Source – commondreams.org
- “…GDP is a useful metric for measuring the sheer output of the commercial part of an economy. Where is it used to measure the health of an economy it makes increased buying and selling into a virtue…There are many economists doing work to shift the discipline more significantly away from a focus on growth…hese economists are developing tools and conceptual frameworks for increasing human wellbeing while maximizing ecological health”
A Just Transition to a Fair and Sustainable Society or Healthy Green Growth?
A review of Tomorrow’s Economy: A Guide to Creating Healthy Green Growth – By Cynthia Kaufman
Mainstream economists insist that the way to measure the health of an economy is in growth in Gross Domestic Product (GDP). (Photo: Getty/Stock Photo/Boris SV)
The main goal of Norwegian economist Per Espen Stoknes’ new book, Tomorrow’s Economy: A Guide to Creating Healthy Green Growth, is to offer the concept of healthy green growth as an alternative to simple GDP growth. Stoknes teaches in a business school, and the economic tools he creates around this concept will probably be very helpful for businesses wanting to measure if, as they create profit, they are also creating environmental and social wellbeing. But for those of us working to shift how we think about the economics of wellbeing, this book is a step backwards in an already rich conversation.
Mainstream economists insist that the way to measure the health of an economy is in growth in Gross Domestic Product (GDP), or how much is bought and sold within an economy. Stoknes by proposing a better form of growth is engaging with the mainstream of Economics, hoping to move it in a direction that takes human and ecological wellbeing into account, while still maintaining the core of its approach.
There are many economists doing work to shift the discipline more significantly away from a focus on growth. They have produced an impressive body of literature that this book would have done well to take more seriously. These economists are developing tools and conceptual frameworks for increasing human wellbeing while maximizing ecological health. Much of that work takes seriously the devastating impacts current trajectory has on the poor in the Global South and on poor and racially marginalized communities in the Global North. In her book Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist Kate Raworth uses the image of a doughnut to talk about the twin problems of alleviating poverty and staying within the world’s ecological limits to outline the “sweet spot” of what an economy needs to aim at achieving. Raworth is joined by many people doing important work in this area such as Amartya Sen, Juliet Schor, Robert Bullard, Michael Pollin, and Claire Brown.
Stoknes shows that after many decades where economic growth almost always led to worse impact on the environment, very recently some countries have begun to see a decoupling of growth and environmental impact. That is, they have GDP growth without increase in environmental destruction. Growth is not always bad for the environment. And because of that we don’t need to point our economies toward “degrowth “and take limiting growth as a goal for environmental sustainability. But, as I will argue, we shouldn’t be using growth as a metric at all for measuring the health of national economies.
Stoknes offers a tool for measuring what he sees as an unmitigated good: healthy green growth. The book develops clear quantitative tools for aggregating GDP growth, resource productivity (a measure of how efficiently production uses natural resources), and social wellbeing (a measure of how much it redistributes wealth). “Healthy growth is measurable, profitable, more resource productive, and more distributive by design” than standard GDP growth.
When discussing the alternative economic indicators such as the Genuine Progress Indicator, and notions of sustainability and happiness, he writes, “rather than wasting our time on GDP bashing or somehow struggling to correct for its many faults, we can integrate existing GDP numbers with additional measures to tell whether any observable change in GDP is the type of growth we want or the opposite…. We don’t have time to reinvent a totally new global national accounting system.” He argues that the idea of growth has a positive resonance and that with his healthy green growth, we can move toward sustainability with little conflict. “All politicians need to do to accomplish this is to have faith in the advice from economists and legislate accordingly. And hence there is no reason for activists to chastise the companies and paternalize the consumers as to what they “ought” to be doing.” Against this claim, I would argue that we don’t have time to wait until businesses learn that they can profit from new healthy technology. Keeping growth as a core goal of our economic systems and relying on green businesses to lead the transition are both grave mistakes we cannot afford.
In his book Happiness: An Introduction to a New Science, Richard Layard argues that GDP was originally intended to help predict and manage boom and bust cycles in an economy. It was not intended to measure the overall health of an economy. Over time it has come to be used that way at least in part because it measures what is of interest to those with the most power in most countries: the wealthy and corporate interests. For them, an economy that generates more buying and selling is a better economy.
Generations of feminist economists have pointed out that GDP measures bads as much as it measures goods. A hurricane that destroys a city, and so that city needs to spend a tremendous amount of money cleaning up, will have its GDP boosted by the hurricane. GDP completely ignores all of the important things we do to take care of our needs outside the realm of buying and selling. A society where people worked twenty hours a week, cooked for each other, shared child care and elder care, and made things for the fun of it, would have much higher levels of happiness and health, than one in which people worked 80-hour weeks and paid for all of those things. The later society would have a much higher carbon footprint, and higher levels of stress. And it would have around a much higher GDP.
Sweeping away decades of important work with the accusation that it is “bashing,” Stoknes insists that healthy green growth is the best way to measure the health of an economic system, because growth is a positive word and we are so used to it that it sets off happy feelings in our minds when we hear it. Stoknes is in a battle on the one side against what he calls “grey growth” or simple GDP growth. I can imagine that at the business school where he teaches, the tools he develops can be helpful. And it is good for someone in the world of business to graft a deep commitment to human and ecological betterment onto the concept of economic growth. I imagine that a business which used his tool to measure its own success, would be much better than one which simply measures profit.
But those arguing for measuring national economies using tools other than growth, are not simply “bashing” GDP because they have an infantile hatred for business. The left has been engaged for over 150 years in serious analysis of what is wrong with an economic system that puts the pursuit of profit above human needs. And for decades may leftist and environmentalist thinkers have integrated protection of the environment into that work. Stoknes, would do well to take that work more seriously.
At the present moment, most national economies measure greenhouse gas emissions, inequality, and progress toward sustainable development goals. Some also use indexes that aggregate a variety of those measures, into well-developed composite measures such as the Human Development Index, Genuine Progress Index, and the Happiness Index. All of those tools are being used widely, so the question isn’t should we throw away GDP and start from nothing. The question is does GDP or “growth” add anything to the mix? GDP is a useful metric for measuring the sheer output of the commercial part of an economy. Where is it used to measure the health of an economy it makes increased buying and selling into a virtue.
One of the most disturbing parts of the book is where Stoknes argues that GDP growth is a good way to fund improvements in human wellbeing. Like many economists, he believes that as economies have more throughput of goods and services being bought and sold, they often have more stuff and that more stuff could end up bringing people out of poverty. And so, he argues that we should look at GDP as a proxy for human wellbeing. And yet a few pages after making that statement Stoknes admits that since the 1980’s places where GDP has grown have also been places where inequality has grown, and so where GDP growth did not lead to more human wellbeing.
Stoknes shares the view of many on the left that increased inequality is a social bad. He quotes the important book The Spirit Level: Why Greater Equality Makes Societies Stronger by Kate Pickett and Richard Wilkinson, which shows that as inequality increases, a wide variety of measures of human wellbeing go down, and that even the wealthier are worse off in more unequal societies.
Stoknes is worried that the messages of those who want to reject growth and GDP are messages of austerity, that tell people that they must do with less, and as a result they will not vote for politicians who promote environmentalist policies. He is right that there is a strong tradition of austerity and doing without in environmental circles. But that critique does not apply to the people doing serious work in this area. Juliet Shor’s book on the way forward is called Plentitude: The New Economics of True Wealth.
Business in the Lead?
Stoknes’ idea for how we make the urgent transition to a sustainable economy is that we need to take our lead from green businesses and push governments to support their interests. He sees profit driven entrepreneurship as the main driver of the transformation. “Gradually, as people encounter more frequent examples of others making more money from fixing resource wastefulness, they will understand that it is a smart strategy. Seeing is believing…. only later as enough examples have accumulated and this idea and the companies employing it have become widespread, will mainstream politicians follow suit.”
Stoknes argues that we are in the midst of the sixth great transformation in human economy, and that in the future companies that are committed to healthy growth will do better than those stuck in old ways. Over and over again in the book he psychologizes the drivers of environmental destruction. “What kind of therapy will it take to lure our minds away from destructive growth and toward healthy growth?”
While pointing to citizen action as part of what we need to transform society, Stoknes is dismissive of disruptive forms of activism, as bashing and simplistic. An organization he calls out for praise is the Citizens Climate Lobby (CCL) in the US. CCL is funded almost entirely by one wealthy individual and their entire program is to push for a carbon tax which is the most business friendly tool on the climate action toolbelt. As I argue in my forthcoming book The Sea Is Rising and So Are We: A Climate Justice Handbook, the bill being proposed by CCL is extremely regressive and if passed, would cause more harm than good.
The Energy Innovation and Carbon Dividend Act…. would institute a tax and dividend system, similar to the one in Canada. Supporters claim that the act is bipartisan because, as of this writing, it has one Republic Senator on board. In order to get that one Republican, they needed to add to the bill the stipulation that the Environmental Protection Agency would not be able to regulate greenhouse gasses for the first ten years of the bill’s life. Carbon taxes, when linked with dividends, can be helpful policy tools, but when they are used to replace direct and effective regulation, or investment in alternatives, they are dangerously counterproductive.
There are some places where it pays for a business to do what is socially useful, but in a society where company behavior is driven by the need for profit, and in our increasingly financialized form of capitalism, where shareholders need to be fed constant quick returns, companies cannot be relied on to act in the public good. No matter how good the intention of the CEO might be.
The claim that business leaders are driving the sustainability transformation is simply historically inaccurate. The wind and solar revolutions have happened because governments invested tremendous resources to support those industries and paid for research and development. People from the grassroots have pushed the government to do those things. Stoknes is right that business will have to play a role in the transition toward a just sustainable society for as long as we are operating in a capitalist context. But how business operates needs to be determined by regulations and policies that prevent those businesses from profiting in ways that are socially destructive.
Sometimes it is in a company’s economic self-interest to for example cut waste, and Stokes shows business that there is much win-win activity in that area. But the limitations in this way of thinking can be seen in one of the most disturbing of Stoknes’ examples. He praises automaker Tesla as an example of a transformative business. Tesla is doing some good work in that win-win space of creating products that help move us toward a green economy. But that doesn’t prevent it from partaking in the other “bads” of a profit driven economy.
Tesla exploits labor as intensely as it can, fighting efforts of its workforce to unionize. When the state of California required Tesla and other factories to close due to COVID-19, the company tried to force factory workers back to the shopfloor. In order to protect its market share, Tesla designed its plugs such that only its cars could use the chargers it installed all over the US, while allowing them to also use standard plugs. Tesla has received billions of dollars in government subsidies, yet its charging infrastructure does not help build public electric vehicle infrastructure needed to spur the transition to electrification. Much of the good that Tesla does is because the government subsidizes it. To the extent that it is doing bad, it is because it can get away with it.
Capitalism and the Climate Crisis
The Tesla corporation is the kind of hybrid beast we will see more of as governments work with business to develop ways of meeting our needs while trying to avert the climate crisis. But to the extent that the decisions that business make are not constrained and shaped by serious regulations, to the extent that those systems are weak because our politicians are captured and controlled by the interests of business, businesses will continue to be driven to engage in destructive practices to make a profit and remain competitive.
Stoknes argues that “if we want change, we need to redesign the framework around capitalism and growth, not negate, bash, or kill it, denying the human psyche it’s subconscious yearning for growth. Because neither capitalism nor growth dynamics are going away anytime soon.” Stoknes rightly claims that in averting the worst outcomes of the climate crisis, we don’t have time to wait until we can eliminate capitalism and put a new system in place. Many anti-capitalists, as well as pro-capitalist thinkers like Stoknes, make the serious mistake of supposing that we need to either eliminate capitalism all at once, or accept it as something positive.
As I argue in my book Getting Past Capitalism; History, Vision, Hope capitalism should be seen as a set of practices that drive some terrible consequences, but which can be fought against in a piecemeal fashion. What we need to do urgently to deal with the climate crisis is to push for less dominance of our thinking by pro-capitalist ways of understanding our situation. We need to push for less of our world to be controlled by the profit motive. We need strong government regulations. And we need to lessen people’s dependencies on capitalist wage labor in order to survive.
Stoknes, as a good Nordic, argues strongly for a strong social safety net. He rightly sees that in a society with a strong safety net it is easier to phase out destructive industries. Those societies have plenty of resources for people to retrain, survive dislocation, and still keep their health care.
If people are less dependent on their jobs, and we have serious moves toward equality, we may all work less and consume less. That path toward a more sustainable world is not a path that requires increased growth, meaning more profits to be made. Keeping growth at the core of our idea of a sustainable economy cuts off from our imaginations some important pathways to sustainability.
One argument Stoknes makes for keeping capitalism at the core of our transformation is that he claims it is the main driver of billions of people out of poverty over the course of the twentieth century. That claim is widely held, and based on a misreading of the evidence. As I argue in Getting past Capitalism, the twentieth century,
saw real increases in longevity in much of the world and real rises in living standards for millions of people…. And yet a curious thing about the twentieth century was that those increases in life span and reductions in poverty happened in societies with both capitalist and communist economic systems. It happened in the United States and in the Soviet Union. In many countries in Sub-Saharan Africa, increases in life span and reductions in poverty didn’t occur under socialist or capitalist systems. In the Soviet Union’s transition from socialism to capitalism, life spans actually shortened dramatically. Life spans increased in the twentieth century largely as a result of basic public health policies that included the use of sewers, clean water, and good nutrition. While in many cases an increase in capitalism has gone along with a decrease in poverty, such as the development of the Asian Tiger Economies in the second half of the twentieth century, in many other cases increases in capitalism have led to increases in poverty (such as the collapse of those same Tiger economies in the 1990s and the transition from socialism to capitalism in the Soviet Union and Eastern Europe). In China, the transition to socialism led to dramatic decreases in poverty, as did the Chinese transition from socialism to capitalism. Capitalism is often credited with social gains that it is not responsible for. Much of the basic research for the forms of medicine that have contributed to life span increases was provided directly by governments or by scientists working at public institutions. Many of the inventions which have fueled capitalist development such as telephones and the internet were developed by government researchers working on projects designed for the public good. While it does seem that in many cases trade can have a beneficial effect on people’s wellbeing and that markets can play positive roles, both of those things can exist in societies not dominated by capitalist logics.
Much of what Stoknes, and other pro-business environmentalists argue for misses the deeply entrenched nature of the drivers toward calamity that are baked into our economic systems. And no amount of positive thinking and focus on the places where there are win-wins-wins for people, planet and profit, will stop those drivers in the time frame we need. Most corporations, which unless they are using a B charter, are required by law to put profit making ahead of any other consideration. There are lucky situations where people, profit, and planet are in alignment, but in cases where they are not, these businesses need to be forced to not destroy our lives. It is crucial that we be clear about the nature of those destructive drivers and what it will take to slow them down.
It is in the interest of profit-making businesses to create products that don’t last so we will keep buying them. It is in their interest to have us buy things we don’t need. In a society with inequality, we will continue to feel a sense of emptiness and status anxiety that will drive people who can to overconsume. The pursuit of profit will drive companies to exploit labor to increase profits. It will drive those with the money to invest in politicians who will serve their interests.
As we make the transition to a just and sustainable society, we can’t stop in its tracks the processes that feed people. But we can wean society off of dependency on the things driving us to destruction. One part of that is getting rid of the idea that private profit making should be at the heart of our social decision making. Unfortunately, a country that takes healthy green growth as a significant measure, will continue to see profit making as a central good.
In terms of his approach to green economics Stoknes rightly explains the ways that the government can help shape markets in ways that will help move resources at the speed necessary to green the economy. I imagine that Stoknes’ healthy green growth will be helpful for an individual business to measure how well it is making progress in social and ecological impacts. But the more we look at the goal of social and ecological wellbeing through the lens of “growth” whether it be healthy and green, or simply grey, we are still keeping our imaginations harnessed to the idea that more market activity is better.
In the short term we need to, as aggressively as possible, and quickly as possible, limit the ability of companies to destroy the environment. We need to push for policies that will direct resources to the communities most negatively impacted by fossil fuel extraction, toxic pollution, and the negative impacts of the climate crisis. We need to impose severe regulations on the ability of corporations to exploit labor and people. And yes, in that transition governments need to give subsidies to companies that will speed the transition, while making sure those subsidies come with strings attached to make sure they serve the public good as they make profits.
Some of us will need to put our bodies on the line to stop the government from acting in ways counter to our survival. We will need to disrupt business as usual. We will need to mobilize social, political, and imaginative resources to as quickly as possible find a path to a system where we all have enough and there is enough for ecosystem health. We need to challenge the power of entrenched interests and hold them to account. We need to prevent fossil fuel companies from pillaging low-income communities and communities of color all around the world.
I hope that Stoknes continues to teach rising business leaders that the profits can be made in the sixth transformation, and to promote well-shaped markets. And I hope that he continues to refine the tools that businesses can use to measure movement toward a world that is healthy for people and the environment.
But our shared goal of a livable world would be furthered by a more respectful acknowledgement of the work of those challenging the entrenched and dangerous forces that are diving us to the brink. To build synergy between the more left and more liberal wings of the movement toward sustainability, it is time for those working on the pro-business side to understand the important work being done to their left.
Cynthia Kaufman is the author of “Challenging Power: Democracy and Accountability in a Fractured World” (2020), “Getting Past Capitalism: History, Vision, Hope” (2012), and “Ideas for Action: Relevant Theory for Radical Change” (2016). She is the director of the Vasconcellos Institute for Democracy in Action at De Anza College. She blogs at cynthiakaufman.wordpress.com