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Economics vs ecology: Progress within limits

By Darryl D'Monte

A recent meeting in Tuscany, Italy, explored the stormy relationship between economics and ecology and questioned the concept of growth without limits

The critique of neo-classical economics for turning a blind eye to environmental (and social) issues is now old hat. It is often pointed out that when nations wage war, the GDP rises because of the investment in goods and services, irrespective of the function that these perform. Traditionally, economists deal with this merely as a matter of choice between 'guns' and 'butter', which is to miss the wood for the trees. Alfred Marshal, the doyen of classical economists, referred to Robinson Crusoe and his subsistence economy only as a matter of choice between what to invest in, a question of survival.

The late Barbara Ward, the British economist also known as Lady Jackson, co-authored the seminal book Only One Earth as a prelude to the UN's Stockholm conference on the environment in 1992. If memory serves me right, she cited the late Sudhir Sen, an Indian economist in New York, who first coined the expression that economists were "resource illiterate" -- echoing Oscar Wilde's famous quip about cynics as persons who know the price of everything but the value of nothing.

Closer home, Anil Agarwal, late founder of the Centre for Science and Environment in Delhi , used to say that there were two GNPs: there was Gross National Product but also Gross Nature Product. There was an inverse relationship between them -- as one went up, the other went down! He made a case for measuring poverty in a predominantly agrarian society in terms of biomass per head, rather than income, which was an inadequate yardstick. This represented a person's wealth more accurately than did earnings in rupees. Yet another familiar criticism of economics is the fact that a standing tree, if its ecological role as a conserver of soil and water is taken into consideration, is three times more valuable than its worth as timber, which is all foresters and 'developers' are interested in.

The stormy relationship between economics and ecology was explored at great length at a recent meeting in the spectacular mediaeval little town of Rapolano Terme in the heart of Tuscany in Italy . It was the second such meeting organised by Forum Greenaccord for international environmental journalists, and this year's theme was 'The Economy and Eco-Economy'. While the prominent American speakers -- Jonathan Lash, president of the World Resources Institute (WRI) in Washington, and Lester Brown, founder president of the Worldwatch Institute in the same city -- revealed their predilection for more conventional reliance on market tools to tackle the world's environmental problems, notably climate change, the Europeans demonstrated that they were thinking far beyond such mundane (and often anti-social) parameters.

Juan Martinez-Alia from the Free University of Barcelona detailed advances in research on material and energy flow accounting -- physical indicators, as distinct from using the market mechanism of prices to determine where a country is heading so far as environmental sustainability is concerned. In Europe , the concept of using the Human Appropriation of Net Primary Production of biomass (known after its ungainly acronym, HANPP), is also gaining ground. Statistical offices like Eurostat are now disclosing figures on material flows for EU countries between 1980 and 2000. These are based on agreed methodology following principles developed through discussions with groups in Europe . The OECD is also sponsoring work on material flows. " Africa is very important to Europe ," Alia observed. " Italy and Spain , for instance, are heavily dependent on resources like phosphates (for fertiliser) and gas."

Alia referred to work done on trade and material flows in 1884 by Patrick Geddes, who spent his formative years as a sociologist, town planner and ecologist - 'ecology' was coined by a German biologist only in 1869 -- in India and in Mumbai. Indeed, he set up the sociology department of Bombay University , a fact little recognised in this country. He proposed a variant of what are today known as input-output tables. The first column would contain the sources of energy as well as sources of materials that are used not for their potential energy but for their other properties.

Energy and materials are transformed through three stages -- extraction, manufacture, transport and exchange. Estimates are needed of the losses at each stage. "The quantity of the final product might seem surprisingly small in proportion to the gross quantity of potential product," Alia notes. US agriculture today spends more energy in production than is embodied in its produce, thanks to skewed pricing and the notorious subsidies.

According to the Spanish academic, Geddes' theory is relevant to attempts by authors to develop a theory of unequal exchange between metropolitan centres and world peripheries (a la Emmanuel Wallerstein). As Alia says: "In neo-classical economics, provided that markets are competitive and ruled by supply and demand, there cannot be unequal exchange...In an ecological-economics theory of unequal exchange, one could say that the more the original exergy (available energy or 'productive potential' in the exported raw materials) has been dissipated in producing the final products or services (in the metropolis), the higher the prices of these products or services. This was indeed implied by Geddes with different words."

He quotes another analyst, to conclude that "market prices are the means by which world system centres extract exergy from the peripheries," and Alia adds that this is sometimes achieved by military power, as the current occupation of Iraq makes abundantly clear. The EU, which consists of 15 countries and poses a major challenge to the hegemony of the US as the world's leading economic power, imports four times more in tonnes than it exports -- in other words, the environmental burden in extracting resources is borne elsewhere. Latin America exports six times more than it imports. Spain shows no signs of dematerialising its economy: in 20 years, its GDP has increased by 74%, but material consumption by 85%.

After Columbus , Spain became increasingly dependent on international trade. These were the much-sought-after 'precious goods' (shades of El Dorado ), which were small in volume but high in value. As Alia told journalists in Tuscany : "The British imported goods from India with ships built from Indian wood." (Nelson's navy also used Indian teak, causing great ecological devastation to what was later known as Bombay province, encompassing Gujarat and Maharashtra today. Much of the poverty of these areas of western India can be attributed to such colonial plunder.) " Peru was deforested as Barcelona imported 60 million tonnes of goods per year," (presumably during the era of the Conquistadores).

Unlike Anglo-Saxon thinkers, Alia has collaborated with a well-known Indian ecological historian, Ramchandra Guha, and co-authored Varieties of Environmentalism: Essays North & South (OUP, Delhi, 1998). He has freely employed Guha's categorisation of environmental conflicts over resources, with terms like biopiracy which, Alia reminds us, "is not new at all; it has been going on for 500 years," even if it now applies more specifically to the patenting of plants and other materials from the South by the North. Among the Indian examples Alia cites of such disputes are water conflicts, like the Narmada controversy; cultivation of shrimp farms in mangroves; and equal rights to carbon sinks (forests and oceans which absorb greenhouse gases, where he acknowledges Anil Agarwal and Sunita Narain of the Centre for Science and Environment).

Alia and Guha have coined a new vocabulary: "indigenous environmentalism" for resistance against external exploitation of resources (like the Ogoni and Ijaw tribals against Shell's extraction of oil in Nigeria); "ecologically unequal exchange" and raubwirtschaft, or the plunder economy used by German and French geographers even a century ago. In 1997, a group called OilWatch issued a declaration at Kyoto , signed by over 200 organisations from 52 countries, calling for a ban on all new exploration of fossil fuel reserves in pristine and frontier areas, since the burning of such materials is the primary cause of climate change, leading to eco-catastrophe. President Bush is doing exactly this by championing the exploration of oil in snowbound Alaska . OilWatch also demanded that oil, gas and coal prices "properly reflect the true costs of their extraction and consumption, including the best estimate of their role in causing climate change in order to apply the polluter pays principle to reflect the cost of carbon in the price".

Other eco-ecological concepts have been derived from India : eco-feminism was first introduced by the economist Bina Agarwal (Cold Hearths & Barren Slopes, Allied, Delhi, 1986) and further advanced by Vandana Shiva. The global struggle over patent rights has centred on basmati and neem in India , as it has over cinchona (for its anti-malarial properties) in Peru and Ecuador . Alia concludes that ecological economics is relevant for political ecology not only in providing tools for alternative analysis but for pointing out that what economists term "externalities" -- the destruction of the environment in the extraction of natural resources -- cannot be estimated in money terms or "chrematistic" language.

Professor Serge Latouche of Paris University questioned the very concept of endless growth espoused, amongst others, by the Geneva-based World Business Council for Sustainable Development, which posits growth as the solution to climate change, not the problem. The world was witnessing "jobless growth," where economies were growing but there was increased unemployment -- a feature that India is only too familiar with, as manufacturing declines and services cannot absorb those rendered jobless in factories. The iconoclastic thinker, Ivan Illich, had called for a programmed end to growth, and Latouche himself advocated decrement -- the opposite of increment, or shrinking, decreasing economies.

Even Jonathan Lash, who waxed eloquent about the 'Power of Markets and the Power of Information' at Tuscany pointed out that 80% of the price of a Nike shoe consisted of advertising and marketing. According to Latouche, advertising was the second biggest global industry, after weapons, amounting to $500 billion a year. "It consists of visual, audio, mental and spiritual pollution," he regretted. He urged societies to reassess life values. Manufacturers of autos in Germany , for example, where vehicles consume 84% of the energy in that country, could go in for co-generation; some households there have already started producing more energy than they consume. Local needs could be relocalised so as to use nearby materials and thereby save on packaging and transport, not to mention providing local employment.

The entire concept of "progress without limits" was ideologically arrogant, Latouche stressed. Growth was a "virus" for both South and North, for which the only antidote was collective detoxification, failing which the planet would be condemned to extinction. France had been becoming 'modern' for three centuries. With industrialisation and advancements in agriculture, the quality of water in the north of France , known for its pristine purity, was contaminated with runoff from pig farms, which, ultimately, made its way to the sea. Was this a sign of progress or regression, he wanted to know, adding for good measure that he had complete faith in the system to generate catastrophes!

Professor Giuliana Martirani from Naples University lamented how we, as voracious consumers ("omnivores," to borrow Guha's expression), had lost personal contact with nature. We had grown arrogant because we feared nature, although the perceptive American biologist and author, Rachel Carson, had pointed to the dangers of the "chemicalisation" of society in Silent Spring, 42 years ago. The economy and ecology were locked in an embrace that was at once competitive and co-operative, rather like cells in the human body itself. She cited, as an analogy, a Brazilian performance that begins as a wrestling match but transmogrifies into dance.

Oil, GMOs and water were three resources on which most of the world's contemporary economic models were established -- and over which wars were sometimes being fought, she asserted. With the occupation of Palestine , privatisation and "petrolisation" were proceeding apace there, with the water table declining at an alarming rate. These resources raised three issues: justice, peace and equity. The current system was "completely and structurally violent," where nature was like a body with five senses but subjected to constant assaults. Societies were being "bombed" by advertising, to the extent that young people no longer made love on the beach but traipsed their way through malls to satisfy their needs through consumerism, in what critics have called the "society of spectacle". Such dichotomies between economics and ecology had to be bridged for human survival.

InfoChange News & Features, November 2004