Better not bigger capitalism

Ian Cheshire, CEO of B&Q Kingfisher, and client of mine, has just posted this very interesting online article about the need for a radical updating of capitalism.

Ian also talks about the need for products and services to shift to maximising units of wellbeing delivered per unit of planet input. This shift is central to the work I am doing with Kingfisher and a number of other companies and is going to be key to breakthrough innovation and sustainability.

Using our Flourish innovation process, the kinds of things we will be looking at with companies are how their products, services and brands interact with a complex landscape of individual and societal wellbeing. And are those products and services giving maximium real needs (not created wants) satisfaction and flourishing with lowest possible inputs of resources.

Flourish helps companies map, measure, manage and maximise the wellbeing effects of their products and services. Flourish acts as a new strategic compass which goes beyond CSR and Sustainability to provide a vision of a new form of prosperity beyond simple measures of throughput, impacts, growth and profits.

There is also some good coverage of Ian’s piece here by Jo Confino. Jo also refers to a recent Abundancy and WWF conference on the limits of growth and the need to shift to a ‘better not bigger’ wellbeing economics.

Posted by Jules in Articles, Blog

only greed can save us?

Just read a tweet by someone who follows my tweets at citizenjules. The tweet pointed to a tweet by Solitaire Townsend about this this piece by New Scientist’s environment correspondent Fred Pearce which suggests that greed will save us from the impending perfect storm.

I disagree with the  piece for two main reasons, one about values and one about growth. My first disagreement is because in my view it is extrinsic values like greed which are the cause of our unsustainable lifestyles, and reduce our wellbeing and that of those around us. This is well documented by Dr Tom Crompton’s genius work

I know Solitaire takes avery different view from Tom and they have had a long standing difference of opinion on these issues. My money – and George Monbiot’s is on Tom’s work. In fact I would say that if you read anything in the  ’sustainability’ world you should read Tom’s work and that of Professor Tim Jackson with whom I work closely.

The second reason I think the piece is wrong is that is misses a key fact in the growth dilemma. That is that BOTH intensity AND  scale are crucial. If you look at the scary IPAT figures in Tim’s Prosperity Without Growth work you will see that we need to reduce the carbon intensity of every dollar of economic activity globally from 770gCO2 to 6gCO2. That means that EVERY dollar of global economic activity needs to get 11% less carbon intensive EVERY year from now till 2050. This despite the best we have ever been able to do in the last 17 years has been 0.7% reductions in carbon intensity.

Yes China is looking like making some good intensity reduction commitments but even if it meets them it also have massive scale ambitions. And the current trajectory of global economic output is still very much in the wrong direction.

Unless we discover the perpetual motion machine I just can’t see how we are going to make these leaps in efficiency and so what we need most of all are significant values shifts in society away from ‘consumer’ values to ‘citizen values’. These are the kinds of values shifts I wrote about with Robert Phillips in www.citizenrenaissance.com and which Tom Crompton and Tim Jackson have written so convincingly about.

Posted by Jules in Articles, Blog

Jules interviewed on Crosstalk TV

Follow this link to see Jules interviewed on Crosstalk about the end of hyper-consumerism.

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Guardian blog on M&S

A recent Guardian blog by Jules at http://www.guardian.co.uk/sustainable-business/blog/consume-less-care-more

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Diplomat Magazine article

REDEFINING PROSPERITY

In Bhutan they’ve scrapped GDP in favour of Gross Domestic Happiness.  Is it also time for the West to re-consider its attitude towards growth? Jules Peck weighs up the arguments.

In conventional wisdom, economic growth and higher incomes mean richer lives and improved quality of life. But, as the Happy Planet Index ( www.happyplanetindex.org ) shows, true prosperity goes beyond material pleasures. Surely it resides in the health and happiness of our families, in the strength of our relationships and our trust in the community? Yet in our search for prosperity, we seem to have lost our way.

Growth has delivered its benefits, at best, unequally. Twenty per cent of the world’s population earns just two per cent of global income. Far from improving the lives of those who most needed it, growth has let much of the world’s population down.

And as the economy expands, so do its ecological impacts. We live now as if we have one and a half planets and peaking in key resources – such as oil – may be less than a decade away. Swedish diplomat and former UN weapons inspector Hans Blix notably warned that climate change was a greater issue than global terrorism, and leading figures in the military have been outspoken about the risk to global security in not taking serious and rapid action to deal with threats such as climate change.

So, as the rich world uses far more than its fair share of the planet, surely we in the wealthy world must radically cut back our planetary consumption if developing countries are to have any hope of their own prosperity?

The dilemma of growth

Continuous improvements in technology mean that fewer people are needed to produce the same goods from one year to the next. So if output doesn’t expand, there is a downward pressure on employment and recession looms. Growth is necessary within this system just to prevent collapse.

The global recession of 2008-10 has thrown this into sharp relief. The banking crisis led the world to the brink of financial disaster and shook the dominant economic model to its foundations. It redefined the boundaries between market and state and forced us to confront our inability to manage the financial sustainability – let alone the ecological sustainability – of the global economy. When growth stalls, as it has done recently, firms go out of business, people lose their jobs and governments may fall.

We find ourselves locked between the horns of a deep-seated dilemma: growth may be unsustainable, but ‘de-growth’ appears to be unstable.

Limits to scale

Economic growth goes hand in hand with increasing use of the Earth’s resources. Prevailing wisdom calls us instead to find a way to allow economic growth to occur but dissociate it from the growth in resource extraction and manufacturing. However, even though we are finding ways to improve efficiency these are continually offset by increases in scale. Global carbon emissions rose by 40 per cent even as the carbon intensity fell. In a world of seven billion people, all aspiring to ever-increasing Western incomes, carbon intensities would have to fall by over 11 per cent per year to stabilise the climate, 16 times faster than they have done since 1990.

To return to living within our planetary means, and share access to prosperity with all, we simply cannot avoid the fact that we need to limit the scale of overall global macro-economic activity.

Prosperity without Growth

There is now rising support for creating prosperity without growth  from people as diverse as New York Times journalist Thomas Friedman, HRH Prince Charles, Archbishop Rowan Williams and American economist Joseph Stiglitz, to name but a few.

This new form of Dynamic Equilibrium economics aims to achieve an equilibrium in our economy but still requires business to be dynamic, creative and innovative as ever.

The issue is also the subject of a recent book by Tim Jackson and TED talk (www.ted.com), outlining 12 steps for transition to a new economics in three areas. These three areas are around: establishing resource and environmental limits; developing a new macro-economics for sustainability that does not rely for stability on relentless expansion of material throughput and growth; and finally freeing people from the social logic of materialistic consumerism.

An end to capitalism?

Robert Solow, Nobel Economics Laureate and one of the architects of the modern theory of economic growth, sees no incompatibility between zero growth and capitalism. And others argue that capitalism needs an urgent update anyhow.

Things are changing. Already a number of leading global companies and organisations like the Aldersgate Group and the World Economic Forum are exploring the innovation opportunities in a direct equilibrium economy. Indeed, in March 2011 WWF, Eden Project and Abundancy Partners will run a corporate conference on this subject with speakers including MP Caroline Lucas and Financial Service Authority Chair Adair Turner. But business can do little without leadership and market evolution by governments.

Governance for prosperity

The transition to a direct equilibrium economy raises questions of governance. How is shared prosperity to be achieved in a pluralistic society? How are the interests of the individual to be balanced against the common good? Which parts of the economy can grow and which should not? What mechanisms can achieve these balances?

Governments are currently conflicted. Although they have a role in ‘securing the future’, as long as macro-economic stability depends on economic growth, governments will have a tendency to support social structures that reinforce materialistic, novelty-seeking individualism.

What is urgently needed is a new political philosophy and vision. None of this will happen without the political will to make space for audacious change, but, for those brave enough, there is voter support for government action on these issues.

Prime Minister David Cameron has in the past been outspoken about the need to dethrone growth and he commissioned the Quality of Life Review which I directed and which gave recommendations on a new well-being economics. But more recently we have heard little about this from him and his Big Society vision is as yet untested.

The UK government’s Sustainable Development Commission has been working on ideas for a Growth In Transition Commission which would carry on the great work done for President Nicholas Sarkozy by the Stiglitz Commission.

Luckily, work by think tank nef is already under way in the UK to model what an economy no longer reliant on growth would look like. InCanada work has shown such an economy could bring high employment, greater equity, a stable economy and combat climate change.

Other leaders are engaging with this debate. German politician Horst Köhler has been clear that growth does not bring happiness. President of the European Commission, José Manuel Barroso, has said: ‘GDP is unfit to reflect many of today’s challenges such as climate change… We cannot face the challenges of the future with the tools of the past’. Meanwhile EU Environment Commissioner Stavros Dimas has stated: ‘There is political consensus on the need to go beyond GDP’. The OECD and European Commission are currently seeking ways of measuring progress and well-being more broadly than by taking GDP as the sole measure which Angel Gurria, OECD Secretary General,  has said ‘will constitute a major contribution to stability and democracy’. As well as at EC and OECD level, countries like Austria, Finland and New Zealand are examining these issues. Bhutan uses an alternative to GDP in their Gross Domestic Happiness measure. And many US states are now developing their own indicators of progress beyond GDP.

Flourishing within limits

True prosperity consists in our ability to flourish as human beings – within the ecological limits of a finite planet. The challenge for our society, for government and for business is to create the conditions under which this is possible. It is the most urgent task of our times and one that is certainly achievable.

http://www.diplomatmagazine.co.uk/index.php?option=com_content&view=article&id=381:redefining-prosperity&catid=37:features&Itemid=100

Posted by Jules in Articles, Blog

Cameron’s Happiness Index is welcome news for progressives

By Jules Peck

The government has announced a wellbeing review. What might this mean and why is this an important and welcome sign of progressiveness?

Prosperity lost?

n conventional wisdom, economic growth and higher incomes mean richer lives and improved quality of life. But, as the Happy Planet Index shows, true prosperity goes beyond material pleasures. It resides in the health and happiness of our families, in the strength of our relationships and our trust in the community.

However, in our search for prosperity we seem to have lost our way. We have become fixated on economic growth as opposed to more meaningful indicators of success.

Limits to growth:

Growth has delivered its benefits, at best, unequally. And as the economy expands, so do its ecological impacts. We live now as if we have 1.5 planets. We are eating into our natural capital rather than living off its interest. We find ourselves locked between the horns of a deep-seated dilemma: growth may be unsustainable, but ‘de-growth’ appears to be unstable. Questioning growth-fixation in these circumstances is deemed to be the act of fanatics or idealists.

Prevailing wisdom calls instead for a slightly greener shade of business-as-usual and a ‘decoupling’ of economic activity from material throughput. But efficiency improvements are continually offset by increases in scale. Global carbon emissions rose by 40 per cent even as the carbon intensity fell. And yet, by 2050, the global carbon intensity needs to be only 6 grams/$ of output – 130 times lower than today’s figure of 770g/$.

Grossly Distorted Picture:

The principal tool to measure economic growth is Gross Domestic Product (GDP). But GDP is a deeply flawed way of measuring progress. While it tots up the total of a nation’s economic activity in any given year, it ultimately fails to reveal anything about environmental stability, social cohesion, psychological health or public services.

Simon Kuznets, the Nobel Prize winning economist who helped develop GDP, recognised such flaws when warning the US Congress in 1934:

“The welfare of a nation can scarcely be inferred from a measurement of the national income.”

GDP measures what we make, but can’t measure what we destroy to make it. Our economy is borrowing prodigiously from the natural economy but without recording the loans. GDP also gives us no information on how well we are doing in maximising the wellbeing of society within the planet’s limits.

Dethroning growth and measuring what matters:

There is now rising support for dethroning growth as the focus of our economies from people as diverse as Thomas Friedman, HRH Prince Charles, Archbishop Rowan Williams and Joseph Stiglitz to name but a few. A new form of Dynamic Equilibrium economics (DEe), where planetary level growth is restricted to planetary limits, would shift the focus of economies towards maximising units of wellbeing delivered per unit planet input.

The details of steps which will be needed to be taken are outlined in the ‘Prosperity Without Growth’ recommendations to Government. These are subject of a recent book and talk, and outline 12 steps for transition to a new economics. An important part of this transition will be around measuring wellbeing, refocusing society around such measures and freeing people from the social logic of materialistic consumerism.

Governance for prosperity:

Governments are currently conflicted. Although they have a role in ‘securing the future’, as long as macro-economic stability depends on economic growth-fixation, governments will have a tendency to support social structures that reinforce materialistic, novelty-seeking individualism rather than true wellbeing.

What is urgently needed is a new political philosophy and vision. None of this will happen without the political will to make space for audacious change but for those brave enough there is voter support for government action on these issues. Consensus from the left and the right on these issues is possible but it requires our politicians to step up to the plate and embrace this ‘big idea’ for the economy (see Jules Peck’s chapter in this Demos report).

Prime minister David Cameron has in the past been outspoken about the need to de-thrown growth and he commissioned the Quality of Life Review which I directed and which gave recommendations on a new wellbeing economics. Until recently we heard little about this from Mr  Cameron, and what we did hear seemed confused. But the recent announcement is to be welcomed. Leader of the Opposition Ed Milliband has also of late joined the debate on the need for new measures of prosperity.

The UK government’s Sustainable Development Commission has been working on ideas for a Growth In Transition Commission which would carry on the great work done for President Sarkozy by the Stiglitz Commission. Luckily work is already underway in the UK to model what a DEe wellbeing economy no longer fixated on growth would look like. In Canada work has shown such an economy could bring high employment, greater equity, a stable economy and combat climate change.

Other leaders are engaging with this debate including Horst Kohler; president of the European Commission José Manuel Barroso; European Union environment commissioner Dimas; and President Sarkozy.

The OECD and EC are currently seeking ways of measuring progress and well-being more broadly than by taking GDP as the sole measure and countries like Austria, Finland and New Zealand are examining these issues. Bhutan uses an alternative to GDP in their Gross Domestic Happiness measure. And many US States are now developing their own indicators of progress beyond-GDP.

Flourishing within limits:

True prosperity consists in our ability to flourish as human beings – within the ecological limits of a finite planet. The challenge for our society, for government and for business is to create the conditions under which this is possible. It is the most urgent task of our times and one we believe is achievable.

see this post also at http://www.leftfootforward.org/2010/11/david-cameron-happiness-index/

Posted by Jules in Articles, Blog

Common Cause and specsavers Lnyx spoof

Its interesting to see the chat going on around the specsavers advert which parodies the Lynx Greed is Good advertising. Apparently specsavers got permission from Unilever for the advert.

However I don’t think specsavers had in mind the critique of Lynx which Dr Tom Crompton’s work at WWF has opened up. Dr Crompton has just brought out a brilliant new report called Common Cause which is causing a real stir in the sustainability world. Check it out and see George Monbiot’s editorial on it here.

Posted by Jules in Articles, Blog

Quality of Life and redefining prosperity – the politics of beyond-growth

Prosperity lost?

In conventional wisdom economic growth and higher incomes mean richer lives and improved quality of life. But, as the Happy Planet Index shows[1], true prosperity goes beyond material pleasures. It resides in the health and happiness of our families, in the strength of our relationships and our trust in the community. However, in our search for prosperity we seem to have lost our way.

Growth has delivered its benefits, at best, unequally. 20% of the world’s population earns just 2% of global income. Far from improving the lives of those who most needed it, growth has let much of the world’s population down. And as the economy expands, so do its ecological impacts. We live now as if we have 1.5 planets and peaking in key resources – such as oil – may be less than a decade away. Hans Blix notably warned climate change was a greater threat than global terrorism and leading figures in the military have been outspoken about the risk to global security in not taking serious and rapid action to deal with threats such as climate change. These include the UK’s Air Chief Marshall Sir Jock Stirrup and Rear Admiral Neil Morisetti and the US’s Commanding General Paul Kern, former Commanding General and General Anthony Zinni, former Commander-in-Chief US Central Command.

So, as the rich world use far more than their fair share of planet, surely we in the wealthy world must radically cut back our planetary consumption if developing countries are to have any hope of their own prosperity?

The dilemma of growth

Dynamics are vital here. Continuous improvements in technology mean that fewer people are needed to produce the same goods from one year to the next. So if output doesn’t expand, there is a downward pressure on employment and a spiral of recession looms. Growth is necessary within this system just to prevent collapse.

The global recession of 2008-10 has thrown this into sharp relief. The banking crisis led the world to the brink of financial disaster and shook the dominant economic model to its foundations. It redefined the boundaries between market and state and forced us to confront our inability to manage the financial sustainability – let alone the ecological sustainability – of the global economy. When growth stalls, as it has done recently, firms go out of business, people lose their jobs and governments may fall.

We find ourselves locked between the horns of a deep-seated dilemma: growth may be unsustainable, but ‘de-growth’ appears to be unstable. Questioning growth in these circumstances is deemed to be the act of fanatics or idealists.

Limits to scale and the myth of decoupling

Prevailing wisdom calls instead for a ‘decoupling’ of economic activity from material throughput. At first sight, this logic fits the evidence. Global carbon intensity fell almost 25% in the last couple of decades, for instance.

But efficiency improvements are continually offset by increases in scale[3]. Global carbon emissions rose by 40% even as the carbon intensity fell. We would need to be decoupling radically faster. In a world of nine billion people, all aspiring to ever-increasing western incomes, carbon intensities would have to fall by over 11% per year to stabilise the climate, 16 times faster than they have done since 1990. By 2050, the global carbon intensity would need to be only 6 grams/$ of output, 130 times lower than today’s figure of 770g/$.

Our record is not good and such levels of decoupling  are inconceivable. To live again as if we have only one planet and share access to prosperity to all, we simply cannot avoid the fact that we need to limit the scale of overall global macro-economic activity. In absolute terms we must stop growth. Indeed the rich world will need to find a reverse gear if we are to live equitably with our fellow citizens.

The Transition to a Dynamic Equilibrium economy

There is now rising support for dethroning growth[4] from people as diverse as Thomas Friedman’, HRH Prince Charles, Archbishop Rowan Williams and Joseph Stiglitz to name but a few.

A new form of Dynamic Equilibrium economics (DEe) will, while being steady in scale, still be thoroughly dynamic and require business to be as creative and innovative as ever. As growth at a macro-scale is dethroned, so too the focus of economies will shift and in DEe countries, companies and markets will focus on objectives based on maximising units of wellbeing delivered per unit planet input.

The details of steps which will be need to be taken are outlined in the Prosperity Without Growth recommendations to Government.[5] These are subject of a recent book[6] and TED[7] talk, and outline 12 steps for transition to a new economics in 3 areas. These 3 areas are around; establishing resource and environmental limits, secondly developing a new macro-economics for sustainability that does not rely for stability on relentless expansion of material throughput and growth and thirdly freeing people from the social logic of materialistic consumerism[8].

Does this infer an end to capitalism?

Robert Solow, Nobel Economics Laureate and one of the architects of the modern theory of economic growth sees no incompatibility between zero growth and capitalism[9]. And there are rising calls for an updating of capitalism.[10]

Things are changing. Already a number of leading global companies and groups like the Aldersgate Group and the WEF are exploring the innovation opportunities in DEe. And in March 2011 WWF, Eden Project and Abundancy Partners are running a corporate conference on this subject with speakers including Caroline Lucas MP, and Financial Service Authority Chair Adair Turner. But business can do little without leadership and market evolution by governments[11].

Governance for Prosperity

The transition to DEe raises questions of governance. How is a shared prosperity to be achieved in a pluralistic society? How are the interests of the individual to be balanced against the common good? Within absolute limits to scale, which parts of the economy can grow and which should not. What mechanisms can achieve these balances?

Governments are currently conflicted. Although they have a role in ‘securing the future’, as long as macro-economic stability depends on economic growth, Governments will have a tendency to support social structures that reinforce materialistic, novelty-seeking individualism.

What is urgently needed is a new political philosophy[12]and vision. None of this will happen without the political will to make space for audacious change but for those brave enough there is voter support for government action on these issues.[13]

Prime Minister Cameron has in the past been outspoken about the need to dethrown growth and he commissioned the Quality of Life Review[14] which I directed and which gave recommendations on a new wellbeing economics. But more recently we have heard little about this from him[15] and his Big Society vision is as yet untested.[16]

The UK government’s Sustainable Development Commission has been working on ideas for a Growth In Transition Commission which would carry on the great work done for President Sarkozy by the Stiglitz Commission.[17]

Luckily work is already underway in the UK[18] to model what an economy no longer reliant on growth would look like. In Canada work has shown[19] such an economy could bring high employment, greater equity, a stable economy and combat climate change.

Other leaders are engaging with this debate. Horst Kohler has been clear that growth does not bring happiness. President Barroso has said “GDP is unfit to reflect many of today’s challenges such as climate change…..we cannot face the challenges of the future with the tools of the past”. EU Environment Commissioner Dimas has said “there is political consensus on the need to go beyond GDP”. The OECD and European Commission are currently seeking ways of measuring progress and well-being more broadly than by taking GDP as the sole measure which Angel Gurria, Secretary General of the has said “will constitute a major contribution to stability and democracy”. As well as at the EC and OECD level, countries like Austria, Finland and New Zealand are examining these issues. Bhutan uses an alternative to GDP in their Gross Domestic Happiness measure. And many US States are now developing their own indicators of progress beyond-GDP.

Flourishing within limits

True prosperity consists in our ability to flourish as human beings – within the ecological limits of a finite planet. The challenge for our society, for government and for business is to create the conditions under which this is possible. It is the most urgent task of our times and one we believe is achievable.

---

[1] http://www.happyplanetindex.org/

[2] http://peakoiltaskforce.net/

[3] http://www.citizenrenaissance.com/the-book/part-three-where-are-we-heading/chapter-seven-the-rise-of-ecological-economics/decoupling-growth-and-resource-use/v

[4] http://www.abundancypartners.co.uk/2010/03/growth-questioners/

[5] http://www.amazon.co.uk/Prosperity-without-Growth-Economics-Finite/dp/1844078949/ref=ntt_at_ep_dpi_1

[6] http://www.amazon.co.uk/Prosperity-without-Growth-Economics-Finite/dp/1844078949/ref=ntt_at_ep_dpi_1

[7] http://blog.ted.com/2010/10/05/an-economic-reality-check-tim-jackson-on-ted-com/

[8] http://www.theecologist.org/blogs_and_comments/commentators/other_comments/269633/the_end_of_consumerism.html

[9] http://www.abundancypartners.co.uk/2010/05/beyond-growthbeyond-capitalism/

[10] http://www.abundancypartners.co.uk/2010/05/beyond-growthbeyond-capitalism/ and http://www.abundancypartners.co.uk/2010/04/capitalism-3-0/

[11] See Jules Peck’s chapter in http://www.demos.co.uk/files/Long_view_-_web-1.pdf?1273077789

[12] http://www.citizenrenaissance.com/the-book/part-three-where-are-we-heading/chapter-nine-the-politics-of-the-green-new-deal/

[13] http://www.globescan.com/news_archives/emm_beyondgdp.htm

[14] http://www.conservatives.com/pdf/blueprintforagreeneconomy.pdf

[15] http://www.respublica.org.uk/blog/2010/02/cameronted

[16] http://www.respublica.org.uk/blog/2010/08/big-society-small-state

[17] http://www.stiglitz-sen-fitoussi.fr/en/index.htm

[18] http://www.neweconomics.org/projects/new-economic-model

[19] http://www.slideshare.net/instruw/peter-victor-managing-withouth-growth-slower-by-design-not-desaster

Posted by Jules in Articles, Blog

The business implications of Dynamic Equilibrium economics

By Jules Peck and Professor Tim Jackson

Prosperity lost?

In conventional wisdom economic growth and higher incomes mean richer lives and improved quality of life. But true prosperity goes beyond material pleasures. It resides in the health and happiness of our families, in the strength of our relationships and our trust in the community. However, in our search for prosperity we seem to have lost our way.

Growth has delivered its benefits, at best, unequally. 20% of the world’s population earns just 2% of global income. Far from improving the lives of those who most needed it, growth has let much of the world’s population down.

And as the economy expands, so do its ecological impacts. We live now as if we have 1.5 planets and peaking in key resources – such as oil – may be less than a decade away[1]. As the rich world use far more than their fair share of planet, we must radically cut back if the world’s poor are to have any hope of their own prosperity.

The dilemma of growth

Dynamics are vital here. Continuous improvements in technology mean that fewer people are needed to produce the same goods from one year to the next. So if output doesn’t expand, there is a downward pressure on employment and a spiral of recession looms. Growth is necessary within this system just to prevent collapse.

The global recession of 2008-10 has thrown this into sharp relief. The banking crisis led the world to the brink of financial disaster and shook the dominant economic model to its foundations. It redefined the boundaries between market and state and forced us to confront our inability to manage the financial sustainability – let alone the ecological sustainability – of the global economy. When growth stalls, as it has done recently, firms go out of business, people lose their jobs and governments may fall.

We find ourselves locked between the horns of a deep-seated dilemma: growth may be unsustainable, but ‘de-growth’ appears to be unstable. Questioning growth in these circumstances is deemed to be the act of fanatics or idealists.

Limits to scale and the myth of decoupling

Prevailing wisdom calls instead for a ‘decoupling’ of economic activity from material throughput. At first sight, this logic fits the evidence. Global carbon intensity fell almost 25% in the last couple of decades, for instance.

But efficiency improvements are continually offset by increases in scale[2]. Global carbon emissions rose by 40% even as the carbon intensity fell. We would need to be decoupling radically faster. In a world of nine billion people, all aspiring to ever-increasing western incomes, carbon intensities would have to fall by over 11% per year to stabilise the climate, 16 times faster than they have done since 1990. By 2050, the global carbon intensity would need to be only 6 grams/$ of output, 130 times lower than today’s figure of 770g/$.

Our record is not good and such levels of decoupling  are inconceivable. To live again as if we have only one planet and share access to prosperity to all, we simply cannot avoid the fact that we need to limit the scale of overall global macro-economic activity. In absolute terms we must stop growth. Indeed the rich world will need to find a reverse gear if we are to live equitably with our fellow citizens.

Governance for Prosperity

Achieving such goals raises questions of governance. How is a shared prosperity to be achieved in a pluralistic society? How are the interests of the individual to be balanced against the common good? Within absolute limits to scale, which parts of the economy can grow and which should not. What mechanisms can achieve these balances?

Governments are currently conflicted. Although they have a role in ‘securing the future’, as long as macro-economic stability depends on economic growth, Governments will have a tendency to support social structures that reinforce materialistic, novelty-seeking individualism.

The Transition to a Sustainable Economy

There is rising support for dethroning growth[3] from people as diverse as Thomas Friedman’, Prince Charles, Joseph Stiglitz, David Cameron and President Sarkozy.

The Prosperity Without Growth recommendations to Government[4], the subject of a recent book[5] and TED[6] talk, outline 12 steps for transition to a new economics in 3 areas. The first is to establish resource and environmental limits and integrate these into economic and social functioning through; resource and emission caps and reduction targets, fiscal reform, and support for ecological transition in developing countries.

The second area is to develop a new macro-economics for sustainability that does not rely for stability on relentless expansion of material throughput and growth, through; developing an ecological macro-economics, investing in jobs, assets and infrastructures, increasing financial and fiscal prudence, and revising the national accounts.

The third is around freeing people from the social logic of materialistic consumerism through; working time policy, tackling systemic inequality, measuring capabilities for flourishing, strengthening social capital, and dismantling the culture of consumerism.

Government must lead on much of this but for these changes to happen, it will be crucial that the business world is able to play a role, lobby for change and experiment and innovate.

Does dethroning growth mean dethroning capitalism?

Robert Solow, Nobel Economics Laureate and one of the architects of the modern theory of economic growth sees no incompatibility between zero growth and capitalism[7].

And there are rising calls for an updating of capitalism[8] including from the FT’s Martin Wolf, Sir Mervyn King, Jack Welch, former CEO of General Electric, Paul Polman, CEO of Unilever and Charlie Mayfield, Chairman of John Lewis. And ideas for updating capitalism[9] abound, including Peter Barnes’ Capitalism 3.0 and a shift from privatisation to propertisation and towards a more mutualised economy[10].

The implications for business of a shift to Dynamic Equilibrium economics

Our vision is of a new form of Dynamic Equilibrium economics (DEe) which will, while being steady in scale, still be thoroughly dynamic and require business to be as creative and innovative as ever.

As growth at a macro-scale is dethroned, so too the focus of business will shift and in DEe companies and markets will focus on objectives based on maximising units of wellbeing delivered per unit planet input.

This will require a shift to a focus on real ‘needs’ instead of created ‘wants’[11] and from ‘bigger’ to ‘better’. Full cradle to cradle ownership and a shift to service models will become the norm.  This in turn will also call for a shift from seeing products as benefits to seeing production as a cost of maintenance of delivery to societal needs.

A maximum physical scale for the economy and strict limits on throughput will require business in which renewable resources are harvested at rates that do not exceed regeneration rates; the rate of depletion of non-renewable resources do not exceed the rate of creation of renewable substitutes; and waste emissions rates should not exceed the natural assimilative capacities of ecosystems into which they are emitted.

Manmade’ capital will be kept intact and emphasis will focus on technologies that increase resource productivity (measured as the amount of value extracted per unit of resource) rather than technologies for increasing the resource throughput. Companies will shift focus to longer-lasting, durable products, more efficient in use of resources in their life and which can be replaced more slowly, thus requiring lower rates of resource use. This will mean an end to some materials such as products which break easily, are impossible to repair and decompose very slowly.

This will also call for a new investment-ecology which supports long-terming of investments in sustainability and steers business away from resource-intensity, labour productivity, endless creative-destruction and hyper-consumerism.

Innovation opportunities for business in DEe

These changes in focus towards the twin lenses of wellbeing and planetary limits can be used as key drivers for a new focus on innovation and new business models.  There will be winners and losers in these shifts. Some sectors will need change more than others, some will reduce in size dramatically. The companies which tune in to these shifts will succeed and will have been part of the move to a sustainable future.

WEF’s Redesigning Business Value echoes this, envisaging an economy where “we are no longer selling ‘stuff’; we are enhancing people’s well-being overall. Sustainability to us has therefore been a catalyst for innovation, it is about the right of all global citizens to consume efficiently and sufficiently, within the limits of natural systems.”

The response from business

2010 is the year in which business, from a standing start, really started to engage with these debates. Bernie Bulkin, former Chief Scientist of BP has said of Prosperity Without Growth “Jackson’s book simply resets the agenda for Western society”.

And already a number of leading global companies and groups like the Aldersgate Group and WEF are exploring with us these issues and the innovation opportunities DEe represents. In March 2011 WWF, Eden Project and Abundancy Partners are running a corporate conference on this subject with speakers including Caroline Lucas MP, and Adair Turner.

Flourishing within limits

True prosperity consists in our ability to flourish as human beings – within the ecological limits of a finite planet. The challenge for our society, for government and for business is to create the conditions under which this is possible. It is the most urgent task of our times and one we believe is achievable.

Tim Jackson is Professor of Sustainable Development, Director of RESOLVE’s[12] Lifestyles, Values and Environment Research group and the SDC’s[13] Economics Commissioner. Jules Peck is a founding Partner of the innovation and strategy consultancy Abundancy Partners, a Trustee of nef[14] and a Fellow of ResPublica[15].

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[1] http://peakoiltaskforce.net/

[2] http://www.citizenrenaissance.com/the-book/part-three-where-are-we-heading/chapter-seven-the-rise-of-ecological-economics/decoupling-growth-and-resource-use/v

[3] http://www.abundancypartners.co.uk/2010/03/growth-questioners/

[4] http://www.amazon.co.uk/Prosperity-without-Growth-Economics-Finite/dp/1844078949/ref=ntt_at_ep_dpi_1

[5] http://www.amazon.co.uk/Prosperity-without-Growth-Economics-Finite/dp/1844078949/ref=ntt_at_ep_dpi_1

[6] http://blog.ted.com/2010/10/05/an-economic-reality-check-tim-jackson-on-ted-com/

[7] http://www.abundancypartners.co.uk/2010/05/beyond-growthbeyond-capitalism/

[8] http://www.abundancypartners.co.uk/2010/05/beyond-growthbeyond-capitalism/

[9] http://www.abundancypartners.co.uk/2010/04/capitalism-3-0/

[10] http://www.abundancypartners.co.uk/2010/05/commons-trusts/

[11] http://www.citizenrenaissance.com/the-book/part-three-where-are-we-heading/chapter-seven-the-rise-of-ecological-economics/needs-means-and-uneconomic-growth/

[12] http://www.ces-surrey.org.uk/people/staff/tjackson.shtml

[13] http://www.sd-commission.org.uk/

[14] http://www.neweconomics.org/

[15] http://www.respublica.org.uk/blog/2010/08/big-society-small-state

Posted by Jules in Articles, Blog