Economics for the Story of Stuff
Annie Leonard’s The Story of Stuff, the explosive online video (now also expanded into a book), provides an entertaining explanation of a glaring economic flaw. The Story of Stuff takes a look at the economy’s linear system that runs from extraction to production to distribution to consumption to disposal. As Annie says, “… you cannot run a linear system on a finite planet indefinitely.” You especially can’t grow the size of that linear system indefinitely. But that’s the misguided aim of current economic goals and policies. Misguided as it is, however, we know why politicians and economists push economic growth and consumer spending. As soon as we slow down our shopping and buy less stuff, the economy spirals into a recession. That’s when we start hearing about and experiencing real problems – problems like people losing their jobs, their homes, and even their ability to take care of basic needs.
What a dilemma! The planet can’t sustain our pattern of consumption, but people get steamrolled in the economy when consumption slows down. The solution is to figure out how to structure the economy so that people can meet their needs without trashing the planet. But restructuring the economy is no simple task. Even gathering the will to take a shot at it is difficult.
The main reason is that economics is a subject most of us avoid. The majority of people understand that it’s good to have money in their pockets, but they don’t necessarily want to get involved in the policies of the Federal Reserve, the inner workings of the Treasury Department, or banking regulations. That’s the job of economists, right? But 99% of economists are entrenched in the old way of thinking. Their training and their methods are aimed at growing the unsustainable linear system. Economists are always talking about growth. Growth, growth, growth. They seem to believe that getting bigger is the only recipe for getting better. It’s worked for them in the past and it’s what they know. And they mostly haven’t studied ecology or physics or other fields that would help inform them about the effects of their policies on the planet.
As a result, economists are doing what they can to prop up the old system, and politicians and the public are inclined to listen to them. Politicians are especially susceptible to the spin. They don’t usually know much at all about economics, but they do know they’ll be thrown out of office if people are losing their jobs and their sense of security.
Why do we grant so much latitude to economists, especially when they have proven time and time again that they can’t predict momentous economic events? With few exceptions, they didn’t know the financial and economic crisis of 2008 was coming. We’ve pursued and achieved economic growth for several centuries, and through official policy for over 50 years. If their prescription of continuous economic growth is the answer, why are we facing so many profound environmental and economic problems? Why should we be worried about global warming and losing our jobs at the same time?
It will take a lot of effort to get the ball rolling on changing our economic structure. On the positive side, ecological economists have already developed the foundation for a new economy. A steady state economy provides a real potential for sustainability that simply cannot derive from continuous pursuit of economic growth. A steady state economy respects limits and strives for stability in population, consumption, and overall use of energy and materials. To get a feel for how this works, think of a healthy mature forest. It does not grow in size, but it is a living system with a complex web of parts. Remarkably diverse groups of species cooperate and compete within the forest, and there are opportunities for new species and ecosystem functions to develop over time.
Just like in the forest, stability in a steady state economy is very different from stagnation. Ecological economists actually call this kind of stability a dynamic equilibrium. This fancy term simply means that a steady state economy is dynamic – it changes and develops over time – but it balances with the natural environment. The idea is to right-size the economy, to find that Goldilocks size that’s not too small and not too big, but just right.
The old economy has one major rule: grow or die. Unfortunately, we’re getting to the point where that rule is changing to grow AND die. In contrast, the new steady state economy lives by four main rules described below. It’s very hard to argue against any of these four rules. In fact, as a test, let’s consider the opposite of each rule as well…
Rule 1 – Maintain healthy ecosystems. Healthy ecosystems provide the life-support services for the planet. Ecosystems tend to be resilient, so they can handle quite a bit of disturbance. But if economic activities grow too large, they can disrupt the ability of those ecosystems to do their job.
The opposite of Rule 1 is that we destroy healthy ecosystems or maintain unhealthy ecosystems, clearly not a good idea (assuming we want to maintain life on the planet).
Rule 2 – Extract renewable resources at a rate no faster than they can be regenerated. Renewable resources, like forests and stocks of fish, provide goods for the economy. The amazing part about them is that they can go on providing goods year after year, so long as we don’t overdo it. If we take only the number of trees and fish that can be regenerated (economists call this sustainable yield), we can keep consuming timber and fish for generations to come.
The opposite of Rule 2 is that we extract renewable resources at a rate faster than they can be regenerated. Following such a course of action would wipe out the forest and drive the fish population to extinction. It would be like killing the goose that lays golden eggs.
Rule 3 – Use non-renewable resources at a rate no faster than we can find renewable substitutes. To use a non-renewable resource, like a fossil fuel or mineral, really means to use it up. There will be less of it available for future generations. This condition doesn’t mean that we have to leave all non-renewable resources untouched. But it does mean that there is a clear limit to their exploitation, and we should be working toward replacing them with renewable substitutes as we use them up.
The opposite of Rule 3 is to use non-renewable resources without finding renewable substitutes.
Following this course of action would deplete the bounty of planetary resources in short order. It would be like winning a million dollar lottery, leaving behind a job, and throwing a million dollars’ worth of lavish parties for one year. It might have been one heck of a year, but at the end of it, the money would be all gone, and future prospects wouldn’t be so bright.
Rule 4 – Dump wastes into the environment no faster than they can be safely assimilated. Depositing wastes faster than they can break down means that we have to live in our own piles of refuse. It makes for unpleasant and unhealthy living conditions.
The opposite of Rule 4 is to dump wastes as fast as we please. We don’t have to imagine the consequences of this course of action. We’ve seen them in the past – remember when it wasn’t all that uncommon for a river to catch on fire? And we see them today in the form of climate change and rising cancer rates.
Before we can go about building an economy based on these rules, we need to tell our economists and politicians that enough is enough (signing the CASSE position is a good start). We need to stop avoiding the thorny subject of economics and demand a new economic framework — preferably a steady state economy that provides a happy ending to The Story of Stuff.
I think you are failing to see outside of the biophysical requirements of any socio-ecological system. You mention the following:
“a steady state economy is dynamic – it changes and develops over time – but it balances with the natural environment. The idea is to right-size the economy, to find that Goldilocks size that’s not too small and not too big, but just right.”
Of course, every ecological system is dynamic in the manners in which you describe. But, social relationships in society do not interact in the same manner that organisms do in a wild environment. We have a plethora of “people” (all dynamic in their own right) with different personalities, conceptions about life, conceptions about governance, conceptions about communicative actions, etc. that create situations of constant conflict and confrontation. These differences are conceptually and ideologically driven; not driven by biology or physics like forest and other ecosystems. Further, these differences can also be rooted in epistemological disagreements to mobilizing armies for land bases and last remaining resources. All of which remain and perpetuate in a hierarchical and competitive socio-ecological situation. I don’t see how these relationships would change in a steady state economy where concepts of domination, privilege and class struggle would still persist if our socio-economic relationships do not change.
If we don’t change from competitive socio-economic structures to cooperative ones with elements of counter-power built-in to reduce concentration of wealth and power, what we see today on a global scale would just repeat itself on a more local scale. If we don’t change our material relationships–how the means of production are allocated and why and for whom and for what purpose–we are doomed to repeat the enormous amount of oppression, domination, exploitation and elite rule that we have had over the last millenia.
I know what you are going to say now. You will probably state: “well, that is what redistribution of wealth is for, right? We’ll just use the State apparatus to levy taxation on the more privileged classes to re-allocate to social services and social programs to help the less privileged. But this will fail as it always has failed!! We are never going to get people who have extreme amounts of entitlement, wealth and privilege to agree to this. They don’t think its fair and that you are stealing from them even though they fail to see their whole idea of entitlement, etc. is a form of theft in its own right.
So, we need complete politico-social decentralization and complete freedom from competitive market arrangements and wage earning relationships to really be able to reach socio-ecological homeostasis if it is possible at all. I just don’t see how we can accomplish this with the goals of a steady state economy.
Thank you.
Economists don’t have any power. They merely justify capitalism, ex post facto. They are the witch-doctors of our still pre-civilized epoch.
The problem is capitalism, not economists.
We don’t have time to tilt against windmills.
Hi Rob, we republished your article on Shareable.net following your CC license. Great article for our audience!
Here’s the article:
http://shareable.net/blog/economics-for-the-story-of-stuff
Feel free to drop me a line at neal at shareable dot net if you’re interested in more content sharing. We’d love to help you find new readers.
Neal Gorenflo
Publisher
Shareable.net
http://www.ourfutureplanet.org/news/366-an-end-to-growthonomics-a-brief-review-of-the-steady-state-economics-movement
Here is a link to an article which I wrote for the OPT .
To Charles Fourier:
I agree with your analysis, but what do you suggest instead? Can you elaborate on what you mean by “complete politico-social decentralization and complete freedom from competitive market arrangements and wage earning relationships”? Are you suggesting central planning (which might not be a bad thing)? I would be interested to hear your thoughts (or post a link you can recommend). Thank you!!
Hi Zooey:
Sorry, i have not responded sooner. I don’t get to this blog that often.
With respect to my meaning of “complete politico-social decentralization and complete freedom from competitive market arrangements and wage earning relationships” I am referring to the following:
Complete political and social decentralization is just the opposite of the “centrally planned” social structures we have today. By decentralization, I mean the dismantling of the current globally-locked, centrally planned, liberal (economic not political) corporate mercantile republics with smaller factions of non-authoritarian, non-hierarchically based social structures, contained within specific bioregions, that are organized within the watersheds they reside. And, where the means of production are equally divided based on egalitarian, grassroots decision making processes that are directly dependent upon a given family or communities cultural, familial and material needs. These faction’s populations and resource uses would be proportional to the carrying capacity (Carrying capacity refers to the number of individuals who can be supported in a given area within natural resource limits, and without degrading the natural social, cultural and economic environment for present and future generations) of the bioregion in which they reside.
You might now ask: How does this differ from the bioregionalism concept? Here is Peter Berg’s definition: http://www.diggers.org/freecitynews/_disc1/00000017.htm Here is Wiki’s definition: http://en.wikipedia.org/wiki/Bioregionalism Sorry for the long links. Don’t know how to do just a word link that I see often.
Bioregionalism by definition and practice does not address what I mentioned before. I may be wrong, but I think the steady stater’s are falling victim to the same social-cultural exploitative state–which I think comes from their neglect or oversight of the situation and not acknowledging the constant conflict and confrontation that comes from the same or similar hierarchical socio-economic relationships that have been violently perpetuated by elites since the beginning of the so-called neolithic revolution and into our present socio-economic milieu. With the change to more sedentary lives, we became more stratified and the division of labor and hierarchical class system was the end result. We can, within physical limits, still maintain sedentary lives (refer to carrying capacity above), but we have to throw out the division of labor and hierarchy scenario that has divided communities based on people’s individual economic contribution (gauged as class) to the communities in question and what has been the root cause (not to be mistaken as the only cause) of the constant conflict and confrontation we experience still today.
This is why I stated the following in my last post: “I don’t see how these relationships would change in a steady state economy where concepts of domination, privilege and class struggle would still persist if our socio-economic relationships do not change.”
And, this: “If we don’t change from competitive socio-economic structures to cooperative ones with elements of counter-power built-in to reduce concentration of wealth and power, what we see today on a global scale would just repeat itself on a more local scale.”
Most of us haven’t the slightest clue how to create and maintain cooperative economic and social relationships. Because, we have been taught all of our lives that a competitive environment breeds some of the most innovative technological discoveries (which leads to a linear understanding of progress), and that it is a component of “human nature” (see Hobbes’ Leviathon–though discredited by anthropologists long ago) to organize social, political and economic relationships based on a competitive bases—as was mistaken by many in the 19th and 20th centuries which led to a new form of “scientific racism” and the subjugation of so-called “primitive societies” to the needs and whims of wealthy, land-owning (or stealing rather) elites of the Western world. All this in order to subjugate people and places to technological prowess, exploitation and progress.
So, with limits to economic growth staring us right in the face, we must begin to disband the global capitalist system to engage in a local, non-hierarchical, self-reliant, self-determined, decentralized, resilient system based on cooperative relationships (e.g. mutual aid) within identified bioregions that are mindful of the particular bioregion’s carrying capacity and ecological limits all along the way.
To accomplish this would be extremely difficult and to some would be utopian, and highly improbable, but we have to start thinking and acting collectively in these ways if we are to mitigate the combined threats of corporate domination of the political process, disproportionate political and economic representation, social disintegration, dissolution of the nuclear family, declining energy availability, climate change, biodiversity loss, ocean acidification, disruption or depletion of soil, hydrological, carbon, phosphorous, nitrogen cycles, etc.
I hope this has helped clarify my meaning to my earlier post. It is difficult, from top of mind, to cover all aspects of my meaning, but it explains the crux of my argument pretty well I think.
Would love to know your or others thoughts.
Hi Charles,
thanks for taking the time to explain this. I understand what kind of outcome you envisage, and I can see how people can work towards this on an individual and group level, organising their own economic lives cooperatively. But how can we organise the meta level, i.e. everything that needs to be provided for everyone – health, education, water, electricity, technological infratructure – in your model? Or does it assume that we revert to subsistence farming?
And how can we work towards this politically? I mean, what kind of changes do we need to make now to move in the right direction?
Would love to hear what you think.
“The planet can’t sustain our pattern of consumption, but people get steamrolled in the economy when consumption slows down.”
Actually, this last part is a common misconception. The economy can adjust to whatever level of consumption people choose to have. Capitalism, in its pure form, is only the reflection of the preferences of individuals and the availability of various resources.
It is true however that misguided economists and perhaps well-meaning politicians tend to promote consumption policies.
In fact, reducing consumption is positive for the economy and the standards of living, as it spawns savings, which can be used to improve the productivity of the the production structure. This allows to produce more and better goods and services with fewer resources.
If people want to protect resources, they simply need to aquire them and protect them. Private reserves have saved many endangered animals in Africa.
Similarly, as some resources get depleted, the production structure will adjust the best it can. This may mean lowered standards of living, this could mean a smaller human population, etc.
A comment above claims that the problem is capitalism. I am curious to know what the commenter thinks capitalism is. Capitalism is simply a system of private property and voluntary exchange. It reflects the wants of its actors and the natural constraints.
Nothing about capitalism forces a linear or faster growth.
Hi Zooey,
Great questions. You state:
“But how can we organize the meta level, i.e. everything that needs to be provided for everyone – health, education, water, electricity, technological infrastructure – in your model? Or does it assume that we revert to subsistence farming?”
Organizing the meta-level is a process that I think would fail as it has failed time and time again (will explain this below). Because, it is too difficult to organize our lives–while still meeting the collective needs of a particular community, within a particular temporal and spatial environment and/or specific to the site of operation (e.g. modes of production comparable to eco-system stabilizing needs)–from a top down framework that is far removed from local/bioregional socio-cultural, economic, ecological and political proclivities. Recall my original post when I stated the following:
“We have a plethora of “people” (all dynamic in their own right) with different personalities, conceptions about life, conceptions about governance, conceptions about communicative actions, etc. that create situations of constant conflict and confrontation. These differences are conceptually and ideologically driven; not driven by biology or physics like forest and other ecosystems. Further, these differences can also be rooted in epistemological disagreements to mobilizing armies for land bases and last remaining resources.”
The process of meta-level projects in this respect are not only exclusive to certain populations with a particular worldview, but also fail to see and act beyond their own self-interest so-to-speak. For example, many meta-level projects start off with the best intentions in mind in order to provide the services you mentioned in your last post (recall the Bolsheviks coming to power after the Russian Revolution–although “best” intentions could be disputed here). But, after time passes, we begin to see a shift in the direction of a meta-level project from one of “providing and/or allocating services” to one of salvaging its own existence despite its contemporary relevance or effectiveness in providing those services. The US government is another great example of this when we see “national security” (at least what elites in Washington consider to be national security) and burgeoning military spending to fuel American economic and political hegemony around the globe having far more importance–thus, outweighing and discrediting the need of basic services for everyday people in order to survive in such a meta-level predicament where they (e.g. local communities) are not directly responsible and/or in direct control of those basic services. This is driven by those who have to maintain the meta-level project in order to maintain their elite status or to perpetuate the status quo–in this case the needs of multinational/transnational corporations and the military industrial complex.
With respect to a reversion to subsistence farming, this is a bit of a stretch on my meaning I think. Subsistence living may be of interest to some, but others may still want to be interconnected (or federated) with other “like-minded” communities in order to share the burden of producing and distributing basic amenities to maintain their respective bioregions and be resilient to the social and ecological changes that will inevitably come their way. Therefore, if we design our bioregions for abundance and resilience (for all life, not just human life), we can begin to move beyond the subsistence concept for individual families or communities, and begin finding ways to distribute the surpluses we receive from designing for abundance and resilience to those that need access to those surpluses. Where drought, floods or other natural disasters impact one bioregion, surpluses from another may be able to fill in the gaps. Don’t know for sure, just thinking it through.
You second set of questions:
“And how can we work towards this politically? I mean, what kind of changes do we need to make now to move in the right direction?”
Short answer. Designing for abundance and resilience at the local level. Begin turning local government into a bastion for local economic development, but from the grassroots, not from the interests of present day “entrenched” political and economic entities/institutions. I like to think of Thoreau’s four basic necessities (but i will provide a fifth) when considering this. Thoreau’s four basic necessities are food, shelter, clothing, and fuel. The obvious fifth I would like to add is fresh, potable water. This is where to start I think. We need to start organizing our local communities around these five basic amenities, but organize them in a way where the “local” community in question has direct ownership and/or “use rights” of/to those basic amenities within their respective bioregions–recall earlier post where I describe this.
All other needs or wants a particular community (within the context of ecological limits of course) may desire could also be managed locally, or could be managed by the other “like-minded” communities I described, to barter or trade based on agreed upon conditions between the interested parties/communities. Agreed upon conditions, I think, should be based on new understandings of “value” well beyond a simple price (in currency) a particular person/community is willing to pay in order to get what is valuable to them.
This relationship is reciprocating because both or multiple parties have a vested interest (not defined by finance or currency exchanges) in what has been deemed “valuable” between them. Then comes the most difficult part. How do we begin to measure “value” in new ways that foster reciprocating relationships of equal worth to the parties involved?
Wow! What a hard project to tackle. But, one of necessity I think given the state of world affairs today.
Again, I welcome your thoughts.
Julien Couvreur says that:
“Capitalism is simply a system of private property and voluntary exchange. It reflects the wants of its actors and the natural constraints. Nothing about capitalism forces a linear or faster growth.”
1) There is a confusion in your statement between markets, which are systems of voluntary exchange between possessors of commodities, and capitalism, which is a system of production founded on private property and wage labour. Markets have existed long before capitalism.
2) Your description is also reductionist. Capitalism is the process of producing commodities (goods and services) from material inputs (raw or transformed materials) using tools/machines and wage labour, and selling the commodities thus produced on competitive markets for a profit. It cannot be reduced to only private property, which has also existed for a very long time.
3) There is actually a built-in incentive toward growth in the capitalist process, that I will try to explain briefly:
As I said, the commodities produced under capitalism are sold on competitive markets. Because markets are competitive, there is an incentive to produce for cheaper to outsell competitors. To produce commodities cheaper, you need to increase productivity, either by developing new production technologies, or finding more efficient ways to organize labour.
Once you increase productivity, you produce more commodities for the same capital investment. You then need to sell your extra production on the market to pocket your extra profit. And all the while, you capture extra market shares, because with increased productivity you are also able to sell each individual commodity for cheaper. Thus, competitors have to themselves increase productivity if they want to keep some market shares, and avoid going bankrupt. This means they too will eventually have to develop more efficient methods that will allow them to produce more commodities.
Thus, because of market competition, part of your profits always needs to be invested in developing more productive methods of production. More productive methods mean an increased throughput of matter and energy in the economic system. As productivity keeps increasing, so does the throughput, and the ecological footprint of commodity production.
Thus I conclude that capitalism is not “only the reflection of the preferences of individuals and the availability of various resources”, but rather reflects supra-individual mechanisms that do not depend on individual wills and preferences but on systemic constraints.