17 Jul 2013
Chandeliers, the President of France, and the future of economic growth: a report
Last week I attended an extraordinary occasion in Paris, which felt momentus and historic, but in the somewhat confused and mixed way these things often do. Hosted in the incredible, palatial National Assembly, with its statues, chandeliers and gold leaf, the event, called ‘An Innovative Society for the Twenty-First Century’ was hosted by IDDRI (the Institute for Sustainable Development and International Relations) under the aegis of Francois Hollande, President of the French Republic (although the President himself didn’t actually attend). It was the first event I have been to which has had such high level support and an explicit questioning as to whether economic growth is the best way forward from here.
This is going to be one of those long posts compiled from the notes I took during the event. Any omissions or misquoting is entirely my own responsibility. So I will go through each session and the key points of what was said by whom, as well as chucking in a few photos of the place just so you can marvel at how the French do palaces. At the end I will give a few of my reflections on the event,
The opening paragraph of the conference booklet stated:
“The first industrial revolution opened up an extended period of intense economic innovation. New technologies, new energy sources and new forms of work organisation were invented and rapidly diffused, this leading to the growth of material prosperity and wealth as measured by Gross Domestic Product (GDP) per capita. Today, some economists are highlighting the fact these growth rates in industrialised countries have been in decline over the course of several decades, raising the issue of the exhaustion of this economic model and the related social and budgetary issues”.
The Opening Session
This began with Claude Bartolone, President of the National Assembly. He began by stating that we are at a pivotal point in history where we readapt our growth model to the changes that are coming. We must, he stated, be sober in our consumption and move to a renewable energy model. This is a new era. The western world has been on a downward curve for several years in terms of growth. This need not, however, mean the end of progress. We should also still be helping developing nations to improve their economies. It should also not mean a rejection of technology. This is about the need to change our thinking.
Renewable energy targets are not a constraint, they are a vision, an opportunity for new jobs. Bringing in smart grids across Europe to better enable renewable energy is a huge opportunity to stimulate the economy. It is important to prepare for social acceptance of this. We know who it is in our economy, in our society, who is suffering, we must learn to live differently, less ostentatiously, and in greater solidarity with others.
Having the necessary tools to make a green economy happen are important. But we must have the necessary tools. Taxes are powerful, but they should not just be seen as an opportunity to reduce the deficit. We have to prioritise. We can live with 4% of our budget going to pay off the deficit, but not with 4°C climate change. In the 1970s, France responded to the oil crises by going nuclear. Now, as those plants near the end of their lives, the question is what next? You are the thinkers of this rethinking, he concluded, and this event is designed to enable this.
He was followed by Laurence Tubiana, Director of IDDRI, who started by saying that this occasion was an invitation to think outside the box. We are seeing, she began, a sense of worry and concern that is stopping people thinking about the future. We tend to look back, to try and make things like they were before.
Growth is key to our thinking about the future. The fact we depend on growth is a problem, because we no longer have any growth. The debate is open. Are we looking at a structural end of growth in mature economies? IDDRI felt this was the right time to bring these people together, given that growth has fallen in France from 5% a year to 1%. The 30 halycon years for the French economy are behind us.
This is complex. We cannot rule out the assumption that things will continue to stagnate. Growth is not the only possible situation. I am delighted that this event brings us together as a group to look at a post growth economy from a number of different perspectives.
There are real movements around this question, people who are not waiting for state funding, and everyone can participate in this, things like Fair Trade, local produce, the sharing economy, not a single system but a multitude of innovations. It is vital that to really take off, these initiatives are allowed to breathe, to move around, to develop. We must find resilience. So how best to proceed.
Session 1: Have our models of growth entered into an exhaustion phase?
This started with Lord Nicholas Stern, author of the seminal Stern Report. He came out from a start as a firm believer that tackling climate change, if done properly, will lead to economic growth, not to the end of it. The cuts we need to make are substantial, he said, and they need to start now. The only way to do it, he stated, is to break the relationship between production and emissions. If we don’t manage this, we won’t manage the change we need to see.
Maintaining a position that growth is desirable is essential because telling a story that it is over would mean our international policy ambitions will be dead in the water. All previous periods of great innovation and technological advance have been led by private sector investment, and this one is no different. The difference with this one is that the government has to set the right framework to make sure we end up with what we want to see.
We need a realistic price on carbon, but to be able to harness private finance, policy is central. One way to boost this is to have a strong emissions reduction target by 2050. We must strongly embrace carbon capture and storage and nuclear. Narrowing the range of choices available to us will get us into deep trouble, let us, he stated, embrace all the technologies. If we start ruling out technologies we will close off opportunities. Let us embrace the full range. If gas substitutes for coal it could be a bridge, and if we go down that route we must make clear that it is a bridge. Let us ensure that whichever energy sources we choose are either low carbon or could become low carbon.
We need a new industrial revolution. Part experience of industrial revolutions is that they drive growth. Now is a time where interest rates are low, unemployment is high, this is our option. Now is the time to invest in the future.
He was followed by Andrew Simms of New Economic Foundation and author of the recently published Cancel the Apocalypse. He started by stating that there are points where he agreed with Nick. Andrew was part of the group that created the Green New Deal report, which shared much of Nick’s thinking , but now feels that in OECD countries the climate challenge means growth is no longer tenable. It is incredible that this conference is happening here. Such an event still feels a long way off in Westminster.
We have a major problem, he stated. We recently passed 400ppm of CO2 in the atmosphere. You might have thought that on the day this became news the media might have been excited to mention it. One paper’s front page on the day offered a free trip into space, another free trips to Legoland. The Guardian, who you might have expected to take it seriously, ran on the horsemeat saga.
Climate scientist James Hansen has said “we are dancing on the edge of losing the climate in which civilisation emerged”. He quoted Winston Churchill who said “it is not enough that we do our best, but that we do what’s necessary”. We think of growth in relation to our children or our gardens as being a good thing. But in nature things grow up to a certain stage, and then they mature in other ways.
Already our use of ecological services means that nature needs a year and a half to deal with the waste we generate every year. The idea that growth is needed in order to reduce poverty is rubbish. With our current ‘trickle down’ model, getting to a stage where everyone in the world has $1 a day would require 15 planets worth of resources.
Kevin Anderson of the Tyndall Centre argues that if you really go through the science, staying below 2% requires cuts of 10% per year, starting now. When looked at more closely, the UK government’s target for staying below 2°C is based on a 60% chance of going past 2°C. If you were playing roulette with a pistol with 10 chambers and 6 bullets, those are not good odds. The International Energy Agency recently stated that we are on course for a rise of between 3.6 and 5.3°C. That’s a catastrophe.
This debate about economic growth is one that has captured the political imagination. It is in the world of better, not bigger, that our future lies, he concluded.
Neither of the two following speakers were quite so engaging. Michele Debonneuil, Administrator at the National Institute of Statistics and Economic Studies and Inspector General of Finances, basically said that a sharing economy, in which goods were made to last and people paid for services not goods was one tool that could both be a new driver for growth as well as solving a range of problems.
Robert Boyer, of the Institut des Ameriques, argued that the role of an economy should be to satisfy the real needs to the people. We need a limit to what bankers can make. The future will not be a simple repetition of the past. We need to focus on our collective long term future, not the short term interests of finance. We need to identify the models whereby top-down and bottom-up can meet.
Session 2: Can we build a post-growth society?
Laurent Baumel, MP for Indre-et-Loire, started by stating that he is a socialist, but that it is good for the Left to question and discuss growth. We urgently need to find new tools to measure wellbeing. The loss of resources and pollution are also a limit to growth. We cannot accept the idea of a dual society where some people make lots of money and others are left behind, dependent on benefits. We do need growth though, so that we can have jobs for everyone which is what gives a society its dignity.
Dan O’Neill, from the Centre for the Advancement of the Steady State Economy in Leeds, began by arguing that growth no longer brings happiness. In a Steady State economy, resource use would be kept stable. GDP would be replaced with measures focused on improving peoples’ lives. A Steady State economy is one where it doesn’t matter what happens to GDP.
It is often argued that growth is invaluable because it addresses inequality, the idea that “a rising tide lifts all boats”, but this is not the case. It is also argued that growth is invaluable for creating jobs, but it is shown that the two do not necessarily follow in the way you would want. We need to reduce working hours, and take the power to issue money from thin air taken away from private banks and transferred to the European Central Bank. We need to change our goal from the accumulation of more stuff to better lives, and from growth to wellbeing.
Jean Pisani-Ferry, Commissionaire general a la strategie et a la prospective, said the growth is mysterious, you never know how it is triggered. In a political world, how and who should determine that prices of key resources should be fixed? I think discussing the idea of a post growth economy causes fear and isn’t helpful. We know what a Steady State Economy feels like because we are living in the middle of it. We can see the results of it. I don’t see this as progress of any kind. We should borrow more money to finance the changes we need and pay this off in a few generations time. He concluded by saying, like Stern, that we should borrow money at the current low interest rates.
Lena Sommestad, former Minister for the Environment in Sweden gave a talk entitled ‘Towards a European Social Investment Model’. Her starting question was how to make our societies more resilient. The age profile of our population is growing. The number of working people as opposed to those who are dependent and in need of care is falling steeply. We need to see investment in society as an investment in the economy of the future.
The ongoing cost of social exclusion is huge, she said. This serves to undermine the cohesion and joint purpose that we need in order to be able to tackle climate change. The EU is still one of the world’s richest regions. This can still be the case as our population ages, but our capacity to tackle climate change depends on social cohesion, so investing in this is central.
The question though is how to make such investments in a low growth economy? It will cost, but it is cost effective. We spend large sums of money on the results of social exclusion, and dealing with this will bring more people into paying taxes and will help to reduce dependency.
Session 3: The construction of innovation.
I was the first speaker in this, the last session of the day. I introduced Transition as an experiment in what a bottom-up response to the issues discussed so far might look like. My experience, I said, is that the real innovation is happening at the local level, it’s where the energy is. I set out 9 innovations that have come through the Transition movement:
- Visioning: the idea that we can create a dynamic vision of a post-growth world
- Transition itself: as a social technology, a learning network, seeing challenging times as an opportunity
- The idea of ‘community resilience as economic development: as set out in the two Economic Blueprints/Evaluations done so far
- The Pay-by-text mobile payment system developed for the Bristol/Brixton Pounds: available for anyone to use, anywhere
- Transition as an approach to development: as seen in, for example, Brasilandia in Brazil or in Greyton in South Africa
- Transition as a bridge between bottom-up and top-down:
- Innovative local food systems that enable ‘patchwork farming’: unlocking the potential of urban agriculture, such as DE4 Food and Crystal Palace Transition Town’s ‘Patchwork Farm’ initiative
- Models of ‘internal investment’: such as Bath & West Community Energy, using inward investment to stimulate internal investment
- Transition Streets: a way of engaging communities in carbon reduction and lower consumption while also building community. Also its role as something that can be rapidly disseminated and spread between initiatives.
Stephane Fourier, of Superagro Montpellier, argued for the role of food and farming in this shift. We need to bring farmers and consumers back together again he argued. More local farming systems will bring a greater diversity and will play a fundamental role in building food security. These models already exist all around us, he said, they just need our support.
Nicholas Colin, Inspector of Finance in France, looked at the role of innovation and where it arises from. It used to be the case, he said, that innovators and entrepreneurs were different people, but now they are the same people. Innovators usually weren’t the heads of their own organisations, they worked in big organisations. Now innovators have become entrepreneurs.
They tend to be radical revolutionaries, more like artists than business people. They are also able to harness the masses through social technology which revolutionises entrepreneurship. We need to do everything we can as society to support our innovators.
Finally, Benoit Hamon, Minister Delegate at the French Ministry of the Economy and Finance, whose work focuses on the role of the social economy in France, spoke. Social innovation, he said, is about trying respond to needs that are not met elsewhere. How are we to finance this, he asked? We will need both public and private finance. It can be very hard to replicate social innovations and to take them to scale, and this needs to be considered. He stated that the government would be truly innovative as that is what the current situation demands. We must focus on social innovation. We must also mobilise public resources to deal with inequality. The individual, the citizen, has to be right at the heart of decision-making, and government needs to focus on social impact.
I was unable to stay for the second day, which contained just two sessions, A New Global Context for Innovation and What Development Model for the Twenty-First Century? Among others, the day was due to hear from Spain’s former Secretary of State for Climate Change, Georgios Papandreou, former Prime Minister of Greece, renowned economist Jeffrey D Sachs, and the Prime Minister of France.
Reflections on the event
This clearly felt like a timely and remarkable event. I suspect that we are still some way off an event such as this. On the positive side, the speeches by the President of the National Assembly and the Director of IDDRI in the opening session laid down a challenge, created an opening, a space, which the bulk of the presenters then failed to embrace. Apart from those who had clearly been invited in order to bring a more radical post-growth/Steady State perspective (myself, Andrew Simms, Dan O’Neill) and Lena Sommestad, there was little to offer much insight into where we go next.
Laurence Tubiana of IDDRI had set it up beautifully in her speech when she said “the fact we depend on growth is a problem, because we no longer have any growth”. Yet many of the speakers approached the subject from the angle of “when we choose between growth and no growth, I choose growth”, which rather missed the point. It was especially interesting to see how the Left, in the form of the French socialists, finds itself unable to go there. The academics often approached the issue by breaking it down and focusing on one small part of it.
For me, most disappointing was Lord Nicholas Stern. By looking at climate change in isolation from issues of energy security and the economy, his vision that we can grow our way out of the climate crisis brought to mind Einstein’s oft-cited quote that “we cannot solve our problems with the same thinking we used when we created them”. His argument that we have to talk about growth or else India and China won’t take us seriously is so alarmingly flawed that I will address this in a later post.
Perhaps the most important thing about this event though is the fact that it took place at all. And also the fact that the Transition movement was invited to be a key part of it. It really felt like significant people in government and positions of power are now starting to realise that economic growth is an outdated model, are waking up to the scale of the multiple challenges we face, and as they cast around for solutions and responses as to what bottom-up responses and the innovations for a post growth economy might look like, are discovering Transition. An experiment that didn’t wait for permission, or funding, or validation from anyone, but just got on with it. As I sat there, beneath the golden ceilings and chandeliers of Paris, I felt something shifting beneath my feet. Barely, almost imperceptably, but definitely shifting.
Finally, a couple of days later, I asked Andrew Simms for his reflection on the event. Here he is:
Addition: Notes on Saturday’s session by Corinne Coughanowr of Paris 15 en Transition, to whom I am very grateful.
Session 5: What development model for the twenty-first century?
Moderator: Laurence Tubiana
Jeffrey D. Sachs, director of the Earth Institute at Columbia University, opened the session by referring to the trend throughout the history of economics of countries trying to catch up with the ones just ahead. With planetary boundaries and their bad consequences making themselves felt, this model is no longer viable.
For the past 40 years, efforts have been made to incorporate ecology into economics, and awareness has been achieved, but not effectiveness. The momentum of the catch-up model has continued, but this is not even viable any more for the poor countries.
We need a new model, he explained, which requires violating the follow-the-next-country approach. For this, we also need new expertise. Questions of population stabilization, CO2 reduction and food supply will need to be addressed.
Two areas of promise, according to Sachs, are the information revolution, with its one-billion-time improvement in data management, and new materials science advances, such as nanotubes, which use abundantly available materials and vastly improve efficiency. Direction on a global level is needed in order to harness such potential in the time-scale required, as well as to manage the profound effects on work and income distribution.
In conclusion, Sachs emphasized that all countries have the right to development that respects planetary boundaries. Certain terms are difficult – we can’t speak of “developed” countries, rather “maldeveloped” ones. Instead of “growth”, it is better to speak of “well-being”.
George Papandreou, former Prime Minister of Greece, addressed the subject of how Europe could be a model for humanizing globalization. He recounted how, four years ago, three problems were being addressed in the EU: the Greek deficit, the Lisbon treaty and the Copenhagen conference. At the time, he said, the collective response of the EU was wrong: these issues were dealt with separately. However, they are all related, and the opportunity was missed to take an innovative, integrated approach. Greece, for instance, could have shifted to a green economy, but fear and scapegoating dominated, instead of understanding.
Among the problems widely prevalent, Papandreou pointed to the global nature of power and markets. Money is buying and corrupting politics and media, so governments are often impotent. Democracy is challenged; citizens are very frustrated with politics. On one hand, the disempowerment of citizens is creating extremism, on the other hand, governments, lacking the trust of the people, cannot make changes.
So what can we do? There are planetary limits – we should build a narrative around this in a positive way. Papandreou suggests a new paradigm at the EU level to pool resources, work together and slow down the crisis so that people have time to adapt. If we can get away from fear and empower the citizens, they can be innovative, take risks and change in positive ways.
Initiatives for which the EU could provide encouragement and resources include:
- support the role of intellectuals, R&D, and platforms to inform citizens
- encourage investment to leverage private money, for example via a green eurobond
- create an “Erasmus” program for the unemployed, to retrain citizens for a green future
- create platforms for innovations in different areas, such as apps, where citizens can participate.
- promote a global CO2 emissions tax, to develop green economies and practices in the developing world
- The environment is an issue for all citizens, including the working class, which is more impacted. Let us imagine a different future.
Luciano Coutinho, President of the Brazilian Development Bank, oriented his presentation around five big trends in today’s world:
1. Demographics
In Africa and other developing areas, we have high birthrates, whereas in other parts of the world, an aging population overburdens retirement and health systems. We do not need to project such high population growth, it is already tailing off. For aging populations, we can innovate new services.
2. Climate change
We need to fight climate change strongly – this is a big agenda. Developed countries need to change their mode of growth first, otherwise they have no moral position from which to speak.
Energy efficiency is a good place to start, since wind and solar cannot completely replace oil. Most industries can achieve energy reductions and reduce CO2 emissions, for example for cars, houses and appliances. Old appliances can be retrofitted.
Wind and solar should be promoted with incentives.
3. Acceleration of IT progress
Coutinho recommends large-scale optimization of systems, for example smart grids for electricity, water and transport. All urban systems should be optimized. Biotechnologies can create new services and opportunities. We should create incentives for tracks we wish to emphasize.
4. The changing geography of growth – for example, in China, growth is decelerating.
5. Persistence of social inequalities
To combat this, training for unemployed workers and policies for employment inducement and income transfer are necessary.
Pascal Canfin, Deputy Minister for Development in France, stated that, with the challenges facing us, the realists are those who want to change the system. We need to ask the right questions and to change our way of thinking.
The situations of instability and degrowth in some countries, such as Greece, and of unsustainable growth elsewhere, such as China, represent two “anti-models” for the future. Canfin says he is an “agnostic” with regard to the debate on growth versus degrowth.
Concerning globalization, he recommends:
- globalizing certain domains, such as consciousness raising and climate politics
- deglobalizing others, such as food and agriculture.
Two cooperative research programs should be undertaken:
- convergence of IT and green economies
- use of carbon as a resource for a closed-loop economy
Citing the example of a small town in the north of France, where the mayor and the citizens have been working together to come up with car-sharing schemes and photovoltaic installations, even on the town’s church, Canfin said we should all be innovators for the future. The planet’s resources are limited, but two things are not: human intelligence and human greed. It’s up to us to choose!
Added remark:
There is a lot of talk about optimization, IT advances and technological solutions.
But for what, for whom? Which of these actually has the good of the people and the planet in mind? Which takes into account all the true costs? Or has a complete cost-benefit analysis?