Stop Living in Fiction: Economic Systems Depend on their Natural Systems

Posted on September 1, 2010 by derek

From Justmeans:

What makes Sustainable Development both an interesting and frustrating field of study is that it’s not environment or economics, it’s not people or nature… it’s all of these things and then some. At its core Sustainable Development should push us to look at problems not merely with new lenses but with new eyes and force us to find pragmatic solutions.

Take for example the current staggering rates of global unemployment. According to the US Bureau of Labor Statistics as of June of this year the US’s unemployment rate hovers around 10%, Ireland’s around 13%, Spain’s at a whopping 20%. After decades long consumption party fueled by cheap credit, conspicuous consumption and a an economic system that doesn’t care what we consume so long as we consume a lot of it, the keg has finally been tapped and the economy is staggering around dazed with quite the hangover.

Millions, if not billions of unemployed and underemployed are suffering the consequences. While it is true that this particular crisis was specifically triggered by a relative handful of financiers who sought in a global ponzi scheme to take their money and dash before the house they wrought out of cards came tumbling down, if we take a step back and really look at the system holistically the problem extends beyond a handful of bankers, or even a lousy system of regulation.

As Economists such as Herman Daly have eloquently stated, when you divorce economic systems from the natural systems upon which they depend, what you create is essentially economic fiction. You cannot have a system based on everyone consuming more today than they did yesterday (assuming relatively flat population growth) – neither the environment nor people can sustain it. It is not surprising that in the wake of the economic crisis we’ve found ourselves, accidentally treading lighter on the earth: global greenhouse gas emissions dropped by 1.1 percent in 2009, with the US dropping 6.5%, its lowest levels since 1995, and Japan dropping a whopping 11.8%. Similarly, during the height of the work-buy-buy- work treadmill of the mid-2000′s there was a steady but vocal backlash as evidenced by the rise of the voluntary simplicity movement, against our consumption paradigm. More and more people were feeling overworked and that there had to be more to life than simply working to purchase things that fail to fill the the void made by reduced time with friends, families and interests outside of work. The richest economies, points out the New Economics Foundation in their annual Happiness Index are rarely the happiest. Similarly, behavioral economics points out that experiences brings us more joy than stuff, and that past poverty level money does not purchase happiness.

No wonder Bhutan has implemented a gross national happiness index.

To borrow from Yeats, when you hollow out the center, the center cannot hold and mere anarchy is loosed upon the world. We have a system that is increasingly showing itself to be faulty – and instead of engaging in frank discussions about how to shift that system into one more sustainable we continue to prop it up with bandage solutions even as it fails to satisfies the needs of fewer and fewer people.

Yet given this situation, we as a planet are not having discussions about how to reshape it, rather we’re trying to grind this engine one more time until people and planet are thoroughly used up.

All of which beggars the question, what do we do about it? As we seek to dig ourselves out of this economic crisis, it’s time to taking steps to actually build systems and institutions that do more than exist; they elevate the human condition while grounded in concrete realities. We can no longer think that we can foul our nest without having to deal with the side effects of that action. Entrepreneurs have to think long and hard asking themselves if they’re actually providing a service, or merely exploiting market inefficiencies? Slowly, we have to re-ground our economies and our social systems.