In his 1968 “The Tragedy of the Commons“, Garrett Hardin explained how population growth threatened ecosystems that lacked the carrying capacity for billions of people. In her 2000 “The IPAT Equation and Its Variants” [pdf], Marian Chertow reviews the history of I=PAT, an equation that summarizes how (Environmental) Impact rises with Population and Affluence but falls with Technology.
In my Jive Talk with Brian Czech of the Center for the Advancement of the Steady State Economy, I was frustrated with Czech’s advice that humans “restrain themselves” from over-consuming as a means of replacing consumption and economic growth with renewal and economic stability. Indeed, Hardin, who thought little of self-control, called for “mutual coercion” as a means of “relinquishing the freedom to breed” [pp 1247-48].
Clearly, there are problems with reducing Impact via reductions in Population or (the wages of) Affluence. There are also, I think, problems with hoping (or assuming) that Technology will advance fast enough to overcome pressures of Population or Affluence. I hold this view because most technological advances increase supply by lowering prices or providing larger quantities at the same prices, which usually means that innovations bring more rather than less consumption. This dynamic is known as the Jeavons Paradox, and we can see it in the way that additional food from the Green Revolution led to population growth, increases in auto efficiency led to larger cars, cheaper clothes led to larger wardrobes, etc.
Are we doomed?
There’s no sign, after 50 years, of Hardin’s “mutual coercion, but I think we have a few chances to save ourselves by reversing our burden on resources and ecosystems. I’ll go from least to most promising.
First, there’s a small chance that technological breakthroughs will bring about an increase of sustainable supply that is so significant that we can eat our cake and have it. In this category, I’d put something like a fusion reactor that sucks CO2 and methane from the air while making energy so cheap as to replace all fossil sources. This “Elon-the-savior” solution is unlikely.
Second, we could price damages and protect collective property via changes in laws and regulations. This step includes global carbon taxes and actions to replace political management of the commons with property rights for all citizens. I’ve written about this idea for national water, but I don’t see the political will to take away all those goodies from the 1 percenters who currently enjoy excess wealth at our expense.
Third, I think that there’s a strong business model for short sellers who use science and public pressure to ban or bankrupt firms contributing to climate disruption, biodiversity destruction, and ecosystem death. In most cases, short sellers bet that stock prices will drop so they can make money. It’s my suggestion that they cause prices to drop by getting businesses penalized or banned. The UK Labour Party has floated the idea of delisting firms that do not keep to climate limits. Many asbestos firms were bankrupted by their legal liabilities. This idea is more powerful than divestment or boycotts that do nothing to undermine these companies’ basic purpose.
Fourth (and the purpose of this post), I think there’s the chance of a paradigm shift in which people decide to consume less than their affluence would support (and perhaps even have fewer kids). This “inward shift of demand” would lower economic growth without lowering our quality of life.
How would it work?
Let’s begin with a definition and a misunderstanding.
The definition: Economic output = productivity * work effort, holding constant capital stocks and allowing proportional input of raw materials. This concept underlies economists’ claim that our prosperity advances with our productivity. It also explains why GDP/capita is the target measure of choice for most economists. High GDP/capita defines the difference between rich and poor countries, but it ignores inequality as well as sustainability. (I prefer the Inequality-Adjusted Human Development Index and Genuine Progress Indicator as measures of success.)
The misunderstanding: Productivity automatically means more output and consumption, when it need not mean more of either. A recent Economist repeats this assumption by asserting that “improving productivity is generally agreed to be the best way to achieve faster economic growth and higher living standards.” Economic growth is neither necessary nor sufficient in providing higher living standards once a minimal level of food, clothing and shelter is achieved.
To understand more about this misunderstanding, remember that economists target “utility” — often defined as happiness — as our motivating goal in life, meaning that humans will chase increases in utility when given the opportunity. But what contributes to utility? Sure, we can talk about the consumption of basic goods (food, shelter, clothing), but we can also include leisure time, a satisfying job, or good health — things that do not necessarily arrive with more money. Going further, we also know that people spend a lot to get “positional goods” that set them above others in some way — a penthouse apartment, for example. (These goods are also called Veblen goods after the economist whose 1899 book, The Theory of the Leisure Class, first defined “conspicuous consumption”.)
The problem is that economists, by assuming we always want as much as possible (“non-satiation”), have lost track of the different ways we maximize utility.
Higher productivity could mean less work rather than more consumption.
Here’s an example. If I work 40 hours and make $10/hour, then I earn $400/week, which I spend on goods and services. Thus my contribution to GDP is $400/week.
If I learn skills and double my productivity, then my wages should rise in proportion (to $20/hour), and I have more choices:
- Conventional: Work 40 hours @ $20/hour to earn (and spend) $800/week. My contribution to GDP doubles with my consumption, and that higher consumption means my “footprint” has also grown heavier.
- Security: Work 40 hours @ $20/hour. Spend $400/week, save $400. My contribution to GDP stays the same but now I have way more financial security, and my savings contribute to capital accumulation that increases productivity and/or natural capital.
- Leisure: Work 20 hours @ $20/hour to earn (and spend) $400/week. Now I have 20 extra hours to do what I want, which could mean doing free activities (cash consumption equal) or “self-supply” activities (e.g., cleaning my own place or watching my own kids) that will save me money but also reduce GDP.
Of course, I could also choose a mix of these three extremes that matches my preferences (subject to “frictions” around working 20-40 hours). The key ideas here are that we should use our productivity gains (i.e., the returns to university education, work experience and the wisdom of life) to make our lives better, not just to consume more — and contribute to ecological stress. (I’m aware of Keynes’s 1930 “Economic Possibilities for our Grandchildren” [pdf] which I will read ASAP 😉
Can this happen? How would it work out?
Yes, it could happen. I have personally made choices that involve less work and less consumption in my pursuit of financial security and a simpler life (what a relief, selling my car). I have also explored how hipsters can pursue a low wage, low consumption path to satisfaction. In terms of social transitions in rich and poor countries alike, I see these steps:
Early stage: Hippies, tiny-house advocates, and those who agree with Thoreau in “my needs are few, therefore I am rich” perspective consume less in a consumerist society. Mr Money Mustache is a famous proponent.
Adaption: Poorer people can immediately do better for themselves if they replace wasteful consumption promoted by influencers and advertisers. The poor of rich and poor countries can pivot to better role models. The poor are still targeted by ponzi schemes, mafias, predatory preachers, and corrupt politicians, but greater financial security might give them more breathing room to step back and make better choices.
Competition: Some people think them must work harder to compete for limited living, educational or social space. That’s true, but reduced consumption of new cars, dinners out, etc. can leave “non-consumers” with more savings or buying power.
Population: A non-trivial number of young people are thinking twice about having kids, mostly because kids are so expensive, but also because it’s hard to bring more children into a world that’s increasingly stressed under the environmental and political pressures of 7+ billion people struggling for positional success. Fewer kids mean less spending and thus less pressure to work as much.
Supply Side: The big change would happen if there’s a “tipping point” of housing demand, i.e., smaller houses replacing larger houses at a 2:1 ratio (two 75m2 flats replacing one 150m2 flat), which would mean more affordable housing, shorter commutes and denser urban spaces. Such changes would need to come with caps on parking spaces (for those who still “must” drive) and other areas of competition over the commons, but the supply shift would also reduce prices and thus the need to work as much.
Demand side: Lower consumption would means smaller stores, fewer deliveries, less waste, and many other improvements that would improve quality of life and reduce ecosystem pressures.
My one-handed conclusion is that you should think about converting your productivity gains into greater happiness rather than greater consumption.
Addendum (21 May): Here’s a good podcast discussion on happiness via non-consumption.