An economy for climate & nature

More often than not, when discussing what needs to be done about the climate-nature emergency, thoughts turn to practical issues around reducing greenhouse gas emissions and other impacts we have on the natural world.

If we are lucky, and we don’t get distracted by promises of future technical solutions to solve the problems, maintaining business as usual, we’ll pick up on advice over what and how we buy and consume goods, materials and resources. 

Pretty much everything we buy, or use, both in goods and services, comes with a carbon cost and/or another impact on the environment. By looking at this in detail, we may be able to chose to buy an alternative, less damaging, item or one that is more long lasting and capable of repair, we may even be able to share the item or service with others and then, if we buy correctly, the items used may be easy to recycle or even reused elsewhere.

The whole object of this regenerative and circular system is to make stuff and activities sustainable and resilient with no more waste than the environment can reasonably handle.

What is not appreciated however, or perhaps is seen as a side issue that makes political sense but is somehow disengaged from the above model, is the economic aspects of these decisions and how they can actually follow the same path.

Take for example a brand of smartphone.  Each year, despite having built perhaps hundreds of thousands of last year’s model, that are now destined to sit on shelves or be recycled or relegated to a second hand market, the company has already got a million of this year’s model in production with millions of $s being spent on marketing to convince consumers that the model they bought last year, or maybe the year before, is now all but obsolete and that, they “must” have the latest model.

This whole process is a perfect example of a wholly non-regenerative system, with wasted materials,  carbon and chemicals, in which natural and precious resources are used for a short time, then thrown away or left to rot. 

This process is mimicked by the company’s financial incentive to constantly create new goods, for ever increasing prices that often rely on cheap labour but, despite large material and marketing costs, wasteful premises and other services, will create not just the profits the company needs to sustain the business but also excess profits to be syphoned out by shareholders whose only interest in the business is the financial return on their investment, an investment that, unless it was at the inception of the business, went to the previous disengaged shareholder when she sold her shares to you. What then happens to those excess profits? 

Most of them end up propping up a financial market, for a tiny % of corporations, that was originally designed to “oil the wheels” of businesses, by providing new finance, but which has now morphed into a separate and self-interested industry creating vast wealth for a tiny minority. 

So, do the millionaire/billionaire owners and other shareholders recycle the money back into the economy in the trickle-down manner originally anticipated by this 20th century economic model? How many yachts, cars or houses do they need, how many household staff or chauffeurs can they pay? In reality the majority of the wealth is just churned to grow the financial markets or is sent away to offshore investments somewhere doing nothing other than gaining interest or saving tax for their owners.

I say the economic aspects mimic the physical product aspects but, when you think about it, it’s the hope of, and desire for, the financial incentives that actually drives the whole thing, not the other way around. In that process, not only does the business generate and perpetuate increasing inequality in wealth and influence, between its shareholder/owners and their lowest paid people, customers and suppliers, but it continues to grow, increasing the waste, environmental and social damage year on year.

That is one business and one product, now multiply that up and you have an economy that is dependent on continuous growth, regardless of its impacts on the wellbeing of the humans and environment. The mantra of growth for growth’s sake has been the norm for nearly a century, and you’ll hear many say “yes it’s not perfect, you have to accept the inequality in society, but look at what it’s done for us in a hundred years”. To which you might reply “But at what cost to them?”

To what use could the wasted and stagnated wealth, as well as the wasteful processes in making it, have been put or, better still, what if the money and processes had been designed to favour just the purpose and wellbeing of the business and its stakeholders, without the obsession for bigger profits and more stuff, how about planning for enough? 

Perhaps working hours could have been cut, with previously unemployed people being given jobs, and all with decent salaries.

Perhaps, rather than seeing other organisations as competitors, to be out competed and even asset stripped as they go out of business, they could be seen as collaborators, sharing resources, cross fertilising ideas and, together, being more resilient and happy than as two competing entities. 

To paraphrase Kate Raworth of Doughnut Economics fame: We currently have economies that have to grow, whether or not we and the planet thrive, whereas what we need are economies that make us and the planet thrive, whether or not they grow.

The best example of how this actually works in practice is in social enterprises or cooperatives, where products and services follow a regenerative route and where profits are still be made but where negative material and social impacts are kept to a minimum or even turned into a positive and where all those with a stake in each enterprise, be they customers, suppliers, employees, partners, owners etc, all share a fair distribution of the fruits of the enterprise’s efforts and where any remaining profits are kept within the enterprise to help it develop and be more sustainable, or invested in other fledgling enterprises with similar purposes.

This is not a political attack on capitalism, rather it’s an acknowledgement, beyond politics, that the capitalism we practiced has outlived its purpose and is now doing more harm than good. Given the threats we face from climate and nature breakdowns only a type of 21st century economics described above will be fit for purpose and will remove the infinite growth obsessions that drove the 20th century economies and helped create the mess we are in. 

Other reading & links:

Nature and the economy: how can we prosper within planetary limits?
Wellbeing Economy Alliance
A healthy economy should be designed to thrive not grow – Kate Raworth