No more business-as-usual

By Angela Tam

The recession is officially over in a number of countries and economists who have repeatedly said this is all
part of the typical boom-bust cycle are eagerly anticipating a return to business-as-usual. Some stock
markets are already soaring, but will there be a return to business-as-usual?

The answer is a simple no, and this article explains why.

Ever since the start of the Industrial Revolution in the 19th century, politicians and economists have trained
us to see the economy and Earth's ecosystem as related but separate entities (see diagram 1). The former is
seen to obtain its raw materials for industrial production from the latter, and to use the latter as a sink for its
waste.

Viewed this way, the economy can expand indefinitely (say from the size of the solid line to the size of the
dotted line); more raw materials will be drawn from the ecosystem and more waste dumped in it, but the only
concern is that this will create more pollution and we may run out of some non-renewable resources, such as
oil. Out of this view, therefore, has arisen the idea of 'sustainable development', which really is about
managing the flow of materials from the ecosystem to support continued expansion of the economy rather
than protecting the environment from further harm.
This, however, is not possible because the whole perspective is actually wrong. In reality, the economy is a
subsystem of the ecosystem, as diagram 2 shows. As the economy expands, therefore, it will fill more and
more of the ecosystem. This means that, however carefully we try to manage natural resources, less and less
of them will become available for as long as the economy continues to grow, because the ecosystem cannot
expand in the same way. In fact, the size of the economy today, relative to the ecosystem, is more like
diagram 3.

While diagram 2 may illustrate the size of the world's economy back in, say, the Great Depression of the
1920s-30s, diagram 3 shows its size as it is today.

That is why economic growth is so damaging to our planet. More importantly, it shows why there is no
going back to “business as usual” this time. Analysts like to draw on historical precedents to support their
claim that the current downturn is typical of the boom-bust cycles the economy inevitably experiences and
that, with appropriate financial stimuli to kickstart growth, all will be well again.

That might well be true in the 1920s-30s, when the world's economy was small, but this is no longer the
case: it has now grown to such a size that it will soon completely overwhelm the ecosystem.

Diagram 3 is not just an alarmist depiction of the state of affairs; all the news coming out of the scientific
community confirms its reality. We are not only past, or approaching, peak oil, we are also rapidly running
out of what ought to be renewable resources but which, due to the rate of exploitation, no longer are.
Overfishing, for example, means that fish stock is not recovering, and we are producing so much greenhouse
gases that the ocean, once considered a reliable carbon sink, is now approaching saturation. The resulting
increase in the sea's acidity is also proving to be devastating for marine life.

The only way to save our planet is to change the economic growth mantra and spread the call for a 'steady-
state' economy. Adopted from the field of physics, 'steady state' refers to a condition in which input and
output are evenly balanced. That is very different from the current situation, where we are constantly
drawing natural resources from the ecosystem and loading it with waste without giving anything back.

Advocating a steady state rather than economic growth does not mean the world's economy becoming
stagnant. Quite the contrary. The existing model is predicated on stimulating consumption, which in turn is
met by increasing production of goods that drain natural resources, even though we don't need most of these
products. It's a model that sets us on a treadmill that goes ever faster until we collapse with exhaustion.

A steady-state economy, on the other hand, will be one in which economic development is focused on
cultivating our human potential and care for the ecosystem that nurtures us. It means a shift from the
production of consumer goods that boost corporate profits but not the welfare of workers to activities that
benefit communities.

Think about the greenhouse gas emissions generated and amount of raw materials exploited in order to
manufacture, package and transport any consumer goods from a factory in one part of the world to a sales
counter in another. And then there's the waste packaging to be disposed of, as well as the consumer goods
themselves when they break – easily, due to built-in obsolescence – or cease to amuse us.

It's a model politicians like, because increases in this type of investment pushes up the gross domestic
product (GDP) figure, even though it does nothing to increase the GNH – Gross National Happiness – score
that Bhutan pioneered.

In a steady-state economy, on the other hand, we could have thriving communities growing and trading
locally produced food that is healthier for us and need not be transported long distances to reach its market.
We could have more teachers to educate the young, the disabled and those who, because of their learning
styles, do not benefit from conventional schooling. We could have more truly 'healthcare' workers to look
after the aged and help us maintain a healthy way of life rather than care for us only when we've been struck
down by disease. We could have more jobs in small, locally-based enterprises engaged in import
substitution businesses, offering goods and services for their communities.

Much hope rests on the climate change deal that can be struck in Copenhagen in December 2009, but there is
no point seeking a new agreement to replace the Kyoto Protocol if governments are to pursue economic
growth in parallel. One scarcely needs further illustration of the conflict between efforts to protect mother
Earth and economic growth, than the news of Australian Prime Minister Kevin Rudd's decision to suspend
plans to introduce emissions trading in order to tackle the recession.

More than a replacement for the Kyoto Protocol, the world needs a change in the prevailing economic
paradigm. Find out more about the steady-state economy by visiting www.steadystate.org.

©Angela Tam 2009