Why politicians and economists are left behind

10/05/2012 / Kaj

John Elkington asks in the Guardian if innovation and new business models can do the same for sustainability in the 21st century? The biggest problem and challenges businesses, politicians and NGO:s have –  Our society is not aligning the human and natural system. Since we developed the Natural Steps 4 system  - a method some leading business leaders understand that they have to  use to find a roadmap that can align the human and natural system in their business strategy. Global reporting initiative (GRI) – and other tools are helping hands for business that integrate economy – ecology and social issues mostly for the business sector of today.

The problem as I see it that we have left the politicians and economists behind. Politicians and economists don’t understand how to measure and report on eco system consequences when they discuss or take decisions and evaluate GDP and GNP. We need a resilient economy that provides a better quality of life for all within the ecological limits of the planet. The initiative Economics of Eco system and Bio Diversity (TEEB)  – is a promising work by Pavan Sukhdev and others. Another interesting article is written by Charles Secrett - 9 reasons why environmentalists should called themselves economists where he points out the necessity of recognising the full productive value of delivering sustainable development (sustainability) in the round, generating honest capital and maximising human well-being.

Our economic system is failing people and the planet. I think the innovation issue should be up to economists and politicians. Why not inspire, push, demand that the political and economic sector be the new change agents before  nature says no and gives us humans no options.

And we need brave and outspoken politicians and economists in Rio+20

Where are you politicians and economists?

Kaj Embrue

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Comments
  1. Hi Kaj,

    My colleague Terry Hallman had been in Ukraine for several years before giving presentations on Economics in Transition to the Economics for Ecology conferences in Sumy. He explored the events leading to the 2008 economic crisis and offered his 1996 treatise, the core argument for an alternate economic paradigm called People-Centered Economic Development.

    It began in 1996 with his paper making the case for business with a social objective rather than pure shareholder ROI. I helped him establish the model in the UK to fund his subsequent efforts.

    In 2006, his paper proposing a social business strategy for microeconomic development and social enterprise had been submuitted to government channels and later published in a web journal, proposing that “Profits can be directly applied to help resolve a broad range of social problems: poverty relief, improving childcare, seeding scientific research for nationwide economic advancement, improving communications infrastructure and accessibility, for examples – the target objectives of this particular project plan. The same financial discipline required of any conventional for-profit business can be applied to projects with the primary aim of improving socioeconomic conditions. Profitability provides money needed to be self-sustaining for the purpose of achieving social and economic objectives such as benefit of a nation’s poorest, neediest people.”

    Within 5 years this advocacy would re-appear in mainstream business thinking as ‘Creating Shared Value’

    All this mat be found on my website link.

  2. Hicham

    Well Sincerely I’m a bit confused in here. After having read this article I can’t distinguish anymore between politicians, economists, economics or ecology and environmentalism. So I find it necessary to shortly draw the basic etymological distinction.

    By economics we hear the laws of the environment, and by ecology we hear the symbols or the logic of the environment. So I consider that economics may constitute the basic scientific grounds for ecology; and that is how externalities, market failure, Pigouvian tax etc. (ISO 14000 in short) are applied.

    I find the syllogisms drawn in ’9 reasons why environmentalists should call themselves economists’ very interesting, for the normative prescriptions and descriptions they propose have far reaching conclusions.
    But I can’t help but draw a similar analogy: like astronomy, economics is the attempt to describe the laws of the environment by critical and rational method. Also like astrology, ecology is an attempt to make sense of the environment by directly trying to understand it (often through uncritical and irrational speculations). Ecology may and does have economic premises but the opposite is not so obvious. Not that the dismal science is not environmentally aware (that is since I already mentioned externalities, market failure, Pigouvian tax) but such analogy is the reason why, I presume, an economist is unlikely to call himself an ecologist. And I hope that may be part of the answer to the question: ‘Where are you politicians and economists?’

    That being said I’d be much more interested to know your definition of the term externality and hear your opinion on the results of Pigouvian taxes for instance.

  3. Pigouvian principles have been tested in the Swedish tax system. The carbon tax (one example)have played an important role both in Sweden and Germany.

    But, more can be done. Smart regulation including rules of barriers and incentives are necessary if you are a serious beliver of a roadmap for Sustainability.

    What I am mostly worried about is the lack of dialogues involving political leaders and economists to talk about system failures and the way out. Green taxes, incentives and smart regulation should be on the top of the political agenda. I followed a discussion in Sweden organised by the King of Sweden and his fund for environment and leadership. One of the professors who participated in the symposium was Robert Ayres who is an American-born physicist and economist. He has been challenging ideas on the economic theory of growth. But , the problem is that established economist don’t let him publish his paper in important magazines and paper. See the program at http://urplay.se/170144

    I must say that I am very worried when you look at the European crises. Focus should be on Sustainable Growth and support of the Low Carbon Economy. When I was searching through the problem for the Greeks I found that both France and Germany selling warships to Greece. Read my blog – Greeks be aware of the trojan horse! – http://www.kajembren.com/greeks-be-aware-of-the-trojan-horse/

    Globally we need to cut of subsidies to fossil fuels. We need to find tools to measure and report on Green GDP and GNP in all nations.

    We need to strenght the local level – cities and and region could play a leading role to challenge the national governments. Local Governments and regions have tools and working with their stakeholders to be fossil free.

  4. Dear Kaj,

    This is a fundamental issue of our time. The challenge we have as sustainability practitioners is that, whilst we can clearly see which way the ship is heading, we are not the ones at the controls, or even in the engine room.

    It seems to me that the seeds of a different way of valuing the things that are important to us all lie in evolving systems and processes that, whilst flawed, still represent powerful means to value, price and distribute things that people need and want.

    A key challenge with the way that market capitalism works is that it has no strategic intent, and it values the future less than the present.

    To seek to address this vacuum we use the vision of “Towards 9 Billion Capable Citizens” a market infinitely more valuable than our present one, and seek to work back to see how that vision could be achieved.
    Achieving such a vision has demands a range of social, technical and industrial pre-requisites.

    Companies and markets would need to:
    •Recognise social interdependence and prioritise personal and societal wellbeing.
    •Preserve and enhance natural capital and ecosystem services.
    •Focus on the sustainable use of scarce resources.
    •Prioritise the use of abundant and renewable resources.

    Such a world would also represent a market for business unparalleled through human history. It would align the interests of individuals, societies and business organically, through common self interest.

    Towards 9 Billion also requires simple but fundamental changes to the irreducible heart of economics – the price function. All economic behaviour flows from the price function, the ability to generate a price for a good or service which allows it to be bought, sold and traded. At present the price function is too one dimensional, it reduces reality to supply and demand and fails to adequately internalise long-term human or ecological value.

    A radical change in this critical mechanism would allow ecological and social sustainability to become a natural outcome of economic behaviour. We therefore propose to “hack the price function” by placing three concepts at the heart of the price equation to yield innately sustainable outcomes.

    Instead of deriving price simply from supply and demand we suggest it should also be based upon:
    •Abundance rather than scarcity – scarce things are only of marginal utility in a world of 9 billion capable citizens – either natural (e.g. biologically based) or managed (e.g. through closed loop stewardship) abundance is inherently more valuable in this context.
    •Natural vitality – making use of the planet’s natural restorative and productive abilities and learning from and utilising natural production techniques as the basis for our technological and industrial models.
    •Interdependence – nothing happens in our modern world without the involvement of others. We need to recognise and balance this interdependence so that our quality of life is not bought at the cost of someone else’s and that our quality of life is not at risk if others we depend upon decide to withdraw their subsidy.

    Read more about our “infinite economy” hack in our submission to the Management Exchange Long Term Capitalism Challenge:
    http://www.managementexchange.com/hack/towards-9-billion-infinite-economy-finite-ecology

    Hope this is constructive!

    Joss

  5. Dr Shailendra P Singh

    If we carefully analyse the dominating global development framework of past, we may see that the 19th century was political era of politician, 20th century was economic era of economist to enable industrialist to create more development but 21st century is Information era of global sovereign individual. Global development framework is changing and we need paradigm shift to enable global individual to take a non-political lead for not only sustainability but thrivability.

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