Redefining markets for ecological growth

Existing markets are not ideal. They are the path not only to periodic financial collapse and poverty for billions, but now leading to global ecological collapse, mass extinction, and social disintegration. Why write an article focused on that rare bird, global ecological and economic growth?

The answer is twofold. First, market means are globally the most accessible path to transform the conduct and consequences of global markets. We cannot start with the assumption: Ok, abolish capitalism and markets, and then receive directions from the all-wisely elected ecological emergency senate and expect its rulings to be implemented effectively and globally anytime soon. Second, it is a fundamental and tragic flaw to separate the nature and conduct of markets from the nature and conduct of society. Our problem is not markets per se, but the nature of the society that has permitted this kind of abuse in the name of freedom and capitalism.

The same could be said of the Soviet Union, whose depredations were conducted in the name of freedom and communism. Sustainable global ecological economic growth is an expression of a society that embraces and pursues these ends. It is not simply the product of an invisible hand or a planning manual. At a conference in China I attended with Politburo members in the audience, one speaker rose to his feet and said proudly, “I am a communist," whatever that must mean in 21st century market-driven China.

The separation between the economic, social, and political is what has put us on the path toward self-destruction. We have permitted and accepted the underlying separation of freedom and community, casting one or the other as the realm of freedom and the other as the countervailing realm of servitude. In reality, freedom and community are completely interdependent and interactive and serve as a summary and ever-evolving expression of our social lives and social realities. Without freedom, community is an expression of obedience, or, at best, a well-ordered tyranny. Without community, freedom is an unlimited expression of desire and ego, a world of Donald Trump.

Ecological and social justice cannot be reduced simply to a redistribution of resources from rich to poor. Ecological and social justice is much more an expression of a common local and global pursuit of both freedom and community as the crucial and interdependent basis for an ecological civilization. An ecological civilization is an expression of freedom and community, of democratic equality, as considered by philosopher Elizabeth Anderson, not simply of markets, capitalist or otherwise. The economic and market means we consider here are meant to be viewed through the lens of freedom and community. In an ecological civilization, economics is shaped and conditioned by the pursuit of sustainability, social and ecological justice, freedom, and community. Economics can no longer be allowed to be in the saddle riding humankind.

Economics, or household management, as Aristotle coined the term, reduced to the basics, is not a matter of growth and greed but a question of balance and sustainability. Economics and markets need to be approached as a cybernetic feedback process that helps signal the best ways to pursue, maintain, and optimize the health and well-being of individuals, society, and the ecosphere, of the one and the many, and of the expression of freedom and community in action. That markets, by their nature, can have substantial advantages over central planning does not automatically make markets either a realm of freedom or immune from the most grotesque consequences.

We must proceed with a deep sense of both urgency and humility in the face of market failure. We do not have anything close to a satisfactory understanding of global ecological dynamics that allows us to properly calibrate our responses to emergent ecological threats. We do not know how close to the edge of catastrophe we can come. This central challenge to stop and reverse climate change is beyond the scope of economic reasoning alone.

Society and ecological markets: a time for humility and action

Apparently, we are spectacularly ignorant of the underlying dynamics of the ecosphere and of the emergent phenomena that are the consequences of our actions. Three recent examples are worth considering.

First, it was discovered not too long ago that global geological forces of tectonic plates in motion leading to the uplift of mountain ranges have led in the tropics to what amounts to a global thermostat. A combination of heavy rain, high temperatures, and huge calcium and magnesium leaden mountains chemically react with atmospheric carbon dioxide dissolved in rainwater to form limestone and sequester gigatons of carbon. Thus, a subset of tropical mountains mitigates the effects of natural increases in global carbon dioxide from volcanoes, for example, that have been the drivers of past climate change and extinction events as well as human carbon dioxide emissions. There are limits to their effectiveness. The good news is that the rate of climate change may be slower or stickier than models predict. The very bad news is that when the last pound of carbon dioxide breaks the climate, the movement to a new climate equilibrium may be catastrophically fast for human civilization or the majority of earth's species.

Second, German naturalists noticed an enormous decline in the number of insects in recent years. There are simply fewer bug splats on car windshields almost everywhere. This is global, not just European, and not just in temperate areas. The best theories are that climate change has disrupted subtle biochemical dynamics and that insects, who cannot self-regulate temperature like mammals, are particularly sensitive to climate change. The collapse of insect populations has been found to be the case even in the protected jungle of El Yunque National Forest in Puerto Rico. Apparently, even a 2-degree average temperature rise disrupts insect reproduction. Bad news for birds, frogs, other amphibians, and some mammals as the food chain starts to unravel and pollinators of humanity's food are disappearing. Who knew?

Third, there are reports from South Africa that the huge baobab tree, the earth's oldest living creature, up to 2,000 or more years old, is starting to die. Again, it appears that climate change, not disease, has killed the trees, particularly in the southern (and cooler) part of their range, recently, subjecting them not just to hotter temperatures but also to drought and wider temperature swings. Climate and its biological effects are not weather. Ecologically, climate change has both slowly unfolding and suddenly dramatic consequences. What was here, it seems, from time immemorial was not really there and will not continue to be as the mass extinction of the Anthropocene unfolds. Who knew?

The social nature of economic reality

The social nature of current economic reality is a useful standpoint from which to examine the current practices of globally self-destructive capitalism. Such pillage is not an expression of markets or capitalism in the Platonic or Marxian abstract. Rather, it is the specific rules and practices that guide our conduct and the consequences of a particular market or non-market system. Economic reality is socially determined as much as social reality is economically determined. Political economy in an ever-evolving social world is driven by the rise of countervailing and healing responses to excess.

Global ecological economic growth, driven by self-preservation and the pursuit of social and ecological justice, is a response to the path leading to ecological calamity and an ever greater concentration of wealth and power by the rich. While the wealth of billionaires increased by 12%, the wealth of the world's poorest 50% decreased by 11%. A handful of billionaires now own more than half the world's poorest billions.

Our definitions of value and justice tend to be idealized as flowing from the results of “free” markets governed by rational choices to maximize value and utility. And it is this “freedom” that is based on the ability to pollute and pillage. We account for everything except what we do not want to know, like the town people living nearby a concentration camp who claimed, with all seriousness, to be unaware of the trains that brought thousands in daily and always left empty.

Absent healing change, as the situation worsens, millions in the streets will make the continuation of business and pollution as usual impossible. The necessity to reduce and remove carbon dioxide emissions has become an existential necessity. The job of economists is to show us ways that the pursuit of ecological economic growth will not only save us but also build the basis for sustainable prosperity for all.

Freedom and community

Ignoring or discounting the interdependence of freedom and community, and therefore the social nature of our ethics and economics, is an error apparently repeated by the wisest of us, economists and philosophers alike, separating the economy variously from morality or immorality. We have one world of idealized markets, and one world of idealized ethics and justice. Of course, this article also posits an ideal in the pursuit of sustainability and ecological and social justice that will be far different, for better and for worse, than gritty reality.

Aristotle first wisely defined economics in the Politics as oikonomia or "household management" with oikos meaning "house" and nomos meaning "law" which he separated, in contrast, from the destructive greed and avarice he called pleonexia in Nicomachean Ethics. Adam Smith, in addition to The Wealth of Nations and self-equilibrating markets guided by the invisible hand propelled by self-interest, also wrote separately about moral guidance in The Theory of Moral Sentiments.

The division between ideal and actual markets is ubiquitous, from Karl Marx to Friedrich Hayek to Robert Nozick to John Rawls to Elizabeth Anderson. The learned disquisitions on ethics and economics are suffused with unspoken and inescapable cultural assumptions and understandings. It is apparently extremely difficult to approach economics as resting on expressions of value and virtue that determine economic and social reality. These represent a variable outside of the differential equations calculating market equilibrium.

Our challenge is to make the conduct of real markets and economic growth serve the interests of real people, their communities, and the ecosphere. Our task is not to consider idealized or typical markets as the Realm of Slavery (Marx) or the Realm of Freedom (Hayek and Nozick). It's the nature of market rules, regulations, laws, politics, and social customs that can lead market systems to successfully pursue economic growth, which leads to ecological improvement and social and ecological justice.

We are what we eat. We are what we do. If you want to transform the nature of business, start and run one. This is the difference between saying, I want to be a writer with all its imagined glories, or simply saying, I write. Social change is usually driven by the energy and exuberance of youth, the realization and magic arising of freedom and community to do what was deemed to be impossible, what was imagined and thought but did not yet exist. Ecological business is about money, but it is also about something much more: an ecological and social revolution changing the way we live now.

Economic “science” today still floats on assumptions about the “rational” economic woman or man, driven by endless desires and in search of maximum gain and maximum pleasure. Fiduciary responsibility, in fact, is about consequences broader than cash balances. We need to understand that markets do not magically heal themselves and create the best of all possible worlds, given the abundant evidence to the contrary.

When John Rawls considered in his masterwork Justice as Fairness an assumed veil of ignorance preventing a person from being aware of whether they would or would not benefit from a decision as being a guide to judging fairness and therefore justice,he did so without much discussion at all of community and its determining influence. The index of justice as fairness does not even have an entry for community. The community, one can infer, has established the rules within which such high-minded decisions can and must be made. Community is the ground; freedom is the action of a self-conscious woman or man.

If we proceed with an understanding of the interdependence of freedom and community, we understand morality, justice, politics, and economy with a focus on both the individual with rights, dignity, and responsibilities and the community, which guarantees and manifests those rights in a community that is more than the sum of its parts.

Two examples spring to mind. When I was in graduate school studying community economic development, a number of my classmates were Native Americans who described to me their tribal decision-making process. In some ways, it was like the New Hampshire town meeting that I was familiar with. Where the native American meeting process seemed different was that the meeting kept going until everyone was given a chance to speak, and it was not unusual to adjourn and come back for further discussion.

At a memorable town meeting in Warner, NH, a selectman sponsored a resolution to support a constitutional amendment to ban flag burning. The debate was spirited. And then a retired Marine Colonel who had fought in all of America's wars, from WWII to Vietnam, raised his hand. And the Colonel stood up to speak; the room was silent. A tall, thin man with a Clint Eastwood mien, he said that he fought as a Marine to be able to live in a free country where you were able to burn the flag if that's what you thought was right. Quickly, the question was called, and the resolution was soundly defeated.

We cannot abstract the market from society. It is inextricably tied to our understandings of virtue, value, and morality. Market failures always happen. Markets are not always clear; markets do not always appropriately value pollution, depletion, and ecological damage. Markets are distorted not just by externalities of production but also by segregation, racism, sexism, nativism, and bigotry of all sorts.

Successful markets are an expression of freedom and community in action, manifested not just by law and rules but also by social values and personal behavior. It must become a deep value to behave ecologically. If we have to have laws that say if you piss in the well, you will go to jail, it should not mean we have to build giant new prisons for polluters.

What are the market rules we must implement and the choices we must make on an ongoing basis to build and maintain a prosperous and peaceful ecological and social order? Economics and ecological economic growth must be understood as manifestations and expressions of this social system, not as separate and independent variables. This is democracy in action.