Sustainable Development part 2

=======================Electronic Edition========================
.                                                               .
.           RACHEL'S ENVIRONMENT & HEALTH WEEKLY #625           .
.                    ---November 19, 1998---                    .
.                          HEADLINES:                           .
.                SUSTAINABLE DEVELOPMENT, PART 2                .
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In his excellent short book, BEYOND GROWTH,[1] economist Herman
Daly says that every economy faces 3 problems: allocation,
distribution, and scale.[2]  What do these terms mean?

Allocation refers to the apportioning of resources among
different products --in other words, deciding whether we should
produce more corn, more cars, more bicycles, more jelly beans, or
more hospitals. Because resources are limited, we can't have
everything, so we must allocate our resources in some way to
provide the goods that people want and can afford to pay for.
The way we do this is "the market" which sets relative prices for
goods.[3]  Prices act as signals that cause people to put more
(or fewer) resources into creating particular products that other
people are willing and able to buy.

The second problem faced by every economy is distribution
--apportioning goods (and the resources they embody) among
different people, not among different products.  Nearly everyone
agrees that goods should be distributed in a way that is fair
(though we may disagree on the precise meaning of "fair").  If
you don't believe this statement is true, think of an extreme
case.  If one person received 99% of all the benefits provided by
the U.S. economy, and all other citizens had to divvy up the
remaining 1%, almost everyone would agree that this was an
"unfair" or unsatisfactory distribution of benefits. The vast
majority of people would say, "There is something wrong with this
picture."  This extreme example is intended to show that nearly
everyone agrees that there are "fair" and "unfair" distributions
of goods.  What is a "fair" distribution --and how we should
achieve it --are the main questions that give rise to "politics."

Unfortunately the market cannot solve the problem of fair
distribution. Left alone, a market economy tends to create
inequalities that grow larger as time passes.  Both the economic
successes and failures of individuals tend to be cumulative --the
successful tend to succeed again and again while the unsuccessful
tend to remain unsuccessful. Marriages tend to result in further
concentration of wealth. Furthermore, as Daly says, dishonesty
and exploitation are not necessary to explain inequality but they
certainly contribute to it.[4] None of these statements is
absolute --you can point to many individual exceptions to each of
them --but the tendencies that they describe are well-recognized.

No, the market cannot solve the problem of unfair distribution.
This problem must be solved by people deciding what is fair, then
making public policies intended to achieve a fair distribution.
After those decisions have been made, then the market can
allocate resources efficiently[3] within the
politically-established framework of fairness.

The third economic problem is the problem of scale --how large
can an economy become before it begins to harm the ecosystem that
undergirds and sustains it?  Here again, the market does not
--cannot --provide any answer.  The market offers no mechanism
for deciding what is a desirable scale or for achieving that
scale.  You can have an efficient allocation of resources[3] and
a just distribution of benefits, yet still have an economy that
grows too large and consequently damages the ecosystem.  (Each of
the three problems --allocation, distribution, and scale --is
separate and each must be solved separately.)

The ecosystem provides us with two major services --it provides
resources that we can use (such as air, trees, copper deposits)
and it provides a place to discard our wastes.  Within limits,
the ecosystem can regenerate certain resources (air and trees,
for example), and it can absorb a certain amount of wastes,
recycling them via the services of the detritus food chain.  (See
REHW #624.)  Unfortunately, it is quite possible for the economy
to grow so large that it exceeds the capacity of the ecosystem to
regenerate itself and/or to absorb our wastes.  At that point,
the economy has grown unsustainably large and further growth will
diminish the carrying capacity of the planet --the capacity to
support life, including human life.

As we saw last week (REHW #624), there is abundant evidence that
the human economy, worldwide, has already grown so large that it
has exceeded some of the ecosystem's capacity to regenerate
itself, and has already grown so large that it has exceeded part
of the ecosystem's capacity to absorb our wastes.  These problems
first appear on a local scale (the U.S. has nearly exhausted its
reserves of tin, nickel, chromium, petroleum, and many other
mineral resources,[5] and many U.S. cities are presently unable
to provide their inhabitants with healthful air because of waste
gases from automobiles).  Eventually economic growth reaches a
point at which local problems become global.  For example, in
recent years we discovered that we had inadvertently damaged the
Earth's stratospheric ozone layer with our CFC wastes, and that
most of the world's marine fisheries have been severely degraded
by overfishing.  We are now making similar unhappy discoveries at
a steady (or perhaps accelerating) pace.

Economists, and business and political leaders, acknowledge only
two of the three economic problems outlined above --the problems
of allocation and distribution.  The problem of scale --caused by
growing quantities of materials and energy flowing through the
economy (see REHW #624) --the problem of scale has still not been
acknowledged by most economists, business people, or politicians.
To them, continued growth can only be good.  The vast majority
of them deny that the scale of the economy must be kept
comfortably within the regenerative and absorptive limits of
the ecosystem (if they have thought about it at all).

There is a deep and abiding reason for their denial.  For the
past 400 years, growth has been the central organizing principle
of all European societies, and especially of American society.
Economic growth has substituted for politics, deflecting
attention away from the contentious problem of fair distribution:
even a small slice of the pie will grow larger each year if the
total pie keeps growing larger. Thus growth has allowed us to
avoid confronting difficult ethical questions about the fair
distribution of income and wealth.[6]  So long as the pie kept
growing we could accommodate the rising demands of slaves,
farmers, immigrants, industrial workers, women, and so forth.

As William Ophuls has said, "We have justified large differences
in income and wealth on the grounds that they promote growth and
that all would receive future advantage from current inequality
as the benefits of development 'trickled down' to the poor.  (On
a more personal level," Ophuls says, "economic growth also
ratifies the ethics of individual self-seeking: you can get on
without concern for the fate of others, for they are presumably
getting on too, even if not so well as you.)  But if growth in
production is no longer of overriding importance the rationale
for differential rewards gets thinner, and with a cessation of
growth it virtually disappears.... Since people's demands for
economic betterment are not likely to disappear, once the pie
stops growing fast enough to accommodate their demands, they will
begin making demands for redistribution," Ophuls says.[6]

The end of growth will change American (and European) politics
fundamentally, forcing us to confront basic ethical questions of
economic fairness.  For this reason, the environmental dangers of
growth are ignored by those who think they have the most to lose
--our business and political leaders (and their academic support
staff, the mainstream economists).

Now stay with me as we probe a little deeper into growth. This
may seem obscure, but it is important.

Growth --the central organizing principle of our society (we
could also call it the main ideology of our society) has been
grounded in an ethical principle developed by the English
philosopher Jeremy Bentham and elaborated by John Stuart Mill in
the 1830s.  Bentham argued that the goal of public action was
"the greatest good for the greatest number" --a goal that most
people would probably embrace today without thinking about it
very carefully.

Now that the end of growth is in sight (because we have begun to
hit nature's limits), we can no longer pretend that we can
achieve the greatest good for the greatest number.[7]
Confronting the limits of the planetary ecosystem, we are forced
to ask, how much good can we achieve for how many people for how
long?  As Daly says, we can have "the greatest good for a
sufficient number" or we can have "sufficient good for the
greatest number" but the "greatest good for the greatest number"
we cannot have.[8]  Daly favors seeking "sufficient good for the
greatest number" --meaning the greatest number of humans that can
be supported year after year into the indefinite future.  If your
goal is to maximize human welfare, this is the formula that does
it.  If we live sustainably, without exceeding the planet's
capacity for regeneration and the absorption of waste, billions
or trillions of humans will ultimately be able to enjoy the good
life on planet Earth, world without end.  The alternative (which
is the path we are presently on) is to load up the planet with 12
to 20 billion people in the next century until the ecosystem
collapses, thus diminishing the carrying capacity of the planet
and greatly reducing the total number of humans who can ever
enjoy a good life on Earth.  If you want to maximize human
enjoyment of the good life, the choice is clear.

An essential step toward sustainable development --offering the
greatest number of people a sufficiency of resources for the good
life --will be policies explicitly aimed at reducing huge
economic inequalities.  Growth will no longer substitute for
ethical public policies.

One of the main features of the modern world that creates and
sustains inequality is the high human birth rate.  An abundance
of people provides a pool of cheap labor to do the world's work.
A high birth rate creates steady pressure driving wages down.  In
ancient Rome the word "proletariat" meant "those with many
children" and the main role of the proletariat in Roman society
was to procreate to serve the patricians.  Failure to help people
control their own numbers --then as now --is a implicit cheap
labor policy.  A high birth rate tends to maintain inequality,
and a reduced birth rate has the opposite effect, tending to
equalize incomes and wealth.

Small wonder, then, that so many of the world's people are denied
the knowledge and the means for voluntarily eliminating unwanted
fertility. In too many societies (including our own) the
knowledge and means for voluntarily controlling fertility are as
inequitably distributed as income and wealth.  The wealthy have
little difficulty controlling their numbers; the technologies are
readily available to them.  The poor find it not so easy.  There
is a reason for this.

More next week.
                                                --Peter Montague
                (National Writers Union, UAW Local 1981/AFL-CIO)
[1] Herman Daly, BEYOND GROWTH (Boston: Beacon Press, 1996).
ISBN 0-8070-4708-2.  Hereafter cited as Daly.

[2] Daly, pg. 159

[3] Relative prices measure marginal opportunity costs; see Daly
pg. 222.  Efficient allocation is an allocation that corresponds
to effective demand, i.e., the relative preferences of citizens
as weighted by their relative incomes.  An inefficient allocation
is one that uses resources to produce items that people will not
or cannot buy, and it fails to produce items that people want,
can afford to buy, and would buy if they could find them.  See
Daly pgs. 159-160.

[4] Daly, pg. 207.

[5] U.S. Bureau of Mines, MINERAL FACTS AND PROBLEMS [Bureau of
Mines Bulletin 675] (Washington, D.C.: U.S. Government Printing
Office, 1985).

Francisco: W.H. Freeman, 1977), chapter 6.

[7] As a matter of logic and mathematics, we never could achieve
the greatest good for the greatest number because it is
impossible to maximize two variables in a function.

[8] Daly, pg. 220.

Descriptor terms:  growth; sustainable development; economics;
herman daly; beyond growth; population; human poipulation;
prices; markets; allocation of resources; distribution of
resources; scale of the economy;

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