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  May 21, 2011

Roundtable on Sustainable Development


A sustainable natural environment requires new forms of distribution and ownership
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Roundtable on Sustainable DevelopmentPAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay. We're in Bretton Woods, New Hampshire, at the INET conference, where hundreds of economists have gathered to come up with new economic thinking, trying to find a way out of the economic crisis. And much of this conference has been about new strategies for growth. But just how much growth can the planet sustain? Now joining us are some economists who are working on the question of growth and the planet. Joining us, first of all, from Capital Institute is John Fullerton. He's the founder and president of Capital Institute, which is a think tank working on these questions. William Rees is a professor and ecologist at the University of British Columbia. Peter Brown is a professor at the School of Environment at McGill University. And Juliette Shor is an economist and sociologist at Boston College. Thank you all for joining. So, first of all, tell us a little bit about what Capital Institute is and what your colleagues are working on.

JOHN FULLERTON, FOUNDER AND PRESIDENT, CAPITAL INSTITUTE: So Capital Institute is a collaborative space where we're focused on the intersection of the financial system and a sustainable economy. And the idea is that finance fuels the economic system, and if the economic system needs to transition, the finance is an appropriate and important leverage point to intervene in order to shift the economic system.

JAY: Okay. So just so we have transparency on all this, you're an investor,--

FULLERTON: Right.

JAY: --and you're looking for investments that you think help sustainability on the planet. And your colleagues here, you're helping finance research they're working on.

FULLERTON: Well, I do two things. I'm a former banker. I spent 20 years at JPMorgan. And so my own investment practice is trying to align my own capital with projects that are in alignment with this sustainability, so things like sustainable agriculture, alternative energy. In addition to that, I founded this think tank, Capital Institute, which is a space where we collaborate with transdisciplinary scholars to address these really complex problems of how you shift the economic system to one that actually operates within the finite boundaries of the planet while yielding just outcomes to people. And I'm working with these three people and many others on these exact problems, and they bring specific and unique expertise to these challenges.

JAY: Okay, William, please bring some unique expertise. What's the problem you're trying to solve?

WILLIAM REES, PROFESSOR AND ECOLOGIST, UBC: Well, one of the things I'm interested in is re-grounding the economy in reality. As an ecologist, it's fairly evident that economic activity, every form of economic activity, has material consequences, which means it has an impact on the ecosystems that sustain the economy. And yet almost all economic discussion ignores that dimension of it altogether. So we have almost a cultural disease in the form of Cartesian dualism that tends to separate humankind and all of our activities from the rest of the real world. So we've created this enormous economic apparatus that is literally feeding on the planet, and yet that doesn't enter into the kind of calculus that economists perform.

JAY: To a great extent, in a sense, in terms of US politics right now, and [to] a large extent Canadian, climate change, issues of sustainability, they're not even being talked about. And the Canadian election's on right now. I think they're barely an issue.

FULLERTON: That's absolutely correct, because we've gone through an economic downturn, and people's attention has once again turned to the bread and butter on their plates, without making that connection again that both the bread and butter come from the ecosphere. And so, you know, we've heard several times today that certain banks are too big to fail. Well, the climate system is too big to fail. The ecosystems that support the economy are too big to fail. In fact, if any of those go down, that would be far more tragic for the human enterprise than if one of the big banks goes down, and yet it's simply not in the ether here.

JAY: So, Peter, why don't you think it's in the ether? What is preventing people from getting some sense of urgency about this? If anything, at least in the US, and I think also, I'd say again, Canada, there's maybe less sense of urgency than there was two, three years ago.

PETER BROWN, SCHOOL OF ENVIRONMENT, MCGILL UNIVERSITY: Well, I agree with Bill that there's a kind of dogma about this. This is the central question. It saturates--American politics saturates Canadian politics, and this is a kind of closed thought system that basically has taken over. You know, it's almost a zombie kind of system--it's come in and taken over our brains, right? So we really have to be very, very suspicious about it. And I think, you know, if you just ask this system five very simple questions, what's the economy for, they'll say it's for growth, high employment, low inflation, because they want social stability. But Bill is pointing out what we're giving up is planetary stability, ecological and climate stability being thrown away. Right? How does the economy work? Well, it has to be described in material and energy terms. You have to actually know empirically, physically, the facts of what happens when we build a car or when we, you know, take an airplane trip to Hawaii or something like that. We have no sense that the economy could be too big for this planet. Gordon Brown spoke at lunch at the conference that we're at. He must have used the word growth 15 or 20 times. If--you know, and he's for growth everywhere in every way. So it really doesn't make any sense. And one of the other things that's really lacking in this system is any sense of fairness. Hardly--the issue of fair distribution of income, fair distribution of wealth, doesn't come up. And fairness to other species doesn't come up. You know, we're pushing many other species to extinction, but we don't regard that as an issue of justice and fairness, and I actually think it is.

JAY: Juliette, this issue of fairness goes to the core of part of the problem of how we're going to deal with the question of climate change and growth. Right now you have a very small percentage of the population of the Earth consuming the vast majority of what gets consumed. So that's the beginning of what's unfair. And then in the countries that have high consumption it's a very small 5, 10 percent of the top that do most of the consumption. So it's hard to tell people that are working two jobs and barely paying their rent that they're consuming too much. So how do you deal with this kind of composition of the question?

JULIETTE SHOR, ECONOMIST AND SOCIOLOGIST, BOSTON COLLEGE: Well, I think one of the things is those are not the people who have to be told they're consuming too much. We need to start looking on climate, on ecological footprint and impact more generally at those distributional questions. So, for example, some of the most interesting recent work in the climate discourse has been to say: who are the top emitters, irrespective of country? Because before that, we were just talking about the US emits this much, and they have this much population in China and it's this much. But it turns out there are 1 billion people around the world who emit the vast, vast majority of the greenhouse gases. So let's talk about the 1 billion high-emitters, for example. That puts those questions about justice absolutely at the core. Or, for example, the fact that we've got, you know, about half the population of the world which doesn't have enough to live on, you know, basically from $2.50 a day down to, you know, the lowest levels of poverty. Let's talk about the climate deal that we need to make globally, putting that at the center, because those people emit almost nothing, basically nothing. So if you put those distributional dimensions at the core, what does change is that you are able to think about a solution that actually benefits the many, the large many, maybe at the expense of the people at the top. But those people at the top are really central to understanding what we were just talking about, which is why we have a zombie economics or why we have a discourse that doesn't allow us to connect finance, economy, and biosphere, because the people sitting upstairs in that conversation are being paid by JPMorgan and Citibank and so forth. They're very much part of that same--.

JAY: And they're doing okay.

SHOR: They're doing very, very well.

JAY: So--go ahead.

REES: And getting better all the time. I think one of the key things to remember here, to connect everything we're talking about, is that the prevailing solution to poverty is growth. If you grow, then even people with a very thin slice of the pie are going to get a little bit more each year at the edge. And that dissolves any requirement that--you discussed redistribution, for example. And yet with the ecological footprint work we do, we can show fairly easily that it would take somewhere between the equivalent of three or four Earth-like planets to raise everyone up to the same material standard that we enjoy in North America. And it's unlikely we'll find those planets in the short decades that [crosstalk]

JAY: So the other option to growth is redistribution of what's already being produced [crosstalk]

REES: That's certainly the next-easiest option to think about, and I think it's one that we really have to take into account. There's plenty of evidence in other literature that shows that we've long since passed the point where there are real gains--in terms of population, health indicators--of further growth. Something around 12 to 15,000 international dollars per year, and you top out in terms of infant mortality, longevity, female literacy, and a whole variety of other things, so that once you've reached that point, an intelligent person might say, well, that's the optimal level of growth, because if we're way out here in the 40, 50, and 60,000 dollar range, we're trashing the planet but gaining nothing in terms of improvements in these quality-of-life indicators. Moreover, in some countries, felt well-being, people's subjective sense of how things are going, is in decline even as incomes increase, for a whole variety of reasons that we can't really get into here. So the question is: how would an intelligent species respond to data that shows growth is destroying the planet, not giving you positive gains either in terms of these population health indicators or felt well-being? Why are we doing this? And the answer becomes: because we're stuck in a way of thinking, in a paradigmatic framing of the issue.

JAY: Well, it's not just thinking, 'cause there's people making a lot of money out of the way things are.

SHOR: Yeah. But I think this--one thing I want to say about the redistribution question is because so often we're trapped in a conversation about redistribution, and really all we get to talk about is keeping the system pretty much as is, and then letting those market outcomes happen, and then the state redistributes. And when we talk about redistribution, we're talking about redistribution of the fundamental access to the planetary resources. So that's really [crosstalk]

JAY: So give an example of what that means.

SHOR: Redistribution of land, for example, so that more people have access to land, so that they could actually be self-sufficient in food.

JAY: This is land reform.

SHOR: That would be a component of it. Redistribution, access to the sky, so the idea of a sky trust in which everyone only has a certain allocation of greenhouse gas pollutants that they're allowed to emit, so that we have an equal sharing of the atmosphere. So it's a much more fundamental concept than just, oh, let's, you know, jigger the tax code a little bit. We believe we're going to have to change the way we structure our economy. And so these very large institutions, corporations, that have captured our governments, for example, that's not compatible with a sustainable economy.

JAY: Well, then you're talking quite serious transformational political change, including changing who owns the commanding heights of the economy, no?

BROWN: Yeah, or rethinking who owns the Earth, right, and including thinking about it in different ways with humans and thinking about it in different ways with other species. One of the things about the billion top emitters is that if you change the price of energy, many of those people won't change their behavior very much, 'cause they have so much money [that] they'll do what they want to do anyway. So we may need to go to something where we have something like a carbon card, right, where you have so many units of carbon, and once you've swiped your card a certain number of times, you're staying home.

REES: One way the market system works today, to go back to the land question, is that as population rises and food prices is rising, because of oil shortages, for example, rising energy costs, some countries, such as China, Saudi Arabia, and others, are now purchasing vast blocks of land in developing countries to produce food for shipment back home, literally then displacing people from those landscapes in their own countries. And that's how the financial market works, at least the money market works. It enables people with lots of money to appropriate an ever-increasing share of the world's output. And we see that as fundamentally unjust, and obviously in violation with the whole idea of continued growth. It just cannot continue [crosstalk]

JAY: John, this does [snip] out of the JPMorgan playbook.

FULLERTON: Yeah, I wanted to make a comment. I think there is a justice issue here, which you're hearing a lot of strongly felt views on. But the people who are driving the system and are the privileged people who are at the top of the pyramid are operating out of a different paradigm. So it's not that they understand this. And I've talked to a lot of them. And I am one of them. It's not that they understand this and don't care. It's that we've gotten attached to this market-based system with the belief that markets solve these problems better than government, therefore, yes, there's all these problems, but if we can internalize costs and make markets better, all these problems get solved. And what they're missing is a critical insight that I learned from Herman Daly, who's, I think, probably a mentor of all of us in some degrees. And he developed--or he was one of the people that developed an intellectual framework called ecological economics. And what he did which was so important is he distinguished between economic problems that are efficiency problems from economic problems that are fundamentally a scale problem. And so in an efficiency problem, markets that are well functioning solve efficiency problems very well. But the scale problem that we're talking about is new on the planet. A hundred years ago the scale of the economy was very small. It was probably 17 times smaller than it is today. Now there's a scale barrier. So it's the equivalent of having--you know, there's 20 people in this room. There's a way to efficiently allocate the water bottles in this room among the 20 people. Well, if we put 200,000 people in this room, there's still an efficient allocation of water; it's just that everyone's going to be really thirsty. And so when you deal with scale problems, they're fundamentally different than efficiency problems. And yet our politicians and our economists and our business leaders and our bankers think of those problems as if they must be efficiency problems and try to find market solutions to them. And so we really need to re-frame the whole debate about the problems we're trying to solve. And the truth is, when you're dealing with scale problems, there's some kind of a constraint or quota--or call it what you want--that is necessary.

SHOR: Well, can I say something? That separation, just to get a little controversy going, the separation of efficiency and scale problems, is another example of old economic thinking, because if we solved the distributional, the fairness issues, if we were able to have a fair allocation of access to resources, we would not have the same kind of sustainability issues that we do today. A major part of why our system is so unsustainable is that it got so unfair and that power got so concentrated and economic resources got so concentrated. So, actually, the solution to both unfairness and unsustainability is going to come together.

JAY: There's one other piece to what got so concentrated, out of which--my opinion is--where power gets so concentrated, and that's ownership got so concentrated.

SHOR: Absolutely.

JAY: And it's one of the things I'm not hearing much discussed here and many places these days is the concentration of ownership, which has increased even--every time you have a recession or a depression, another whack of concentration, of ownership, mergers, consolidations. And the political consequence of that--so you get where you can't get any real finance reform, because Wall Street has too much political power.

BROWN: One of the reasons we're really interested in working together--John brings something to this that at least I think the other three of us don't, which is some background in finance and how finance has sort of worked to make this whole problem a lot worse. So if you could--maybe you could help us with that and--.

JAY: Well, I'd like to ask you--there's an interesting--seems--you're, first of all [snip] self-admitted member of the American elite. So there seems to be a real division in the American elite between a section which is trying to look ahead and has a kind of view that this isn't sustainable, either capitalism as we know it's not sustainable, it's not sustainable in terms of the planet, but a perhaps more powerful section of the American elite doesn't believe there's climate change, or if--at least they say so--are very happy to finance political forces that just want to trash any possibility of public intervention in these issues. Talk a little bit about--I mean, you have an insider's view of this.

FULLERTON: Yeah. And yet those are the same people that are celebrated at the fundraiser when they've made a $10 million check to a hospital. So they're actually welcome citizens in our society. I believe there is more ignorance than there is bad will in the world, and I think the challenge we have is to educate.

JAY: So if we could just get the Koch brothers in on a good symposium.

FULLERTON: I'd love to have a chance. I mean, I've heard they're good guys, to be honest, and they're not stupid. And the work that these three people do is so self-evident, if you slow down and take the time to think about it, that I think most rational people would understand it. They may then choose whether or not to change their life to deal with it. And the problem with people who run big corporations is they don't have time to think about this, they don't have time to read the books, they don't have time to process the implications of these facts. And they're going on the quarterly earnings, you know, treadmill just like the rest of the business community. But it's when they step off that--and I have conversations with people who have retired from that, and suddenly this all makes sense. And the question is, you know, is it too late for them to then use their clout and their power in society to reengage in what I think are the most important issues facing civilization?

JAY: William?

REES: Well, just to add a dimension to that, there is a question of whether there's evil in the world. And maybe people aren't ill-intended, but there's also an issue that right now there are five lobbyists from the financial sector for every congressperson in the United States. These are the people from whom our governors hear all the time, so it becomes a problem when they begin to identify with the interests of these special interest groups. Whether they intend evil or not, the consequences are evil in the long run. We don't really have a democracy when you have that kind of unequal access to the people who make the rules, so to speak.

JAY: I mean, I always go to an example for myself is that the people that ran tobacco companies who were hiding the research that tobacco caused cancer encouraged their kids to smoke.

REES: Yeah, they do.

JAY: I mean, they get trapped in their own interest-paradigm. It's not even about good or evil. They're just--they almost personify how they make their living [incompr.] they become that.

REES: Well, I think there is some evil there, because some of the data were incontrovertible. And yet it was being suppressed and withheld and denied, which raises a whole other issue. In society today, there are literally hundreds of think tanks being financed not to do research but to create literature that denies the reality of, say, climate change or some of the other kinds of things that we're dealing with here, so that the average voting member of the public is purposefully misinformed about the issues that are going to really be foundational in terms of how the world turns out over the next few decades. So you cannot have a functional democracy if there's vast resources being spent to misinform people. For a democracy to work, you need political engagement of an informed population. And what we're seeing is increasing disillusionment of people who drop out of the political process altogether, and those who stay in are, well, Tea Party folks who perhaps don't quite understand the issues, and for good reason: they're being misinformed by--.

JAY: They also represent a tiny, tiny fraction of the population.

REES: No, but they're taking over the Republican Party, etc.

JAY: And with the help of a big media platform.

REES: Well, exactly.

JAY: Yeah, Peter.

BROWN: Yeah. Well, one thing about evil, many of the things that used to be vices have become virtues. Like, greed is now a virtue: the more you make, the better you are, in a way. Avarice: the more you accumulate, the more you are jealous about your neighbor, the sort of a better person you are. Lust is obviously used in backing up the market, getting people to consume stuff they don't need. So there's kind of a reversal of our moral world in a way, in service of this zombie paradigm we're talking about.

JAY: So, just to wind things up, imagine you're speaking to someone in Baltimore who lives next to seven boarded-up houses and may be on the way of getting turfed out of downtown Baltimore altogether, or maybe somebody in downtown Vancouver who doesn't have a job. Explain what your research--why it matters to them and why they should support what you're doing.

SHOR: Well, those folks need to go to Cleveland. The first thing I'm going to do is finance a trip to Cleveland for them, where they can see an amazing transformation that's taking place, in which inner-city folks in Cleveland, which has a poor inner city, have started four amazing cooperatives, worker-owned cooperatives: one in solar energy; one in a green laundry, so low-impact laundry; organic vegetables and fruits; and a newspaper, so an independent media outlet: and together with foundations and what are called anchor institutions there, so the big hospital, the Cleveland Clinic, Case Western Reserve University, which cared enough about their city to come together. And those are elites who said, you know, we need to do something, we need local economic development here of a truly ecologically sustainable type, and one which changes that property-owning process that we talked about earlier. Every one of those workers doesn't just have a job; they own those companies. And the new Cleveland model has interest from around the United States, and maybe Canada too. It's a fantastic new model that is--

JAY: Okay. Well, we'll go do a story about it.

ELLIS: --is getting a lot of interest.

FULLERTON: Well, actually, Juliette [crosstalk] Capital Institute is doing a field study on it which is going to be published in about a week. And so the idea is to illuminate these projects and then identify sort of the generalizable principles that can apply elsewhere. And this idea is actually grounded very much on a famous Canadian economist, Jane Jacobs, who had this idea of using place-based anchor institutions--hospitals, universities--as the core economic fuel source of a local economy.

JAY: And that was part [snip] Cincinnati model, wasn't it?

SHOR: Cleveland.

JAY: Cleveland. [crosstalk] Cleveland model [crosstalk] hospital said they would buy local and that would help drive it.

SHOR: They provide the market so that these cooperatives are not going to fail in the early days 'cause they can't get buyers for their products.

FULLERTON: And there's a model of this which is somewhat different (it sprang out of a different kind of crisis in Spain) called the MONDRAGON co-ops. And they are, I believe, something like $20 billion in sales, of companies.

JAY: Which is all a workers-owned co-op.

SHOR: Yeah.

FULLERTON: Yeah. And so--and, again, it's not that we're--you know, this is not some communist idea of worker ownership. This is a way to create wealth through equity in businesses, as opposed to all the wealth streaming to, you know, distant shareholders and [crosstalk]

JAY: And the other thing which I think is part of the solution is that you start finding diverse ways to have ownership. So you don't--I mean, the problem with the old socialist model was you had a concentration of ownership of everything within a single state, which leads to this one party [incompr.] almost mirrors monopoly ownership in a capitalist form. But if you can find diverse ways to own things, it also has a democratic character to it.

REES: Another thing that flows out of the co-ops, especially the MONDGRAGON co-op, is something that Peter alluded to, and that's [the] need for almost regulatory restrictions on maximum incomes, low incomes. So within the MONDRAGON co-ops initially (this goes back to the 1950s), the CEO could not earn more than three times what the shop floor worker earned. I think it's up to seven times now, because as Spain has become integrated into the global economy, it became increasingly difficult to attract people. But the point is seven to one is still a much better ratio than the literally hundreds-to-one that pertains in North America today. So you have people with a vested interest in the firm because they're all owners, but there's also built-in equity so that the maximum earnings are not that significantly greater than the minimum.

JAY: Alright. Peter, final word. What would you say to our imaginary audience in downtown Baltimore or Vancouver?

BROWN: I like the idea of going to Cleveland, seeing something that really works. I used to live in Maryland, and I know that, you know, Baltimore was really a tough town, and to some degree still is. The major urban renewal projects that they had--big downtown core, knock a lot of stuff down and build something nice on the harbor--didn't really work that well there. It needs to be much more bottom-up, much more participatory, much more common-ownership.

JAY: Yeah, 'cause what you have is this beautiful downtown harbor and acres of boarded-up houses next door.

BROWN: Right around it. Yeah, it's kind of a donut. And [incompr.] where Johns Hopkins is is nice again, but it's not a good model. And Jane Jacobs, by the way, was American to begin with and hated Robert Moses. And that's one of the reasons she moved to Canada.

JAY: But she did move to Toronto.

BROWN: Right.

JAY: Thank you all for joining us. And thank you for joining us on The Real News Network.

End of Transcript

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