green economics

By Mark Paul - Dollars and Sense, February 2017

Last week, Donald Trump signed an executive order to advance approval of the Keystone and Dakota Access oil pipelines. This should come as no surprise, as Trump continues to fill his administration with climate deniers, ranging from the negligent choice of Rick Perry as energy secretary to Scott Pruitt as the new head of the Environmental Protection Agency. Pruitt, a man who stated last year that “scientists continue to disagree” on humans role in climate change may very well take the “Protection” out of the EPA, despite a majority of Americans—including a majority of Republicans—wanting the EPA’s power to be maintained or strengthened.

As environmental economists, my colleague Anders Fremstad and I were concerned. We crunched the numbers on the Dakota Access Pipeline (DAPL). The verdict? Annual emissions associated with the oil pumped through the pipeline will impose a $4.6 billion burden on current and future generations.

First and foremost, the debate about DAPL should be about tribal rights and the right to clean water. Under the Obama administration, that seemed to carry some clout. Caving to pressure from protesters and an unprecedented gathering of more than a hundred tribes, Obama did indeed halt the DAPL, if only for a time. Under Trump and his crony capitalism mentality, the fight over the pipeline appears to be about corporate profits over tribal rights. Following Trump’s Executive Order to advance the pipeline, the Army Corps of Engineers has been ordered to approve the final easement to allow Energy Transfer Partners to complete the pipeline. The Standing Rock Sioux have vowed to take legal action against the decision.

While the pipeline was originally scheduled to cross the Missouri River closer to Bismarck, authorities decided there was too much risk associated with locating the pipeline near the capital’s drinking water. They decided instead to follow the same rationale used by Lawrence Summers, then the chief economist of the World Bank, elucidated in an infamous memo stating “the economic logic of dumping a load of toxic waste in the lowest-wage country is impeccable and we should face up to that.” That same logic holds for the low wage counties and towns in the United States. The link between environmental quality and economic inequality is clear—corporations pollute on the poor, the weak, and the vulnerable; in other words, those with the least resources to stand up for their right to a clean and safe environment.

By Eleanor Finley - Entitle Blog, February 7, 2017

In this second article of the series “Ecology after capitalism“, Finley revisits the concept of growth from the libertarian socialist perspective of social ecology. She draws on Bookchin’s work to interrogate the limits of a degrowth conception of ‘growth’ and argues that we might find more opportunities for social and political transformation in social ecology’s analysis of post-scarcity and growth as ecological development. 

For more than two centuries, a critical narrative has emerged problematizing economic development, consumption, and growth. While its terms and definitions have shifted over time, the underlying logic remains the same: human society is growing too fast, faster than the limits of nature can accommodate.

In order to avoid global catastrophe by destroying the environment on which we depend, human beings must dramatically reduce the quantity of our own energetic and material consumption. Since the 2008 global financial collapse, a revised form of this analysis called degrowth has gained momentum among European environmental activists and Left academics.

In contrast to their predecessors who rejected the ‘industrial society’,  degrowth advocates blame capitalism as the engine of current ecological crisis. Joining a chorus of eco-socialists and radical ecologists, degrowth advocates argue that a planet of finite resources simply cannot sustain a social system based upon an axiom of production and consumption for its own sake.

In Can there be a socialist degrowth? ecological economist Giorgios Kallis argues that a tension is present between socialism and the apparent need for degrowth, arguing that a socialist society may not necessarily be post-growth, and thus ecologically sustainable. Such a conclusion rightly suggests that degrowth calls for the transcendence of traditional socialist concerns of labor, production, and technological advance. Yet, it does not yet account for how a socialist society may pursue growth along qualitatively different lines to produce a comfortable, materially abundant, and technologically sophisticated society.

By Alex Jensen - CounterPunch, December 2, 2016

In 2015, a major study of 24 indicators of human activity and environmental decline titled ‘The Great Acceleration’ concluded that, “The last 60 years have without doubt seen the most profound transformation of the human relationship with the natural world in the history of humankind”.[1] We have all seen aspects of these trends, but to look at the study’s 24 graphs together is to apprehend, at a glance, the totality of the monstrous scale and speed of modern economic activity. According to lead author W. Steffen, “It is difficult to overestimate the scale and speed of change. In a single lifetime humanity has become a planetary-scale geological force.”[2]

Every indicator of intensity and scale of economic activity — from global trade and investment to water and fertilizer use, from pollution of every sort to destruction of environments and biodiversity — has shot up, precipitously, beginning around 1950. The graphs for every such trend point skyward still.

The Great Acceleration is manifest everywhere, including many areas not covered in the study. It is impossible to directly, humanly appreciate the ghastly scale of change. Only statistics can do that. For example:

• Humans now extract and move more physical material than all natural processes combined. Global material extraction has grown by more than 90 percent over the past 30 years, reaching almost 70 billion tons today.[3]
• In this century “global economic output expanded roughly 20-fold, resulting in a jump in demand for different resources of anywhere between 600 and 2,000 percent”.[4]
• For more than 50 years, global production of plastic has continued to rise.[5] Today, around 300 million tons of plastic are produced globally each year. “About two thirds of this is for packaging; globally, this translates to 170 million tons of plastic largely created to be disposed of after one use.”[6]
• The global sale of packaged foods has jumped more than 90 percent over the last decade, with 2012 sales topping $2.2 trillion.[7]
• “In the last 50 years, a staggering 140 million hectares… has been taken over by four industrial crops: soya bean, oil palm, rapeseed and sugar cane. These crops don’t feed people. They are grown to feed the agro-industrial complex.”[8]

Not only are the scale and speed of materials extraction, production, consumption and waste ballooning, but so too the scale and pace of the movement of materials through global trade. For instance, trade volumes in physical terms have increased by a factor of 2.5 over the past 30 years. In 2009, 2.3 billion tons of raw materials and products were traded around the globe.[9] Maritime traffic on the world’s oceans has increased four-fold over the past 20 years, causing more water, air and noise pollution on the open seas.[10]

By Brian Davey - Credo, July 31, 2016

What economists call “externalities” are not unusual or a special case, they are ubiquitous. They are rooted in private property and the relationships of market society. The way in which non market societies protect bio-diversity through totem arrangements is described.

Private property means that a single owner has the right to do with a resource as s/he sees fit. However, what they decide about these “resources” affect communities of people and communities of species (eco- systems). Very often, the effects are not positive. John Ruskin, a 19th century art critic who also wrote on economics, coined the term “illth” to describe the destructive effects imposed on society and the environment by the economy of his day.

Economists have had to adjust their theories and have come up with the concept of “externalities”, that is, the benefits or costs of an allocation decision that arise for non-owners. In a later chapter I critically examine the idea that these externalities can be managed by those people affected by them coming to a deal with those causing them. This would involve finding “the right price” for the externality and then doing a trade. The purpose of this chapter is to look at the institutional and property relationship contexts in which these “externalities” arise, and thus, to show how and why, in some kinds of society, there are no “externalities”.

The word “externality”, conveys the impression that this is a footnote to economic theory, a sort of additional point. Actually, externalities are ubiquitous. There cannot be any kind of resource allocation decision involving matter or energy without externalities. “The economy” is embodied and embedded in physical and energetic processes in the physical world.

It involves “stuff” processed by energy conversions. This stuff, the matter, can neither be created nor destroyed, though it can change its form. Likewise, energy changes its form when used. It follows from this that what are used as “economic resources” must have come from somewhere originally where these resources had an original function and/or were part of some other system or structure. These resources must also go somewhere after they are embodied in products and/or where they are wholly or partly turned into wastes. Extracting resources from places has consequences and dumping wastes and pollution has consequences. Over several centuries, this extraction and dumping has usually been out of, and back, into the commons.

By Alberto Acosta; Translated by Dana Brablec - Alternautas, June 4, 2016

Marx said that revolutions are the locomotive of world history. But perhaps things are very different. It may be that revolutions are the act by which the human race travelling in the train applies the emergency brake.

Walter Benjamin (1892-1940)

Mainstream thinking – embedded within capitalist globalisation – leads us to accept the impossibility to imagine an economy that does not promote growth, as much as a world without oil, mining and agribusiness is impossible. Within this mainstream thinking, we can find people from every political stance, from neoliberals to socialists.

Reality, however, is that we must overcome such views, that is the great task of this moment. On the one hand, we must rethink the question of economic growth, and free ourselves from its shackles before we enter into a global socio-environmental debacle with unforeseeable consequences. On the other, it is increasingly urgent to move from an extractivist perspective focused on the demands of capital, towards a view that prioritises a dignified life to its fullest extent and enables the construction of structurally democratic societies. This task puts the capacity of critical thinking to test, as well as the capacities of our societies, states, and that of social and political organisations to engage in innovative and creative thinking.

Closing the door to this debate would entail closing the door on democracy itself.

By Ayhan GÖRMÜŞ - Çalışma ve Sosyal Güvenlik Eğitim ve Araştırma Merkezi, 2016

Climate change and its effects on environment and economy have become one of the most debated issues academically and institutionally. In this respect, it is expected that transition to green economy will reverse or mitigate the negative effects of climate change on environment and general economy. However, specific analyses of effects of climate change on labour market are limited numbers in academic debates. In this context, this paper explores relationship between jobs in green industries and socio-economic circumstances to contribute to academic debates. For this purpose, British Labour Force Survey data set is analysed by using logistic regression modelling to examine the part of those who are employed by green industries. The research results suggest that a range of workplace characteristics, flexible work and work-status nominators have effect on jobs in green sectors. Also, the paper suggests that British green sectors offer good prospects for creation of better jobs.

Read the text (Link).

By Devashree Saha and Mark Muro - Brookings, April 19, 2016

The recent boom and bust of unconventional oil and gas development, or “fracking,” has reopened serious questions about resource management in many U.S. states. While the oil and gas boom generated revenue, jobs, and economic development, the recent bust has adversely impacted state budgets due to declining industry investments in exploration and production and job cuts.

The boom-bust cycle of unconventional oil and gas development highlights the need for strategic management by state governments of fracking-related revenues, not only to minimize the less desirable aspects of the boom-bust cycle but also to enhance long-term prosperity. States can address these challenges by imposing a reasonable severance (extraction) tax on their oil and gas industry and channeling a portion of the revenue into permanent trust funds. In doing so, states can convert volatile near-term revenues from unconventional oil and gas development into a longer-term and continuous source of investment funds for building sustainable and dynamic economies.

To that end, this report advances five elements of good fund governance and management that states should consider in the design and implementation of permanent trust funds:

• Establish an effective governance framework
• Define the fund’s revenue source, deposit, and withdrawal rules
• Design the investment strategy
• Seize the opportunity to invest fund earnings to economic transformation
• Formulate explicit disclosure and transparency standards

Read the text (Link).

By Yessenia Funes - Yes! Magazine, March 15, 2016

Our lifestyle is inextricably linked to fossil fuels. We pay the industry to heat our homes and power our cars. Though driving might be optional where public transit is available, heat is not during harsh winters. We know about the effects on the climate of burning oil, gas, and coal for energy, but we don’t know what turning our backs on them will do to our economy. Some worry that closing our oil refineries and shutting down our mines would throw the market into a dangerous vortex. That doesn’t need to be the case. A successful energy transition could actually benefit the economy and reduce inequality.

The economy relies on a number of things, including spending, manufacturing, trade, and personal income. The availability of fossil fuels has largely driven these for 150 years. “[Oil] is the world’s first trillion-dollar industry in terms of annual dollar sales,” environmental author Jack Doyle wrote in 1994. In North Dakota, a major oil- and gas-producing state, an oil boom created the $53.7 billion gross domestic product the state sees today.

But booms often have downsides. When the journal Energy Economics compared six states that produced the vast majority of the West’s crude oil and natural gas, it saw per capita income decrease by as much as $7,000 in counties whose incomes relied most on such development. Also, the crime rates and percentage of adults without a college education increased in those counties. The study offers possible explanations, including an increasing reliance on nonlocal workers and changing wage structures.

The oil and gas industries are the largest industrial sources of volatile organic compound emissions—2.2 million tons a year. These chemicals cause smog, which can increase the risks of asthma and premature death. The industry also produces cancer-causing pollutants: benzene, ethylbenzene, and n-hexane, which are emitted during the refinement process.

Low-income communities of color disproportionately bear this health burden and are also least likely to have access to health care, including preventive medicine, checkups, and prescription drugs. The inequality of care only widens the income gap by adding more financial pressures to an already stressed group.

What about jobs? Extractive industries currently employ nearly 200,000 Americans and pay some employees as much as $42.90 an hour. These jobs are a valid concern. The U.S. unemployment rate is finally down to about 5 percent. Surely we don’t want all those people put out of work.

That won’t happen if we launch the renewable energy sector in sync. Economists at the University of Massachusetts Amherst’s Political Economy Research Institute (PERI) have studied this topic since the early 2000s. Their research shows how a transition to renewables can lead to a post-carbon world and a fairer economy.

By Flor Avelino, et. al. - Transformative Social Innovation (TRANSIT), September 2015

There are numerous social innovation networks and initiatives worldwide with the ambition to contribute to transformative change towards more sustainable, resilient and just societies. Many of these have a specific vision on the economy and relate to alternative visions of a ‘New Economy’. This paper highlights four prominent strands of new economy thinking in state-of-the-art discussions: degrowth, collaborative economy, solidarity economy, and social entrepreneurship.

Taking a perspective of transformative social innovation, the paper draws on case studies of 12 social innovation initiatives to analyse how these relate to new economies and to transitions toward new economic arrangements. The 12 cases are analysed in terms of a) how they relate to narratives of change on new economies, b) how they renew social relations, and c) how their new economy arrangements hold potential to challenge established institutional constellations in the existing economy.

Read the text (PDF).

By Richard Smith - World Economics Association - 2015

This book is a collection of five essays that deal with the prime threat to human life on Earth: the tendency of global capitalist economic development to develop us to death, to drive us off the cliff to ecological collapse. It begins with a review of the origins of this economic dynamic in the transition to capitalism in England and Europe and with an analysis of the ecological implications of capitalist economics as revealed in the work of its founding theorist – Adam Smith. I argue that, once installed, the requirements of reproduction under capitalism – the pressure of competition, the imperative need to innovate and develop the forces of production to beat the competition, the need to constantly grow production and expand the market and so on, induced an expansive logic that has driven economic development and overdevelopment, down to the present day.

In successive essays I explicate and criticize the two leading mainstream approaches to dealing with the ecological consequences of this over-developmental dynamic – décroisance or “degrowth”, and “green capitalism”. I show that the theorists and proponents of no-growth or de-growth – like Herman Daly or Tim Jackson – are correct in arguing that infinite economic growth is not possible on a finite planet, but that they’re wrong to imagine that capitalism can be refashioned as a kind of “steady state” economy, let alone actually “degrow” without precipitating economic collapse. There are further problems with this model, which I also investigate. I show that the theorists and proponents of “green capitalism” such as Paul Hawkin, Lester Brown and Frances Cairncross are wrong to think that tech miracles, “dematerialization”, new efficiencies, recycling and the like, will permit us to grow the global economy – more or less forever – without consuming and polluting ourselves to death. I show that while we’re all better off with organic groceries, energy-efficient light bulbs and so on, such developments do not fundamentally reverse the eco-suicidal tendencies of capitalist development, because in any capitalist economy the environment has to be subordinated to maximizing growth and sales, or companies can’t survive in the marketplace. Yet infinite growth, even green growth, is impossible on a finite planet.

In the final essays I argue that since capitalism can only drive us to ecological collapse, we have no choice but to try to cashier this system and replace it with an entirely different economy and mode of life based on: minimizing not maximizing resource consumption; public ownership of most, though not necessarily all, of the economy; large-scale economic planning and international coordination; and a global “contraction and convergence” between the North and the South around a lower but hopefully satisfactory level of material consumption for all the world’s peoples. Whether we can pull off such a transition is another question. We may very well fail to overthrow capitalism and replace it with a viable alternative. That may be our fate. But around the world, in thousands of locations, people are organizing and fighting against corporate power, against land grabs, against extreme extraction, against the incessant commodification of our lives. Here and there, as in Greece and China, ruling classes are on the defensive. All these fights have a common demand: bottom-up democracy, popular power. In this lies our best hope. This little book is intended as more ammunition for that fight.

Read the report (Link).