David C. Korten, a contributing editor to IN CONTEXT and chief advisor to us on this issue, has emerged as one of the world’s most articulate spokesmen on the issues of environment, development, and economics. He is a highly credentialed and experienced consultant to international development agencies, with a background that includes a doctorate in business management from Stanford, a faculty position at Harvard’s Graduate School of Business, a staff position with the Ford Foundation and a consultancy with USAID. He is founder and president of the People-Centered Development Forum – based in Manila, but moving to New York City this year – and the author of Getting to the 21st Century: Voluntary Action and the Global Agenda. (See IC #28 for a lengthy interview, "Beyond Bureaucracy.")
A different version of this "open letter" appeared first as an article in Development, the journal of the Society for International Development.
Five hundred years ago, when Columbus landed in the Western hemisphere, the prevailing system of European thought maintained that our Earth was flat and that the sun, stars, and planets revolved around it. Then in 1543, the year of his death, Nicolas Copernicus published Revolution of the Celestial Spheres, setting forth the thesis that the Earth is only one among the planets that revolve around the sun – itself one of countless such stars of the cosmos.
Copernicus spoke a humbling truth regarding the insignificance of humanity’s physical position among the stars – considered a heresy in its day and a threat to many cherished institutions. His act and the resulting change in perspective regarding man’s place in the cosmos, deflating as it was of a long-standing human arrogance, liberated Western society from a number of debilitating intellectual and institutional constraints, ushered in the age of science, and led to human accomplishments that have exceeded even the most fanciful imaginings of the greatest thinkers of his day.
This was not, unfortunately, the end of our society’s propensity toward a debilitating – and, in our present case, potentially fatal – arrogance. The highly evolved intelligence that produced the scientific revolution and made possible the industrial age has given our species a decided competitive advantage over other forms of life in the competition for ecological space on this planet. This success has been of such magnitude as to lead us once again into a trap of blinding arrogance – a belief that our technology makes us the masters of nature and places us beyond the reach of natural law.
We now face the need for a new revolution in our self-perception and institutions, an ecological revolution, with implications for human behavior and institutions that may be more profound than those that followed from the insights of Copernicus. While such a revolution will be certain to bring its own trauma, there is substantial prospect that it may also release a new era of progress as far beyond the current human imagination as the accomplishments of the modern era would be to those who lived in the Middle Ages. In the absence of such a revolution we will almost certainly remain locked onto our present course of social and ecological disintegration – the outcome of which may well make life in the Middle Ages look advanced.
Yet the countries likely to play the most influential roles in making the choices we currently face – the industrialized countries of the North – have committed the full weight of their political and economic resources to policies that seriously threaten the future of our planet and its people. These policies are built on three assumptions:
* Sustained economic growth is the key to human progress.
* Integration and globalization of the world economy is a key to growth and beneficial to all but a few narrow "special interests."
* International assistance and investment work to build strong economies in less fortunate nations and are important to the progress of their people, especially the poor.
Unfortunately, these assumptions turn reality on its head; they are the economic equivalent of maintaining that the sun revolves around the Earth, when all the contemporary evidence points to the contrary. Policies based on these assumptions are actively exacerbating poverty, environmental destruction, and the disintegration of the social fabric in nearly every country of the world. They are the antithesis of the policies required to support truly sustainable development.
ORTHODOXY AND HERESY
These three assumptions, which also comprise the orthodoxy of the international development community, have become so deeply embedded in the collective belief system of most development institutions that to challenge them is to set oneself apart – to commit heresy against the faith and its moral foundations. Three heresies against mainstream development thought define the foundational beliefs of the ecological revolution as it applies to the development enterprise:
Growth is not the solution * Sustained economic growth is not possible, because human economic activity already fills the available ecological space. Furthermore, economic growth is not the key to human progress. Human well-being depends more on how available physical resources are used than on increasing the rates of their extraction and consumption.
Economic integration is part of the problem * Integration of the global economy will not result in growth in a world whose ecological space is filled. It will erode institutional capacities to deal appropriately with ecological limits. It will also encourage unsustainable ecological exploitation and widen the gap between rich and poor.
Foreign assistance and investment are making things worse * Increased financial flows from North to South stifle sustainable development in the South. The key to Southern progress is to reduce the outflow of ecological resources from the South that feed the North’s overconsumption and increase the South’s access to and control over beneficial technologies.
Few discussions of sustainable development seriously raise such issues – consequently revealing how far we remain from dealing in realistic terms with the environmental and social crisis that currently grips our world. Let’s examine each heresy in more detail.
THE WORLD IS FULL, NOT "EMPTY"
What may be the ecological revolution’s most important intellectual treatise to date recently emerged from an unlikely source: the World Bank, contemporary mother church of orthodox development theology. Edited by Robert Goodland, Herman Daly, and Salah El Serafy (1991) and issued as a working paper in July 1991 by the Environment Department of the World Bank, Environmentally Sustainable Economic Development: Building on Brundtland challenges the most fundamental premises of that theology, as set forward in the Bank’s World Development Report 1991.
The centerpiece of the Goodland, Daly, El Serafy heresy is the observation that current economic theory and policy are based on an assumption of an "empty world," i.e., a world in which the scale of human economic activity is sufficiently small relative to the scale of the Earth’s ecological system that its impact is inconsequential. The contributors to this unusual collection (who include two Nobel laureates in economics) document the increasingly evident reality that this assumption no longer holds. We now live in a full world, one in which our aggregate economic activity fills the available ecological space.
Much of what we measure as economic growth depends on increasing the flow of physical materials – such as petroleum, minerals, biomass and water – through our economic system. We depend on Nature to supply these materials and absorb the resulting wastes. Nature’s capacity in this regard has proven to be enormous, but not unlimited. We have now reached Nature’s limit – and systems of economic thought and management based on the absence of such limits must be replaced. To assume that economic growth, as we currently define it, can continue without limit is to believe the impossible.
Arguments that our technology frees us from these limits assume that what man produces serves as an adequate substitute for what nature produces. While this is true to an extent – we have made considerable progress in reducing the amount of scarce physical materials required to serve specific human needs – such possibilities also face natural limits. In most instances natural and man-made capital are complementary, not substitutes. In the end, the sawmill has no function without a forest. The fishing boat, no matter how advanced, has no function without fish (Daly, 1990).
Is it the rich or the poor who bear the primary responsibility for the environmental crisis? The debate is readily resolved: according to Worldwatch Institute, each American, on average, accounts for the consumption of 52 kilos of physical materials each day (Durning, 1991, pp. 160-61). This contrasts starkly with the estimated average consumption of 11/2 kilos of locally-collected biomass by the one billion inhabitants of our planet who live in absolute poverty.
Viewed from this perspective, the argument that poverty is a primary cause of environmental destruction – and that economic growth is the key to increased environmental responsibility – is clearly perverse. We are no longer talking about an expanding pie of resource consumption. Rather, we are talking about the allocation of a finite flow of physical resources through our economic system to meet the needs of the more than 5 billion inhabitants of our planet – destined to grow to 12.5 billion before stabilizing in the next century.
Our systems of economic management, currently geared to increasing system throughput (growth), must now be transformed to concentrate on reallocating the use and benefits of existing levels of throughput to optimize human well-being (development) at equitable, and relatively modest, per capita levels of physical consumption.
In other words, there is enough for all of Earth’s people to live well, though not extravagantly, at current levels of resource use – but only if we share what we currently have with each other and if population growth is brought under control with all due speed.
Much of the change can be accomplished simply by reducing unnecessary consumption, which simultaneously reduces income needs, potentially freeing time for those activities that bring real happiness, including family, friends, and voluntary community service. "Modern" society has tended to sacrifice these satisfactions to a compulsive drive for financial success. The result is a sense of social, psychological, and spiritual emptiness that multitudes of advertisers assure us will be satisfied by the purchase of their particular gadget or status symbol. The greater the emptiness, the greater the drive for more income to purchase the goods expected to fill it – an endless, futile, and self-destructive quest.
This is not to suggest that the changes in lifestyle and economic organization required will be easy for us. The barriers posed by existing social values and institutions are enormous. The end result, however, need not involve significant deprivation. The changes are, in fact, more likely to be liberating – particularly to the extent that they result in freedom from economic slavery, restore a sense of community and the beauty of our environment, and encourage our further spiritual, intellectual, and social development.
ECONOMIC INTEGRATION: A DESTRUCTIVE ACCELERATOR
The catechism of contemporary development theology is nowhere more clearly articulated than in the World Bank’s World Development Report 1991. Here the Bank presents its assessment of the lessons of forty years of development experience and concludes that the market is the key to economic growth. Thus it calls on governments to complete the integration of their national economies into the global economy by removing all existing barriers to the free flow of trade and capital across borders; focus their efforts on investing in social and physical infrastructure; eliminate "labor market rigidities" (read unions and minimum wage legislation); and allow international market forces to play themselves out locally without government interference. That economic growth is both good and feasible is taken in the Bank’s report to be self-evident.
Whether such measures would produce socially beneficial growth in an empty world is, however, no more than a hypothetical issue, of interest primarily to theoreticians and historians. Our present concern is with the consequences of such policies in a full world, for that is our present and future reality.
In a full world, growth-centered policies that presume to expand the economic pie serve primarily to intensify competition for the finite pool of available ecological resources. In an unregulated market, such competition has two consequences: control of resources becomes increasingly concentrated in the hands of those with economic power, and the gap between rich and poor grows at an accelerating rate. The sustainable limits of resource use will be exceeded, the regenerative capacities of the ecosystem will be systematically degraded, and the total real wealth of the society, as defined by its future productive potential, will contract. This is exactly what is now happening, and the continued movement toward unregulated global economic integration can only accelerate these trends.
In an integrated global economy, goods and capital flow to the locality offering the most immediate prospects for short-term profits. Governments lose their ability to regulate and manage their own economies in the public interest and, in fact, become pitted in competition among themselves to attract investors. The "winning" country is the one that offers the cheapest and most compliant labor; the weakest environmental, health and safety standards; the lowest taxes; the most fully developed infrastructure; and the least restricted access to natural resources. Labor loses its bargaining power, resources are extracted at well below their true value, and the costs of pollution and toxic dumping are passed onto the community with impunity. Again, these are the forces we see at work throughout the world in Northern, as well as Southern, countries.
FOREIGN ASSISTANCE: AN UNSUSTAINABLE DEVELOPMENT
Almost as sacred as the belief in growth and free trade is the belief that increased financial flows from North to South are crucial to address the South’s social and environmental needs. In the name of development, money has been flowing into the South to build dams, tree plantations, export-oriented agricultural estates, and mining projects. A few benefit. The many suffer. And at the moment, the net capital flow is actually from South to North – at the rate of some $50 to $60 billion per year.
But financial flows, whatever their direction, mask more fundamental underlying realities. These include the fact that many projects funded with foreign assistance have been overly expensive, have not worked at all or worked badly; and many – even those labeled "environmental" projects – have had detrimental social and environmental consequences.
More important, however, is the fact that most development assistance agencies are actively promoting a development model that in the current context serves mainly the interests of transnational capital and its allies among the elites of the South. It is the very antithesis of sustainable, people-centered development.
Finally, the loans made in the name of international aid add to the indebtedness that allows international agencies to dictate the economic policies of borrowing countries in line with their view of the world and their interests.
Foreign investment is no better. Attracting free-floating international capital may provide a temporary economic spurt, but this is not to be confused with development – which is a process by which a community or country develops the capacity to manage its own resources in a sustainable way to meet the needs of its own people. The development success of Japan, Taiwan, and South Korea was based on strong, protected domestic markets, gaining control over technology, and building a domestic capital base and entrepreneurial capability. They at no time demonstrated an interest in turning their domestic economies over to footloose international capital.
Prevailing aid and investment policies both mask the reality that the poverty of the South is not a consequence of inadequate financial flows from the North. It is a consequence of an unbalanced system of international economic relationships that allows the North to extract a substantial portion of the South’s share of the world’s ecological resources to support its wasteful lifestyles.
SUSTAINABILITY AGENDAS, SOUTH AND NORTH
An appropriate agenda for sustainable development in Southern countries – as growing numbers of grassroots organizations are coming to realize – is to concentrate on regaining control of their remaining ecological resources to meet domestic needs, beginning with food, clothing, shelter, and basic social services. With few exceptions, this is within their means – if their resources are properly organized and used.
However, they will need to:
- reduce dependency on conventional forms of aid;
- eliminate long-term international borrowing;
- reduce export dependence, military spending, and arms imports;
- demand the freest possible access to beneficial technologies controlled by the North;
- repudiate odious debts that involved fraud and the misuse of public funds for private gain, or shift the repayment of obligations to the individuals who benefited (see Adams, 1991);
- negotiate a significant reduction or cancellation of remaining long-term debt;
- bring population growth under control; and
- radically restructure the allocation of available resources and assets.
We in the North have an obligation, as well as a survival need, to facilitate these adjustments. First and foremost, we must drastically reduce our dependence on the South’s ecological resources and learn to live within our own means. This will include working to restructure the international trade and financial system to return to Southern countries control over their own economies, and to price environmental resources at full cost levels in international markets. The North cannot return to the South the wealth it has already consumed. It can make partial restitution, however, by giving the South the rights, knowledge and skills required to make full use of the North’s store of beneficial technologies.
North and South must work together to create a fair and balanced international trading system, facilitate the widest possible sharing and access to beneficial technologies, encourage broadly distributed local control of capital, and establish an interlinked system of self-managing, locally controlled, democratically governed, and ecologically self-reliant local economies that provide for the fullest human development – but not the wasteful consumption – of their members. There must also be cooperative action toward the collective regulation of transnational corporations to enforce anti-trust measures, to assure adherence to local and international social and environmental standards, and to enforce the collection of taxes by appropriate authorities.
These will not be easy or simple changes. Willis Harman has written that "… the Copernican revolution amounted to a successful challenge to the entire system of ancient authority …" (Harman, 1988, p. 7). The ecological revolution presents a similar challenge to many of the most powerful of contemporary institutions, which remain resolutely committed to the system of belief underlying their authority. In the end, however, they cannot survive the destruction of the society on which they depend, any more than society can survive the destruction of the ecosystem on which it depends.
The heresies of the ecological revolution have not found their way onto the agenda of the so-called Earth Summit in Brazil. Indeed there are powerful interests, including the US delegation, who have been intent on assuring that they do not. Consequently, while the Summit may produce some important agreements, it will almost certainly fall far short of confronting the real issues of sustainable development and the profound changes that our global economic system must undergo if we are to reverse our current course. And of course, these issues will not go away after June 1992.
It is imperative that those of us in citizens groups engaged with environment and development – and, indeed, all concerned members of the human family – strive to bring attention to these more fundamental – yet ignored – issues, project them into the broad public debate, and take action to facilitate this necessary ecological revolution. If we meld the lessons of our experience, and do not shrink from embracing the truth of heresy, we can work together to create a more just and sustainable global partnership.
References
Adams, P. Odious Debts: Loose Lending, Corruption, and the Third World’s Environmental Legacy. London: Earthscan Publications, 1991.
Brown, L. R. et. al. State of the World 1991. New York: W. W. Norton, 1991.
Daly, H. "Sustainable Growth: An Impossibility Theorem." In Development, 3/4 (1990): 45-47.
Daly, H. and J. Cobb, Jr. For the Common Good: Redirecting the Economy Toward Community, the Environment and a Sustainable Future. Boston: Beacon Press, 1989.
Durning, A. "How Much is Enough?" in State of the World 1991, Lester R. Brown et. al., 153-188. New York: W. W. Norton, 1991, pp. 153-188.
Goodland, R., H. Daly, and S. El Serafy. Environmentally Sustainable Economic Development: Building on Brundtland. Washington, DC: Environment Department, World Bank, July 1991.
Harman, W. W. Global Mind Change: The Promise of the Last Years of the Twentieth Century. Indianapolis: Knowledge Systems, Inc., 1988.
The Unison Snoring Of Supine
Economists In Deep Dogmatic Slumber
World Bank economist Herman Daly is co-author, with theologian John Cobb, of one of the premier books on sustaianble economics, For the Common Good: Redirecting the Economy Toward Community, the Environment and a Sustainable Future (Boston, Beacon Press, 1989). He recently reviewed a draft of Agenda 21, the principle document to be signed as a rhetorical commitment to action at the Earth Summit, and prefaced his review this way:
I recently reviewed the draft chapter of Agenda 21 on International Policies to Accelerate Sustainable Development, the document’s first substantive chapter…. It is a disappointing document – the unison snoring of supine economists in deep dogmatic slumber.
The chapter’s theme is "promoting development through trade." Its actual thrust is to promote international trade and global economic integration as a self-evident good and then call the result "sustainable development." Hopefully more thoughtful minds will prevail before Agenda 21 is finalized in Brazil, as the old dogma has itself become a serious threat to our planet.
– Herman E. Daly
Excerpted from a People-Centered Development Forum column of 1 March 1992. The PCDForum column series provides short analyses by leading international development thinkers for reprint free of charge. For information, contact PCDForum president David Korten, c/o Ford Foundation, 320 E. 43rd St., New York, NY 10017.
