I am, by practice and way of thought; an engineer, although theoretically minded enough that I probably should have been a physicist. Over the past few years my interests have grown to focus squarely on the issue of future energy sustainability and the social reform required to make that sustainable. Given my background this would suggest that I work on technology X, compared to technology Y, and energy source Z, blah blah.. which I do. However, over the past several years I have become much more interested in the need for an interdisciplinary approach to this problem, whose sources, implications, and evidences lie in so many different aspects of our society: agriculture, politics, economics, ethics, marketing, even religion, etc. And as we approach anything that can be adequately considered along the lines of the beginnings of a "solution" it is something that addresses just as wide of a range of facets of life.
Before diverting too much, what I am currently most interested in, perhaps because I know the least about it, is the economic system's role in this "energy crisis." As I understand it, there are two fundamental issues with regard to our economic system's design that hinder our ability to proceed towards an energy sustainable and ecologically balanced future.
1) Ecological systems and natural capital are absolutely necessary in supporting life and human welfare, and thus must represent a large portion of total economic value; yet these systems and resources are consumed or damaged in processes contributing to economic value with zero market representation. (1)
2) Our success is (loosely) defined as economic success and progress, meaning increasing profit and GDP, and this is our approach to solving issues of poverty etc. Thus, we perpetuate economic growth. However this growth is counter to the steady state operation of the world as it already struggles to support the oversized economy of today. (2)
Costanza (1) provides an assessment of ecosystem and natural capital market values, justifying this need based on evidences such as the economic effects of the hypothetical situation that they were completely removed, or the costs and requirements if we were to replicate these in a future artificial environment. This reasoning could be used to establish their actual economic value at infinite. In one publication (3) the two collaborate to develop solid policy recommendations based on these contentions from Costanza combined with the issues relating to differentiating between "the concepts of growth (material increase in size) and development (improvement in organization without size change)" as "growth cannot be sustainable indefinitely on a finite planet." Additionally focusing on the notion that macroscopic economic measures (GDP, GNP) which we focus on, "measure mainly growth, or at best conflate growth and development." (3)
The conclusions from this effort follow the need for efficiency increases, rather than throughput, and to limit the human scale to within the carrying capacity of the world. However, as they are the most recent and the most economic-specific, I would like to reprint the 10-point policy summary from Daly's publication for closing and discussion, which is at the forefront of my current consideration, with the hopes of sparking discussion of the inherent difficulties with some of the suggestions, or which are more controversial; as these things are less obvious to myself.
1. Cap-auction-trade systems for basic resources. Cap limits biophysical
scale according to source or sink constraint, whichever is more stringent.
Auction captures scarcity rents for equitable redistribution. Trade allows
efficient allocation to highest uses.
2. Ecological tax reform—shift tax base from value added (labor and
capital) and on to “that to which value is added”, namely the entropic
throughput of resources extracted from nature (depletion), through the
economy, and back to nature (pollution). Internalizes external costs as
well as raises revenue more equitably. Prices the scarce but previously
unpriced contribution of nature.
3. Limit the range of inequality in income distribution—a minimum income
and a maximum income. Without aggregate growth poverty reduction
requires redistribution. Complete equality is unfair; unlimited inequality is
unfair. Seek fair limits to inequality.
4. Free up the length of the working day, week, and year—allow greater
option for leisure or personal work. Full-time external employment for all is
hard to provide without growth.
5. Re-regulate international commerce—move away from free trade, free
capital mobility and globalization, adopt compensating tariffs to protect
efficient national policies of cost internalization from standards-lowering
competition from other countries.
6. Downgrade the IMF-WB-WTO to something like Keynes’ plan for a
multilateral payments clearing union, charging penalty rates on surplus as
well as deficit balances—seek balance on current account, avoid large
capital transfers and foreign debts.
7. Move to 100% reserve requirements instead of fractional reserve
banking. Put control of money supply and seigniorage in hands of the
government rather than private banks.
8. Enclose the remaining commons of rival natural capital in public trusts,
and price it, while freeing from private enclosure and prices the non rival commonwealth of knowledge and information. Stop treating the scarce as
if it were non scarce, and the non scarce as if it were scarce.
9. Stabalize population. Work toward a balance in which births plus inmigrants
equals deaths plus out-migrants.
10. Reform national accounts—separate GDP into a cost account and a
benefits account. Compare them at the margin, stop growing when
marginal costs equal marginal benefits. Never add the two accounts.
1 - Costanza, Robert, "The Value of the World's Ecosystem Services and Natural Capital" Nature May 1987, Vol 387:253-260.
2 - Daly, Herman E., "A Steady State Economy" Sustainable Development Commission, UK University of Maryland, April 24, 2008.
3 - Costanza, R., Daly, H., "Natural Capital and Sustainable Development" Conservation Biology, Vol. 6, No 1, March 1992, 37-46.