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Solving The Economics Crisis: Is The Green Economy Really The Answer?

Submitted by: Francesca Rheannon

Posted: Nov 08, 2011 – 10:50 PM EST

Tags: economics, green, economy, clean tech, sustainability, new economy


By Francesca Rheannon

A recent talk by economist Juliet Schor posed some thorny questions about whether we can grow our way out economic crisis – even with green technology.

The New Economics Institute inaugurated its new office in New York last week with the 31st Annual E. F. Schumacher Lectures: Voices of a New Economics. New economics pioneer Gar Alperovitz talked about democratic, community-based economic development. An impressive panel of seasoned young activists from Occupied Wall Street made the connections between the OWS movement, climate activism, economic justice in international trade and socially responsible investment by universities.

But the most thought-provoking talk was given by economist Juliet Schor, who posed challenging questions about profit-driven economic growth as a solution to economic problems—even when that growth promoted the green economy. While Schor sees an important role for clean energy and green technology innovation, she says it cannot proceed on a simplistic growth model without posing serious threats to ecosystems’ sustainability.

She laid out the dimensions of the problem first:

  • The US – with the debt-ridden economies of western Europe set to follow – faces decades of high unemployment and worsening inequality;
  • Attempts to “grow our way out” of recession exacerbate ecological overshoot, as advanced economies use up planetary resources at an annual rate three to five times faster than the capacity of the Earth to supply them; and
  • The Global South is dramatically increasing its ecological impact as emerging economies raise the standard of living for their citizens. Moreover, justice requires that the billions still mired in poverty improve their living standards as well, putting further pressure on planetary resources at a time when climate change threatens to reduce them.

The dilemma: the usual prescription to solve economic woes – more growth – threatens to tank the planet. 

Why can’t we innovate our way out of the problem with a new clean, green economy that improves efficiency and substitutes cleaner processes for dirtier ones? It’s the promise so many in the sustainability community pin their hopes on, including many readers of CSRwire. The technological solution to both our ecological and economic crises is powerfully argued by such heavy hitters as Paul Hawken and Amory Lovins (Lovins is out with a new book on the subject, Reinventing Fire, which I’ll be reviewing soon.)

Schor says market-driven solutions are, “very popular in the design and engineering sector of the sustainability community, where movements such as Factor four, Factor 10, cradle-to-cradle, zero waste and bio-mimicry have proliferated. Sociologists who take this view call themselves ecological modernizers, given their belief in a business-led, profit-driven greening that they see as the foundation for the next major growth phase of capitalism.”

But, despite real gains in efficiency and the growth of the clean tech economy worldwide, Schor points out the relentless trend upward of carbon emissions in the atmosphere has continued, hitting a record high this year.

Although that rise was largely fueled by the Chinese “economic miracle,” Schor noted that not even the economies of Western Europe, which are making laudable efforts to control their carbon pollution, have managed to “de-carbonize.”

Despite the German feed-in tariff (which has made Germany the world leader in rooftop solar power) and wholesale efforts by countries like Denmark and cities in Sweden to go green, etc., the ecological footprint of these countries is increasing (although not as much as the US’).

One reason, Schor told the audience, is some are simply outsourcing their carbon emissions, as they import goods from countries using high carbon production, like China.

Another reason is that the promise of increased efficiency has not been realized; in fact, it has often led to higher use of materials in production and consumption – the famous “Jevons Paradox.” So, while per dollar carbon intensity may go down, the overall carbon footprint increases.

The Jevons Paradox has been rightly criticized as failing to take into account the role rising incomes play: the rise in use isn’t just driven by individual owners who take advantage of efficiencies by cranking up the AC. It’s also driven by higher incomes in the developing world, as more consumers have the wherewithal to buy air conditioners.

But do we really want to deny people in the Global South the ability to cool themselves through technology – especially as global temperatures soar? Schor says no. Instead, “The global community requires a trifecta that dramatically reduces eco-footprints and greenhouse gas emissions while solving the economic problems of the Global North and [emphasis added] raising the standard of living of poor people in the Global South.”

The solution, Schor says, lies in two complementary strategies: reducing hours of work in the formal economy and expanding participation in what she calls the “open source hardware” economy, which encompasses a range of small-scale, local “enterprises” and networks, like CSAs, goods-sharing networks, “hi-tech” DIY, small manufacturing, time banks, etc. The shift toward this New Economy is driven by redefining well-being away from GDP and toward “time affluence, higher levels of self-providing and self-reliance, and social capital.”

Rising productivity in the formal economy can be translated into cutting work hours, without cutting pay. This has been done very successfully in Europe, resulting in far less painful dislocations in the labor market during the current economic downturn. (As we know, rising productivity in the US has been translated right into the astronomical pay packages of the top 1% of earners, while leaving the 99% in the dust.) Cutting hours means more jobs overall. (Schor cited figures showing under the current Business-as-Usual scenario, it will take at least 25 years to reach pre-Great Recession employment levels.)

As workers have more leisure time, their ecological footprint gets smaller. Schor draws on research she has recently completed (not yet published) to show that when hours of work fall, so do consumption levels, as people engage in more socially satisfying, less consumer-driven activity. (For example, they drive less and bicycle more; they buy less fast food and garden more.) As a result, their ecological impacts fall, even though levels of well-being rise. 

The shift has already begun, pushed by the rise in unemployment and widespread distrust of our broken financial system. People are buying less and saving more, joining barter networks, raising backyard chickens and using the Internet to create richer social networks, like ride-share sites, that can meet real needs. Scaling this shift up to society-wide levels remains the challenge, but the New Economy is already rising from the ashes of the Old.

About Francesca Rheannon

Francesca is CSRwire's Talkback Managing Editor. An award-winning journalist, Francesca is co-founder of Sea Change Media. She produces the Sea Change Radio’s series, Back to The Future, and co-produces the Interfaith Center of Corporate Responsibility’s podcast, The Arc of Change. Francesca’s work has appeared at SocialFunds.com, The CRO and E Magazine, and she is a contributing writer for CSRwire. Francesca hosts the nationally syndicated radio show, Writer's Voice with Francesca Rheannon.

This commentary is written by a valued member of the CSRwire contributing writers' community and expresses this author's views alone.

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