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Essentials of Economic Sustainability
- 1. The Essentials of Economic Sustainability Economic Sustainability: Ability to meet the economic needs of the present without diminishing economic opportunities for the future Prepared by John Ikerd for MUM Deep Green Business Symposium, July 5, 2013
- 2. Economic Worldview: Sustainability: Internalize Externalities
- 3. Nature Economy Society Ecological Worldview: Sustainability: Rethink Economic Reality
- 4. Hierarchy of Sustainability • Purpose and Principles are determined at higher levels: – Nature and society set bounds and define parameters for economic development. – All economic value is derived from nature by way of society – there is no other possibility. • Possibilities determined at lower levels. – Economy determines the extent to which society can realize the potential of society & nature.
- 5. Investments in nature and society essential for economic sustainability have no economic value. • Economic value is fundamentally different from social and ethical value. – Economic value: Individual, Instrumental, Impersonal – Social Value: Interpersonal, Instrumental, Personal – Ethical Value: Communal, Non-instrumental, Impersonal. • Internalizing economic externalities is necessary but is not sufficient for sustainability. • The economy places a premium on present value relative to future value.
- 6. Interest: Savers: Reward for delayed gratification or use. Borrowers: Cost of advanced gratification or use. Compound Interest: Growth in economic value over time. $100 at 7% Compound Interest
- 7. Discounted Present Value: Economic value of a future benefit Discount: Consumers: Cost for delaying gratification -- Investors: Cost for delaying return on investment $100 at 7% discount rate
- 8. We have created an unsustainable economy. • All economic value is derived from nature by way of society – there are no other possibilities. • Nature is finite in its ability to create economic value – productivity ultimately limited by solar energy. • It is necessary to respond to economic incentives to use nonrenewable resources more efficiently and shift to renewable sources of energy – but not sufficient. • The economy places too little value on future benefits to ensure the level of investments in nature and society essential for economic sustainability. • The resulting degradation of nature and society has degraded the productive capacity of the economy.
- 9. Ethical/Nature Individual Economy Social/Society Economic Sustainability will require “An Expanded Social and Ethical Awareness”
- 10. We are inseparable from nature. Our purpose, principles, and priorities are of nature. • A cultural ethic reflects a societal consensus of the purpose of life and the principles that must guide it. • A cultural/ethical commitment to sustainability must take priority over societal values and needs of society must take priority over individual preferences. • Economic and social autonomy is necessary but must be bounded by societal and ethical responsibility. • A sustainable economy must function within the bounds of an equitable and just society.
- 11. The Essentials of Economic Sustainability This is not some new-age philosophy. This is hard, cold economic reality. We are economic, social, and ethical beings. It is not a sacrifice to care for others or care for the earth. We are all part of the same inseparable whole The “expanded awareness of self” essential for Economic Sustainability is a key to a better way of life and a better world.
Notas do Editor
- Economic recession: widespread concern for global economy. Blessing in disguise. Unsustainable economy. Not meeting needs of present or future. Ecological and social degradation defended as necessary for economic growth. Growth of last 30 years, an illusion. Economists baffled, but offer no real alternatives.
- Economists restrict sustainability to intersection of econ, soc, & Env. Internalize externalities: get prices right. Blind faith in markets is source, not solution. Einstein: must change thinking. Prices right, necessary but not sufficient.
- Internalizing “externalities” does not address values that are intrinsic “non-economic,” meaning purely social and ecological values, thus leaving nature and society vulnerable to economic exploitation.
- Can ignore principles but can’t avoid consequences. Have to get principles right. Ecological principles: holism, diversity, interdependence; social principles: trust, kindness, courage; economic principles: scarcity, diversity, sovereignty.
- Everything doesn’t boil down to economics. Values are different. Economic value: individual, instrumental, impersonal; Social value, Interpersonal, instrumental, PERSONAL; Social value evolves to ethical value: communal, non-instrumental, impersonal. Social capital, going well, doing good: but much is purely social, ethical.
- The economy has lost much of its capacity or ability to create real economic value.
- Internalizing “externalities” does not address values that are intrinsic “non-economic,” meaning purely social and ecological values, thus leaving nature and society vulnerable to economic exploitation.
- The economy has lost much of its capacity or ability to create real economic value.
- Economic recession: widespread concern for global economy. Blessing in disguise. Unsustainable economy. Not meeting needs of present or future. Ecological and social degradation defended as necessary for economic growth. Growth of last 30 years, an illusion. Economists baffled, but offer no real alternatives.