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19 Oct 2010

Economic Collapse or Prosperity without Growth? A Conversation in Totnes…

Hot on the heels of the talk by Tim Jackson that I posted here yesterday, here is a film of a recent event that was run in Totnes, which featured Tim, as well as Ed Mayo and TTT’s Naresh Giangrande.  My thanks to the good people at nuproject for doing this…

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3 Comments

Robin Walker
19 Oct 10:10am

Brilliant little film – and thank goodness for the short musical breaks in the middle – I was getting really depressed, and then the narrative turned to hope for a positive way forward, though it definitely won’t be easy!
Thank you for sharing!
Best reqards
Robin Walker, Chair, Transition Evesham Vale

James Samuel
19 Oct 10:34am

Thanks NU Project for witnessing the discussions that people are having around the world. I see these conversations being had more widely day by day, and my sense is that we are on the runway towards taking off into a new paradigm.

The feelings of disquiet that these conversations can bring, and which are being expressed here, can be easily understood, if we acknowledge that we don’t know what the future will look like – which is all the more reason to hold the vision of the best we can possibly imagine.

This is yesterday’s future, the one we have been co-creating with our thoughts, visions, words, deeds, fears, desires, hopes and… our silence.

What do we want to co-create next?

Brad K.
19 Oct 12:14pm

Naresh Giangrande made some good comments, concrete and useful.

I think . . prosperity involves acting on resources and assets, such that they increase in value. Ship potatoes to my store, in condition and quantity such that the return from sales pays for the resources and effort expended in the transporting. A physical resource that increases in value, I might call a real wealth or real profit. The interest I receive from money in a savings account, the dividend from a stock or bond, or a mortgage backed derivative – I might call a virtual wealth or profit, since only money, not a physical resource, “increased” in value. Deflation could be said to drain the virtual assets out of an economy.

I think the new economy will have drastically less virtual wealth. I think that in the future many more people will be closely involved with increasing value in physical assets and resources.

Sustainable resources are self-renewing. Livestock, sunlight, wind, herbs and grains. Sea water and waves. Where these are increased in value in a sustainable fashion (slaughter a herd of cows and you reduce the capacity to provide meat next season or next year), prosperity might be sustainable.

Where prosperity depends on exploiting a copper mine or an oil field – that runs for a time, then runs out. The resource is expended. There will be assets that profit the individual and community for a time – but it can only be “sustained” by finding new resources to expend.

In historic novels the wealthy were said to employ servants for “room and board, and two sets of clothes per year, with a half-day off each week”. That might well be the goal for sustainable cost of human effort.

Because sustained economic growth only happens among the wealthy. Only the wealthy have sufficient money to continuously purchase beyond the needs of the moment. The travesty of “economic stimulation” is an attempt to get a general population to spend as if it were wealthy. When the underlying real wealth is generated using assets that aren’t sustained – a mine plays out, an oil field produces less or runs out, drilling for oil in the course of sustained exploration is halted (a loss of expectation, of virtual assets) – the wealth that might have fueled growth is reduced. Stimulation is less effective with less actual wealth to spend. Virtual growth as a multiplier on real growth is compromised – 5 x 1 is always going to get smaller, when the underlying real wealth becomes 5 x 0.6.

But prosperity need not be measured solely in coin of the realm. Barter is but one means of non-monetary exchange of goods and services. Children and apprentices working as they grow and learn, for maintenance only, is an informal economy. Help for a friend or neighbor is an asset in an informal economy. Handing out sandwiches to the homeless, from one’s back door, is an act in the informal economy.

Part of my objection to Tim Jackson’ approach is his total and unthinking immersion in the fallacy of today – that all valuation is in terms of money, that is, the formal economy. Working with neighbors, working to benefit the community or for something that will sustain one in retirement – those are exchanges in an informal economy. Tim’s heart is in the right place, but his “self/other” definition misses the point. The distinction for tomorrow is that we must value so-called “non-(formal)-economic” actions and assets and exchanges much more than they are valued today.

When we consider one euphemism for oil, “black gold”, it should be apparent that reducing access to oil, reducing the quantity available or that we use, reduces the fundamental, real wealth in that economy. The inflated cost of human labor, where the expectation is that earnings support a wealthy lifestyle, that, flounders, too, when the total wealth in the economy begins to drain back to the real wealth component.

Globalization has shifted jobs to lower cost labor, benefiting the region and nation where the new jobs are created, but leaving the original nation vulnerable by reducing the amount of real wealth created by the now-closed factories. As oil scarcity and price volatility make globalization less profitable, it seems inevitable that the shrinkage will be more painful where there is less underlying real wealth beneath that mountain of virtual wealth.

I think Tim mis-spoke about how corporations wouldn’t be owned by share holders; that model seems pretty sustainable. Where today many business choices include virtual profits and dependence on cheap energy, those choices will be . . ahem . . simplified. Will business encompass informal economic values? If history is a guide, some may, others will be just as morally corrupt as they are able. That is why we call it “business” and not “community husbandry”.

The new economy? similar to today, but with much less virtual wealth in the economy, and generally less wealthy a lifestyle. More craftspeople, more farmers and factory work, and fewer stock brokers or trophy wives, or people making a living blogging. More catalog sales through mail and the internet. Perhaps more value placed in family and community life.