Do economics and business make unsustainability inevitable?

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I believe that the most fundamental root cause of many of our current social and environmental problems lies with our institutions – primarily our institutions of economics, business and governance. Poverty, climate change, mounting debt…these can all been attributed, to greater or larger extents, to the institutions that modern civilization is built upon; institutions that are cracking and creaking as they prove increasingly insufficient for the challenges of the modern world.

Let’s look at sustainability. We have an economic system that requires constant growth in order to survive. We have a business system that has to play by these economic rules and thus also requires constant growth. This is a model of business (the corporation) whose bottom line and primary purpose is to maximise its profit. Neither of the business or economic institutions take any consideration of social or environmental impact, although this is very slowly changing. Both of these institutions in fact treat our environment as unlimited income (rather than finite capital) and, it could be argued, require natural resources in order to run effectively – in order to meet their inherent need for constant growth. Neither institution takes in to consideration the possibility of limits.

So, our economic institution, and by extension our institution of business, requires constant growth yet takes no consideration of limits. Our civilization and entire way of life is dependent on such institutions. Every nation (with the possible exception of Bhutan) and business on the planet is chasing economic growth, with almost no acknowledgement of the possibility of limits. When this is understood, it seems of little surprise that our path is so unsustainable. It seems quite clear that our impact on the planet, particularly in the form of climate change, and our inability to manage our resources sustainably is a result of the institutions we have built our world upon. Such problems represent a very serious threat. Overshooting limits has had a role in every civilization collapse in history. And here we are, building modern civilization upon institutions which take no consideration of limits. Clever.

It does not take a physicist to tell you that infinite growth in a finite system is impossible. Simple common sense is enough. And yet, this is what our institutions demand. Currently, in order to achieve sustainability we are fighting against the institutions which define modern society. They have served us well for a long time, but are becoming increasingly outdated. To succeed, it seems clear that these institutions will need to undergo significant change.

Time to re-think our values?

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Over the last few years I have watched enormous resources (human, financial, material) thrown at various social and environmental issues. Organisations coordinating the programs all report back with tremendous positivity about the impact they are having. And yet…at a holistic level we don’t seem to be getting anywhere. I recall working on a project attempting to tackle homelessness, and we were told by the experts that homelessness has actually increased, quite remarkably, in parallel with the resources invested in tackling it. Have we really made such great progress in areas like health, education, economy, environment, poverty? There have been many leaps forward (we have met some of the Millennium Development Goals already), and yet personally I do not feel that we are making particularly impressive progress given the resource investment. Perhaps we are tackling the symptoms, and not the cause.

 

I believe to understand where all of humanity’s problems come from we must first accept a most uncomfortable truth:

 

We are the cause of every single one of them.

 

I have learned from my experience of depression as well as my time in social enterprise that we must first accept a problem in its entirety before we attempt to tackle it. Taking responsibility is perhaps also an important step, given how inclined we seem to be individually and collectively to absolve blame and point the finger elsewhere. By taking responsibility for a problem, we can then take responsibility for tackling it.

 

I am not telling you of course to take responsibility yourself for the entire 2 billion people living in poverty. A problem of such scale is not the fault of one individual, or even one nation, but the fault of billions of individuals collectively. Whether you like it or not, you have had a role to play though, as have the people you see around you. By buying materials and produce made by those living in poverty at such a reduced rate you are contributing. We buy from corporations whose greed-driven purpose is to maximise profit, by nature then exploiting those who have so little. On a systems level we are all players in the game of capitalism, which polarises wealth.

 

I see the fault for many problems we face lying within our cultural values. Here are some of the values that define mainstream society today:

Greed

Throwaway culture

Short-term interests maximised at long-term cost

Break down of close-knit communities

Quantity over quality

Demand for constant growth

Consumerism

Lack of respect for environment we wholly rely on

 

Unfortunately many of these values have spread from the ‘dominant’ west which much of the rest of the world aspires to imitate. The west looks impressive on the surface with its big shiny buildings, fancy technology and 2 cars per household, but that conceals the rotten core beneath. Record levels of obesity, stress and mental illness are hardly symbols to me of a flourishing civilization. I can think of few who feel particularly satisfied or purposeful in how they are living their lives. And all this for a lifestyle which is, quite simply, unsustainable.

 

The car crash of our misplaced values is playing out in slow motion, right before our eyes, as our economy wobbles with little sign of recovery, the climate inches ever closer to dangerous levels of warming, and ever more of us find ourselves fighting over ever fewer resources on this planet.

 

Such a state of things has been caused by contemporary approaches and contemporary values. To chart a more sustainable and prosperous course for ourselves going forward requires a new approach. It requires new values.

Why we need to drop GDP as a measure of progress

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How do we measure progress? There’s no question that the indicators we use to achieve this are of utmost importance as they underpin key high-level decisions. Since 1944, the measurement indicator we have used is GDP. I am going to work through the flaws of this measure, and suggest alternatives that would more accurately and universally reflect human progress.

Gross Domestic Product (GDP) can be defined as the value of a country’s overall output of goods and services at market prices, excluding net income from abroad.* In other words, the economic value placed on the amount of stuff a country produces. GDP has become the measure of progress. Countries use it to compare how they are doing against other countries. Governments use it to compare how they are doing against past governments.

In truth, it was never intended to be used in the way it is now. Simon Kuznets, the creator of GDP, said of it that, “the welfare of a nation can scarcely be inferred from a measure of national income.”** He disputed its accuracy as an indicator of standard of living. I’m inclined to agree, and I have serious reservations about GDP; honestly I find it astonishing that it is used as it is now. And that’s without even going in to the copious number of methods that governments have come up with allowing them to doctor GDP and present a falsely optimistic picture.

Pure production output fails to take in to consideration the physical or psychological well-being of the citizens, and indeed GDP has often been criticised for this recently. Some have called instead for ‘Gross National Happiness’ as a measure. I object to this, although it does have some merit. I take issue with happiness as a measure, because happiness is a fleeting emotion and my neuroscience background tells me that it exists (like any emotion) purely as a feedback mechanism rather than a long-term state of being that we can attain. I would argue that ‘Gross National Well-being’ is preferable, as our general sense of well-being is less transient than happiness. Perhaps for some people they are one and the same though and I am simply being pedantic.

GDP also fails to consider two concepts which I feel will become of increasing importance given current global trends. Those concepts are resource efficiency and environmental footprint. As we bump harder and harder against the natural limits of the planet, both of these will have to be used as measures of progress. How efficient we are at using resources and minimising waste will matter because of the growing scarcity of global resources. Countries ought to be incentivised to be as efficient as possible with the resources available to them. Similarly, we are making living conditions increasingly precarious through runaway climate change. Widespread deforestation is a danger given the crucial role that trees play in regulating the delicately balanced composition of elements in our atmosphere that we depend on. These are just two examples of environmental footprint; there are many others.

Somehow, it is in our human nature to keep on developing and moving forward; to learn and to create. Improving our sense of well-being and standard of living would seem to be at the heart of this, as we continue to make our lives more comfortable, more safe and more efficient. So this sense of well-being must remain in any measure of progress. Well-being does not go hand in hand with material wealth/output however, and yet GDP as a measure of progresses incentivises material production. By removing material production from progress indicators, you free up other means of improving well-being such as sense of purpose, sense of community, and leisure time to name a few.

So I believe a better measure of progress would incorporate well-being, resource efficiency and environmental impact. In this sense you are capturing the key indicators of progress – the country’s ability to sustain itself and its citizens’ well-being.

The Happy Planet Index developed by the London-based think tank New Economics Foundation is an excellent example of what a true measure of progress could look like – check it out. I would also recommend looking in to the recently launched Social Progress Index.

 

 

 

 

*Taken from The Business Dictionary http://www.businessdictionary.com/definition/gross-domestic-product-GDP.html

**Taken from Wikipedia http://en.wikipedia.org/wiki/Simon_Kuznets

Are we destined for an international government?

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Some time ago, life was organised in to community living. People lived in small villages, everyone knew one another and they sourced all that they needed from the land in the village. We then started building towns and cities; great population and resource hubs. This required more sophisticated governance and management. Nations came next, made of multiple cities and towns and requiring yet another level of governance and management. I believe that we are approaching another stage, that of international governance.

 

For one, it seems a natural next step forward from the progression listed above. From community governance to city governance to nation governance to international governance.

 

Secondly, never before has our world been more interconnected. Few (if any) countries are entirely independent, as countries have come to rely on others for crucial resources such as food and oil. Nations now are even buying farmland in other countries to use for crops. Now if one nation struggles, then it has a knock-on effect on the rest of the world. We also feel empathy for those in other parts of the world, an empathy that goes beyond the borders of our nation. We are truly interdependent. The bizarreness of North Korea is the only obvious exception to this interconnectedness, but I’m sure that too will change in time (peacefully, I very much hope).

 

Thirdly, we are already seeing international bodies that represent something not so far off international governance*. Perhaps the closest example is the European Union, with its parliamentary process and shared currency – tying these nations closer together. The United Nations of course comes to mind as an international political body. The UN is a membership body rather than a governing body however, and has little power to issue directives to other nations, thus it can easily be undermined by the actions of a single nation (more so than the EU). Its charter is built around the principles of global peacekeeping, building relations between nations and solving international problems. It is the last principle here that I feel makes international governance inevitable.

 

Never before have we faced planetary limits as we do now. In the past, when a nation or civilisation has exceeded its natural limits it has collapsed largely in isolation. Now is very different, as any environmental crisis we face will be international in nature and thus require an international solution.

 

Climate change is perhaps the greatest threat humanity has ever faced, and requires every nation to commit to action on it. Yet we saw what happened in Copenhagen. With the whole world watching, no agreement was made. Even if every country but China were to drastically reduce carbon emissions, then so long as China continued their rate of emissions the disastrous impact would affect all of us and the good work would be undone. China have been obstinate on reducing carbon emissions, because providing a decent standard of living to their citizens requires continued industrial output and thus continued emissions. That would be all well and good if China had an atmosphere to itself, but unfortunately the atmosphere is not divided up by nation and we all must share the same one. International cooperation is imperative to tackle carbon emissions and we must commit to action as a global community; nation borders only prove an obstacle and lead to mixed motives. I could have used deforestation instead of carbon emissions as a very similar example.

 

The above is an example of our environmental impact, but the other side of the coin is our resource consumption. Our current consumption is beyond what the planet can regenerate, and we are overshooting by about 40% (and rising). Obviously, this cannot continue. And again, this requires international cooperation. Population size requires stabilisation, resource consumption needs regulation and global efforts need to be directed towards more efficient resource usage.

 

The UN in its current guise does not have the power to tackle the global challenges laid out above. How you would do it I have no idea and it would be plagued with issues, but international governance is required if we are to all live together on this planet. Nationhood is no longer sufficient in a global interdependent world facing global challenges.

 

The UN was born out of the most devastating international tragedy in human history. It will take something similarly catastrophic born out of the environmental sphere to mobilise nations in to international governance, but it will happen. It must happen if we are to work with the necessary international urgency and cooperation to tackle the global challenges we now face.

 

 

 

*Other examples are regional bodies such as the Arab League and ASEAN, and international membership institutions such as the World Bank and International Monetary Fund

Changemaking: A flaw and an opportunity to do good better

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This recent article from Nesta sheds light on a worrying observation for those working to create social or environmental change. Despite the consistent increase in resources (human, financial, tech) invested in social and environmental issues, the underlying trends that we are trying to reverse continue to worsen. The article ends by asking whether we are willing to ‘abandon Business-As-Usual approaches’ and embrace new approaches to social innovation. In attempting to ‘do good’, ethics dictates that we must be critically assess our approaches, and aim to invest resources in the most effective manner possible.

I’ve observed a clear and worrying trend during the time I’ve split between Australia and the UK. It’s certainly not the root of the issues outlined above, but it is a clear opportunity. It is as follows:

The concept of being an agent of positive change, of ‘changemaking’ has become far too synonymous with social entrepreneurship. I see this as a fundamental flaw in our approach to generating change, and with that an excellent opportunity to do things better. I will explain.

I define ‘changemaking’ as the act of generating social or environmental change with the aim of improving upon current circumstances. Or more simply if you like, trying to make the world better. There are clearly a great many techniques one could use for achieving this, but one approach has taken on an excessive and unjustified prominence; social entrepreneurship. Social entrepreneurship is the act of building a new organisation with a social or environmental purpose. I have nothing against social entrepreneurs and would apply that label to myself – I have  founded two organisations myself and have had a significant hand in the establishment of two others. The title of this blog is a bit of a giveaway. I would, however, suggest that this makes me well-placed to critique.

In Australia I searched for programs that develop my ability as a changemaker. Overwhelmingly, they support or prioritise social entrepreneurs; The Foundation for Young Australians’ Young Social Pioneers program, Centre for Sustainable Leadership program and of course the School for Social Entrepreneurs. When I was invited to attend the Foundation for Young Australians’ ‘Young and Extraordinary’ event, most of the delegates were attempting to start their own initiatives. Likewise as I have searched further afield for leadership development programs or networks, it is rare to find one that doesn’t expect you to be working with an organisation that you have founded. In other words, they expect you to be a social entrepreneur.

This learning towards social entrepreneurship is not just evident in the programs that cater for them, but also in how we praise them. Founding an initiative is seen as a stamp of approval, and to some extent I felt as though I wouldn’t be perceived as credible within the changemaking community unless I did so. In Australia, many of the winners of the ‘Young Australian of the Year’ awards had founded their current organisations. Social entrepreneurship is seen as sexy and we place these people on a pedestal.

And yet…social entrepreneurship is just one piece of the complex puzzle that is changemaking. It has its place yes, but setting up a new organisation is hardly the solution to every problem we encounter. In fact, I feel it irresponsible to assume that it is, given the resources we then expect people to put in to it, and given that every positive step will have some negative side effects. There are only so many resources to go around, so splitting them between ten organisations (there are over 50 breast cancer charities in Australia) with identical missions is hardly ethical or efficient. A little competition is healthy and valuable yes, but it has gone to to absurd levels. We must weigh up our options carefully if we are serious about generating positive change, and there are other approaches we can use. Perhaps this particular social or environmental problem needs more public awareness. Perhaps it needs corporate resourcing. Perhaps it needs a different systemic approach from government. Perhaps what it definitely doesn’t need is a new organisation launched to tackle it.

So what about intrapreneurship – generating powerful change from within an organisation that already has resources waiting to be put to use? There’s collective impact, which recognises that real change is only possible when corporates, governments and nonprofits are all sat around the table. And what about politics? Whether we like it or not, government and politicians run the country (along with banks and heavyweight corporates, depending on what you read). What about campaigning and rallying people around certain issues that matter – empowering social movements? Or how about producing and publishing research that moves our understanding forward? There are other subtle ways too, like speaking or writing where we can reach many people and have a positive impact. These are the different techniques I speak of.

I’ve had to search out these other areas myself. There is no School for Social Intrapreneurs. No course for people who want to make a positive difference through politics (and my goodness could we do with one). I’ve learned about collective impact by searching out organisations who have this at their core and getting involved. I’m learning now about politics by chasing up and spending time with my local Councillors and MP. There are two barriers here:

1) We do not encourage changemakers to explore these areas.

2) We do not have the programs to cater to these interests.

These issues I feel are especially poignant for young changemakers entering the space with good intentions and uncertainty around how to channel them. Currently, they will get pushed towards social entrepreneurship as a default, which I firmly believe to be a mistake.

Ok, so I’ve mostly covered the flaws. What’s the opportunity? The opportunity of course is to channel the tremendous energy, skills and good will of people to make things better in a much more effective way. I have some suggestions for how, but I would turn to people with more experience in changemaking to critique these and generate their own. So in the context of the two issues I highlighted above…

Encouraging changemakers to explore other means of generating change

I’d like to see individuals who are using these other techniques to generate change celebrated more and given a higher profile. Intrapreneurs, those working in government, campaigners, speakers. Leaders in change who are not just social entrepreneurs. I’d like to see these other techniques given more attention at changemaking events. I’d like to see programs and organisations that cultivate changemaking build in to their program at an early stage a lot more learning and information about these techniques. To critically ask; ‘is setting up a new organisation really the best and most responsible way to tackle this issue?’

Catering to other means of generating change

Here I’d love to see existing programs for changemakers start to build in these other techniques. To give those on the program a flavour for collective impact, for politics, for intrapreneurship. In time, to see programs in place that specialise in these other techniques, just as there are so many excellent programs now that specialise in social entrepreneurship.

If we are serious about generating change in a more efficient and effective manner, then we need to move away from our flawed obsession with social entrepreneurship and take advantage of this great opportunity to do things better.

Why equality is fundamental to a sustainable future

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If we want to live sustainably within the limits of our planet, we must address global inequality in standard of living. Relieving poverty is not just a good outlet for guilty westerners who want to do something that makes them feel good, but a necessity if we want to preserve a sustainable future for ourselves.

One of the main stumbling blocks in the current global discussions around any international actions on sustainability is that it is not at all a level playing field. The unsuccessful Copenhagen conference is testament to this, as unlike in the past it was the developing countries – namely China and India – who were the most resistant.

The western lifestyle is absurdly unsustainable. The demand we place on the planet for fish, meat, fuel, electricity is extreme and proportionately far higher than the majority of the people on the planet. Likewise, the impact we have through our carbon footprint, and the poisonous effect of the excessive waste we generate is also grossly disproportionate. As quoted from the article I am going to reference in this blog, Americans ‘…make up 5 percent of the global population, but use 20 percent of the world’s energy…eat 15 percent of the world’s meat… produce 40 percent of the world’s garbage.’

That sounds quite concerning to me.

This infographic brings home just how concerning it is. Costa Rica don’t put much demand on the planet right? Well, we’d need 1.4 planets to sustain the world’s population if everyone lived like Costa Ricans. If everyone lived like the French, we’d need 2.5 planets to sustain it (probably more if we’re taking in to consideration snails or frog legs). If we all lived like they do in the US? 4.1 planets. And that is at current rates. There are two further complications:

1) The population of the planet is increasing

2) The standard of life and demand on the planet is increasing across the globe

People across the world look at pictures of the USA on their TV screens, in the newspapers, on their computers and they aspire to that. For those of us privileged enough to live in the west, who the hell are we to tell them they can’t? What gives us the right to tell China to cut their excessive carbon emissions, when their per capita environmental impact/demand is far lower than that of us in the west. Who are we to tell them they can’t continue to increase their quality of life when 70% of its people live on less than $5 per day? I didn’t see many four-bed detached houses when I was in Southeast Asia, but I did see a lot of tin shacks that people called home.

Us humanfolk measure our state of wellbeing on relative, and not absolute terms. We look at those who seem better off and aspire to that. Most of the world is looking at the west and feeling as though they want that standard of living. As long as this is the case, those of us in the west will get almost nowhere in telling the rest of the world they need to reduce their environmental demand/impact. It’s hypocritical. It is us who need to radically alter the way we live if we’re interested in preserving a sustainable future.

Problem is, even if we manage across the world to make the enormous shift to a way of life that is clean, renewable and that places a demand that is within the planet’s limits, developing countries will not be satisfied knowing that their quality of life and per capita demand is far lower than those of us in the rich west. They will never accept that. Nor can we reasonably expect them to.

This asks some deeply painful questions. Are we committed enough to the future to be willing to reduce our material standard of living? To be willing to share more equally with the developing world that makes up the majority of the world’s population? Is this in human nature to do? I have my doubts.

Growth: a uniquely human pursuit?

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I was reflecting this morning on the ‘growth-collapse’ paradigm of human behaviour I wrote about recently. It’s hard to understand why we have developed such a transfixion on the concept of endless growth, when history (and present circumstances) suggest that it doesn’t serve us so well.

 

It seems somewhat maladaptive that by and large we are unable to within our environmental limits. Past civilizations (with a few notable exceptions) expand until they go beyond their limits, and consequently collapse. A much more adaptive response would surely be to live in equilibrium with the environment.

 

This is what has me fascinated with some of the indigenous peoples around the globe. Take the Australian aboriginals, for whom the land and environment is not something to be consumed and exhausted, but rather a gift to be thankful for. They view themselves as custodians and protectors of their environment, rather than consumers of it. Whether it is due to genes or other factors, they have developed a certain equilibrium with their surrounds that has allowed them to survive for 60,000 years whilst countless great civilizations around the world have risen and fallen. For me, this makes them a wiser and more emotionally evolved culture than the modern industrialized culture. But cultures like that of the Aboriginals are the exception, rather than the rule. Some island cultures (like Tikopia and Tonga) have come close to a clash with environmental limitations, and responded by implementing measures of population control and more sustainable agricultural techniques that have enabled them to live in equilibrium with their environment. Imagine, instead of dedicating excess resources towards growth, those resources could instead be diverted towards prosperity and wellbeing.

 

Whether this constant drive for growth is a uniquely human trait is uncertain. It is possible that other species would grow and grow if they were not subject to normal population limiting factors such as predators and disease. In fact, there are examples in which this has happened. When European settlers moved to Australia, they introduced a number of foreign species to make the environment more familiar. This proved an incredibly naïve and devastating error of judgement.

 

Australia’s ecosystem is quite unlike many of the others in the world (it has a startlingly high percentage of species unique to the continent – link http://www.dfat.gov.au/facts/flora_and_fauna.html) and is delicately balanced. When European rabbits were introduced to the country it was a disaster. They had no natural predators in Australia, and were not controlled by natural disease. And after all, rabbits do mate like…

 

Rabbit population growth boomed uncontrollably and aspects of the environment were damaged beyond repair. I recall from reading Bryson’s book Down Under, that much of the delicate inland vegetation was lost forever to the hungry stomachs of unstoppable rabbits. It was only human intervention through scientifically designed diseases that brought the population back under some sort of control.

 

Perhaps it is simply that this drive for species growth is inherent within all species, but it is the mastery humans have developed over their environment and other species that has enabled them to overcome population limiting factors. Our science and technology means that we are not under threat from predators, and we have been able to eradicate an extraordinary number of lethal diseases.

 

There’s also the point that our brains have evolved to be hardwired to tackling immediate, short-term problems that we are faced with. We are not so tuned in to complex, longer-term challenges. I’d suggest that the challenges presented by growth, unsustainable living and bumping in to limitations build up over time and until we reach tipping points, they fall in to the category of long-term challenges. Past societies only have typically only responded when lack of sustainability becomes an immediate problem (usually food shortages). So in a sense, our mastery of the environment means that we now bump in to problems that we haven’t evolved to know how to tackle – the limitations of our environment.

 

Only, this would be the first time we bump in to global limitations, rather than local limitations like past civilizations have done. What the consequences of this would be, we really have no idea. This is a unique period in human history.

 

The challenges may seem scary, but it’s a very exciting time to be around.

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