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Green Economics Views on Lower Growth Economics

The Green Economics Institute has started to investigate Lower Growth Economics as a realistic possibility and will publish books and articles on this in the months to come. It is aslo working in the European Parliament to decide on policies and a statement on this with a group of european economists, Miriiam Kennet Director gave a speech in the Austrian Parliament on this and is writing a paper with European collegues in the parliament.

Initial thoughts and ideas and information from literature is being gathered and there will be a report about some of the dialogue already in progress. In the meantime I have prepared some information that might be relevant.

Incomes UNDP 2001 4.6 people in developing countries 850 million are functionally illiterate, 1 billion lack access to water, and 2.4 lack access to basic sanitation,11 million children under 5 die each year from preventable diseases. 30 000 children a day ( UNDP 2001) 1.2 billion live on less than US 2$ a day. Average incomes in 2001 were 15000 per person per annum in OECD countries and 5000 in Latin America, and the Caribean and the rest were all below $2500 per person per year. This gap had significantly widened since 1960.

Walt Rostow 1916 - 2003 wrote Stages of economic growth a non communist manifesto. 1960

His work has influenced the acceleration of growth and especially US economic policy for many years as well as TNC justifications for expansion and their role in the post war and perhaps post colonial and post communist era as well.

He saw his work as a political mission and he worked with Gunnar Mydal and believed in economic take off. He argued that development policy could be a political instrument in the east west conflict. He formed the Charles River Clique working on President Kennedys campaign. He believed that economic growth would stop communism.

He distinguished 5 stages that countries have to pass through,

a) the traditional society

b) the preconditions for take off

c) the take off

d) the drive to maturity- (self sustained growth)

e) the age of high mass consumption

Here Green Economists find the roots of todays current difficulties- and the difficulty and reluctance to change direction- this is the theoretical framework which many of us have adopted even unconsciously- that economic development follows this continuum in all cases- and I think we are going to have to change this view- and it wont be easy Kennet 2007

The building blocks of this are the promotion of science and technology, and the sharp increase in the savings and investment rates in order to achieve continual growth, the role of the innovative entrepreneur ( influenced by Schumpeter) and the concept of key sectors.

Alternative interpretations of development Rigg (1997) in Potter et al.:4 Possible advantages include

Development brings economic growth Development brings overall national progress Development brings modernisation along Western lines Development brings the provision of Basic needs Development can help create sustainable growth Development brings improved governance Bad Development is dependent on subordinate process Development is a process creating and widening spatial inequalities Development undermines local cultures and values Development perpetrates poverty and poor working and living conditions Development is often environmentally unsustainable Development infringes human rights and undermines democracy

The Green Economics Institute argues that Growth is defined as year on year increase in GDP. GNP per capita is measured by the total domestic and foreign value added of a nation divided by its total population. It gives no indication of distribution.

The particular indicator GDP is believed to be a poor indicator of well being for people or planet, and an example of this is the Uk which comes out 5th from the top in GDP and bottom of all the industrialised nations in well being and happiness of its young people, and in the gender pay gap and in the representation of women, reinforcing the image of conventional economics, in recent surveys, (UNEP and the Fawcett Society)) being predicated for the preferences for homo economicus, white middle class male.

The Human Development Indicator is based on longetivity, knowledge and a decent standard of living (UN 2001:14) It is measured by life expectancy, educational attainment, ( adult literacy, and combined primary secondary, and tertiary enrolment ) plus adjusted income per capita and purchasing power parity.( : 10).Human development is thus translated into a linear process indicated by levels of deprivation of how far countries depart from western ideals, (Potter et al 11)

There are several responses to this situation. One is that Green Economics attempts to investigate what economics looks like when it takes the viewpoint of all people everywhere including minorities, women and former colonies, and also the planet and the biosphere.

The other is that alternative indicators for well being, happiness, rights or needs can be introduced.

Another perspective is that Growth is an argument used interchangeibly with Development. This we have sustainable growth or sustainable development which have both been used to mean more business as usual growth or the right of less developed countries to be allowed to develop along the lines of those who have already developed.

Development economics is an important partner to green economics as it deals with similar issues and in particular poverty. Development economists and writers include a raft of writers who we might include in a list of green economists, such as Vandana Shiva, and Amartya Sen. So there is much overlap.

Globalisation similarly is regarded by many as a right of developing countries to participate. Many believe that Africas problem is that it doesn't participate in globalisation or Foreign Direct Investment rather than the fact that it does, albeit at the end of the supply chain not at the beginning, and its resources are used by others in value added processes and manufacturing.

There is also criticism of this from the view point that it ignores the top down development in Germany and Japan, He liked assistance from the outside the World Bank, direct foreign investment, multinationals and military advisors. The war in Vietnam was partly justified by his position.

Development and post colonial growth theory is summarised also by Preston 1996.

And the arguments for "progress". Development was represented by Christian Order, modernisation and responsibility. Darwinsim equated development with evolution., a change towards something more appropriate for future survival. And this then developed into the correct way of development based on western social theory which became heavily economic in nature.

Escobar (1995) argues that development has created such abnormalities as poverty, underdevelopment, backwardness, landlessness, and addressed them through normalisation programmes that deny culture or initiative. Post modern theories argue that history is a sequence of events not a goals.

Globalisation

The meaning of globalisation is

UNDP 2001

Growing interdependence of the worlds commodities

Greater integration of the worlds economies cultures technologies and governance

Global flows of ideas, goods and services, innovations, financial capital and new technologies enhanced by gains in communications technology and the Internet, and openness to trade and market expansion.

AT Kearney index- of globalisation 2001

The degree of economic integration and flow of goods and services -measured by the share of international trade- in gross domestic product GDP and the convergence of domestic prices with international prices.

Level of monetary flows

Expansion of information technologies-

There have been challenges to this approach

Lester Brown World Watch Institute Reports (2004) argues that consumption is creating the problems and the green view is for less consumption and disagrees with the end goal of Rostow.

Earlier John Stuart Mill described a Steady State Economy and more recently this was taken up by Herman Daly and Boulding. So three levels of states are possible.

John Stuart Mill ( The Principles 1806-1973) the limited quantity and limited productiveness of the land as the real limits to production. He describes several variables in economic growth

Case 1 population increased - capital and the arts of production stationary

Case 2 population stationary capital increasing arts of production increasing

Case 3 population and capital increasing arts of production stationary

Case 4 population and capital stationary - arts of production increasing

Case 5 population capital and arts of production all increasing

Mill argued that as the margin of population in the most affluent counties appeared to reject further striving for higher real income per capita defined in material terms.(We need to remember he was influenced by Malthus. Ed)

Progressive state-

( reference of this part to be confirmed) •accumulation of population and growth of capital

•Stationary state

•Population simply reproduces itself,capital reproduces itself, John Stuart Mill- says we would use less commodities,no inexhaustible resources. Reliance on solar energyand perfect recycling of materials- Boulding like paleolithic culture- but its only temporary as in the end you use up resources

•Pride - we can surpass the physical world and attain freedom through creativity and science

•Humility - man as fallen needing benevolence of the creator/ we are part of an evolutionery process embedded as a gift bestowed by God- ultmate end- is preservation of life, and evolutionary process

•Ultimate means is determined by the laws of physics

•Boundaries within which steady state economy functions.

•1. Social institions:

•A) limit on population nationally licenses for births-zero population growth- 2.1 per female

•B) stabilise the stock of human artifacts within physical limits of environment- marketable quotas for this

•C) cap on personal income and wealth- moral boundaries - all persona have access to societies resources Borrows from thermodynamics

•Popular with environmental movement and scientists not with economists

•Pride - we can surpass the physical world and attain freedom through creativity and science

•Humility - man as fallen needing benevolence of the creator/ we are part of an evolutionery process embedded as a gift bestowed by God- ultimate end- is preservation of life, and evolutionary process

•Ultimate means is determined by the laws of physics

•Output per worker does not change over time-new capital production from savings exactly equals rate of existing capital depreciation.Technology is unchanged

•Solow - in exogenous growth models show how economies tend towards the steady state. 1956.

•Declining state-

The supply and demand model describes the interaction in the market for a certain good between producers and consumers, in relation to the price and sales of the good. It is the fundamental model of microeconomics, and is used to explain a variety of microeconomic scenarios, as well as as a building block for many other economic models and theories. It was originally described by Antoine Augustin Cournot, and was popularized by Alfred Marshall.The model predicts that in a competitive free market, price will function to equalize the quantity demanded by consumers and the quantity supplied by producers, resulting in an economic equilibrium.

References and further reading (this is currently being completed and will be finalised shortly

Simon D Fifty key thinkers on development (2006) Routledge

Pressman S Fifty key economists (1999) Routledge

Potter R. Binns T Elliott J and Smith D Geographies of development . (2004 )Pearson Prentice Hall

Aryeetey- Attoh Geography of subsahran Africa Prentice Hall 2003

Rostow WW (1990) Theorists of Economic Growth from David Hume to the present, Oxford University Press

Daly H. Most recently 2005 in Fullbrook What is wrong with Economics various Texts

Boulding

Mill JS Principles

Shiva V various texts

Mies M The subsistence perspective (1999) Further references in the text and will be updated shortly UNDP 2001 Sen A Various texts and development as Freedom ( ) Rigg (1997) in Potter et al.:4

Miriam Kennet November 2007

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