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10 May 2013

An interview with Prof. Calvin Jones: “Economics is a child of the oil age”

calvin2

The other day I read an excellent piece by Calvin Jones, Professor of Economics at Cardiff Business School (see right) called Technology Cannot Tackle Climate Change.  Having argued that, due to a range of issues, economic growth is no longer possible, he writes:

“Faced with these issues it is easy to withdraw into either a belief in an economic growth fairy, or into passive, nihilistic depression. But this is not necessary. Many societies historically have functioned perfectly well without ever-increasing levels of growth and complexity”.

He also wrote “the cognitive dissonance we feel, as GDP figures rise, and we feel ever more tired, stressed and scared, is real, and must be challenged”, rapidly becoming one of my favourite quotes.   Given the challenges of condensing complex arguments into short articles, I thought it would be good to have a chat with Calvin.  So what follows is either the audio file to listen to while you’re hoovering the stairs, or a transcript of our talk.

You wrote in your article “growth is not only undesirable but in the medium term impossible”. Could you expand on that a little bit?

That’s not my own idea. There’s a fantastic blog called Do the Math written by a physicist in the States which points out that as long as growth includes energy transformations, within a reasonably short period, a couple of hundred years, the Earth won’t be able to radiate the excess heat into space let alone worry about where the materials are coming from or the energy sources for this growth.

There’s something peculiarly odd about chasing economic growth on a finite planet with no end in sight. When I teach my third-year students I point out that the original economic thinkers, Adam Smith, J.S. Mill, Keynes had some idea of economic growth as a means to an end, that at some point we would have ‘enough’ and be able to move to a steady-state economy where our needs are provided for. I think we’ve lost that in the interim and that’s what I’m trying to get back to, thinking about how to reform economics to get to some idea of where the end-point is.

It seems to be at the moment that current governmental obsession with getting back to growth at all costs, that questioning growth is met with derision and looking the other way. I was at an event recently with Chief Executive Officers of district and county councils. At the beginning they were asked where they thought the economy was going over the next 5, 10, 20 years. Did they think we were getting back to growth? Three quarters of them said it’s not going to happen. Again and again my experiences when I meet people in local government, MPs even, when you get them away from what they’re supposed to be saying in public, often the message is it’s just not going to happen.  

So I wondered, if that’s the case, as you were arguing in your paper, where does the ‘Emperor’s New Clothes’ moment come?  How do we tackle that denial, this obsession that we have to get back to growth, and it will happen, even if it kills us?

I think this is really really complicated and it’s difficult to argue this through in a blog of the nature of the one that I wrote. The issue is that when we think about economics, is that it’s purely a fossil fuel age. When you think of Adam Smith, born in 1723, 20 years after Newcomen steam engines started emptying coal mines of water, all the economic thought that we’ve had has been on the basis of a growing economy with investable opportunities based on very cheap fossil fuels.

I think we start from a place where the theoretical basis of how we understand the economy is predicated towards a growth bias. If you lay on top of that the whole idea of joint stock companies which have to have returns and are not linked to the owner’s or investor’s label, you  have to have an increased resource base to service those claims.

We’ve got an economic system that we’ve only seen work under growth. Certainly for the last 30 years in the UK, we’ve told our public servants that there is no alternative, that this is the way in which you get increased efficiency, hopefully increased tax resources to pay for all the things you’d like to pay for. So I think we come from a place where there’s genuinely a huge disquiet about the way the world has gone, particularly post-2007.

At the same time, what I always say is, capitalism is such a strong incumbent that you need an equally strong challenger. What we don’t have in any post-growth or agrowth or degrowth scenarios is a strong, coherent plan, paradigm, structure for what we think post-growth looks like, and that’s because it’s incredibly difficult. It’s not a case of talking to public servants or the man or lady on the street that there is an alternative and this is what it is. If you look at what the alternatives are, there is of course a huge range. And then if you look at what capitalism is, which is very understandable, it’s devil take the hindmost largely, and if you’re lucky with a little bit of money left over as a safety net.

I think people are really concerned about the undefined nature of the alternatives to what they’re familiar with. Until we get that nailed down, and obviously there are various ways in which that’s being furthered, both in Transition Town Networks and the French Décroissance movement and various other steady-state economy developments. But until we’ve got a coherent vision of how places work under degrowth or agrowth scenarios, it would be difficult to make that change.

What’s your take on what a post-growth world and economy would look like?

When I look at the way in which debates go, I think we fall into a couple of traps. The first one is certainly I have a lot of time for the Transition Network and Transition Towns, but the question I always ask myself is “who’s got the guns?” When you look at purely localised economies, whether they’re city-state or town economies like you’re trying to forward, what I wonder then is where does the vision come from for the overarching security apparatus for the overarching transport infrastructure that we mainly get between these towns. Whether it’s a nation-state or a smaller organisation spatially, who actually enables that into place – trade or the things we need to make these places go places.

I always say to people in conferences – at the moment many people say that the way forward is Transition Towns. I say that’s very true but if Llandeilo is spending the next 20 years learning to grow cabbages then the rational thing for Llandovery to do is learn how to be bandits.

Unfortunately, because what’s happening with our hugely centralised, hugely hierarchical political systems is so obviously wrong, the natural tendency is to want to throw that away and come up with something very localised. But it’s been a long time since we’ve had something properly localised in terms of human organisation in Europe at least. I can’t see how, in the Transition Town framework, who pays the brain surgeons? Or do we simply not have brain surgery? If you want brain surgeons, how do we tax individual towns, because we’ve got to have a brain surgeon per town to provide those specialised services, and how do we then allocate it to those individual towns? [Editors note: I think Calvin somewhat misunderstands Transition here, Transition have never advocated complete localisation and the end of national institutions, rather appropriate localisation within those structures, as and when they are still appropriate to a more resilient, low carbon economy]. 

The local economy agenda fills that gap of what happens within localities, and then I think the requirement for people like me and others is to think about what sort of framework a decentralised framework, a framework which allows autonomy and flexibility for those places, and what John Michael Greer called dissensus not consensus, so lots of different places doing different things, not all following the same path. What sort of framework can allow that and yet need to be sustained so there’ll be some measure of bureaucracy, some measure of organisation from the centre which enables the roads between towns to get patched, for example.

I’ve not seen that system fully fleshed out, and until that happens I think it’s going to be very difficult to show that the Emperor actually has no clothes.

Do you think the push for a post-growth model that thinking and making it happen in practice, do you think that’s inevitably going to be led from the bottom up because the top-down just can’t go there and by the time it does go there things are going to be pretty dire? Or is there some flicker of hope, particularly in the Welsh context?  I get the sense in your piece that there’s something in Wales that’s more open to this than certainly here in England. Is there any chance of a top-down led process of exploring what life beyond growth is?

I think partially yes. I wouldn’t want to overstate my optimism, I think that Wales is in a similarly poor position in terms of the quality of the economic debate we have. But I think what we do have in Wales is that there still is something around the importance of community and something around a desire to retain and protect that which could actually lead to a genuine debate about what growth is for.

The sorts of organisations and debates I’m involved in tend to be focused a lot on the ecological arguments but also on regeneration arguments and how can we regenerate places. I think you can put all the money in the world into a poor place whether that’s from European funding or Communities First or anything else, but if you have a massive supermarket at the end of the road and various other multinationals getting money out of people and places, it’s a worthless task.

When you look at the New Economics Foundation’s Plugging the Leaks work, leaky buckets in terms of local spending and so on, I think a debate that starts there which is about how we can foster prosperity in places then leads you to thinking about different forms of organisation. For example not-for-profit organisations or social enterprises, co-operatives, mutuals and so on, that leads to debate down that path. I think that from that direction we might get somewhere.

If we start from the theoretical perspective that growth is broken, at a central or even regional government level – at the Welsh government level – I don’t think we get very far because there is genuine terror within the cabinet.

You wrote one of my favourite sentences in that article which I’ve put all over the place. You said “the cognitive dissonance we feel as GDP figures rise and we feel ever more tires, stressed and scared is real and must be challenged”. Could you expand on that a little bit?

That just comes back to the link between work and welfare, and a sense of wellbeing that has been dissolved more and more over time. I think back to when I was growing up. Obviously in a South Wales valley the dominant employment was mining and obviously there were many miners including members of my family. It was a horrible, dirty, difficult, incredibly dangerous job, but one which had a huge amount of social kudos and one where work really meant something and where you were valued in the community.

Now I think what we have is a vast majority of people – luckily I’m not one of them- who go to work purely because they know they must, and they can see no way out of that. Further to that, they know they must look forward to a life of nothing but work until they reach some notional retirement period which seems to be getting further and further away.

The fact that you spend half or more of your waking life doing something you know is pointless, and this comes back to my point in the piece about genuinely welfare-adding work, if you are doing jobs which seem to be benefiting no-one apart from the owner of the business you’re working for, then we have to think about what we call work and think about what it is that we want to do with our time, and think about how we can bring those two things together.

Because we have a default measurement which is GDP, which measures only the monetised value of activity, it’s very difficult to have conversations about the value of work within a system where we simply can’t value it in any holistic sense.

What would you say to somebody who says “what does he mean we’re nearing the end of the age of growth? All my stocks and shares seem to be doing OK, the value of my house is staying relatively steady,” how does the concept that we’re nearing the end of growth tally with people’s everyday experience?

The first thing is that it’s simply not true that we have stock markets that are doing relatively well. I think back to taking my money out of the stock market in 2002 when it was at 6000 and we’re at 6003 now. That’s 12 years worth of returns which are not particularly impressive and I suspect looking forwards will only get worse.

Again in my piece, for the average working Joe, according to American data the high-point was the early 70s in terms of disposable income and what you could do with it. That perception that we’re getting richer is not necessarily borne out by the facts. Yes we’re certainly living longer, we have more material things, but in terms of levels of welfare and so on, we’re not actually getting that much better off. There’s an extent to which we’re continually enabling our level of material prosperity based on our exploitation of other people in other parts of the world, and my argument there would be that that is in fact coming to an end.

Regardless of what you think about economic growth and the ability to continue growing, a soon as your average Chinese family gets to a stage where they can afford to buy their own car, refrigerator, computer, exports from China will stop and I expect that domestic consumption will take off for better or worse, ecologically speaking, and we will find the goods we want to import then extremely expensive.

At that point, irrespective of whether growth globally is continuing or not, I suspect that the West is going to find itself a lot worse off in material terms. This is not going to happen tomorrow, but certainly when I think about my children, I wouldn’t expect them to be growing up and becoming adults in a world anything like the one that I did.

If you saw the Local Economic Blueprint that we did in Totnes recently, what we were trying to do with that was, I suppose to set out that what people are looking for an economy to do is to create jobs, to create economic resilience, to create wellbeing. It feels like a post-growth approach is only going to gain any attraction if it can do that better than the existing model. Do you think that we’re nearing the point in terms of an evidence-base where we can show that that could be the case?

I’m not sure we are, and the reason for this is that the material prosperity that we are intimately comfortable with and expect day to day, is so linked to our growth model that we have to take people on a very, very  long journey towards thinking about what they really want. I can imagine sitting down with a group of people and telling them how the world is going to be much nicer and they’ll be doing useful work and the work will be more spread out and they’ll be happier, and by the way of course there’ll be no foreign holidays in this brave new world. People will say, hold on, what do you mean no foreign holidays? Similarly there’ll be no ipods or ipads in this world, because we have to redefine what we think of as welfare at a fundamental level.

I suspect – and I really hope I’m wrong on this – that if you take away fossil fuel input to our level of welfare, the very notion of retirement may be something we look back fondly on, because again retirement is an invention of the fossil fuel age. Nobody stopped working in 1600 or 1500 or 1 AD unless they were a rich landowner. Most people worked albeit within a household context until they died.

That work may have been very pleasant, looking after the kids for instance, it might be helping to sew clothes, cook, within a reborn household economy. That’s certainly what I would look to in terms of a positive vision. If we go back to the idea of an extended household with different members of that household providing for different requirements, that is a positive vision that I would try and sell rather than effectively what we have now but not growing.

I think the notion of a steady-state economy, providing the same sorts of benefits that we have now is a very difficult one. Once you take away the ever-increasing material base, you take away the incentives for companies as they’re currently constituted to invest and innovate and so on, and it’s very hard to see what you’d put in its place to enable this level of material prosperity which doesn’t end up re-raping the world again.

Molly Scott Cato recently wrote a book all about the concept of bioregions, the concept of the bioregion becoming an organising and political framework. Does that feature much in your work? 

Not personally. I’ve come across it quite a lot because our planning school is quite into opposing notions of bioregions and eco-regions. I’m not an expert on this but I understand that a bio-region is more to do with large-scale bio-agriculture and an eco-region might be more what we understand by an American bioregion. I’m not sure it’s a very clear concept, not for me anyway.

The idea of functional regions or functional spaces certainly appeals. That’s something which I think there’s value in thinking what scale human organisation should happen at. What is the appropriate scale? The problem is that we don’t want to get into a situation where we have an idea that there should be a best practice or best scale. What I do worry about is if there’s any ideal that we should aspire to – in the old days or in a perfect world, regions would be this size and these are the sorts of things which would be provided for in that region. I’m a fairly scientific guy and I just look at humans as a species which has way over-exploited its ecological niche and whatever happens now will be a sort of messy crawling towards something that sort of works.

Any attempt to put a structure on this, to call it a bioregion or to carry on with the nation-state as it is, or to go to a Transition Town localised system, I think what might end up happening is we’ll have  a load of messy odds happening across the world. Some places will look very Transition Town-y and will be very localised with a very low level of higher organisation. Some might be very regional. Maybe some regions do make sense in a functional way and can provide for their citizens mostly from within that geographical space. Other places will maintain a sort of eco-fascist approach with a very centralised approach to doling out whatever resources are left, continuing with a strong hierarchy.

The regional piece was about my worry that what we’ll get is ‘Capitalism V 2′, run by renewables covering the world to try and substitute for the fossil fuels we’re using at the moment. I think that may well happen in some places. But I don’t think there will be a one-size-fits-all solution to all this. Everything should be examined as far as we can because at the moment because hopefully the more we throw at the wall the more will stick.

As somebody who is an economics academic and is within that world, what’s the experience of being someone in that world who explicitly questions assumptions about growth. Is it accepted, or are you out on a fringe?

Most of my colleagues think I’m absolutely barking mad. I gave a talk a couple of months ago to my economics section in the school. My argument was that the lack of easy and cheap fossil fuels will lead to the end of growth, that we can’t have an increasingly sized economy globally with 100 dollar shale oil or tar sands as opposed to 10 dollar Saudi oil. It’s amazing how the criticisms of that, from my colleagues were purely “something else will come along, when oil gets to a certain price, something better will come along”.

The economics profession is used to substitutability in things. In the past we slaughtered all the whales to get their fat in Pembrokeshire to light the streets of London, and when we ran out of whales and whale fat became more expensive we moved on to gas and eventually petroleum-type products. The economics profession simply thinks that under the price mechanism things will move towards an ever more efficient and ever lower cost equilibrium.

One guy I talked to after this talk was a PHD student on ethical economics. What I had said chimed with him because he and I were talking out the late Bronze Age collapse, when we moved from the Bronze Age to the Iron Age. Iron is actually a far worse material than bronze – it’s heavier, it’s not half as good as bronze at most of the implementations it was put to. But Mediterranean societies had to move to iron following some catastrophe, the trade routes that brought the tin and copper from the edges of Europe collapsed, so you didn’t have the tin and copper from the UK and Spain to make the Bronze.

At that time the move from the Bronze Age to the Iron Age was a move from a better to a worse technology, and effectively the cities around the Mediterranean emptied for 500 years. Troy disappeared and most of the Greeks effectively went back to the caves. Archaeological records show a huge diminution of population around the Mediterranean at that time, whether it was an earthquake or tsunami or whatever it was.

We are faced with that level of structural change and economics simply cannot deal with it. Economics is a child of the oil age, of the hydrocarbon age, and it’s very difficult to get the profession to accept that price does not do what you want it to do in this situation. I would argue that there’s no substitutability between oil and renewables for many applications. By the time you’ve built the wind farm out at sea, you’ve got that electricity back on shore to put into a battery, the losses involved with that compared with burning oil are so huge that you can’t do the same sorts of things with it. The costs involved don’t allow it. That’s a conversation which is met with blank incredulity amongst most of my profession unfortunately.

Lastly, I wondered what your thoughts were having read the Totnes & District Local Economic Blueprint, and its usefulness as an approach? 

In the same way as all this, none of it is something to be disagreed with. What I’m interested in is how this works. What I always think to myself is, how will this work in Gurnos? Gurnos is a very poor social housing estate about 20 miles north of Cardiff where the only land they’ve got has a huge open-cast coal mine on it. There’s no social capital, there’s no financial capital, and my interest is in what sorts of approaches are going to be attractive in places which are very challenged.

There’s a reason why Transition and this interesting thought has emerged in places like the South-West of England, West Wales, various places in the US. You have the space to do it and no other pressures. What I’m interested in is what is the version of that for the Valleys, and that’s what I’m struggling with at the moment. How you engage with a population who are currently very disengaged because they’ve been on the edge of the economic system for so long they don’t believe that anyone has their best interests at heart?

 

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2 Comments

Tamsen
11 May 12:50am

I think you make a brilliant point about a potential steady-state economy. Who knows if we will ever reach such a stage where currency becomes obsolete and poverty no longer exists. More important, how will we have move towards that stage with the continuing fascination with money and its like to power.

Len Puglisi
13 May 8:09am

Dear Rob – I did submit a comment, but failed to tick ‘Notify me of followup via email’. That was an oversight by me.Did you see my comments on that interesting interview? And at this stage, if not too late, it can go in.

Sorry once again for mucking you around. If it’s unsolvable, please ignore this belated note.