’s population from satisfying its essential needs (water, energy, and food).
– Finally, we are calling for a reinstatement of public decision-making power in order to overcome the crisis through ecological measures. Provided it respects the basic principles and rules of democracy, political decision-making is the sole avenue towards circumscribing and enacting a notion of common good which has also become globalized. Political decision-making will make it possible to put into force a number of measures that are indispensable if humanity wishes to succeed in the transition toward a just and equitable, frugal and sustainable economy.
What most urgently needs to be done is
– to enforce environmental and social rules within the World Trade Organization, in order to affirm social well-being and the respect for the limits of the biosphere as foundational principle of a sustainable world economy;
– to develop binding national and international financial norms in order to put an end to the abuses of the financial system and to reorient it toward the financing of the real economy;
– to take concrete steps to embody our solidarity toward the victims of ecological crises and toward the populations suffering from extreme poverty, which implies—among other things—implementing the Green Climate Fund whose design was called for during the 2009 Copenhagen Summit, along with innovative ways of financing the Fund and of controlling the allocation of its funds;
– to mobilize public money creation in order to finance the ecological transition and the adaptation to a natural world that is changing very rapidly, but also to put an end to the debt crisis and to return to balanced public budgets in the area of current spending;
– to shift the fiscal burden from work and investment toward the extraction of resources, so as to establish a genuinely ecological fiscal policy that creates incentives for lasting behavioral changes;
– to reform the teaching of economics and endow our universities with path-breaking research programs on new economic and social models compatible with a decreasing and equitable consumption of resources;
– to use the education system to transmit values of civic virtue and of respect for human beings and for nature, which are indispensable preconditions for a good personal and social life.
Faced with the alarming drifts of a society that has become more and more individualistic, we are calling for a renewed role given to political decision-making, within the strict limits of democratic control.
To support this manifesto, please go here.

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This manifesto was signed initially by the following individuals, before it was put on the Web on May 25, 2012:
Yohann Ariffin (political scientist, University of Lausanne, Switzerland)
Christian Arnsperger (economist, FNRS and University of Louvain, Belgium)
Floran Augagneur (philosopher, Sciences Po. Paris, France)
Guillemette Bolens (anglicist, Vice-Chancellor of the University of Geneva, Switzerland)
Nicolas Bouleau (mathematician, Ecole Nationale des Ponts et Chaussées, France)
Dominique Bourg (philosopher, University of Lausanne/vice-président Fondation Nicolas Hulot/ Switzerland)
Baptiste Campion (media scientist, University of Louvain, Belgium)
Isabelle Cassiers (economist, FNRS and University of Louvain, Belgium)
Gauthier Chapelle (biologist, scientific director of Biomim-Greenloop, Belgium)
Jean-Christophe Charlier (CTB, Belgium)
Jean Cornil (former federal MP, Belgium)
Alain Dangoisse (Maison du développement durable, Louvain-la-Neuve, Belgium)
Felice Dasseto (sociologist, University of Louvain, Belgium)
Rodolphe de Borchgrave (Cadmos, Belgium)
Maurice de Borman (attorney, Association Wéry, Belgium)
Thierry De Smedt (media scientist, University of Louvain, Belgium)
Christophe Derenne (director of Etopia, Belgium)
Eric Duchemin (environnementalist, director of the online journal "Vertigo", University of Quebec, Montreal, Canada)
Marc Dufumier (agronomist, AgroParistech, France)
Benoît Faraco (political sciensist, Fondation Nicolas Hulot, France)
Augustin Fragnière (environnementalist, University of Lausanne, Switzerland)
Benoît Frund (Vice-Chancellor of the University of Lausanne, Switzerland)
Michel Genet (economist, director of Greenpeace Belgium)
Paul Geradin (ICHEC, Belgium)
Jean-David Gerber (geographer and political scientist, University of Lausanne, Switzerland)
Gaël Giraud (economist, Ecole d'économie de Paris, France)
Pierre Henry Gouyon (biologist, Museum National d'Histoire Naturelle, Paris, France)
Alain Grandjean (economist, co-founder of Carbone4, Fondation Nicolas Hulot, France)
Thierry Hance (biologist and environmentalist, University of Louvain, Belgium)
Gérald Hess (philosopher, University of Lausanne, Switzerland)
Marek Hudon (economist, Solvay Business School, Université Libre de Bruxelles, Belgium)
Nicolas Hulot (president of the Fondation Nicolas Hulot, France)
Jean Jouzel (climate scientist, IPSL/CEA, Paris, France)
Alain Kaufmann (director of the Interface Sciences Société, University of Lausanne, Switzerland)
Etienne Klein (physicist and philosopher, CEA, France)
Pietro Majno (surgeon, Geneva University Hospital, Switzerland)
Dominique Méda (philosopher, Paris-Dauphine University, France)
Jacques Mirenowicz (director of La Revue Durable, Switzerland)
Cécile Ostria (director of the Fondation Nicolas Hulot, France)
Déborah Philippe (sociologist, University of Lausanne, Switzerland)
Cécile Renouard (philosopher and economist, Centre Sèvres and ESSEC, Paris, France)
Philippe Roch (former director of the Office fédéral de l'environnement, former secrétaire d'Etat, Switzerland)
Adèle Thorens Goumaz (philosopher, national adviser to the green party Verts/VD, Switzerland)
Alain Tihon (Spin out sprl, Belgium)
Nicolas Van Nuffel (CNCD-11.11.11, Belgium)

To support this manifesto, please go here.

"Money and Sustainability: The Missing Link" by Bernard Lietaer, Christian Arnsperger, Sally Goerner and Stefan Brunnhuber

Just out from Triarchy Press

Money and Sustainability: The Missing Link
by Bernard Lietaer, Christian Arnsperger, Sally Goerner and Stefan Brunnhuber

A report from the Club of Rome
to Finance Watch and the World Business Academy

Axminster (UK), Triarchy Press, June 2012
216 pages – £24.00 – $30.00
(initial offer price: £16.00)
ISBN 978-1-908009-75-3
http://www.triarchypress.com/pages/Money-and-Sustainability.htm

See table of contents below

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Our money system systematically undermines sustainability initiatives and objectives. It is also the structural cause common to all financial and monetary instability. These systemic problems are first explained – and then elegantly resolved by the practical innovations proposed in this book.

Our money system IS the "Missing Link."

We tend to assume that we must have a single, monopolistic currency, funded through bank debt, enforced by a central bank. But we don't need any such thing!

In fact, the present system is outdated, brittle and unfit for purpose (witness the eurozone crisis). Like any other monoculture, it's profitable at first but ultimately a recipe for economic and environmental disaster. The alternative is a monetary "ecosystem," with complementary currencies alongside the conventional one. This is more flexible, resilient, fair and sustainable. Societies worked like this in the past. So can we.

Pioneering new research from the Club of Rome

In 1972, the famous first Report for the Club of Rome – The Limits to Growth – showed how an economic system that demands infinite growth in a finite world is fundamentally unsustainable. This new Report explains our present monopolistic money system and the flawed thinking that underpins it. It spells out the catastrophic problems – environmental, socio-economic and financial – that we will continue to experience unless we make radical changes. Finally, it sets out nine practical proposals, which can be implemented now, to run alongside the current money system. This book is essential reading for policy makers, business leaders and economists, anyone concerned about sustainability, those working in the field of monetary systems and anyone with an informed interested in the future of the planet.

"We will never create sustainability while immersed in the present financial system ... I used not to think this. Indeed, I did not think about the money system at all. I took it for granted as a neutral and inevitable aspect of human society. But ... I now understand, as proven clearly in this text, that the prevailing financial system is incompatible with sustainability."

– Dennis Meadows, co-author of The Limits to Growth

"... we are witnessing the dismantling of the state as guarantor of public good. Almost everything is for sale in most EU countries. Austerity is imposed at all levels ... We dare hope [the book] will inspire many a decision maker and opinion leader to change course."

– Mark Dubrulle, President, Club of Rome - EU Chapter

"The book contains powerful arguments that need to be listened to, digested and acted upon … it points to new ways of reforming our financial system, to pioneering ideas and to potential solutions. The call for alternative thinking and innovative strategies is timely and necessary."

– Ian Johnson, Secretary General, Club of Rome; formerly Vice President for
Sustainable Development at the World Bank

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TABLE OF CONTENTS

Foreword by Dennis Meadows (can be read online; click here)

Executive summary (can be read online; click here)

Chapter I: Why This Report, Now?
1. Identifying Structural Issues
2. Offering Pragmatic Solutions
3. The Importance of Timing

Chapter II: Making Economic Paradigms Explicit
1. Dealing with the Natural World
2. Dealing with the Monetary System

Chapter III: Monetary and Banking Instability
1. The Emergence of a "Global Casino"
2. Systemic Crises: Frequency, Types and Geographical Spread
3. The Sovereign Debt Squeeze
4. A Solution: The Privatisation of Everything?
5. Conclusion

Chapter IV: Instabilities Explained – The Physics of Complex Flow Networks
1. The Misclassification of Economics
2. Complexity
3. The Physics of Complex Flow Networks
4. Lessons from Nature
5. Application to Monetary Systems
6. Towards a Structural Solution?
7. Conclusion

Chapter V: The Effects of Today’s Money System on Sustainability
1. The Pro-Cyclical Tendency of Money Creation and Flow: ‘It Never Rains, but it Pours’
2. Short-Termism: Why the Future is Discounted
3. Compulsory Growth Pressures: On Debt and Compound Interest
4. An Unrelenting Concentration of Wealth: the Poor vs. the Super-Rich
5. The Devaluation of Social Capital: Why Competitive Behaviour CAN Overpower Cooperation
6. Money as an Attractor
7. Conclusion

Chapter VI: The Institutional Framework of Power
1. Semantic Traps
2. The "Chicago Plan"
3. The Official Paradigm
4. The Fiat Currency Paradigm
5. Comparing the Two Paradigms
6. Conclusion

Chapter VII: Examples of Private Initiative Solutions
1. Doraland: Creating a "Learning Country"
2. Wellness Tokens: Overcoming Market Failures in the Health Care System
3. Natural Savings
4. C3: "Commercial Credit Circuits" for Small and Medium-Sized Enterprises
5. The TRC: an Initiative for Multinational Businesses

Chapter VIII: Examples of Governmental Initiatives
6. Torekes: A City-Initiated System to Encourage Volunteering
7. "Biwa Kippu": Funding a Regional Environmental Project
8. Civics: Funding Social, Cultural or Civic Activities
9. ECOs: Declaring War on Climate Change
Pulling All the Strings Together

Chapter IX: Beyond the Limits to Growth?

Appendices (available online only, click here):
Appendix A: A Primer about Money
Appendix B: Climate Change
Appendix C: Mapping Paradigms
Appendix D: Complex Flow Networks
Appendix E: A Chinese Insight
Appendix F: Wealth Concentration
Appendix G: Kondratieff and the "Long Wave"

... And now for a bit of philosophy: On economics as a science of prosperity

Happy New Year to everyone!

Since I suggested two posts ago that 2012 might be the year of Ecological Economics, and since I have claimed that Existential Ecological Economics ("EEEcon") is the only genuine way ahead, I would like to offer you some reflections which encapsulate what I, as an economist, find most important philosophically speaking. Since the ushering-in of the New Year is sometimes an occasion to do some soul-searching and some realigning, here are a few simple thoughts on how economics could be made into a more relevant science for the challenges we face -- both at the environmental and at the anthropological level.

After these few posts on economics as a scientific discipline, I'll go on exploring Next-Step scenarios, with a substantial part of the effort being devoted to discussing the work of other scholars and practitioners in the area of sustainable development and the "green economy." The idea is not to go on philosophizing forever. I do believe, however, that reflecting on method and science is an integral part of ushering in the Next-Step Economy. That's why I want to make occasional discussions of economics, ecological economics, and EEEcon part and parcel of this blog.

And now, on to those reflections...

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Economics is a science of infrastructure. Its sole social function -- but it is, of course, an important one -- is to work out the conditions under which everyone can access the required goods and services to live a full life. Period. By infrastructure I mean here not just investment goods and equipment (which is what the word means in common parlance), but whatever resources are necessary to underpin, or support from the inside ("infra") the search for a full life. This includes both annual income and accumulated wealth, i.e., flows as well as stocks, private as well as collective.

This means that scarcity has to be overcome in all relevant existential dimensions, to whatever extent necessary for full access to be ensured for each and every human being on earth. But the way to overcome scarcity -- the mechanisms by which "tradeoffs" are going to be made through the adjustment of economic variables -- is a matter for political choice, not a technocratic issue at all. Technicians, among which most of today's economists, have no entitlement in determining these mechanisms. As technicians they can only follow the guidelines established by political decisions. Now it may be that, perhaps, there is a "congruence" mapping linking certain types of "fullness" of life to certain types of scarcity-overcoming mechanisms. To that extent, and that extent only, is the economist allowed any critical claim. But if so, then competence in the philosophy and anthropology of economics is required. Most economists nowadays do not have that competence. This implies that most of today's economists have no entitlement to express preferences as to what kind of scarcity-overcoming mechanisms are to be politically chosen and implemented. However, once such a philosophical and anthropological competence is developed -- as I believe it ought to be -- an existentially and ecologically informed institutional economics can become a discipline that constructs and promotes normative arguments about which scarcity-overcoming mechanisms are preferable.

Data about the "happiness paradox" show that there is indeed a level of economic infrastructure (goods and services) below which the search for a full life is deeply impaired. Let's call this level the happiness threshold. (We'll change that name in a moment to something better.) This provides ample justification for the existence of a science of the economy. In fact, economics is part of the economic infrastructure it purports to study. Economists have to judge themselves on the basis of how well they fulfill the task at hand. This means that no element of the infrastructure -- neither the way the economic system as a whole is organized, nor the way in which the economics profession is organized -- can be off limits. The only task at hand is this: to ensure that every single member of humanity accesses the happiness threshold.

Above the happiness threshold, the building and maintenance of per-capita economic infrastructure is pathological. It means that people keep generating more income and wealth -- eventually in the form of constant "growth" -- while their search for existential fullness stagnates. This is the pinnacle of absurdity. It illustrates a simple but extremely important fact: Once per capita economic infrastructure has exceeded the happiness threshold, an economic science that takes as its objective the continuation of that "growth" for any individual is a science of existential avoidance. Therefore, the threshold is more aptly termed the "existential-absurdity threshold." Let me explain.

One hallmark of existential absurdity is that you keep on doing something that has long since lost its initial meaning. You're on a mechanical treadmill, going through the motions and no longer recalling precisely why you're here. We often have this feeling in our lives, and waking up to the reality of absurdity can be extremely painful. In the most extreme cases -- which, unsurprisingly, are getting more and more frequent in today's economic climate -- the waking-up mechanism is curtailed by addiction: you can't wake up because that would simply mean the end of what you feel is Your Life, with capital Y and capital L. For the addicted, waking up means dying. But even in less extreme cases where waking up would merely imply a more or less severe dose of transitory discomfort, keeping on the treadmill is literally a way to avoid the pain of waking up to the absurdity. The best parable for this figures in Antoine de Saint Exupéry's Little Prince, when the small boy asks a drunk what he's doing. "I’m drinking," answers the man. "And why are you drinking?" retorts the Little Prince. "To forget." "And to forget what?" The man’s answer pierces the reader’s heart: "To forget that I'm drinking." Haven't we all, in one form or another, experienced this inner dialogue?

No one is entitled to impose the specifics of what "a full life" means. However, unless we are already fully alienated to the pervading culture, we must recognize that there are some constants to the quest for existential fullness. To witness, the sorts of preoccupations our toddlers, children, youngsters, and adolescents have when they're not busy conforming to the latest commercial fashion or TV fad. What preoccupations? The basic "business of life": getting reassurance, warmth, and affection; building and maintaining meaningful human relationships; coping with the fragility of one's body and psyche; integrating one's sexual impulses; giving one's vital energy to causes worth fighting for; feeling at home in nature; knowing why one is alive, whether there is a transcendent meaning and how one can understand it and translate it into one's actions. With apologies, let me wrap all these things together in the somewhat dry expression "existential integration." No, not food, not water, not shelter, not clothing -- those are already part, albeit a very basic, indispensable part, of the infrastructure. Health yes, in the sense of a basic feeling or awareness of one's body, mind, and spirit operating in a fluid synergy and opening up horizons of sensation, thought, meaning, and understanding; but health services, no, and not medication, either. The latter are, again, part of the very basic infrastructure, the access to which it's the economist's job to secure for everyone.

None of this implies that anyone is going to impose one specific doctrine or faith about existential integration should be gotten. That's open. What matters is that the path to existential integration not be obstructed by a peculiar, and particularly pernicious, form of poverty: the poverty of economic affluence…

When kids or young people get caught up in fashion, fads, or imitation rivalry, they have already been infected by existential alienation. It's not specific to our modern commercial culture. However, the curse of consumerism is that it creates the deadly illusion that existential integration can be equated with a flow of goods and services, extending all the way to health services and medications (which also get more and more routinely over-consumed). To the extent this is the case, "commodities" end up summarizing existential integration in the very process of also making it meaningless -- and the whole economic infrastructure becomes a scam for existential avoidance: escapism from fragility, relationship, mortality, sexuality, etc. There's a lot of death and sex imagery in consumer culture, but it's precisely there to mask the true issues involved in mortality and sexuality.

In that sense, there is a widespread, rampant poverty in affluent society. It is quite literally a poverty created by the very affluence and opulence we have generated to block out the difficulties of true existential integration. You can be poor by being insufficiently rich, i.e., when your economic infrastructure lies below the existential-absurdity threshold; but you can also be poor by being too rich, i.e., when your economic infrastructure lies above that threshold.

Let's distinguish between a lower and an upper threshold: below threshold A, you are poor by lack of economic infrastructure; above threshold B, you are poor by excess of economic infrastructure. Below A, your existential integration is bad-to-mediocre because of sheer lack, and it improves only slowly as you get somewhat less poor, picking up speed as you reach threshold A. Between A and B, you can develop your potential for existential integration by actually using the economic infrastructure to enhance your integration -- that is, by using health care and transport and clothing and food to pursue and perfect your relationships, sexuality, religious quest, and so on. Above B, however, as material wealth continues to climb your existential integration dwindles, and you might get so caught up in the absurdities of large wealth that you could drop to pre-A integration levels. The factors that account for these threshold effects can either be linked to (a) the unanticipated external effects of infrastructure buildup, such as the degradation of social relations and the degradation of environmental conditions; or they can be linked to (b) the unconscious internal effects of infrastructure buildup, such as the alienation suffered in meaningless work, in mindless accumulation, or in mechanical consumption. (In this blog, I have called the former "bio-environmental externalities" and the latter "anthropo-environmental internalities." See the April 18, 2011 post.)

Economics is about keeping us all prosperous, not about making us ever more affluent. That's a very wrong message, which the hijacking of economic science by the industrial-capitalist-modern mentality has ended up sending out. Economics ought to be about nothing else than maintaining human beings between these two thresholds -- prosperous, which means neither too despondent nor too affluent. It's a great and noble task, full of links to psychology, ecology, and spirituality. It's why I wanted to be an economist. And it's also what no economics class ever taught me because for two centuries economists have been busy trying to push people above threshold A. Meanwhile, economists have become so engrossed by wealth as a value, and by the social legitimacy which their role as professional assistants to "wealth creation" gave them in the eyes of the powerful (as well as being a juicy a source of financing for their own personal career purposes) that they have ended up forgetting to look out for threshold B.

Moreover, they have in their overwhelming majority -- and despite their above-mentioned incompetence in matters of philosophy and anthropology -- taught the "virtues" of an economic system whose logic makes some people's overcoming of threshold A dependent on other people's overshooting threshold B. This is the current rhetoric of free-market "development" through international trade or, more generally, the rhetoric of a "trickle-down effect" going from the affluent over-consumers to the under-consuming poor. It neglects the existence and relevance of the A/B divide. All economic systems that make some people's overshooting of B a mechanical or technical condition for the survival of those who remain below A are perverse systems.

To renew economics, we simply need to make visible the distinction between thresholds A and B, and to insist that navigating the more or less narrow space between them is what the "new" economics should be about. Economics should be about wealth reduction just as much as about wealth creation. (Please note that I wrote "just as much as," not "instead of.") When this is so, it will be about prosperity, as indeed it should be: a science of increasing or reducing economic infrastructure in the name of people's existential integration.

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So much for philosophy. The reflection on Existential Ecological Economics isn't just an abstract, reclusive activity. Existential integration isn't merely an intellectual concept. They serve as the (often unrecognized) basis for our more concrete and immediate efforts. Therefore, all of these reflections having been set out, it's now back to the Global Green New Deal, the development of sustainable investment, finance and banking, the promotion of eco-preneurship, the development of efficient mobility and responsible tourism, and so on. It's all part and parcel of the same endeavor.

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

Caught between a rock and a hard place: What, in the end, do we want?

One of the main activities of an earnest thinker is to convert the frustration of stale ideas into food for further thought. It's basically a mental recycling mechanism. It used to be called "dialectics," but that sounds too Soviet and outdated, so let's not be fetishistic about the term. All it means, really, is that tensions, seeming inconsistencies, or even what sometimes feel like downright impossibilities need to be pushed to their own extremity, and gone into fully, so that a solution emerges from the very insolubility that seemed so perplexing. It's a tricky business. It can lead to all sorts of delusions and wishful thinking. But it's also the core of creativity through emergence. It's not just a matter of dialogue: What we need is dialectic dialogue, by which I mean a way of talking and debating that leads from the mere opposition of "A" and "non-A" (which can go on forever and can justify a pluralistic, sometimes polite and sometimes conflictual, but completely indecisive state of affairs in which the status quo continues to thrive) to their overcoming towards "more than both A and non-A."

Why am I saying this? Well, one of the consistent frustrations of my intellectual life is that I feel constantly caught between a rock and a hard place when it comes to presenting and discussing the "next-step" economy. When I draw up demanding long-term horizons, like I've done in most of Part 4 of this blog, the realists and the moderates throw their arms up in the air and claim that no actual credible transition scenario has been offered. Where, they ask, will we find the social forces and the psychological resources that would make the six framework measures palatable and feasible to most citizens? (One brand of realist are conservatives, who believe such social forces and psychological resources not only are non-existent, but shouldn't exist because human beings are as they are and because greed, short-sightedness, and lack of reflexivity are simply a given.) And when I present a moderate next-step scenario in which the current actors who dominate the economic and political scenery are given the benefit of the doubt and in which a Green New Deal, sustainable investment and banking, and eco-preneurship could serve as realistic steps towards more profound changes, the radicals, deep ecologists and bottom-up democrats feel betrayed and get annoyed, asserting that "green capitalism" can only reinforce the problems, never contribute to their solution -- and that even the six framework conditions are much, much too consensual...

So it seems I'm damned if I do and damned if I don't. It's an occupational hazard I'm quite willing to bear for a while, but not to adopt as my permanent professional ethic. Simply engineering a perpetual "democratic dialogue" between realists and utopians, between progressives and conservatives, has ceased to be an interesting and worthwhile goal for me. By that I mean that resolution and resolve have to follow upon dialogue at some point. This is what democracy is for. The issue -- to risk belaboring a point on which I have already insisted quite often here -- is not bottom-up versus top-down, or science versus politics, or long term versus short term, or left versus right, or green capitalism versus (truly) sustainable post-capitalism, or whatever else. I don't scorn people who deal with these oppositions; I've spent quite a lot of time and energy myself over the past decade trying to find an orientation among them. They are not totally irrelevant oppositions, but I feel they have started to become obstacles to dealing effectively with the single most important issue: How do we organize a free, open economy at the planetary level in which freedom and openness are compatible with the incontrovertible fact that any development trajectory must take place within a finite, non-growing biosphere among finite, fragile, and questioning human beings?

This is the very precise reason why I am convinced that (as I argued in my previous post of December 22, 2011) the paradigm of Existential Ecological Economics, or "EEEcon," is the only possible way forward. I have little patience for discussions about whether EEEcon is conservative or progressive, or about whether its inspiration ought to come from political ecology or from the Austrian school of economics. Such stale and, meanwhile, outdated oppositions need to be recomposed into new, productive, and fruitful tensions. For instance, it is important to know how to make EEEcon compatible with the science of climate change and of natural resources, and it is crucial to create massive dialogue between climate and natural-resource scientists and ecological economists. Nicholas Georgescu-Roegen made this dialogue a cornerstone of his "thermodynamic" critique of neoclassical economics, and Herman Daly's call to replace the neoclassical "empty world" view by a scientifically rooted "full world" view obviously presupposes a constant revision of economic principles in the light of scientific knowledge. In an "empty world," natural resources are not scarce -- and, I would add, human beings are not pushed to their emotional and existential limits. In such a fictitious world growth, measured as increasing throughput, effectively has no significant negative effects, and whatever relative scarcity arises can be immediately reflected in continuously but minutely shifting relative prices on efficient markets. In a "full world," on the contrary, relative prices shift abruptly as scarcity becomes massive due to the economic subsystem's overshooting of the physical limits of the ecosystem -- and, I would add again, due to increasingly massive disruptions in human beings' lives and in the circulation of "resources of meaning." To keep growth going, costs skyrocket and can only be dampened by increasingly distorted, and hence ecologically false, prices thanks to subsidies or to geopolitical "resource wars." As ecological economists recognize, investigating the constraints of a "full world" is impossible without the input of scientists who exercise their criticism vis-à-vis absurd assumptions such as the infinite substitutability of natural and economic capital.

I believe that such interdisciplinary research stands to gain both from approaches that are traditionally labeled conservative -- such as the Austrian school of von Mises and Hayek, which has much of interest to say about currencies and markets -- and from ones that are usually called progressive -- such as political ecology in the tradition of Gorz and Illich. This doesn't mean we have to create a consensual, indistinct mush of ideas designed to satisfy everyone. It simply means that the dividing line between status quo realists and pie-in-the-sky utopians is no longer productive; we need to co-opt all relevant scientific knowledge and all interesting economic ideas in the ruthless search for a paradigm that will draw a new line: between those who effectively believe in an "empty world" view based on scientifically untenable assumptions; and those who endeavor to construct a scientifically correct and economically sound "full world" view that allows to replace prosperity as growth by prosperity as development without growth. The realist/ utopian divide has ceased to be useful because the purportedly realist arguments of those who believe that perpetual "decoupling" and technological progress can offset tendencially rising throughput seem outright utopian to those who have moved towards an approach of strong sustainability -- and whom the realists, in turn, continue to label utopian because of their claim that a stationary, non-growth economy can be prosperous.

In my more radical days I used to be wary of Tim Jackson when, towards the end of his Prosperity Without Growth, he asks about the reforms he proposes: "Is it still capitalism? Does it really matter?" (p. 202) I saw this as a troubling sign of ideological compromise. Now, even though I still have qualms about certain aspects of Jackson's approach, I think I understand this particular position of his a bit better. It's not so much a matter of standing on one side or the other of predetermined political and ideological lines, as it is a matter of simply investigating, on the basis of the existing scientific evidence coming from geo-, bio- and climate science, to what extent a capitalistically driven economic system can cohere with a "full world" view. I am still skeptical about the possibility for capitalistic incentives to generate endogenous growth-dampening mechanisms and, even more so, of making a non-growth economy viable and just. Indeed, from within the current capitalistic incentive mechanisms, arguing against growth is -- to quote a colleague of mine -- like "being a pacifist on the eve of a major war." And that's why I now believe that the main task of democratic political governance today is to engineer a gradual transition whereby green capitalism is harnessed by new institutions and new mentalities, in such a way that its own "green" component will gradually make the emergence of sustainable ways of producing, working, consuming, and investing -- that is, ways of producing, working, consuming, and investing that replace growth by development without growth -- an endogenous necessity.

Can this be done while retaining a capitalistic incentive structure? I'm not sure at all, and I have indicated it in various previous posts, but it simply has to be left open at this "immediate next step" stage. Status quo realists will scold me for wanting to make "green" capitalism into what it cannot be -- namely, a stepping stone towards a post-growth development model, which to them is heretic given that growth is (they claim) the only tool we have ever had to promote development. Green utopians -- who quite rightly, in fact, see themselves as green realists given the mounting evidence of ecological catastrophe, but who have to be labeled utopians in reference to how far they believe we need to move away from the status quo -- will resent me for seeking to make green capitalism into an avenue towards a post-growth development model, when we know (they claim) that it is in fact intrinsically unsustainable and can only impress and mislead gullible consumers and investors through greenwashing. For the status quo realists, "green growth" is what we need -- although they fall virtually silent when pressed for an answer as to how we're going to avoid the finitude of the biosphere. Ever-deepening "decoupling" thanks to perpetual technological progress is their standard, increasingly desperate reply. Almost no physicist, chemist, or resource scientist believes in this reply anymore. For the green utopians, "green development without growth" is what we need -- although they need to (and increasingly do) face up to the insufficiency of the usual answers they offer, be it in terms of voluntary simplicity, self-sufficiency, transition towns, bottom-up local governance, and so on. Virtually no institutional economist will accept that such ideas can help solve the massive problems we are facing, if they aren't supplemented by (a) structural measures to harness today's capitalism into a new global compact and (b) a co-opting of today's entrepreneurial and financial classes into a new view of sustainable finance, banking, investment, and international trade.

So what, in the end, do we want? A more or less perpetual angry face-off between status quo realists (often denounced as utopians) and green utopians (often claiming to be realists), throwing around the usual couples of opposing concepts? Or a low-key but earnest attempt to combine whatever can be gotten from both realist and utopian approaches into a next-step economy that harnesses the existing power relations towards development without growth? In the former case, we're sure that while the opposing factions are bickering and throwing invectives at each other, the status quo will perdure -- and the "transition" model will look increasingly unlikely as the "collapse" model becomes more and more probable (see the April 16, 2011 post). In the latter case, we'll at least have a chance to engineer a new brand of economics -- EEEcon, as I have labeled it, which combines ecological and existential economics with institutional knowledge from political science and law, and with knowledge from geoscience, bioscience, and natural-resource science: a new brand of economics that can offer hope and direction in an intellectual landscape where brilliant but irrelevant models and theories abound.

Those of us who embrace this new brand of economics are bound to remain caught between a rock and a hard place for a while yet -- but we are not without the resources to create dialectic dialogue, a way of asserting the absolute necessity of development without growth while inviting all areas of knowledge and practice to participate in the endeavor. Something which, I have no doubt, both the realists and the radicals will see as yet another sign of the "weakness" of the approach. But that, as I said, is an occupational hazard I'm willing to bear. It's a difficult job, but somebody's got to do it...

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

2012, the year of Ecological Economics? Exploring the mad rationale for asset price bubbles

Hello everyone,

It's been a while -- almost five months now -- since I last posted anything. There are various reasons for this, none of which I want to go into here. Considering this long silence, it's rewarding to see that Eco-Transitions has kept being visited from all over the world.

The need for thought on, and action towards, the transition to a new economy certainly has not diminished. However, there has been massive displacement from issues of ecological and economic sustainability to issues of keeping the globalized financial system from collapsing. As we collectively struggle to continue bailing out banks, financial institutions, and governments whose debt-ridden demise would mean disaster for hundreds of millions of households and firms, we shove climate change, peak oil, and transition into the background again. Doing so, we are in fact severing the link that exists between an economically unsustainable financial and monetary architecture (based on debt overhang as the main source of mainly scriptural profit-mongering, massively disconnected from the real economy) and an ecologically and anthropologically unsustainable production and consumption system (based on the structural need to overshoot available natural and human resources by denying finiteness and remaining deaf and blind to both bio-environmental externalities and anthropo-environmental internalities). Severing this link and worrying primarily about how to keep the financial and monetary scaffolding from crashing down on workers, families, small and medium enterprises, and governments is a massive diversion. Not that we shouldn't be worrying about this -- indeed, we should, and urgently so. But the very fact that we have to be worrying about this and are, in the process, losing the broader picture of what's wrong with that scaffolding even when it "works well," simply shows the degree to which we have collectively become hostages to a debt-money and leveraging mechanism that has long catered to our wild dreams and illusions of sustainable quantitative growth.

*

In fact, as I explained in earlier posts, one of the main reasons why this growth-oriented system of production and consumption is unsustainable -- that is, generates actions that systematically ignore that the economy is a sub-system of a finite, non-growing biosphere -- lies in the financial and monetary architecture that supposedly "finances" this system. Far-sighted (that's Newspeak for "prophetic") analysts like (a.o.) Bernard Lietaer, Margrit Kennedy or Richard Douthwaite have been hammering this message for two decades -- and have been joined more recently by a new generation of younger and no-longer-so-young people such as (a.o.) Richard Heinberg, John Michael Greer, Charles Eisenstein, Stephen Belgin, Marek Hudon or myself. Not that we all agree on all the specifics of how a new monetary and financial architecture could emerge and what it would look like. We don't. However, we agree on the basic premise that the hubris -- the denial of physical limits, the built-in refusal of human finiteness -- characterizing the current money system is largely responsible for the consistent overshooting of natural resource utilization and the equally consistent damage inflicted on so-called human resources. In other words, we agree on the fact that the way money is being created, circulated, and spent in today's globalized economy violates the basic tenets of the paradigm of Ecological Economics due to Nicholas Georgescu-Roegen, Kenneth Boulding, and Herman Daly.

Ecological Economics doesn't deny the need for money -- meaning, simply, the existence of one or several means of exchange that are accepted for payments by all members of a community, including the government -- nor does it reject the necessity of financing economic activity. It doesn't question the usefulness of markets as devices that support a healthy division of labor. What Ecological Economics simply and straightforwardly rejects is the unholy cocktail of bank-debt-money and competitively oriented "innovation" that makes globalized financial capitalism into a forced-growth system. The unavoidable finiteness of the biosphere -- which various mainstream growth models tend to minimize through the tricky idea of "decoupling" -- implies that "prosperity as growth" needs to be replaced by "prosperity as development without growth," to borrow Daly's terminology. More precisely, it's all about creating possibilities for qualitative flourishing that don't depend on quantitative accumulation. By now, this idea has almost become a commonplace platitude. The question is, Why does it motivate so few of us?

A by and large stationary economy such as the one Daly calls for is incompatible with massive leverage (i.e., debt financing predicated on future value growth), since the latter relies on the tacit assumption that asset values measured in dollars or euros can keep growing essentially into infinity. Moreover, this value growth can't possibly be purely inflationary, since this would mean that no additional purchasing power is generated and all value growth is due only to rising prices. Speculators of all walks of life rely on asset-price bubbles in order to quickly siphon off sufficiently high numbers to their own bank accounts -- but once that money has landed on their accounts, by God they want to be able to count on it in order to buy more stuff! Huge amounts of money that aren't backed by material stuff to purchase (at least potentially) become totally useless. So the basic message of the financial and monetary system to the rest of the economy is: Now that we've generated this huge overhang of pending means of payment, now that all our banks have created this flood of scriptural cash based on speculators' bets -- and therefore debts -- we expect the real economy to make the goods and services available for all this cash to be spent. Remember that this was the reason why Fed Chairman Alan Greenspan encouraged, or at least totally condoned, the subprime lending spree: It was supposed to help already over-indebted households spur on the real economy through new home-building projects. In a sense, this was "financial Keynesianism": the Fed allowed vast quantities of cash to flood the economy, hoping this would (just like Keynes had hoped public expenditure would) generate spending, employment, and growth.

The housing asset-price bubble was used as a strategic tool. It was encouraged and consciously sustained. It was, in a sense, the ultimate bet: Let a localized inflationary craze generate sufficient bank-account wealth for a sufficient number of people, so that when they start to spend this as yet unbacked monetary wealth, the material wealth that was needed to back it would start getting produced. Greenspan's bet, rooted in his deep faith in self-regulating markets and in the "prosperity as growth" paradigm, was that this would jump-start a virtuous process through which the real economy would rally to quickly close the gaping chasm created by the financial and monetary logic of money creation. It didn't work. It eventually forced most States to create even more debt in order to bail out the perilously exposed banks and financial institutions that had speculated on the continuation of growth. And now that the sovereign-debt crisis is threatening the whole architecture, the immediate reflex is to try to spur on growth through yet another "trick": no longer through a new asset-price bubble, but through a massive "austerity" plan based on the idea that since private-sector economic agents are better able than the public sector to generate real wealth quickly, so that public spending has to be reduced drastically in order to free up resources for investors, private employers, and privately employed households to spur on growth. Austerity measures are thought to be a growth-creating measure by which the reduction of public deficits will supposedly increase private opportunities, so that supposedly efficient competitive markets will generate the needed economic growth.

Does that sound like the remedy is awfully similar to what caused the disease? Only because it is. And it couldn't be any different as long as the basic architecture of the financial and monetary system remains what it has been. Prosperity as forced growth is simply how this system defines the possible horizon. As I was watching the documentary "Inside Job" yesterday night (you can stream it on http://vimeo.com/25491676), I clearly felt the extent to which the main actors of the financial crisis in fact staunchly believe that there is simply no other possibility than to keep pursuing the same old macroeconomic project -- what can vary is the kind of tool (whether a new asset price bubble or a wave of austerity measures) that is best used in order to pursue it. Is it any wonder that, in parallel with this scramble for yet another jump start, we are witnessing such ecological regressions as Barack Obama stopping the process of improving air quality in the air traffic sector, or Canada announcing that it is leaving the Kyoto Protocol? It simply seems impossible to fully accept that prosperity cannot -- can no longer -- be bought at the cost of denying the biosphere's finiteness and the fragility of human beings.

Ecological Economics offers an alternative avenue. It argues that the whole architecture of our system, and in particular its monetary and financial aspects, needs to be recast. The bulk of the past posts of this blog are an attempt to suggest directions in which this recasting process might conceivably move. Why are these directions so very, very difficult to accept? I think that this question, more than the content of the measures to be implemented (about which a broadening consensus is actually emerging), needs to be addressed. Ecological Economics clearly questions what it means to be "rational" nowadays. It therefore needs to face squarely the existential issue of why its basic macro- and microeconomic assumptions -- all resting, basically, on the all-pervading fact of finiteness -- generate such deep distress. Why do they trigger such fears and anxieties? Why do so many of us perceive that the new assumptions fly in the face of the very meaning we've learned to give to our lives? Why is ecological rationality so quickly brushed under the carpet as soon as economic growth stalls? These are crucial questions. And this is why Ecological Economics needs to be supplemented by what I call Existential Economics -- the analysis of how deep-seated fears, as well as non-investigated worldviews about what existence means, condition what we consider to be economically rational, feasible, and realistic.

Without such an investigation, the "next step" we need might be either too timid, or deemed unfeasible from the beginning. More on this as we move into the New Year.

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

On pioneers and potential followers: Further reflections on capitalism, transition dynamics, and the role of citizens' consciousness

Well, it seems my previous post (dated July 20) was both controversial and... too long. Ahem. OK, the "too long" part is familiar to you guys by now. Take it or leave it. It can't be helped. I'm long-winded and that's why you like me -- or don't like me. I assure you I'm not doing it on purpose. (See the post of May 10, 2011 for a short justification of long-windedness.) If you're reading this, chances are you're still finding those long posts nourishing enough. So -- ready for another one?...

Now to the more controversial aspect of the July 20 post as well as of the June 25 and 29 ones. It seems the distinction I make between low-grade (or low-intensity) and high-grade (or high-intensity) radicalism leaves quite a few people skeptical. Fine. The skepticism is associated with doubts as to the role that can be played by the "consciousness" or "awareness" of actors in the business and finance world. Top-down imposition of regulation and constraints, so the skeptics argue, is the only way to circumvent both people's ignorance (and/or plain laziness) and their ingrained interest in things not changing. F-i-n-e. Now let's suppose we do agree -- not a wild assumption, given that this view of top-down governance, based on a de facto elite that has understood things and has the intellectual means to know what's best from the vantage point of the "common good" (the "We" that's to be desired), is very widespread in both academic and political -- as well as juridical -- circles. Let's suppose we subscribe wholesale to Frédéric Lordon's idea (see the July 20 post) that

"given the manifest -- and manifestly dangerous -- degree of autonomy acquired by contemporary finance, bringing it back into subordination will no doubt require imposing on it brutal, if healthy, regressions"
(Frédéric Lordon, Jusqu'à quand?, p. 164, © 2009, Raisons d'agir)

and that the finance sector's

"extravagant privilege of profitability is an aberration to be eradicated as radically as possible. As always, the privileged, who present their privilege as something self-evident, will scream denouncing a refusal of modernity, an assassination of talent or God knows what else, perhaps even an 'injustice' since nothing seems to stop them. History has shown that there are more violent ways [than regulation] of reducing privileges -- such as reducing the privileged! --, and so they will simply have to get used to the idea that the perspective of merely getting pulled back into the general, common order of things in terms of profitability is actually exceedingly soft and caring."
(Frédéric Lordon, Jusqu'à quand?, p. 169, © 2009, Raisons d'agir)

The affect of anger is clearly perceptible here, and the black humor is indeed funny enough. But is it helpful when it comes to understanding transition?

Lordon's basic stance is that the protests of the finance industry are nullified by anticipation because, given the self-interest class to which they belong (see the July 20 post for an explanation of this), bankers and financiers are now lagging behind history. In French: "... eux sont des retardataires" (p. 184). True enough, many finance actors as well as finance economists seem not to want to let the extreme seriousness of the 2008 crisis, as well as its roots in a decades-long monetary binge, sink in. The historical breaking point represented by the 2007-8 meltdown may be lost on quite a few minds still. No doubt about it. And there's little doubt, either, that this coordinated myopia has led to both intellectual and political misinterpretations as to what needs to be done to repair the effects of the crisis, or at least to mitigate them. When a sufficient number of people's self-interest is sincerely aligned with visions of the "We" that involve problematic or dangerous mechanisms (such as the legally sanctioned use of almost unrestrained leveraging to generate alleged "prosperity" in a slow-growth economy, betting against all odds on a massive jump-start effect that will later on allow all outstanding debts to be repaid), then terrible collective effects can be generated without the slightest evil intentions on anyone's part. All this is true. Being embedded, through a necessity not of their own choosing, in a system that operates on cutthroat competition, lightning-speed information technologies, and a generalized scramble for "high (or ever-higher) yield," bankers, financiers, entrepreneurs, and investors play the game they are made to play. This game shapes their perception of their own interest to such an extent that many of them de facto become not just passive participants in, but active promoters of, the existing logic. It provides them, as Lordon rightly says, with existential meaning.

Along that line of reasoning, "alternative" investors or entrepreneurs are an oxymoron, a mere linguistic construction without actual substance: They are, by assumption, tied into a class of interests which acts like the noose on a fox trying to pull himself free from a trap in which he is caught -- the harder he pulls to get away, the more firmly he remains stuck until, eventually, he strangles himself to death. Along the exact same line, we could disqualify the credibility of any movement of consumer liberation or "critical consumption" since, supposedly, consumers in today's consumerist system are constitutionally incapable of envisaging life without the complete trappings of what feeds their self-interest. If overconsuming makes up your existential meaning, how can you break free of it and suddenly become "alternative"? So, both in the case of financial regulation and in the case of taxing excessive consumption or reducing work hours, those who can and might call for rules and regulations are not, by assumption, those whose interest class traps them in the system. If this is so, the question arises: For whom is Frédéric Lordon (in this case) writing his critical analyses? To whom does he address his ideas about the radical re-regulation of the financial sector? Inevitably, they will only be taken seriously and absorbed -- to the point of prompting action -- by citizens who have undergone a sufficient degree of what I would call cognitive emancipation: (a) they have actually bothered to gather information and ideas about what happened in the finance sector and its repercussions on the rest of the economy; and (b) what information and ideas they have gathered has led them to agree with the sort of analysis Lordon is offering. Both are necessary. What (a) means is that the person is a concerned citizen -- one who has formed the desire to understand key aspects of the system s/he lives in. As to (b), it means that this concerned citizen has furthermore undergone existential experiences such that his/her interest lead him/her to subscribe to Lordon's analysis.

All this may sound pretty tautological, but it isn't really. It's quite crucial to our reflection on transition. It means that we are going to go along with Lordon's critical analysis and conclusions -- again, I'm just taking him as a case in point here -- only if there is some sort of peculiar resonance between the reasons he, as a citizen who does research, had for developing his ideas and the reasons we, as citizens who seek information and ideas, have for adhering to his ideas. In other words, apart from eloquence and a particular talent for doing research and for writing and communicating, there really isn't that much difference between Frédéric Lordon and the citizens who, upon reading his ideas, agree with him and are led to act on what they read. At a deep existential level, anytime someone agrees with you it means you've been "preaching to the choir" all along: The audience that responds favorably to certain ideas is always the group of people who were just waiting to have a moment of recognition, or of what Plato called anamnesis. The question now is, Can an investment banker, a business lawyer, or the CEO of a multinational have such a moment of recognition? Strictly speaking, Lordon's own theory of structure-induced interests would forbid it: If such a person were to claim that they had a moment of recognition and that they realized how flawed the system in which they've been living and working really is, they'd be immediately suspected of hypocrisy or, worse still, of strategically appearing to agree in order to be able, actually, to "hijack" the regulatory process later on by watering it down or even standing in its way. That this is what often happens is obvious; that it always necessarily happens isn't obvious at all. I know people who have had genuine moments of recognition based on ideas and analyses that didn't cohere at all with their supposed interests as the incumbent systemic logic defined it for them.

The trouble is, of course, that the systemic logic does impose constraints and interests that must be pursued no matter what. You indeed cannot be an investment banker in a highly competitive banking sector and, just because you've had a moment of recognition, immediately reverse the logic of your trade, offering your clients "triple-bottom-line" investments which, while not much less risky than single-bottom-line ones, yield a lower financial return in exchange for a higher sustainability, or "intangible," return. Given the current accounting rules, the existing regulations, and the prevailing mentality among the bulk of your own clients, you'll be speedily driven out of the market and disposed of by your shareholders. So what do you do? Either you manage, out of sheer talent and visionary force, to become a pioneer in a new field and you carve out a niche for yourself -- a niche in which you can shine as an exemplar of what ought to be done but which, given the prevailing logic of the overall system, isn't large enough to accommodate many more exemplars like you. (To wit, the ferocious competition that goes on in academia amongst otherwise anti-competitive "heterodox" economists to occupy the very, very few university positions in which they can actually exercise their "heterodoxy.") Or you stay in the mainstream as long as necessary for better opportunities to present themselves, so that you remain outwardly indistinguishable from your pro-system colleagues -- even though there's once crucial interior difference: You, contrary to them, are playing along with the existing rules of the game while quietly but alertly waiting for a possibility to act on what you are convinced is right. Why would you do this? Well, there are as many reasons as there are personal histories, but basically they all boil down to the fact that individuals, too, have transition trajectories -- so that having had existential experiences that led you (let's say) to read Lordon's work and agree with him may not immediately lead you to leave your position as an investment banker and create a radically "alternative" investment firm. In the same way, just because you may have heard a jarring, life-changing talk by John Ivanko and Lisa Kivirist on their 2008 book ECOpreneuring: Putting Purpose and the Planet Before Profits doesn't mean you'll become an eco-preneur next week, or even next year. In fact, the system may simply not allow you to do so, for a while or maybe for a long time. (Besides, you may have a family -- or two -- to take care of, kids in college, and a mortgage to pay off, and such fundamental career changes just don't occur on the spur of the moment. They need to be prepared.)

So there are two categories of concerned citizens (trait (a) above) who agree with novel, alternative ideas impelling them to act (trait (b)): on the one hand, pioneers and, on the other, potential followers who are poised but still hesitant. The pioneer plays within the existing rules of the economic system and, for whatever reason, is able to dig him/herself into a niche where something exemplary can be built up and displayed to the rest of the world. This invariably means that there's some resilience factor allowing the pioneer to disconnect from the constraints imposed by the prevailing system: S/he may have a personal fortune from previous mainstream ventures (like the private banker turned eco-preneur, or the no-holds-barred tycoon turned lavish philanthropist); s/he may have adopted a lifestyle that simply makes her/him less dependent on what the system has to offer (like the couple of academics turned subsistence farmers, as in the case of Sharon Astyk and her husband -- see the sidebar); or s/he may, for a more or less extended period, rely on unconditional public income support or on public subsidies (like the academic who uses the shelter of his/her statutory wage to develop non-mainstream ideas not yet palatable to the private sector, as in Lordon's case). In all cases, the pioneer will be trying out things, building ideas, or taking actions that can't, given the prevailing rules of the systemic game, be universalized yet. The position of the potential followers is different. They don't enjoy the same degree of resilience with respect to the system, and they may also not have the same talent for imaginative action and for visionary thinking. But this is actually not a bad thing: It will impel them (since they, too, are blessed with traits (a) and (b)) to think about what more they would need, in terms of practices, resources, and infrastructures put at their disposal, so that they too might "make the jump." (And remember, again, that this is a jump they're just waiting to make, given the convictions they've built up through trait (b).)

It turns out that potential followers -- and not just pioneers -- actually play a very important social role: While the pioneers are fully busy developing an exemplar of possibility that has no chance yet of being taken up by everyone, the potential followers can -- impelled by the very frustration they feel at being "trapped" in a system they'd like to change -- get busy developing modest everyday "bridges" that will ever so slightly tweak existing practices and ever so discreetly instill new questions into existing mental reflexes. (One of my close acquaintances is a very high-ranking bank manager. Another is a former CEO of a very big capitalist group. Together, they co-organize a forum of managers who invite academics and "pioneers" to think about new management practices. The jury is still out on whether this will end up revolutionizing the system. Neither of them is probably him/herself going to become an eco-preneur or a triple-bottom-line investor anytime soon. But the questions and ideas circulated in their forum are new, and unheard of compared to even a decade ago.) These potential followers can also -- and this may, in fact, be an even more important role -- interact with the pioneers, on the one hand, and with political decision-makers, on the other, to begin to militate for larger-scale regulatory changes to be imposed by the government or by international or supranational bodies, so that the potential followers may soon have more leeway to become second-wave pioneers in a less hostile environment.

Notice that I have written "to be imposed." The idea is not that first- and second-wave pioneers will create a whole new, "ethical" business and financial world in which no external regulation is necessary, and in which self-regulation through do-good ethics and spontaneous "social responsibility" is sufficient. Not at all. Regulation is needed to have a level playing field at whatever level is deemed collectively desirable. (In fact, so-called deregulation is merely a particular case in which the State regulates itself into irrelevance so as to create a level playing field at the lowest possible level of "collectivity." It is still a form of regulation, after all. Indeed, officially proclaiming that a game has no rules is still a way of ruling. I would claim that the deregulated capitalist market with its alleged optimality properties is, in fact, a form of collective planning. This is why, unsurprisingly, the State was called in by the private-finance sector itself to help as soon as free-market capitalist finance failed in 2008 due to its own excessive credit dependence and risk-taking. There is never a clear-cut distinction between a so-called "public" sector and a so-called "private" one.) To the extent that a sufficient number of us are convinced that Frédéric Lordon's severe re-regulation of private finance is warranted -- including within the private finance sector itself -- so that alternative finance practices can develop from small pioneering ones into generalized ones, we will indeed push for such severe reforms to be imposed. But this obviously requires two things: first, that alternative finance practices have already developed within the incumbent logic -- which keeps them marginal and embryonic, as well as only moderately successful; and, second, that they are inspiring a sufficient number of "insiders" who would want to become alternative, too, if only more favorable regulations were put into place.

Why should people from outside the financial sector be more compelled in favor of severe reform than actors within that sector? Lordon's own answer, based on his interest-class model, is that it's rational and logical for actors within the finance sector to oppose regulation that might reduce their access to high yields and force them to bear more of the costs of their own risk-taking. Thus, the argument continues, citizens from outside that sector, who have no such rational interest and whose sense of existential meaning doesn't depend on high yield, on competitive ranking, and on a jet-set life -- citizens who, moreover, realize that recent and current financial practices actually go against their own best interests -- will rationally and logically call for regulation to cap yields and increase accountability. Now this would be a valid argument if all actors in the financial sector were exclusively after high yield and competitive ranking no matter what. But even if this were the case, a question remains: Who would devise the regulation? It couldn't be the anti-regulation financiers (and the economists who subscribe to the same views as them), who know much too much to give away their tricks, nor could it be the incompetent average citizen (including the average politician, as well as all economists who understand too little about finance), who know far too little to be able to think up regulatory measures on their own. So the only persons left are, in Lordon's model, those critical economists who know enough about the subtleties of financial mechanisms, such as himself and a handful of others. That doesn't create a political movement. So popular adhesion must be sought outside the financial sector -- by assumption -- and this means enough citizens must be made to realize how flawed this system really is. Faced with the prospect of not being reelected if they continue to support current financial practices, politicians will then presumably follow suit.

Now this model may actually work in Lordon's case, since his proposals for financial reform don't really, for all their radicalism, move very much out of the box. He doesn't consider a multiplicity of currencies as a challenge to the monolithic debt-money model of credit creation, nor does he question the basic growth model inherent in capitalism. He doesn't call for a plural economy and his re-regulated capitalism is still, in its essential features, a form of capitalism -- to be pitted against what he rightly calls deregulated capitalism. The re-regulated capitalism he calls for is a return to social democracy in its respectable, traditional form: a full-employment capitalist economy, hence a growth economy, which (thanks to a suitably reined-in financial sector) generates investment in such a way that upward-drifting wage incomes can fuel consumption and hence employment. Deregulated capitalism in and after the 1980s has wrecked the social-democratic regulation framework, and this is what Lordon is lamenting. He certainly can't be blamed for doing so. Very few of us are still, after the 2007-8 financial debacle, claiming that social-democracy's hara-kiri in the late 1970s brought on a durably better economic climate. However, at best, the framework ushered in by Lordon's calls for re-regulation would be some form or other of "green capitalism" -- not as a stepping stone for a genuinely plural economy such as the one I've been suggesting in Parts 1-4 of this blog, but as a further "regime" of capitalism, coming after the Fordist regime and the deregulated financialized regime. (Remember, again, that so-called deregulation is basically a form of regulation.)

By being skeptical -- to say the least -- of the existence of genuinely "alternative" trends, people, and interests within today's financial sector, and therefore by condemning investors, financiers, bankers, and managers as a class to be "latecomers" (retardataires) on the stage of history, Frédéric Lordon is effectively claiming that the only way of implementing the intermediary goal of re-regulation is to vindicate re-regulated capitalism as the sole ultimate goal. This is where his "metaphysics of struggles" (see the July 20 post) comes fully into its own: As a social democrat steeped in the belief that the role of the State is to regulate the struggles for the sharing of surplus value between capital and labor, Lordon isn't interested in de-growth, in reasoned re-localization, or in bioregionalism -- that is, he doesn't believe in a transition trajectory that would lead through a period of coexistence between capitalist and non-capitalist modes of economic organization, and would end up with a durably plural, sustainable economy. Full employment and high social protection seem to imply, for him, one form or other of capitalism along with a strong regulatory State that controls money and finance. The rest is mere bucolic fantasy. There are no credible later stages. Here's how one of the characters in his play, more precisely one of the President's advisers, ironically expresses the dismal things that will occur if the crisis is allowed to wreck the existing economic system:

"Disparition brutale des moyens de paiement,
Toute l'économie prend un tour amusant:
Retour au jardinet ou bien à la cueillette,
Vivent les joies du troc et celles de la diète...
Nous payerons en fleurs, ou bien avec des glands.
[aux banquiers]
-- Ça n'est pas dit pour vous, ce serait déplaisant...
En tout cas mes bravos, magnifique avancée,
Le retour à la terre, il fallait y penser!
Est-ce cela qu'on nomme "Nouvelle Economie"?
N'hésitez surtout pas, développez, je vous prie.
En revenir au foin ou bien à la luzerne,
Quel projet audacieux, et du dernier moderne,
Cette modernité dont vous étiez si fiers --
Quand vous nous ramenez droit à l'âge de pierre."
(Frédéric Lordon, D'un retournement l'autre, p. 57, © 2011, Editions du Seuil)
(Here's a loose translation, with no attempt to mimic the alexandrine meter and all the very French traits of humor: "All means of payment brutally disappearing, and the economy taking a pleasant turn: Back to the little garden or to picking from trees, long live the joys of barter and of dieting... We shall pay with the help of flowers, or perhaps using acorns. [He turns to the bankers.] I am not saying this for you, that would be discourteous... In any case, you have my applause: What a great leap forward -- back to the land, why did we not think of it before? Is this what goes by the name of "New Economy"? Do not hesitate, I beg you, and be even more precise. Back to straw (or is it alfalfa?) -- is that not one bold project, the epitome of modernity? -- This modernity you were so proud of, and which is now leading us back to the stone age.")

Now a severely re-regulated green capitalism would, of course, need its own brand of pioneers, in the form of a new generation of Schumpeterian entrepreneurs, innovators, and investors able to ride the "Green-to-Gold" wave and to make ecology into good (albeit, in this case, severely re-regulated) business -- and this is fine in itself, except that these green-capitalist pioneers, who fill the pages of today's "sustainable investment" literature, don't seem to be very interested in the six framework conditions I've been setting out in Part 4. Again, this is quite normal and not, in itself, objectionable: In line with Lordon's theory of structure-induced interests, re-regulated capitalist private finance will generate... well, new capitalists, what else? He seems to believe that such a re-framing will allow a better power balance in the ongoing struggle around wages and profits. He's right, of course, and from a traditional social democrat's perspective this is the best one could wish for, since capitalism as a monolithic system is simply assumed to be here to stay. [Lordon's other book on the financial crisis, entitled La crise de trop, does contain a final chapter on ways to exit capitalism -- among others, participatory coordination akin to what I discussed in the May 9, 2011 post. However, he starts out by acknowledging that he doesn't see that scenario as "the most likely." That's reasonable, of course, but his proposals in that book aren't very clear, either, about how intensely he believes ideas such as bioregionalism, re-localization, or de-growth ought actually to be promoted. Pointing towards Albert and Hahnel's participatory economics, as he does in that final chapter, isn't quite enough to ensure that the five other framework conditions I've set out will be promoted as well. I suspect they won't in Lordon's approach.]

I, on the other hand, believe that the true, deeper potential of green capitalism is to serve as a first-generation transition mechanism towards yet more ambitious goals, and that we should therefore use the innovations, the dynamism, and the enthusiasm generated by the "green economy" movement in order to reach a sustainable pluri-economy such as the one I've been describing in Parts 3 and 4. Sure enough, this does require a strong regulatory State. But its role shouldn't just be to rearrange today's framework conditions -- be it drastically in the way Lordon suggests -- so as to have the same old actors with the same old interests and motivations playing a somewhat new game. We do need a new game, no doubt, but within that new game have to find ways to (re-) regulate green capitalism in such a way as to also foster the emergence of new types of actors, with new types of consciousness or awareness, hence with new types of interests and motivations, so that eventually a much more deeply renewed set of framework conditions can be pushed politically. Of course, we have nowhere else to begin but the world as it is now -- but there are indications that within the critical sectors of today's economy, and within banking and finance in particular, there already is a fringe of "new consciousness" people who would want to put their atypical and counter-systemic motivations into action but haven't all found the best climate to do so. A few are pioneers, but most are potential followers, poised but hesitant. So instead of operating as if the deeply renewed framework conditions were already in place (which they indeed aren't), they go for more modest things like social business, sustainable investment on Wall Street, or trying to start thinking outside the box within mainstream business schools. It's these people who are strategic so that new framework conditions can be pushed for, because they're already operating within the existing structures and trying to work out whatever "alternatives" can be worked out even while the educational, regulatory, and political support superstructure hasn't yet been upgraded. This is what I mean by low-intensity radicalism as a prelude to high-intensity radicalism.

It isn't a question of whether "top-down" should be replaced wholesale by "bottom-up," as if it were a binary, either/or choice. It's a question of which types of new economic "leaders" (a term from the management literature which I don't particularly like in other, more mainstream contexts, but which is apt nevertheless) can be made to emerge from within the system as it is today -- and this means that pinning self-interest classes against one another too rigidly probably isn't the most productive strategy. If green capitalism is going to be a positive transition tool instead of becoming the next obstacle to further transition, all actors involved, from management schools to trade unions, from government to the banking and finance sectors, from the fledgling social economy sector to our massive industrial mammoths, from our towns to our myriad of small-and-medium enterprises, need to be pulled into a broad and demanding discussion around two inextricably interconnected questions: on the one hand, how do we raise our levels of consciousness and change our ways of life (our "existential interests") so that we can push for really deep regulatory changes in the future -- and on the other hand, how do we already create sufficiently new regulations in the present so that our levels of consciousness and our ways of life can change more easily in the future?

As economists and social scientists know, this sort of micro-to-macro-to-micro loop implies a host of very difficult technical issues -- particularly about the timing of reforms and about how to detect and exploit hidden potentials in individuals and organizations -- but if we are to engineer a three-tier transition that eventually leads us towards a genuine pluri-economy with equal opportunities, we can't avoid these difficulties. The whole idea of this blog is to -- modestly and, no doubt, very imperfectly -- set the stage for tackling at least some of them.

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

Regulatory change, consciousness building, and the three transitions (including a debate with Frédéric Lordon)

The whole idea of a "Next-Step Economy" is to make do with the unavoidable fact that, since (for better or for worse) we are living in a capitalist social democracy with globalized goods and financial flows, the transition towards a genuinely plural economy (ultimate goal) will require a transition towards new framework conditions (intermediary goal), which in turn will require the emergence of new economic practices, the forging of new political alliances, and the modification of at least some citizens' awareness (immediate goal). Of necessity, such a three-tier model of transition implies the need for tactics. More to the point, depending on "our" ultimate goal, "we" need to recruit citizens whose immediate interests, given their current level of awareness and consciousness, are in line with the intermediary goals "we" have envisioned (i.e., in our case, the six basic framework conditions for a genuine transition).

Now this pronoun "we" that I've been using in the previous few sentences is notoriously elusive. At the same time, it's of absolutely crucial importance. In a democracy -- and in the present day this means, roughly, a parliamentary and therefore representative democracy, usually quite prone to special interests intervening at various stages in the ongoing "muddling through" process in order to influence policy-making -- the only concrete "We" is, trivially, the set of inhabitants of the relevant decision-making area: a sovereign country or, as in the case of Europe, a set of countries that have in part relinquished their sovereignty. When it operates its economy or when it sets in motion the mechanisms of a general election, this concrete "We" functions as a more or less mechanical system. In that case the "We" actually works like an "Its," a collection of things in interaction. Cogs and wheels start moving, inputs become throughputs and then outputs, and certain measurable results ensue. However, the same concrete "We" also generates, and is sustained by, a language-mediated culture, in which ethical values, metaphysical worldviews, and political visions circulate through language. Ideas start to flow, words and images become debates and arguments, and gradual shifts in collective values and views (sometimes hard to quantify) occur. Cultural exchanges and systemic interactions make up the external and the internal sides of "the collective," and they reinforce each other: the dominant systemic logic -- made up of a myriad of interlocking mechanisms -- influences, and is in return influenced by, the dominant cultural motifs, made up of a score of assertions about what's right to "us," what's self-evident in "our" eyes, what "we" think is the meaning of life and the cosmos, and so on.

Now notice, however, how these first-person-plural pronouns have suddenly become much more abstract. OK, "we" may generally believe that parliamentary democracy is preferable to all other systems -- that's part of today's democratic culture -- and "we" may be living in a society where the market is considered as preferable to all other allocation mechanisms -- that's part of today's market culture -- but not all of "us" equally believe these things. It's not an issue of being right or wrong at this stage; it's just a plain fact. Not every "I" within the concrete "We" actually adheres to the dominant mechanisms and ideas that "We" profess as a collective. Contrary to what the most reductionist neuroscientists would have us believe, the universal biological and neuronal features of each "I," which we all share as human animals, don't completely determine what aspects of the abstract "We" each "I" will adhere to when it comes to fitting into the concrete "We." In other words, there exist various degrees of -- more or less conscious -- non-adaptative and anti-functional thinking and behavior in human "I"s when faced with the dominant systemic logic and the dominant normative motif of the "We."

In my recent book Full-Spectrum Economics (Routledge, 2010), I have tried to spell out the consequences of this for economics as a scientific discipline. These consequences are actually, or so I believe, quite momentous. Once the external and internal sides of the "We" and the "I" are all taken into account, economics needs to be re-thought almost completely and made into a highly pluralistic discipline -- which it isn't for the moment, although some small progress is slowly occurring at the fringes. In this post, let me say a few things about how I believe this "four-quadrant" approach (OK, yes, some of you may have guessed I take this framework initially from Ken Wilber's so-called "integral" approach and then work out its implications for social science) allows us to better understand the three-tier transition model I'm proposing in this blog.

Actually, I'm glad to be able to use this opportunity to reflect further on the pro's and con's of awareness and consciousness building in economic agents. The opportunity is given me by a book I recently finished reading, by a French colleague of mine from Paris, Frédéric Lordon. The book is called Jusqu'à quand? Pour en finir avec les crises financières. Frédéric easily stands as one of the most brilliant economists of his, and hence my, generation. (Well, yes, it's publicly known that he was born in 1962, just four years before yours truly.) The way he blends technical expertise, political shrewdness, and a focused interest in philosophy and anthropology is something I find not only personally appealing, but scientifically essential. Frédéric Lordon has endeavored over the past twenty years to build his own particular brand of what I would call integral economics. Taking his cue from the 17th-century philosopher Baruch Spinoza, he has chosen to use economic agents' "affects" (which lie at the border between the neuronal and the emotional) as the anchoring point for both an approach to money and finance which is truly fascinating, and a theory of social conflict which he terms a "metaphysics of struggles" (métaphysique des luttes). I won't go into too many details now, but let me just say that Frédéric's central idea is that, since we (universally) act in the vicinity of our affective perceptions, and hence of our interests as we perceive them, we can only be brought to change if we affectively adhere to the idea that something must change; and, on the contrary, as long as (be it out of fear or because we are angry that things of interest to us are going to be taken away from us) we affectively refuse the idea of change, we won't just resist it but actively struggle against it. Therefore, the "We" is a theater of constant struggles -- and this, to Lordon, is a metaphysical fact, not just a momentary feature of reality -- and interests clashing with, or even crashing into, other interests. Self-regulation is therefore virtually impossible, and codes of ethics and good conduct are, in his eyes, a complete sham. For him, calls for morality and "ethics" are, especially in the business and financial worlds, mere alibis to avoid having to submit to the only really effective tool: political -- and therefore juridical -- regulation.

It's a shame that Frédéric Lordon's two gripping books on the financial crisis -- Jusqu'à quand? Pour en finir avec les crises financières (Raisons d'agir, 2008) and La crise de trop: Reconstruction d'un monde failli (Fayard, 2009) -- as well as his hilarious play in alexandrine meter (D'un retournement l'autre, Seuil, 2011) haven't been translated into English. Together, they form an amazingly didactic panorama about the causes and consequences of financial deregulation (alternatives in English include George Cooper's The Origin of Financial Crises and Adrian Buckley's Financial Crisis), and they also trace out radical reform measures by way of re-regulating the financial sector, re-disciplining banks (way beyond what the current Basel Accords impose), and massively backtracking on so-called "financial innovation." Lordon's threefold message -- if I may be permitted to collapse his truly brilliant analyses into a few rudimentary words -- is that (a) financial deregulation and the proliferation of high-risk "innovations" were pushed in the name of a more economically efficient "We" (efficient money, asset, and capital markets were supposed to allocate risks and resources "optimally") and of a more culturally advanced "We" (Fed Chairman Alan Greenspan saw the access to home ownership, with the associated feeling of prosperity as people rode the wave of the real-estate bubble, as a way to reinforce pro-capitalist worldviews in the U.S.); but that (b) in actual fact, the underlying economic and cultural model served a small minority of interests and created perverse incentives for an even smaller minority of "I"s whose existential meaning lay in earning ever more millions -- and those minorities could obviously not be counted on to regulate and rein in their own excesses. Ergo, (c) only a State-driven, public and therefore sufficiently drastic re-regulation of finance, banking, and the market economy in general could undo the fundamentally perverse incentives which the promoters of financial interests had created for themselves.

Let's call Lordon an ontological and metaphysical realist. He's not neo-Hobbesian, however, because for him, everything is political to begin with -- there isn't ever any "state of nature" in reference to which the rules and regulations we adopt could be explained. There's never an "I" without a "We" in Frédéric's work (he doesn't espouse stark methodological individualism), but the key issue in his metaphysics of struggles is that, most of the time, the "I" uses the reference to the "We" out of pure self-interest -- hijacking the collective, as it were, to use it for the furtherance of his/her own interest, of his/her existential meaning. This is what points (a) and (b) of his message indicate. In other words, each "I" builds his/her worldview and preferred economic theory (both of which refer to "We") in such a way that they will cohere with, and further, his/her existential interest -- and s/he does this within a framework in which, most likely, political relations are highly asymmetrical so that some worldviews and theories get disproportionately more hearing from public authorities than others. This means that a minority of "I"s' self-interested references to the abstract "We" get translated into actual policy (in this case, financial deregulation in the alleged "common interest") and become the dominant political and cultural reference point of the concrete "We."

In the everyday functioning of society, there will therefore be various classes of self-interest. Each such class is a network of "I"s who, even though they may never have met and may never meet, share the same outlook on what's important for them and therefore for society as a whole. There is no conspiracy involved (although there frequently are asymmetries as to who gets listened to most, and who gets ridiculed), there is simply an objective collusion of self-interests based on shared existential outlooks (that is, shared views as to what's meaningful and what's important). These interest classes, Lordon proposes, gradually shape the functioning of the economic system and create the incentives (for instance, asymmetric bonuses leading to an absence of accountability, or financial derivatives that allow for Herculean amounts of leveraging) which will most further their interests. The self-interest of certain intellectuals, he continues, plays into these mechanisms as well, leading some economists to defend deregulated financial markets as "efficient" and to portray -- in line with the interests of the financial institutions that sometimes finance their research -- various "financial innovations" such as derivatives as conducive to optimal risk-sharing, even though the reality of the crisis has shown markets to be grossly inefficient and derivatives to create leverage-driven catastrophes of previously unheard-of proportions as huge risks that had long remained invisible suddenly materialized.

Lordon brilliantly combines the microeconomics of Spinoza, Keynes, and Bourdieu with the macroeconomics of the French "régulation" school of economics to offer us an approach to the crisis in which the sole plausible outcome is a firm, top-down re-regulation of the whole financial sector by the public sphere. He makes a very convincing point of it and, in fact, goes about it in a way quite similar to what I earlier called the "ultimate" and the "intermediary" goals. Frédéric's ultimate goal is a high-growth, full-employment capitalist economy with high levels of social protection (as a Keynesian social democrat, he isn't at all interested in de-growth or in post-capitalist alternatives). His intermediary goal is a set of regulatory framework conditions -- both microeconomic and macroeconomic, going from the creation of unlimited negative bonuses (i.e., "maluses") for traders all the way to the radical reforms of the Lisbon treaty -- that severely rein in the latitudes of financial institutions to reap two-digit returns by emitting exceedingly risky instruments. What Lordon's approach is highly skeptical of, however, is what I have called the "immediate" goal of building awareness and consciousness among citizens in general, and among the agents working in the economy in particular.

Why is this so? He holds hard and fast to a theory of "interest classes" which says that people will only act on their own interests and, more precisely, on the affective emotions that "mobilize" them to act. So yes, there may be -- and are, in fact, likely to be -- revolts and even revolutions as the common people gradually realize that, for all the dominant rhetoric and for all the dominant mechanisms of the economy, none of what goes on in the financial sphere is in their own interest. But Lordon's approach is adamant that such movements will not be transitional but, rather (as happens at the end of his play D'un retournement l'autre), will be more or less reenactments of the storming of the Bastille. The reason for this is, mainly, that in his perspective revolt or even a change of vision and a change of heart, leading to "transition advocacy," can't possibly occur in people who are active within the financial sphere. Why? Well, because if such people did act on "alternative" or "transitional" convictions they'd be trampled by the competitive logic that's at work in the sector -- they'd make losing investments, offer too low rates of returns, and be driven out of the market in a short while. Their "class" interests wouldn't be furthered at all. It's not a question of individuals being "bad," says Lordon, it's a question of the structural rules not being the right ones -- and this is what motivates his insistent call for top-down re-regulation without any concern for whether there are agents within the system who might "support" this regulation. In short, he is utterly skeptical of what I have called "low-grade radicalism" as a prelude to "high-grade radicalism" (see previous post, dated June 29).

I have spoken in private with a few "alternative" investors, as well as with a few economic lawyers, who have been kind enough to look at some or all of my blog posts. The lawyers will tend to agree with Lordon and stress that regulatory measures must be pushed for at top levels and with no regard for what most investors, entrepreneurs, bankers, or politicians at the grass roots think or believe -- simply because most of these agents are so busy getting by within the system that they have no objective interest in really thinking about the system or in investing the time and resources required to do so. So, forget the "Next-Step Economy" and just push for the six framework conditions wherever necessary so that they can be implemented directly -- same as Lordon's conviction that the re-regulation of finance ought to be imposed on the finance sector. And, in full coherence with his own approach, he does express this conviction in acidly trite, and also sometimes affectively charged, ways. Translated into our terms here, this would mean that the six framework conditions identified in Part 4 should simply be imposed -- meaning, in a democracy, voted into being through the maze of national, international and supranational decision-making entities.

The alternative investors, surprisingly enough, are more ambivalent. They do, of course, recognize that regulation is crucial if there is to be a common foundation for everyone's decisions -- which is the regulatory version of the free-market idea of the "level playing field." They see clearly that worldwide accounting rules need to be modified, that international or supranational rules for protecting "green" or "integral" foreign investments more than "gray" or "brown" ones may be needed, and so on. But they also believe that such regulations only have a chance to be passed if they're advocated by a sufficiently visible minority of powerful actors in the investment community itself. This may be an unfortunate fact of our contemporary capitalist social democracy, but if a whole "interest community" whose interests stand to be affected by legislation or regulation has the financial and symbolic means to lobby against it, that legislation or regulation will not be passed unless there's a haphazard coup within the political institutions. "Muddling though," remember, means that competing interests are to be given equal hearing -- and de facto this often means they get un-equal hearing, some turning out to be more equal than others... Therefore, in order to even have a chance to have new regulations and legislation encouraging eco-preneuring and sustainable investment, we need to have a sufficient number of investors themselves asking for such new rules -- and that obviously requires the emergence of a minimum number of already active, already practicing "alternative" investors. Not pseudo-alternative ones, not greenwashers (for these will gladly, in full compliance with Lordon's theory, push for more of the same and for business as usual), but individuals who, due to some event in their lives which caused them to experience a consciousness shift, are truly open -- with their whole affectivity -- to going all the way and doing, as well as asking for, whatever regulation is necessary for a genuine transition to get off the ground. But for this to be the case, they already have to be such alternative investors within the system as it is. Which means that they already have to have started on low-grade radicalism -- some because they think it's just good business, others already with a view to furthering high-grade radicalism later (in the form of a genuinely plural, sustainable economy as the ultimate goal).

So the fated expression, "consciousness," has been pronounced yet again, and it could equally well have been "awareness." Structures-oriented social scientists are legitimately wary of these expressions. Frédéric -- as well as other radical colleagues I'm thinking of -- will surely associate them with the worst of New Age hogwash. If consciousness/ awareness is structure-determined, he might claim, then what sort of "mutation" can one expect from a person who's still busy making a living within the financial system, investing his/her own or other people's money? Actually, wanting to do "alternative" investment within the existing structure is suicidal: the deregulated capital and asset markets and their cutthroat competition will take care of such fantasies... The only true latitude for surviving within the system while appearing to be "alternative" is, indeed, to practice greenwashing -- so that greenwashing is, in fact, the only really systemically coherent form of behavior and is, by that token, only to be expected from capitalist investors. Or so the claim would be.

Of course, as he's surely aware, "heterodox" economists such as Frédéric Lordon himself are living counterexamples to this very approach. In order to survive intellectually, institutionally, and financially within a profession whose dominant mainstream is quite hostile to them, "alternative" economists both accept sacrifices (on average, fewer career opportunities and lower salaries) and militate for the creation of "havens" and opposition forces, such as professional associations and partnerships with specific institutions (e.g., trade unions or government agencies, rather than perhaps banks or multinationals). There are also, within the mainstream of economics, quite a few "heterodox-washers" (Lordon offers a scathing critique of some of them in his two books) who seek to combine a critical-looking façade with innocuous practical recommendations. Their existence makes the life of more sincere heterodox thinkers even more difficult, but the latter nevertheless sometimes manage to carve out a place for themselves -- just like Frédéric himself has done -- in the hope that they might, someday soon, influence the deeper structure of the profession and of teaching curricula so as to durably modify the incentives economists face. (I have devoted two books to a general theory of the reform of economics: in French, L'économie c'est nous [Erès, 2006] and, in English, Critical Political Economy [Routledge, 2008].) If economics is someday to become a genuinely pluralistic discipline, the first transition that has to occur -- still at a long distance from this ultimate objective -- is the emergence of thinkers such as Lordon who, through one form or other of "mutation" of their self-interest, start doing alternative economics within a still largely hostile professional environment with its institutional constraints and systemic sanction mechanisms. (Another example is my colleague from the University of Athens, Yanis Varoufakis, born 1961, who has just co-authored a stunning Modern Political Economics [Routledge, 2011] and has spent two decades struggling within the establishment, ending up successfully creating a pocket of serious, rigorous, and credible "heterodoxy." His book, written with Joseph Halevi and Nicolas Theocarakis, is the uncontrovertible proof that this is possible.) This first transition toward a critical mass of "new consciousness" economists might then, in a second transition, lead to a modification of the rules by which PhDs are awarded, academic positions are labeled and filled, and economics departments are evaluated -- so that, in a third and final transition phase, the actual everyday functioning of the profession might become durably pluralistic. That such a transformation requires deep structural changes is quite clear; that it also, and probably first, requires the emergence of a cohort of "alternative" actors who start acting from within seems to me equally clear.

This, and nothing else, is what I see as the "Next-Step Economy" phase. I don't care about building a Next-Step case per se. I, too, like many of the visitors to this blog, would prefer the six framework conditions (and others accompanying them) to be implemented in a one-shot, once-and-for-all "bang!" It would save a lot of time and a lot of energy spent working on mentalities in more or less skeptical, more or less hostile environments. It would save the resources that, right now, are going to have to be devoted to creating embryonic groups of "alternative" actors. And by that I mean groups aiming to have a significant impact given the intermediate and ultimate goals set out in this blog -- not given a hidden agenda of neutralizing radicalism so as to maintain the status quo. And this, as I insisted in my two previous posts (June 25 and June 29), requires critically vigilant citizens (a minority, surely, given current living conditions in our societies) and partnerships between NGOs and businesses that go way beyond empty declarations about "social responsibility" and "the greening of business" (a minority endeavor also, to be sure). In fact, when Frédéric Lordon admonishes his readers about the primary influence of structure-determined interests on most people's actions, he is offering a tool to critical citizens who seek to work with the currently available handful of genuinely "alternative" investors and decision-makers. (This is, in fact, how the great late French sociologist Pierre Bourdieu, who has clearly had a big influence on Lordon, saw the role of his own theory of "habitual" action: Most actors in politics and in the economy aren't upfront interested in deeper change, but clearly becoming conscious of this very fact might lead a minority of them, and then an increasing proportion, to actually become interested in structural change.)

Is it all a gamble? Yes, in a way. Given the current power relations, and given the way incentives work in the capitalist system, even among those who are genuinely concerned about alternatives there will only be a handful who step forward as pioneers. (It's the exact same idea as Warren A. Johnson's point, put forward in an earlier post [dated April 21, 2011], that there's a crucial social role to be played by pioneers who sacrifice their comfort inside the system and resolutely act "outside the box" so as to set an example.) So let's say that while Frédéric Lordon may be quite correct as to what regards the average population's lack of concern, he may not be right in inferring that regulation and legislation can, and should, be pushed forward regardless of the readiness of anyone in the business community and the political elite to follow suit. In fact, he may well want to argue that this is what should happen, but I fear that it simply won't be what actually happens. That's why some people I know are working in the world of investment or in environmental NGOs in order to win at least some of the mainstream business actors over to some embryo of "radical" change. Which means, like it or not, consciousness- or awareness-building -- but with convincing economic arguments as to why the six framework conditions, if implemented, would either (a) not mean any losses and would perhaps even improve business or (b) imply restrictions and losses whose magnitude would be more than compensated by other valuable aspects linked to environmental or social bottom lines. And once such actors are convinced of this, they will themselves not simply draw up vacuous and opportunistic "ethical charters" but ask governments and international as well as supranational institutions for regulations that make sustainable investment more easily feasible and allow more localized banking and trade to be less exposed to the strictures of planetary competitiveness.

No easy task, and more than occasionally frustrating, to be sure. But necessary if, in the medium run, the six framework conditions are to have any chance of emerging with enough legitimacy and if, in the long run, a truly pluralistic, sustainable economy is to become a durable, established reality. In fact, even those of us who read Frédéric Lordon's own suggestions for radical reform of the financial system will only adhere to them, and make them part of our individual conception of a desirable "We," to the extent that -- like Frédéric himself -- we have undergone a change in awareness that makes us agree in a deep, affective way that this system has deep faults and needs to be changed structurally. Now, Lordon believes such awareness will come more easily to citizens who are not working within the financial system itself because their affect of revolt and anger can be more easily mobilized. But to have a "Next-Step" case for reforming our system and for taking the first steps towards a long-term transition goal, we also need people from within the system to experience affective changes in awareness, i.e., to be jolted into the "gut feeling" that something is very wrong. There are a handful who already have had such an experience -- each with his/her own specificity and his/her own character qualities and flaws -- and it's these individuals who need to be mobilized towards genuine structural change, because it is they who can help decision-makers realize that there's an "intra-system" demand for change, not just a "clamor from the street." Both are very necessary in a democracy, but without the demands for truly structural re-regulation and legislation from within the system, a long-term transition will be much more difficult to steer.

Does this mean we must, as citizens, uncritically accept all calls for regulation and legislation arising from within the mainstream system? Not at all. Transition-oriented vigilance means that we'll probably -- in line with Lordon's skeptical approach -- unmask 90 percent of such calls as covert attempts to hijack the transition process and maintain an interested (and interesting) status quo. Yes, there's a lot of greenwashing out there, and there's bound to be quite a lot of "transition-washing," too. At the same time, the principled stance according to which no businessperson from within the mainstream economy could ever truly renege his/her own "class" interests and be won over by a truly alternative perspective is nonsense. True enough, a few isolated cases wouldn't be sufficient. Critical mass is essential, and therefore the "Next-Step Economy" and its specific properties (which I set out in the post dated June 25) requires that a new "interest class" be gradually built up -- a class of individuals whose conception of a desirable "We" rests mainly on the promotion of sustainable (or "green") investment, of genuinely alternative management (or eco-preneurship), of new processes of European integration and a new logic of trade regulation, and of a new social compact (or Green New Deal). Surely, protests from the man in the street may help quite a bit in hastening the change of awareness in some decision-makers -- but they will never be sufficient in a real-world capitalist democracy where, like it or not (and this sometimes takes objectionable forms indeed), the powers that be -- elected representatives as well as administration officials -- need to see that a significant fringe of the capitalists, investors, and CEOs have changed their minds before they go for more or less radical legislation for re- (as well as de-) regulation.

This means, of course, that if such a new interest class doesn't arise, our cherished transition objectives won't be attainable. Sure enough, we may be able to create tiny "alternative" enclaves where some of us live "as if" the transition had taken place, but still in total dependency on the system they would have wanted to transition away from. This is what happens now with all manner of "voluntary simplicity," "transition town," or "grass-roots agriculture" groups. It can be stimulating to see how such groups operate and what new horizons of possibility they're imagining. It is, in fact, essential. But in the end it can get highly frustrating, too, if the systemic logic in which all of these groups are embedded doesn't change a bit. That's why what is ultimately needed -- here I fully agree with Lordon as well as with my economic lawyer friends -- is full-scale regulatory change of a fairly deep nature. This regulatory change needs to be supported by some of those who have the means to act on it and who -- therefore -- also have the means to block it. Alas, this is part of the realpolitik of capitalist social democracy. That they might massively use their economic poser to actually block real advances -- and again, Lordon is quite right in suggesting that this might happen -- is what prompts the need for extreme vigilance on the part of citizens (and NGOs should ideally be of help here). But citizens' vigilance will only overcome such blockages if, in parallel to grass-roots activism (and here, again, I follow Lordon's lead, but with a smaller dose of skepticism than him), the emergence of a new interest class that genuinely wants investment, trade, and governance, both nationally and internationally, to be shaped in a transition-conducive way.

A long shot, yes? Sure. But if there's another avenue short of remaining stuck in the status quo and feeling resigned to it, I'm eager to hear about it.

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