{"id":82580,"date":"2016-11-21T12:00:32","date_gmt":"2016-11-21T12:00:32","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=82580"},"modified":"2016-11-06T17:03:40","modified_gmt":"2016-11-06T17:03:40","slug":"towards-a-new-green-economy","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2016\/11\/towards-a-new-green-economy\/","title":{"rendered":"Towards a New, Green Economy"},"content":{"rendered":"

3 Nov 2016 – This paper is one of many proposals for a systemic alternative<\/a> we have published or will be publishing here at the Next System Project. We have commissioned these papers in order to facilitate an informed and comprehensive discussion of \u201cnew systems,\u201d and as part of this effort we have also created a comparative framework<\/a> which provides a basis for evaluating system proposals according to a common set of criteria.<\/em><\/p>\n

A sustainable, equitable economy is on the horizon <\/strong><\/p>\n

This paper explores what we will call the green economy as a potential solution to the multiple\u00a0challenges from climate change, biodiversity loss, and resource scarcity to social injustice, and\u00a0financial instability.1<\/sup><\/p>\n

Green economy is still a contested concept. At its worst, it simply provides cover\u00a0for business-as-usual\u2014the escalation of unsustainable corporate practices that\u00a0threaten the integrity of the natural world and undermine the resource base for\u00a0future prosperity. At its best, green economy offers a positive blueprint for a new\u00a0economics: firmly anchored in principles of ecological constraint, social justice,\u00a0and lasting prosperity. A premise of this piece is that such a blueprint is worth\u00a0articulating.\u00a0Explorations of the green economy have until now mostly taken place at a national\u00a0or international level. This paper addresses the implications of the green economy\u00a0at the local level. It offers analyses on the conceptual foundations for more\u00a0sustainable, people-friendly community-based economic activities and presents\u00a0some empirical evidence for successful implementation of these ideas.<\/p>\n

A green economy is not an end in itself. Rather, as we argue in section two, it is a\u00a0means towards a shared and lasting prosperity. But what exactly does prosperity\u00a0mean? We propose a definition of prosperity in terms of the capabilities that\u00a0people have to flourish on a finite planet. It is clear that a part of our prosperity\u00a0depends on material goods and services. Living well clearly means achieving\u00a0basic levels of material security. But prosperity also has important social\u00a0and psychological components. Our ability to participate in the life of society is\u00a0vital. Meaningful employment, satisfying leisure, and a healthy environment also\u00a0matter. We show how individual prosperity is linked intrinsically to community.\u00a0Thriving communities are the basis for shared prosperity.<\/p>\n

A further premise of this essay is that the principal goal of the green economy is\u00a0to deliver prosperity. In other words, the green economy must deliver the capabilities\u00a0for individuals to flourish and communities to thrive. Prosperity demands\u00a0not only the provision of goods and services but also security in employment and\u00a0stability in markets. Drawing on emerging understandings of the green economy\u00a0at the macroeconomic level, we identify four specific aspects which are of primary\u00a0importance to thriving communities: the role of enterprise, the quality of\u00a0work, the structure of investment, and the nature of the money economy. These\u00a0aspects of the green economy are explored below.<\/p>\n

We propose a role for enterprise grounded in providing the capabilities for people\u00a0to flourish in their communities. First and foremost, of course, these capabilities\u00a0must include the necessities of life: food, clothing, and shelter. But beyond these\u00a0needs, our prosperity depends on the \u201chuman services\u201d that improve the quality\u00a0of our lives: health, social care, education, leisure, recreation, and the maintenance,\u00a0renovation, and protection of physical assets and natural systems. We also\u00a0explore forms of company structure and organization set up specifically in the\u00a0interests of community: cooperatives, B corporations, and community and social\u00a0interest enterprises.<\/p>\n

The role of work and employment is fundamental to the success of the green\u00a0economy. Work is more than just the means to a livelihood. It is also a vital ingredient\u00a0in our connection to each other\u2014part of the \u201cglue\u201d of society. Good work\u00a0offers respect, motivation, fulfilment, involvement in community, and, in the best\u00a0case, a sense of meaning and purpose in life. We outline a two-fold strategy for\u00a0achieving high levels of employment within the green economy. On the one\u00a0hand, we illustrate the expansion of employment through a \u201cservice-enterprise\u201d\u00a0economy. On the other, we explore the role of reduced working hours in achieving\u00a0a just distribution of working time.<\/p>\n

Investment is one of the most important functions for any economy. Protecting\u00a0the assets on which future well-being depends is an integral component of prosperity.\u00a0We identify a number of essential targets for investment at the local level.\u00a0The portfolio of green investment must include: improving energy efficiency and\u00a0resource productivity, increasing the capacity for a local service enterprise sector,\u00a0building and maintaining community assets, protecting and enhancing social\u00a0and natural systems, and developing local renewable energy opportunities.<\/p>\n

A key finding from our own macroeconomic work on the green economy is\u00a0that the money economy (the creation, maintenance, and stability of the money\u00a0supply) is a vital component of sustainability. The unconstrained creation of\u00a0money through commercial debt stimulates unsustainability in investment and\u00a0instability in financial markets. In the wake of the financial crisis of 2008\/09,\u00a0with wider capital markets still in disarray, lending constraints hinder green\u00a0investment and undermine the prosperity of communities. We explore community\u00a0responses to this dilemma and outline a range of potential institutional\u00a0innovations, including: community banking, peer-to-peer lending, community\u00a0bonds, local exchange trading schemes, and the role of sovereign money in\u00a0directing social investment.<\/p>\n

The final section of the essay draws together our findings and identifies positive\u00a0steps towards the creation of green local economies. We explore the opportunities\u00a0for communities to take independent positive action in pursuit of a green\u00a0local economy. It would be a mistake, however, to suggest that transformation is\u00a0possible without wider institutional and infrastructural changes. So, we explore\u00a0the wider role of governance in stimulating and enabling change and propose an\u00a0inventory of policy levers that could aid the transition to a green economy.<\/p>\n

\"green-economy-peter-a-victor-and-tim-jackson2\"<\/a><\/p>\n

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  1. Introduction <\/strong><\/li>\n<\/ol>\n

    In our view, the contest over the meaning of the green economy has not yet\u00a0been decided.2<\/sup> As ecological economists, our work is anchored in the view that\u00a0economies are subsystems of the biosphere, mediated by the values and institutions\u00a0of society. For several decades we have worked individually and together\u00a0to understand the many dimensions of these relationships.3<\/sup> Most recently, we\u00a0have begun to collaborate on the development of what we call \u201cecological macroeconomics.\u201d<\/p>\n

    Responding to the dilemma of remaining within ecological limits in a growth-based\u00a0economy has often been construed primarily as a microeconomic task\u2014\u00a0one that governments can address with conventional fiscal instruments of tax\u00a0and subsidy. By these means the \u201cexternal\u201d costs associated with environmental\u00a0and social factors would be \u201cinternalized\u201d in market prices, according to familiar\u00a0axioms. More specifically, these conventional arguments claim that incorporating\u00a0\u201cshadow prices\u201d for environmental goods into market prices will send a clear signal\u00a0to consumers and investors about the real costs of resource consumption and\u00a0ecological damage, and incentivize investment in alternatives.<\/p>\n

    But this long-standing prescription has been hard to implement over the last\u00a0several decades. Even before the crisis, it proved difficult either to forge agreement\u00a0on fiscal measures to internalize environmental costs or, indeed, to stimulate\u00a0appropriate levels of private investment in alternative technologies. The\u00a0financial crisis has certainly made both of these tasks harder. Despite an early\u00a0focus on \u201cgreen stimulus\u201d as a way of invigorating the global economy, subsequent\u00a0responses have failed consistently to address ecological challenges.<\/p>\n

    Fears of damaging economic growth prevent politicians from responding effectively\u00a0on either ecological taxation or green investment. In fact, fragile private\u00a0and public sector balance sheets have slowed down investment in the real economy\u00a0generally, to say nothing of the additional (and less familiar) investment\u00a0needed to make a transition to a low-carbon economy. Conventional responses\u00a0focus instead on cutting public spending (austerity) and stimulating consumption\u00a0growth (consumer spending) as the basis for economic recovery. Unfortunately,\u00a0these responses tend to ignore the structural problems of the conventional\u00a0paradigm and delay the investment needed in the green economy.<\/p>\n

    The scale and nature of this dilemma suggest that the combined challenges of\u00a0climate change and resource scarcity require macroeconomic as well as microeconomic\u00a0responses. In fact, we believe, there is a need to develop a fully consistent\u00a0ecological macroeconomics, in which it is possible to maintain economic\u00a0stability, ensure full employment, address inequality, and yet remain within the\u00a0ecological constraints and resource limits of a finite planet.4<\/sup><\/p>\n

    This task\u2014to develop an ecological macroeconomics\u2014is the one we set ourselves\u00a0to in the aftermath of the crisis.5<\/sup> The fundamental building blocks of our\u00a0approach are three-fold.<\/p>\n

    First, we wanted our model to reflect accurately the structure of the real economy\u2014that is, to provide an account of incomes, spending, investment, taxation, demography,\u00a0and the structure of industry consistent with the United Nations System of\u00a0National Accounts for any given country. Second, we wanted our framework to\u00a0make a full and proper account of the ecological and resource constraints on the\u00a0global economy\u2014as they applied at the scale of the national economy. Finally, we\u00a0wanted our model to incorporate a consistent description of the financial economy,\u00a0including the supply of money from and to economic actors, and the effect of the\u00a0money supply on both nominal and real demand. An ecological macroeconomics\u00a0must show us not only how much investment is needed\u2014for instance, to reach\u00a0ecological goals\u2014but also how that investment is to be financed.<\/p>\n

    This last objective was particularly important in the wake of the financial crisis.\u00a0One of the main shortcomings of conventional economics was its failure to anticipate\u00a0the impact of fragile balance sheets on the stability of the economy. In fact,\u00a0most conventional economic models virtually ignore the balance sheet structure\u00a0of the national economy, in spite of warnings by some far-sighted economists of\u00a0its importance for economic stability.<\/p>\n

    Our intention here is to explore the implications of the green economy at community\u00a0scale. We draw substantially in what follows on the understandings we\u00a0have gleaned from working at the national scale. But we also explore the lessons\u00a0to be learned for the green economy from numerous small-scale, community based\u00a0initiatives for social and ecological change.6<\/sup>\u00a0Our aim has been to tease out the cross-cutting organizational dimensions of the\u00a0green economy. The kinds of questions that orient our inquiry include:<\/p>\n