Economic crisis -- new thinking needed

Recognising that the world economy is in crisis, I quote an old truism that states “if you keep doing what you have always done – don’t be surprised if you get what you have always got in the past”. The logical extension of this is that we urgently need to review the very basis and implementation strategies of our current economic models .

The much advocated principles of “sustainable development” clearly state that all future development must be “sustainable” in terms of society, environment and economic growth. It seems, however, that our economic model is not fulfilling any of these three terms of measurement.

From an economic sustainability perspective, the economic crisis is sufficient to illustrate that our economic model is not producing “sustainable economic growth”. It is also worth considering the amusing but true words of an economist who said “Anyone who believes in sustained economic growth on a finite planet – is either a madman or an economist”.

Let us therefore examine the two other critical elements of “sustainable development”, namely the social and environmental dimensions.

From a social perspective, consider the fact that over the past 50 years, whilst the global economy has steadily grown in terms of gross domestic product (GDP), income inequality has increased (rich getting richer and poor getting poorer) and the index for sustainable economic welfare shows that our quality of life has been declining despite the increase in GDP. Furthermore the economic trend is toward ‘jobless growth’ with a relentless growth in levels of unemployment. Thus whilst the economy has undoubtedly grown, it has not produced “social sustainability” in terms of employment, quality of life or social equality.

From an environmental perspective, we all know that economies depend on the natural environment both to supply basic resources and to absorb the wastes that we produce in the process of economic development. However, the rate at which the world’s growing economies are using up our natural resources and polluting our eco-systems has already far exceeded the planet’s ability to regenerate itself or assimilate the waste we are producing. Conservative estimates show that in the last 50 years we have lost, destroyed or seriously depleted two thirds of the world’s agricultural land, half of the world’s freshwater wetlands, mangrove swamps and rivers, over a quarter of the marine fish stocks and 20% of the forests. In short, the current economic model is not “environmentally sustainable”.

Quite understandably there is, however, a reluctance by many to challenge current economic models. This is as a result of a misperception that we have only two possible options – capitalism or socialism. Socialism they say has clearly failed (as witnessed by the spectacular fall of the USSR) and we must therefore live with the capitalist system. Happily this is not the case. A new or “third way” of economic modelling and thinking appears to be rapidly emerging, which recognises that the wellbeing of both society and the environment can be achieved without necessarily being proportionate to the quantity of materials, goods and products consumed (de-linking social, environmental and economic wellbeing from the tenants of consumerism). This new thinking is led in South Africa by the South African New Economics (SANE) Network whose basic economic reform principles include :
1. Promoting local and limiting global economic activity
2. Paying a basic, non-means-tested income to all citizens
3. Encouraging complementary currencies to stimulate economic activities in cash-poor communities
4. Monetary reform to break the money generating monopoly of the banking system
5. A tax structure which taxes non-renewable inputs and value subtracted (“bads”) rather than income and value added (“goods”).

After attending the SANE annual conference a few months ago I walked away feeling excited and absolutely heart-warmed by the examples we saw of cities and communities around the world that have adopted new economic values and practices that have uplifted previously impoverished communities, generated thriving commercial activity, restored damaged eco-systems and engendered a strong sense of social community and wellbeing.

For further reference on SANE thinking go to www.sane.org.za

Yours eco-logically
David Parry-Davies