| Steady State, Economy of the Future: The Brian Czech Interview |
| Wednesday, 19 October 2011 | Carol Rich | Interview |
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In the following interview, Czech points out that the human economy grows at the exclusion of nonhumans and that it cannot exist for long without a healthy ecosystem. He counters common misconceptions about growth, such as the notion that perpetual economic growth is possible by always increasing the ratio of services to goods. He also weighs in on whether we are living on borrowed ecological time. EcoHearth: Please describe the concept of a steady-state economy and its benefits? Brian Czech: In a steady-state economy, population and per-capita consumption of goods and services are stabilized or mildly fluctuating. This is the only type of economy that’s sustainable. You can’t have perpetual growth or perpetual recession; both are physically and ecologically impossible. With a steady-state economy, you avoid the booms and busts that ravage the environment and peoples’ lives. EH: What are some ways that economic growth threatens the environment? BC: The ways are myriad. Perhaps the easiest to recognize is the fundamental conflict between economic growth and biodiversity conservation. I teach this topic in my Ecological Economics course at Virginia Tech, telling my students to summarize the conflict in one sentence. I offer this as an example: “Due to the tremendous breadth of the human niche, which further expands via new technology, the human economy grows at the competitive exclusion of nonhuman species in the aggregate.” With that one sentence, you encapsulate some core concepts in ecology such as niche breadth, carrying capacity and competitive exclusion, each of which is profoundly relevant to human economics. In fact, many if not the vast majority of ecological concepts are applicable to the human economy. That’s why before the term ‘ecology’ was coined in 1866, what we call ecology today used to be referred to as the ‘economy of nature.’ A lot of the same principles, patterns and processes in production, allocation of resources, competition and sectoral partitioning are parallel between the economy of nature and the human economy. EH: How did you become interested in and committed to steady-state economics? BC: During my PhD research in the 1990s, I decided to transition from my earlier career as a wildlife biologist to assist with conservation policy at the national level. I was conducting a policy analysis of the Endangered Species Act; part of this entailed assessing the causes of species endangerment in the US. I noticed that these causes were like a who’s who of the American economy. Naturally that led me to the study of ecological economics, economic growth theory, history of economic thought, and political economy. Eventually I established CASSE because I noticed there was no other organization focused on educating the public on the need for a steady-state economy. We focus on educating citizens, organizations and policy makers on the conflict between economic growth and environmental protection, ecological and economic sustainability, and national security and international stability. We also promote the steady-state economy as a desirable alternative to economic growth, and study the means to establish it. EH: What role should the ecosystem play in economics and politics? BC: The ecosystem is the foundation of the economy. In fact, it might be more illuminating to say that the economy is a “wholly owned subsidiary” of the ecosystem—and here I’m quoting the father of ecological economics, Herman Daly. The ecosystem provides the land, matter and energy—the natural capital—required for the production of manufactured capital and consumer goods. And the ecosystem—with its nonhuman species, processes and functions—provides ecosystem services that the human economy depends on. These include water purification, nutrient cycling, climate regulation, pollination services for agriculture….The list goes on. People tend to think of the ecosystem, if they’re not familiar with ecological economics, as some source of amenity for people who make a living “independently” of the ecosystem—when in fact, there isn’t a sector in the human economy that can exist for long without a healthy, functioning ecosystem. In a recent issue of Frontiers in Ecology and the Environment, I described the “self-sufficient services fallacy,” which is the erroneous notion that you can have perpetual economic growth by constantly increasing the ratio of services to goods, thereby magically de-materializing the economy. This misconception stems from a lack of recognizing the integrated nature of the economy. I also described it at length in my book, Shoveling Fuel for a Runaway Train. This, to me, is one of the most dangerous fallacies of our time. EH: How would the establishment of a steady-state economy impact a state or country’s ecological footprint? BC: Essentially, by definition, a steady-state economy results in a stabilized ecological footprint. A growing economy has an enlarging footprint, and a receding economy has a diminishing footprint, even though a recession can result in some obvious environmental problems such as poaching and lax enforcement of environmental laws. Over the long haul, though, a steady state is the only one with a steady footprint. EH: How much more can the economy grow before bumping into environmental limits? BC: No ecologist or economist is omniscient, and perhaps what matters most here is the quality of life at various levels of an economy. Perhaps it is possible—I’m not saying it would be easy or that it’s even feasible—to have a $100 trillion economy in 2009 dollars. That doesn’t mean that it would be even remotely desirable. It does appear that the planet could sustain a global economy toward the lower end of the tens of trillions of dollars of production and consumption for some extended period of time. But I would guess that we’re already beyond the environmental and ecological limits of long-run production and consumption and we’re living on borrowed ecological time. We’re able to live that way because of the fossil fuels that allowed us to grow beyond the levels of sustainable, renewable natural-resources income. In other words, we have been liquidating our stocks of natural capital. We also know that, at this point in history, we are experiencing environmental limits, and that’s one of the overlooked reasons for the financial crisis. The monetary sector became unglued from ecological reality and is now coming back down to earth, figuratively and, in a very real sense, literally. EH: How large should a government entity be to effectively embrace the steady-state economy—city, state or federal? BC: A steady-state economy may be pursued at all levels of government, although not necessarily beginning precisely at the same moment. For example, a town in the US–and there are communities with an interest in establishing a steady state economy, for example Bloomington, Indiana, and Charlottesville, Virginia–it’s not going to work for them if they are situated in a context of state and national policies that are aggressively pro-growth. It takes a suite of fiscal, monetary and trade policies to maintain a steady state economy and, in the US, as with most nation states, the monetary authority is national, along with much of fiscal policy and most trade policy. Ultimately, it will take international cooperation and diplomacy for the establishment of what amounts to a global steady state. And we shouldn’t expect poverty-stricken nations to begin their efforts toward a steady-state economy at the same time as the wealthiest nations. That would be neither politically feasible nor ethical. EH: What happens to jobs in a steady-state economy? The stock market? BC: When you think of the major macroeconomic variables, the quintessential distinguishing characteristic in a steady state is that they are stabilized. It’s important to remember that a steady-state economy includes stabilized population as well as stabilized per-capital production and consumption. War is the one variable on the list that, although very closely related to economic conditions, is not often thought of directly as an economic institution or effect, yet we’re seeing more and more that war is almost always a function of economic affairs. Tip O’Neill said that all politics are local; I like to say that almost all politics are economic and since we know there are limits to economic growth, then those countries that decide to exceed the ecological capacity of their economy will find themselves in conflict with other nation-states over resources. Let’s remember, for example, that one of the underlying philosophies of the Third Reich was Lebensraum (living space). That was basically nothing more than an implicit acknowledgement that the Third Reich did not have the resources available to sustain its level of economic activity, so it burst out the seams and rolled into Czechoslovakia and Poland for the agricultural resources. Quite a good book was published on this relationship between resource shortage and warfare called Resource Wars: The New Landscape of Global Conflict by Michael T. Klare. EH: Is a steady-state economy compatible with the most prevalent political systems—capitalism, communism, socialism et al.? BC: It certainly is the case that a steady-state economy is unlikely to be achieved in laissez-faire capitalism, but there is nothing in the American constitution that would preclude the establishment of a steady-state economy, given a citizenry adequately informed about the conflict between economic growth and the sustainability of the economy for their kids and grandkids. Perhaps the best way to think of an economic system in post-industrial terms is as a mixed economy in which the state and markets are melded in a way that meets citizens’ desires both for a good standard of living and long-run security for future generations. I would like to add that steady-state economists do not tend to be revolutionary Marxists or neo-Marxist communists. There is no reason to believe that a Soviet-style Politburo is any more capable than a constitutional democracy with well-developed markets to maintain a steady-state economy with a fair distribution of wealth and an efficient allocation of resources. There are politicians in the world, especially in Europe, who are competitive--and even in office--who embrace the steady-state economy. This includes the sitting secretary of state in Wisconsin. There’s also a Parisian in the national assembly of France who advocates a steady-state economy, as does a member of the European parliament in the UK. Additionally, a German politician signed the CASSE position on economic growth at our website. EH: Will politicians who embrace the steady-state economy be able to get elected? BC: Some have already been elected, including the ones I mentioned and presumably a number more. But it’s probably true that they did not emphasize the steady-state economy in their campaigns. At the present moment, there are not too many governments in which a steady-state politician will prevail, but we find that increasingly the wildly pro-growth politician, too, is becoming politically anachronistic. Right now, the citizen is having a difficult time deciding what to vote for vis-à-vis macroeconomic policy, but surely in the foreseeable future a steady-state economy will become a viable element of the politician’s platform. The US Green Party is not a political powerhouse, but it is worth noting the plank in its platform advocating a steady-state economy as the overarching macroeconomic goal. It certainly is not yet a mainstream political plank, but it is also far from being an unimagined or unimaginable policy. More successful green parties in other parts of the world also advocate the steady-state economy. In fact, at CASSE we recently received an endorsement of our position of economic growth from the Green Party of England and Wales. EH: Would the steady state lead to the collapse of some businesses? BC: Probably not as traumatically as a bloating economy leads to the collapse of so many businesses. EH: Would entrepreneurship, creativity, individuality and scientific progress be negatively impacted by a steady-state system? BC: No, I think we have yet to see our finest entrepreneurship, which would occur in a steady-state economy. I mean that both in the nonconventional sense of policy-making entrepreneurship and in basic business entrepreneurship. As with any economy, there will be competition for market share and we’re starting to see signs—even among industries that would least be associated with sustainability—of some efforts to at least appear green. This is perhaps one of the early signs of entrepreneurship, to marry the goals of a competitive enterprise with macroeconomic stability and sustainability. EH: Is steady-state economics currently being practiced anywhere in the world? BC: Not quite intentionally or explicitly, to the best of my knowledge. However, there are some policies that incidentally approach the steady state. Our European director at CASSE, Dan O’Neill, is one of the word’s foremost authorities on this subject. There do appear to be nations practicing something akin to steady-state economics in Southeast Asia. There are some philosophical elements in that region highly conducive to a steady-state economy, such as the pursuit of Gross National Happiness in Bhutan and the concept of the Sufficiency Economy in Thailand. Some people like to point out that several of the world’s non-growing national economies are in a steady state. These are not necessarily the ones we would aspire to, such as 1990s Russia, or Cuba for the past few decades. We agree with Herman Daly that—and this is a key point—a failed growth economy is not the same as a successful steady-state economy. In Russia, what we saw was a failed growth economy that collapsed as it attempted to win the Cold War with a more rapidly growing GDP than that of the US. EH: Has a steady-state economy been practiced by any civilization at any time in history? BC: That would depend on what we mean by civilization. As it’s presented in the typical 20th-century history book of the western world, civilization was barely a meaningful term until quite recently in the human experience. Yet think of all of the tribal cultures in the world that managed to live in relative harmony with the economy of nature and with a stable ecological footprint. EH: What is the history of the steady-state model? BC: I’ve alluded to the pre-industrial precedents for stable systems. I don’t want to sound Pollyannaish; we realize there were also unsustainable pre-industrial economies, but there certainly were examples of stability as well. This stability was most severely tested and lost during the industrial revolution when human economies, especially in the western world, underwent unprecedented growth. The great classical economist, John Stuart Mill, observing the instability of the British industrial revolution, wrote about the “stationary state” as a desirable macroeconomic condition in which people were free to develop culturally and spiritually and politically rather than debasing themselves with an obsession with growth. Mill could be viewed as the intellectual grandfather of steady-state economics. EH: How can people interested in steady-state economics help? BC: First, sign the CASSE position on economic growth. By reading and signing this, the reader becomes familiar with the physical and ecological concepts establishing limits to growth and the trade-off between economic growth and environmental protection, national security and international stability. The position is also an educational tool: it and its list of signatories helps to educate policymakers about increasingly widespread support for the steady-state economy. CASSE also has a well-developed volunteer network, who assist in the advancement of the steady-state economy based on their own strengths and experience. For example, they may give talks at professional conferences or to business groups or civic organizations; they may write letters to editors and opinion pieces for newspapers if they’re in the broadcast media; and they may establish shows or features on the steady-state economy. Or, they may simply help us to acquire more signatures of the CASSE position. And of course, all citizens can help us move toward the steady-state economy by choosing wisely with their consumption decisions. Additional resources: [If you know someone who is deserving of an Eco Hero profile on EcoHearth.com, please contact us. – Ed.] Help the Earth, Spread the Word: Share this article with family and friends by clicking on the "Email This" or "Share This" links below right.
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