Kalle reflects on a four-headed elephant in the economic room

Today’s sustainability driven debate about the economic system contains four misconceptions. They create a perfect storm, where four hidden components are enmeshed into one very dangerous beast. It confuses rational conversations and halts a need to update economic systems into non-obsolete and more innovate ways to assist development of attractive futures. The hidden components, can easily be visualized and amended by use of the FSSD:

(i) Economic growth is not a goal, but a means to reach any goal.

(ii) The economic system is not the most important means to reach goals, in this case attractive sustainable futures. It is but one of many important means to the end, all of which should be strategically integrated in mutually supportive ways.

(iii) Infinite growth of value is not impossible on a finite planet.

(iv) GNP as a measure of real value for life-quality need not be trashed altogether. It needs amendments, for sure, but believing that we need to invent something completely new only adds to confusion.

More in detail:

First Elephant head: Economic growth is regarded as a goal, not a means towards goals. It is taken for granted that economic growth would be a rational objective in our age of economism, the cart before the horse. Whereas the fact is that economic growth is but a means to reach any objectives. Objectives first, then the means. The horse in this case stands for attractive futures, within social and ecological boundary conditions that make such goals possible, and the economic system is but one of many means to get there.

Second Elephant head: Economy regarded as the most important means. We live in the time of economism, where the economy is not only erroneously regarded as an objective, but it is also completely dominating amongst other means that must be directly (not indirectly through an economic lens) monitored in other ways. For instance Knowledge Management, Education, Laws, and Political Instruments other than those belonging to the Economy.

Third Elephant head: Economic growth is often regarded, mainly by the green movement, as impossible on Earth. However, true value, in the common interest, can increase on Earth, for ever. Nature is a good example here. It has grown in value for billions of years until one specie could play Music, cure patients with very difficult diseases, and have knowledge exchange for how to save our threatened Civilization. This happened, to begin with, through increasing material flows into mainly a growing biosphere-mass of relatively un-differentiated species. Followed by growth of only value through differentiation of that biomass. For millions and millions of years. So, it is exponential growth of material flows that is impossible in the long run on a finite planet, not development into more and more refined species and cultures within constraints of material growth. The common flaw of thought here is based in the way we measure GNP, where growth of all material flows is given high weight regardless if value is created by the respective growing flows or not. Civilization’s current situation is that quantitatively and qualitatively destructive flows destroy the biosphere more and more, while being accounted for as a plus in the GNP measure. So, the debate for or against “growth” is rather a semantic one – do we mean growth of values or material flows? Continued growth of value is desirable and possible, and so are a transient growth of some material flows, in combination with a decrease or phase out of other material flows.

Fourth Elephant head: GNP is sometimes regarded by the green movement as all together obsolete, calling for completely different and new economic measures. Not rarely looking at Nepal and other countries that have tried this. However, GNP as a means is quite elegant in many respects and considers many things that need to be monitored just like we are used to. GNP can be adjusted or modified to fit as a rather elegant economic tool to reach attractive sustainable goals.

1. GNP

The issue of economic growth has occupied the environmental movement since its infancy in the late 60s. And always with the same sign “growth is impossible”. This misconception, based on the belief that economic growth must be synonymous to a GNP-growth without any amendments to make it fit for purpose in our times, is of course, not right. Better wise than alarmist.

2. GNP and flows of matter

The Earth has its size. To regard it as feasible to systematically increase flows of matter on the limited surface of the Earth should not be the subject of any further debate. However, due to the way we measure GNP today, looting and poisoning of ecosystems are still financially recorded as economic successes. According to Paul Hawken, the author of “The ecology of commerce”, this is like having a pocket calculator without a minus key. I.e. a flawed way of accounting. And he continues, “there is nothing wrong with Economic growth, it is just a pity that we have never tried it”.

3. The principle of a more sophisticated measure of economic growth, one of value

So, economic growth does not have to, and should not, be about a political urge to increasing the flows of matter per se. It should be about the growth of the livelihoods’ real human values such as quality of life. It is fully doable to measure such more sophisticated increases of value in Dollars, Euro, Yen and any other currency. The prerequisite is, as usual when it comes to FSSD thinking and planning, to model possible scenarios for attractive and scalable futures where all life-sustaining systems, i.e. forests, fields, marine systems, material flows, infrastructure and HR issues stay within robust boundary conditions for sustainability together. And to develop, and invest in technologies, business models and policies that can make the attractive future scenarios, as well as ways to get there, possible. How far could we then drive economic growth? The answer is for ever. Not necessarily exponentially, but nevertheless continuous real-value growth for ever.

4. Nature a role model

Here we can use nature to create an analogy that may effectively help us to see the point: Our ecosystems have evolved over eons of years to ever higher life forms and diversity-richness within the same level of material flows, from a period of cyano-bacteria, through primitive species such as grasses, ferns and jellyfish, to the nature we now today. Where an incredible diversity of species has emerged, and where one of the species can now play Bach, cure the sick, trade knowledge and consider its own fate. An almost unimaginable growth in value, in any currency. This is exactly what ‘economy’ was once developed to do, to economize on limited resources to achieve greater human benefit per resource throughput. In other words, decoupling (a term endorsed by the EU) the concept of growth from a one-eyed focus on the size of matter flows. Or in Paul Hawkens’ analogy, using also the minus key of pocket counters for the accounting of real capitalism.

Well, we have not reached the end of the road today, not anywhere on Earth. Everywhere we still have an opportunity to mimic nature and develop more sophisticated material flows put at service of value-growth. Where some material flows are not only decreased but phased out, while others must increase until they suffice for a more differentiated civilization. Not to mention how good it would feel to spreading such thoughts and opportunities to become a global norm.

5. Trashing GNP altogether?

Having said this, let us not through the baby out with the bathwater. The economy is a rather elegant system and carry many important innovations and aspects that would be easy to include in an updated version of GNP. But, again, the existing perversion, in the age of economism, is that economic growth in our current GNP terms has an emphasis on material flows at the cost of differentiation and values created by such. Why not keep the original purpose of the economic system, to be a means alongside also other means that must be monitored in other ways for instance knowledge, education, indicators of things that cannot be measured in economic terms e.g. laws, and political instruments other than economic ones? And could we not make interventions in the GNP measure for an updated version? One where Paul Hawken’s minus key is put at use for the accounting? Such that discounting rates and bonus systems that benefit short-termism are accounted for as negative, which also goes for taxes that favour financial ownership at the expense of labour.

So, the factual discourse is not primarily about throwing the whole well-functioning GNP child out with the bathwater, nor about considering all kinds of growth as being impossible. It’s about placing the economy, and the dimensions we chose for monitoring it, along many other means that are at least as important to achieve attractive sustainable futures.

Conclusion

So, again, the typical struggle is full of elephants in the room. In fact, the discourse is rather semantic than about facts and terms per se. Economic growth of real value is possible, for ever. To that end we need a more fruitful societal discourse than the one we currently have. How could we develop more sophisticated means for the monitoring of growth of value, where an updated version of GNP could be one. While the monitoring of other means, that are at least as important as economic growth, would work well in harmony with economic growth e.g. knowledge management, education, laws, and political instruments other than economic ones.

Perhaps we could ask economists for advice and help regarding these thoughts?