Renewable Matter # 18 / September-October

The New Economy According to Tim Jackson

Interview with Tim Jackson

by Rudi Bressa, interview with Tim Jackson

Seven years on from the first edition, a new version of the book questioning the myth of growth has been released. Such volume explains why “the current model is not improving people’s lives.”

 

 

Meant as a report for the British government in 2009, Prosperity without Growth is back in the bookstores in a completely revised new edition. In such volume, Tim Jackson, professor of Sustainable Development at the University of Surrey, is tackling in an extremely clear way a theme that can no longer be postponed: creating prosperity for humankind, without further plundering Earth’s natural resources while evening out social inequality. That is an alternative concept of economics which so far has been based on endless growth. Indeed, according to Jackson, it is possible to envisage an economic model that goes beyond exponential growth, able to revise the very concept of prosperity, a shared one imbued with hope. A world in balance with nature and able to create widespread well-being.

 

You are currently presenting the second edition of your book. But the first 2010 edition stems from rather bizarre circumstances. Could you expand on that?

“This book stems from a report commissioned by the British government. It was my consultation on sustainability for a governmental committee. The idea was to revise the concept of economic growth, in particular of the conflict between endless growth and the environment. A concept already elaborated in the Report on the Limits to Growth edited by the Club of Rome in the ‘70s. Prosperity without Growth tried to tackle such topics. While I was writing it, the financial crisis started to make itself felt. The interesting thing is that the report was released during the 2009 London G20, when the world’s leaders met to kick-start the economy. As I state in my book, the government did not like the report, Prime Minister Gordon Brown was very disappointed in it. Moreover, the press just ignored it. Then the report became so popular that it was published in 17 languages, including Italian.”

 

Tim Jackson, Prosperity without Growth – Foundations for the Economy of Tomorrow, 2nd Edition, Routledge 2017; tinyurl.com/hpgnh4y

 

 

The book was very captivating. Probably because other people started asking themselves how they could prevent such an impacting crisis from happening again. Is it so?

“The economic crisis had a profound impact on our way of seeing economics and politics. It highlighted inequalities, the huge disparities between the rich and the poor. The interesting aspect is that all this happened at a time when the whole world had to come to a decision about climate change. In 2009 at the Copenhagen Climate Change Conference specific targets were set, in particular for developed countries. It had been made clear that if we wanted to tackle climate change we would have needed investments. But in order to have investments we would have required healthy financial institutions. And this was what we were lacking. Such trend is still ongoing. True, today the financial world is more stable, banks are stronger, but we are still missing sufficient investments in technologies in order to tackle climate change, even nine years after the crisis. This is what pushed me to revise my first book.”

 

On the one hand we have the financial crisis, austerity, the difficult economic conditions of some European nations and on the other there are growing economies such as China and India. What has changed in only a few years? What should we expect?

“Many things have changed. We are living in a completely different world. The meltdown was already looming before the financial crisis. The model was already crumbling: the idea of an economy promoting more and more consumption, if necessary by generating more and more debt, does not work. It was already struggling in 2006. When the financial crisis occurred, I believe ours was a very naïve vision of what the implications would be. It seemed as everything could go back as it was before. But the model does not work: it creates inequalities, it creates environmental problems and it creates an unstable financial system. It is neither improving the life of people nor making them happier but rather it is making them unhappy. Suffice it to think of the increase in lifestyle-related diseases such as obesity. They stem from a model that is no longer working. And we cannot solve these problems only with technology or austerity, an appalling experiment. Austerity left millions of people behind. And that caused the growth of populist movements, both right and left, claiming some sort of hope for the future, no matter how. If necessary even by leaving Europe, as it happened in Great Britain. This is an extraordinary historical period because general consensus concerning capitalism and democracy is crumbling. True, there is technology, the circular economy, renewable energies. So, in what kind of economy should we invest?”

 

Meanwhile, 1% of the population owns 50% of the world’s wealth. Should we redistribute wealth? And how?

“What is happening is that an ever-smaller number of people has most assets and profits deriving from them (an asset is a resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit, editor’s note). Meanwhile, people’s working lives become more and more insecure. Paid work is a cost. Capitalism tries to continuously widen this gap, rather than narrowing it, unless assets and profits are not redistributed. This can be achieved in three ways. One is to raise tax for the richer. But such solution is like putting a plaster on a wound that is oozing blood. It could work but it would not necessarily change inequalities amongst assets owners. Then there are other systems. For example allowing workers to share corporate assets: in this case workers own the company, so it is possible to redistribute ownership of goods and capital. The third possibility is protection of paid employment: if we slightly slowed down job replacement with technology and protected paid employment, we could automatically redistribute wealth, because we would reduce the gap between salary and profit.”

 

Academia agrees with the statement according to which endless growth on a finite planet is virtually impossible. Why politics and part of the economic world struggle to accept a concept that is so clear to ecologists?

“Because we have a growth-based model. Let’s think about that for a moment. On the one hand we know we live in a world with finite resources, on the other we have an economic system telling us that the more we consume, the better it is. Ecologists say that we cannot expand beyond our planet, while economists reply that technology will be able to make all processes efficient, while employing fewer resources. It is the so-called decoupling, or the magic trick we will be able to make any service or good in a more efficient manner. But how realistic is such an idea? How fast should we develop new technology to make such magic trick work? We have clear climate targets, we know how much CO2 we can emit, we know to what extent the economy will be able to grow. So what would technological efficiency be and how much can it still grow? True, over the years efficiency has grown, but what we are witnessing at the moment is that resources consumption is not shrinking as expected. Over the last few years, emissions have stabilized, but not reduced. All this indicates that decoupling is not enough and is not working.”

 

What do you think about the concept of the circular economy? Can it give growth fresh impetus?

“The circular economy is a fantastic idea, like the thought of making the whole economic system more efficient, but it is not enough. And it does not tackle economics’ main problem. If we think that the circular economy can give growth fresh impetus, we are making everything more difficult. So, if we want the economy to grow more and more rapidly, it will have to become more circular, more efficient. And this is extremely difficult.

“What we need is another kind of economy. We have to revise the concept of business, work, investment and money. From a merely capitalistic point of view, business is nothing more than a process to maximize profits, to extract raw materials as quickly as possible, to process and sell them at the highest possible price and then discard them. But this is the wrong concept of what business should be. Instead, it should provide us with what we need to achieve a better quality of life. This is why we should revise the business model. Do we want a kind of business that keeps on producing according to the linear model? No, we want it to produce in a more circular way. Do we want it to produce more and more products? No, we want to give people a better quality of life: health and social care, education, ecosystem conservation, urban regeneration. In other words, investments in society, culture, ability of people to live together. It is an extremely specific task. We should start thinking – rather than about a mass production system – about one able to offer products and services people really need for society, in order to improve their quality of life.

“It is an extremely interesting question, because it is connected to ‘blocked assets.’ This is a financial term according to which if we want to tackle issues about climate change, we cannot carry on using fossil fuels. This means that keeping on investing in oil explorations, over time will create ‘blocked’ investments, i.e. investments that are likely to become worthless in the immediate future. If we want to meet targets on the reduction of carbon emissions, how long will such investments still be possible, 20 more years? While investments meant to improve society will certainly have a lower profit margin, they will last forever.”

 

Recent scientific studies demonstrated how only 90 large companies are responsible for 70% of CO2 emissions. Powerful groups, able to influence public opinion and politics. Why would they want to change their economic model?

“In particular for two reasons. The first is that if governments implement a legislature to tackle climate change, all the ‘blocked’ or ‘stranded’ assets for the following 20-30 years would no longer be good investments. This shows the ongoing struggle between politics and common people to tackle climate change. Norway is a good case in point. It disinvested all carbon-based assets from the sovereign wealth fund. This is a powerful message for such companies: ‘The future is slightly different from what you expected.’ The other reason is that the world created so far is one world in which social instability is the main problem politics has to contend with. This boosts populist movements, more difficult to control and able to destabilize politics. Governments oriented in such manner would no longer invest in the fossil fuel industry, because they would be busy dealing with social problems and upheaval. I am convinced that at least a small part of such big groups is realizing that social and political instability is able to damage their economic success.” 

 

 

Centre for the Understanding of Sustainable Prosperity www.cusp.ac.uk