Guest post: To Save The Economy, We Have To Break Its One Sacred Rule

Written by Jason Hickel, originally appeared on FastCo on 15/03/16.

Scholars are still trying to figure out why the society on Easter Island collapsed, ending the people famed for their construction of towering stone heads. One interesting theory holds that it had to do with the heads themselves. Somehow, the islanders decided that the giant heads represented power and success, so different groups competed to build as many heads as possible. But because there was only one quarry, to move the stones around the island required felling trees to use as rollers. To feed their lust for heads, they felled the trees so eagerly that, over just a few generations, what was once a tropical forest was reduced to barren scrubland.

The islanders must have realized that their obsession with heads would quickly spell their doom. As the project wore on, they no longer had sufficient wood to build fishing boats or houses, nor trees from which to gather fruits and nuts. They must have seen this disaster unfolding—slowly starving to death and forced to live in caves for shelter—right up until they felled the last palm. It was all because of a myth, but a myth so powerful that, despite knowing its madness, they could not resist it.

Humans are strange creatures. We create our own myths and then we live by them almost as though we didn’t create them at all, as if they were handed down to us by the gods. And this is not just a characteristic of small societies. Our global civilization has its fair share of powerful myths, one of which is remarkably similar to that which destroyed Easter Island. Just as multiplying heads became the sacred rule of Easter Island economics, so there is one sacred rule that underpins our global economic system: namely, that GDP must grow, and must grow at all costs. Why must GDP grow? Because GDP growth is equivalent to human progress.

We tend to take the GDP measure for granted as though it has always existed. Most people don’t know that it was invented only recently. It has a history. During the 1930s, the economists Simon Kuznets and John Maynard Keynes set out to design an economic aggregate that would help policymakers figure out how to escape the Great Depression. Kuznets argued for a measure that would help us maximize human well-being and track the progress of human welfare. But when World War II struck, Keynes argued that we should count all money-based activities—even negative ones—so we would know what was available for the war effort.

In the end Keynes won, and his version of GDP came into use. GDP was intended to be a war-time measure, which is why it’s so single-minded—almost violent. It counts money-based activity, but it doesn’t care whether that activity is useful or destructive. If you cut down a forest and sell the timber, GDP goes up; GDP does not count the cost of losing the forest as a habitat, or as a future resource, or as a sinkhole for carbon. What is more, GDP doesn’t count useful activities that are not monetized. If you grow your own food, clean your own house, or take care of your aging parents, GDP says nothing. But if you buy food from Tesco, hire a cleaner, and send your parents to a nursing home, GDP goes up.

Of course, there’s nothing inherently wrong with measuring some things and not others. GDP itself doesn’t have any impact in the real world. GDPgrowth, however, does. As soon as we start focusing on GDP growth, we’re not only promoting the things that GDP measures, we’re promoting the indefinite increase of those things. And that’s exactly what we started to do in the 1960s. GDP was adopted during the Cold War for the sake of adjudicating the grand pissing match between the West and the USSR. Suddenly, politicians on both sides became feverish about promoting GDP growth. GDP growth became a sacred rule. And we remain in thrall to it today.

The imperative for growth is incredibly powerful; probably the most powerful force in our world. When the entire global political establishment puts its force behind this goal, human and natural systems come under enormous, overwhelming pressure.

What does this pressure look like in the real world? In India, it looks like corporate land grabs, which leave peasant farmers dispossessed. In the U.K., it looks like privatization of public services—with corporations eager to exploit untapped markets. In Brazil it looks like deforestation, which is eating the Amazon at a rapid clip. In the U.S. it looks like fracking, backed by a government desperate for cheap energy. Around the world it looks like trade agreements that strip away regulations that protect workers and the environment. And for all of us it looks like longer working hours, expensive housing, depleted soils, polluted cities, wasted oceans, and—above all—climate change.

We normally think of these as separate crises. But they are not: they are all connected. They all proceed from the same deep logic of GDP growth, the collective madness at the heart of our economic system. To fight them as separate issues is to mistake the symptoms for the disease.

People who spend their lives pushing against these destructive trends will tell you how futile it feels. It is futile because our governments don’t care. They don’t care because according to their most important measure of progress, destruction counts as good. Indeed, under the tyranny of GDP growth, the destruction must continue at all costs. The problem here is not that humans are inherently destructive. The problem is that we have created a myth that encourages us to behave in destructive ways, and have given that myth the power of a sacred rule. As Joseph Stiglitz has put it, “What we measure informs what we do. And if we’re measuring the wrong thing, we’re going to do the wrong thing.”

Why does GDP growth retain such a hold on our imagination? Because we assume that when GDP goes up, it makes our lives better: it raises our incomes, it creates more jobs, it means better schools and hospitals and so on. This may have been true in the past. But unfortunately it no longer holds. In the United States GDP has risen steadily over the past half century, yet median incomes have stagnated, the poverty rate has increased, and inequality has grown. The same is true on a global scale: since 1980, global GDP has grown by 380%, but the number of people living in poverty has, according to World Bank numbers of people living on $5 a day, increased by more than 1.1 billion. Why is this? Because past a certain point, GDP growth begins to produce more negative outcomes than positive ones—more “illth” than wealth, as the economist Herman Daly has put it (if “ill” is the opposite of “well,” “illth” is the opposite of “wealth”).

GDP growth might make sense on a planet with endless room and endless resources. But we don’t live on such a planet. In fact, we’re already overshooting our planet’s biocapacity by more than 50% each year. There are no longer any frontiers where accumulation doesn’t directly harm someone else, by, say, degrading the soils, polluting the water, poisoning the air, and exploiting human beings. At this point in our history, GDP growth is creating more misery than it eliminates. And the problem is not just that the growth is inequitably shared, although that it is a major issue; the problem, rather, is aggregate growth itself. In our era of climate change, even sober scientists are pointing out that growth is leading us down a path that that has widespread famine and mass displacement just around the corner.

Yes, some try to reassure us that our economy is gradually “decoupling” from material throughput, and that soon we will have growth without destruction. Butstudy after study has proven that it’s not true. In fact, global consumption of materials has nearly doubled over the past 30 years, and accelerated since 2000.

The rule of GDP growth may seem sacred, but it is not. As quickly as we created it, we can pull it apart. And pull it apart we must—it’s time for the giant stone heads to roll. There are already movements in this direction. A number of states and countries have adopted much more sensible alternatives, like the Genuine Progress Indicator, which seek to promote human and environmental well-being. There are many others we might consider, and it doesn’t much matter which we choose—indeed, each city or country could pick a different measure, or no measure at all. The important thing is that we shake off the tyranny of GDP growth and open up a creative, democratic conversation about what kind of world we want to live in.

African and Asian leaders call for new development bank

Leaders of emerging African and Asian countries are calling for the establishment of a new development to rival the World Bank.

At the 60th commemoration of the Asian African Conference in Jakarta, Indonesia last month a number of leaders agreed that, to succeed, there is a need for a new bank, totally separate from the World Bank and the International Monetary Fund (IMF) because the two can no longer be trusted to fully fund development infrastructure projects.

Indonesian President Joko Widodo, the conference host, said those who still insisted that global economic problems could only be solved through the World Bank, International Monetary Fund and Asian Development Bank were clinging to “obsolete ideas”.

In his opening statement, Widodo said that African and Asian countries felt a global injustice because the developed world is reluctant to change the status quo:

“The view that the world economic problems can only be solved by the World Bank and the International Monetary Fund is an outdated view. I am of the view that the management of the global economy cannot be left only to these international financial institutions. We must build a new global economic order that is open to new emerging economic powers.

“When rich nations, which comprise a mere 20 percent of the world’s population, consume 70 percent of the world resources, then global injustice becomes real.

“When hundreds of people in the northern hemisphere enjoy the lives of the super-rich, while more than 1.2-billion people in the southern hemisphere struggle with less than 2 dollars per day, then global injustice becomes more visible before the eyes.

“When a group of rich countries think that they could change the world by use of force, the global inequality clearly brings about misery, of which the United Nations looks helpless.”

You can read the full text of Widodo’s speech here.

Speaking in his capacity as the African Union leader and the Southern African Development Community chairperson, Zimbabwean President Robert Mugabe echoed these sentiments, arguing that Asian and African countries “should no longer be consigned to the role of exporters of primary goods and importers of finished goods” in a “role that has historically been assigned to us by the colonial powers and starting from the days of colonialism”.

He argued that policies fostered by the IMF and the World Bank had led to deindustrialisation and declining income in sub-Saharan Africa and that both institutions should be criticised for “failing to deliver ­solutions” to alleviate poverty, ­distribute wealth and close the inequality gap in developing countries.

He said the two Bretton Woods institutions were based on “Western doctrine and exploitation” and that developing countries needed to look for alternatives to secure their place in global affairs: “We see this by the decision taken by Brics [Brazil, Russia, India, China and South Africa] countries in establishing a development bank and the establishing of Asia Infrastructure Investment Bank championed by China. This is how we must forge ahead if the voice of the South is going to matter in international affairs.”

Mugabe said the development of these banks would usher in a new world economic order that would focus on South-South co-operation and make developing countries self-sufficient. (Source – Mail & Guardian)

Reactions to this will be mixed – controversial Zimbabwean President Robert Mugabe is one of those leading the charge for a new bank; Indonesia has many of it’s own problems, and turnout at the conference was low (21 leaders attended of 109 invited). However, I believe it’s really important that these conversations are being had, and that there is a growing dissatisfaction with the current world economic order, its inequalities and it’s unfairness towards the global south. Widodo himself said the group may be meeting in a changed world but still needed to stand together against the domination of “a certain group of countries” to avoid unfairness and global imbalances – and this was a sentiment shared by other leaders at the conference.

I completely agree that it’s time for a ‘new world order’, or a ‘new world civilization based on social justice, equality, harmony, and prosperity’ as President Widodo put it – let’s just hope that these leaders recognise that they need to lead by example.

It’s not going to be easy, and I have numerous concerns about the fine detail; including the task being handed over to China, or the China-backed Asian Infrastructure Investment Bank (AIIB). The AIIB is seen by many as a competitor to the Western-dominated World Bank and Asian Development Bank and a ‘threat’ to U.S efforts to extend its influence in the Asia-Pacific region and balance China’s growing financial clout. I think that it’s important to challenge US influence, but I do worry that this will just herald more of the same problems that accompany a global dominant hegemony – unchecked power, global inequality and debt, but with China at the helm.

I look forward to seeing where this one is headed and hope it is authentically, passionately, fairly, compassionately fruitful!

Let me know what you think – a good idea or a bad one? How might this work? Is it possible with/without China leading the way?

Overdevelopment, Overpopulation, Overshoot

‘In the developing world, the problem of population is seen less as a matter of human numbers than of western over-consumption. Yet within the development community, the only solution to the problems of the developing world is to export the same unsustainable economic model fuelling the overconsumption of the West.’

Kavita Ramdas.

Read the full article in The Guardian.

Photograph by Brett Cole.

The Bill and Melinda Gates Foundation and their neoliberal agenda

You might remember I had my suspicions about The Bill and Melinda Gates Foundation​, when I went to listen to Melinda speak at a Family Planning conference in London last year. This week, they’ve gone and proven me right…

Last week, it was reported in the Guardian that they’re investing in fossil fuels. This, from an organisation that says that the threat of climate change is so serious that immediate action is needed.  According to Guardian analysis of the charity’s most recent tax filing in 2013, they held at least $1.4bn (£1bn) of investments in the world’s biggest fossil fuel companies.

You can support the Guardian campaign to persuade them to move this money here.

Today, an email from Global Justice Now, and confirmed by reports from The Ecologist and openDemocracy, announces that the Foundation is holding a secret meeting in London with USAID – US Agency for International Development​, entitled “Multiple Pathways for Promoting the Commercial and Sustainable Production and Delivery of Early Generation Seed of Food Crops in Sub-Saharan Africa.” Or, as openDemocracy​ puts it “this is a meeting where corporations will discuss how to increase their control of the global seed sector”.

The report recommends that in countries where demand for patented seeds is weaker (i.e. where farmers are using their own seed saving networks), public-private partnerships should be developed so that private companies are protected from ‘investment risk’. It also recommends that that NGOs and aid donors should encourage governments to introduce intellectual property rights for seed breeders and help to persuade farmers to buy commercial, patented seeds rather than relying on their own traditional varieties.

Finally, in line with the broader neoliberal agenda of agribusiness companies across the world, the report suggests that governments should remove regulations (like export restrictions) so that the seed sector is opened up to the global market.

The neoliberal agenda of deregulation and privatisation poses a serious threat to food sovereignty.

This neoliberal agenda of deregulation and privatisation, currently promoted in almost every sphere of human activity – from food production to health and education – poses a serious threat to food sovereignty and the ability of food producers and consumers to define their own food systems and policies.

The two organisations organising the conference, BMGF and USAID, are two of the main driving forces behind the adoption of commercial, patented seeds among poor farmers in Africa. When seed markets are dominated by a handful of companies selling their patented seeds, farmers’ ability to save, exchange and sell their own seed varieties is threatened.

Source: openDemocracy, 23 March 2015