“The time has come to break out of past patterns. Attempts to maintain social and ecological stability through old approaches to development and environmental protection will increase instability. Security must be sought through CHANGE.” (UN report Our Common Future, 1987)
My tentative ideas about the current crisis are as follows:
Recessions, in our modern economies, are normal. For a while it was thought that recessions belonged to the past, but no longer.
Why not? Because there is a compulsion to growth (which in my heretical view is caused mainly by the modern money system, by the system of money-must-grow). Businesses have to produce a. continually, and b. with maximal output or performance. This requires continuous and maximum sales, i.e. ditto consumption. Anything hampering this will have serious economic consequences. Any sudden rise in the costs of production (oil, resources, ecological requirements) or less spending by consumers – and companies and shops immediately feel the pinch.
This economy of supply is something we’ve all got used to and take for granted. But in fact it is absurd. For it is based on, is wholly dependent on, constant and ever-growing consumption, with entrepreneurs having to produce as much as possible the whole time (or be otherwise profitable the whole time). It is an absurdity to which we have become blind, because this economy has become our natural surroundings, the very air we breathe.
What triggered off the Japanese recession several years ago? A financial crisis? That was not my judgement. It was just a slowing down of consumer purchases. Less homes, computers and cars being sold, a stagnation of building activities – all very normal. Because of the way everything is interconnected, though, this partial “calm-down” immediately affected the whole economy.
What started the recent misery in the USA? Was it developments in the financial sphere, or rather a dip in consumer spending, a slump in the value of homes, a rise in production costs? What I mean is: was is not in the real economy that the misery originally began?
Of course this had repercussions in the financial realm – with its specifically American features – and so the situation was aggravated enormously, exploded. Which in turn is bound to affect the real economy.
[An image I can’t get rid of these days (as you know, I love illustrative drawings): at the top, all the current upset and commotion in stock exchanges, banks, finance houses, government offices and many private homes, with underneath the baker baking his/her bread, the mechanic repairing a car, the farmer milking his/her cows, the mother looking after her children, the dockworker loading a ship, the miner drilling his part of the coal face, the – often kerchieved – woman cleaning your office after you’ve left – all quietly getting on with their daily work far away from all the turmoil above them.]
My point is this: let us not allow the current turmoil in the financial realm to obscure the need to transform the economy’s real domain. Which in my view means replacing the money-driven economy of supply that is ruining the surface of the planet (our very home!) by the old economy based on demand – a demand kept within ecological bounds. My now 20-year-old proposal – in April put forward at an international conference on degrowth in Paris (www.degrowth.net) and this month at a meeting of economists in Utrecht* – is to make production flexible. Demand for numerous goods and services fluctuates, so enterprises should likewise be able to fluctuate without having to close down immediately they fall behind in the rat-race, as is the situation today. This would mean a. making the remuneration of capital flexible, while tying business and investors closer together, and b. making the workforce flexible, by diversifying the sources of income of most workers (so that most people will have more than one job).**
[Another intermezzo: for most mainstreamers, today’s crisis has come out of the blue. But in the small but intelligent world of alternative-globalists, growth-opposers, greens etc., it has long been anticipated that what they are now calling the ‘balloon-economy’ was going to implode, sooner or later.]
Two passages from my paper Let’s Stop the Tsunamis (2005):
“There are several 'tsunamis' on their way to our shores. Rising sea levels and climate change, causing both storm and drought, cold- and heat-waves (and worse). Dwindling stocks of fresh water, oil and other vital products. Destruction of nature and loss of species, with whom we are so vitally connected. A run-away globalisation, market fundamentalism and emerging 'tigers' like China, India and Brazil. The upset after a collapse of the dollar or of the stock exchanges. The huge military expenditure worldwide. Continuing disintegration of our own societies, undermining of standards and values, and of democracy too.
All these tsunamis have an enormous capacity for damage and devastation, probably far greater than terrorism.
These are problems that need tackling by governments comprising all the major parties, for they transcend, by and large, any controversies between majority and opposition, right and left, conservative and progressive. 'All hands on deck' is what we need now.
And so we propose a solution for all industrialised countries facing structural unemployment and social disruption, a sound solution both ecologically and socially.
In doing so, I am afraid I must start with a wise word of caution from the famed economist John Maynard Keynes: "The difficulty lies not in the new ideas, but in escaping from the old ones which ramify into every corner of our minds." ”
(…..)
“We are not against globalisation, just in favour of a drastic regionalisation of the economy – the whole world over! – as an intelligent correction thereof. Some form of protectionism, possibly with regional currencies (many already in Germany and elsewhere!), will be necessary, in response to today's massively protected supranational flows of capital, and will in fact prove rather healthy, ecologically as well as socially. It will be a liberation from outside capital coming and going as it pleases, holding our governments and municipalities permanent hostage. (The more capital is mobile, the more our economies are instable.) As to Europe, our proposal would create a Europe of the regions (Denis de Rougemont) – in a world of the regions…
Our proposal is in fact not that different from the social market economy as promoted by the economist and former Bundeskanzler Ludwig Erhard, provided made very green and with full internalisaton of costs. Some people think such a market-economy should free itself from capitalism. It depends on the definition of capitalism. Perhaps a healthy step would be, as Keynes seems to suggest with his 'euthanasia of the rentier', to free capitalism from capitalists.
Certainly, our economies would be more sober than those of today, with their squander and waste, their structural overshoot, their excessive luxury. To paraphrase Goethe: "It's by constraint that the surviver is marked." (In der Beschränkung zeigt sich der [Meister] Überlebende.) A little less liberté and a little more égalité will be all to the good of fraternité. Our ‘home’-economies will be a lot more fun, they will be greener and cleaner, more social and tastier as well!
The new major economic activity worldwide: regreening our planet. All revenues from oil, coal and gas (old photosynthesis) should be used for generating new photosynthesis ('New from Old' campaign).
In 1939, Britain had to change overnight into a wartime economy. If we are to effectively tackle the problems that face us today – with our production overkill and frantic consumerism, have we not declared war on ourselves? – we need to make the same kind of sudden U-turn.
This is my Economic Revolution***. Maybe it will soon be yours.
- A liberation of production and the entrepreneur.
- Business at last operating truly sustainably, at the service of the community.
- Intelligent economy-building regionally (much activities substituting useful imports).
A move towards a life-saving economic paradigm-shift. Regenerating enthusiasm, energy and a perspective in our lives. It is now or never. We have to act fast. The 'tsunamis' are on their way.”
To conclude: I doubt whether we can continue to produce (in the sense of material production) things that are not strictly necessary. This has all to do with entropy – to our shame a notion unfamiliar to most people. But what I propose will at heart be a liberation of our whole economy. Today, the economies of the rich countries are causing such ecological and social disruption that their net result, contrary to official calculations, has become downright negative. To calm them down and achieve degrowth would therefore mean a step towards … real growth. And moreover a step towards greater human dignity and a more advanced civilisation.
After The Inconvenient Truth (thank you, Al Gore), The Happy News!
Willem Hoogendijk, Earth Foundation (wh@aarde.org) Utrecht, October 2008
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* A follow-up of the Declaration of Tilburg: www.economischegroei.net (text in English)
** Further on flexibilisation: my contribution to the Paris meeting: Let’s liberate our economies! From supply back to demand. (www.degrowth.net All other papers now also available. A pioneers’ collection!)
*** The Economic Revolution - Towards a sustainable future by freeing the economy from money-making. International Books, 1991/1993. 208 pp. ISBN 90-6224-997-3 (try at Amazon). Translated into Indonesian and Czech. A French edition is in the making. [Dutch version in two parts: I. Economie Ondersteboven (The heretic analysis. ISBN 90 6224 287 1, but no longer available in bookshops) & II. De Grote Ommekeer (Solutions), available from www.aarde.org]
