Circulation and Circularity

I was really cheered to see a comment on my post about the need to understand the economy as a complex system, pulling me up for not mentioning the limitations of a Keynesian approach in an era of ecological crisis. I covered this point in my earlier post 'A green paradox of thrift', but I am still encouraged to know that the no-growth position is now so established that people are reminding me about it!

When proto-green-economist Kenneth Boulding made his point about the need for a 'circular economy' he was using this conception as a contrast to the wasteful production-and-destruction economy that typifies capitalism, which he described as linear. Materials come in at one end, they are transformed using large quantities of energy into products, which are sold and usually become redundant or unusable within a short period of time. They have then become 'waste'.

Since achieving all her ambitions in terms of round-the-world sailing, Ellen Macarthur has set up a Foundation to shift the mode of the productive economy towards a more ecological circular pattern. She freely acknowledges this as a far greater challenge than the southern oceans. The aim is to ensure that nothing is wasted, that products last longer, and when they can no longer be used in their current form can be broken down and reused as components or as materials. Reducing energy is another key aspect of this 'circular economy'.

German MEP Sven Giegold has recently produced a report linking the Eurocrisis to European economies' dependence on fossil fuels. I cannot make this link work, perhaps because of the slow Broadband speed in my semi-rural idyll, but his conclusion makes me feel that it is worth my while to persevere:

'The increase in raw material import costs between the first quarter 2009 and third quarter 2011 equals on average to 50% of their current account deficit in the same period. The rising import bill is particularly affecting lower and middle income groups, as they have to spend a disproportionately large part of their disposable income for energy consumption. Consequently, convincing measures to overcome the euro crisis have to reduce the dependency on fossil fuels and other non-renewable raw materials: No stabilization of the Euro without a Green New Deal.'

It is important that we explain to people why public-spending cuts are bound to cause recession, that we help people to understand the economy as a system in which circulation is what matters, not individual transactions. But it is also important that we are clear about the false dichotomy of austerity or growth. I hate to have to say this, but what we really need is a third way, a way in which we maximise local, quality economic interactions, and minimise those based on the use of materials and energy. Qualitative growth, and growth in local economies would build greater resilience and happier communities. While we need to be austere with our use especially of fossil fuels, the austerity of the spirit should always be condemned.
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Resilience Hierarchy

I was delighted to spend Wednesday morning this week at a conference on the subject of Peak Money organised by the Transition Network. Economics has been a key theme of Transition since the beginning. Useful outcomes have been the book on Local Money by Pete North and the economics content of the Transition Timeline book by Shaun Chamberlain. Both are available from Green Books.

I tried to fit into the 'transition culture', although that isn't always easy for me, since my motivation is for political action as much as local practice, and the discomfort some of the transitioners feel for this sort of critique is difficult for me at times. I seem to become cast in the role of angry politico, always taking a critical position. While I like to reframe myself as the grit in the oyster, it doesn't always make for an enjoyable exchange.

I used my time on Wednesday to share some of the political-economy background to the question of how Transition Towns should deal with the economic crisis, focusing on the question 'Why waste a good crisis?' I feel that we are wasting this crisis. The reality is that only the 2008 Recession managed to successfully reduce UK CO2 emissions, which makes our point that tackling the growth imperative of the capitalist economy is vital to ensuring an adequate response to climate change.

I also felt bound to question the idea of 'peak money', which I find unhelpful in spite of the slide in Tony Greenham's presentation which was fairly suggestive of a peak curve for net lending by UK banks. My concern about the concept is that it draws a parallel between a natural, non-renewable resource, whose exhaustion is inevitable, with a socially constructed tool that we can change at will. Since much of the business of economics is precisely about creating abstractions, imbuing them with power, and then using them to acquire resources, it seems to me vital that those of us building a sustainable economy should be very clear about what is real and what is subject to social or political control.

Instead of the idea of 'peak money' I suggested the idea of a resilience hierachy, moving from the least to the most abstract. In this way of framing the economy, money comes at the bottom of the hierarchy, because it is highly abstract and (as somebody once said) you cannot eat it. Fossil fuels might be somewhere in the middle: real but enhaustible. At the top of my hierarchy will always be land, the sole and eternal source of our support. To place land back at the heart of economics must be the most important task of a green economist.
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Sunshine State or Resilient Region?

Those of us who are active in Transition Towns have been disappointed by the government's inability to respond to the impeding food crisis that will result from the exhaustion of oil supplies. So I was surprised, I'm not sure whether or not it was a pleasant one, to find that the Department for Business, Innovation and Skills employed some consultants in 2008 to develop a range of scenarios in response to the need to radically reduce our national use of energy.

The scenarios are based on a series of 2 x 2 matrices arising from two ‘axes of uncertainty’. The x-axis ‘describes the significant uncertainties in the global political and economic context in 2050’, while the y-axis ‘looks at the type of innovation which attracts investment’. On the x-axis are represented possible assumptions about the extent of co-operation between nations, while the y-axis marks out the continuum between investment in optimising existing systems or developing wholly innovative solutions.

This process results in four possible scenarios: Green Growth, Carbon Creativity, Resourceful Regions and Sunshine State. Two of the scenarios have commonalities with a bioregional future, although both are based on this relocalisation as a response to a failure of global solidarity which is by no means the basic assumption of a more regionally based economic future. In the first, the Resourceful Regions, ‘The key distinguishing feature is that English sub-regions have a high degree of autonomy, matching Scotland and Wales’:

‘The countryside is used more intensively than in the past, for food production, mining
and other activities. Within built up areas, retrofitting rather than new build is the
preferred approach. Any new buildings are increasingly built in a local vernacular
style, and there is considerable emphasis on urban green space to tackle overheating. People in this Britain like to think they are self-reliant, and are proud of being British, even though the country is closer to breaking up than any other time in the previous century. Their living conditions vary widely as regions have their own economic structures and differing levels of economic success. But acceptance of the situation is underpinned by strong regional identities and the effectiveness of most regional government’s moves to support vulnerable groups and public services such as public transport.’ (Foresight, 2008: 14)

In the Sunshine State scenario, ‘Government has fostered an emphasis on localism to respond to energy problems’ and there are other aspects of the imagined future that could find resonance with a bioregional approach: ‘There are more local shopping streets and other community resources, partly because of planning decisions intended to promote local autonomy and partly because of municipal enterprise.’

I cite these examples not to support their vision of the future, which I think is limited by the nature of the underpinning assumptions, as well as the method used, but to indicate that government is considering the future design of economic systems that must result from rapid reductions in energy use. Policy focus has been most strongly on the Green Growth scenario, with profit-driven companies providing technological solutions, and to a lesser extent the more co-operative Carbon Creativity approach, but these are political choices. In a democracy, visioning the future is a job for all and these scenarios make clear that a bioregional future of the sort I am proposing frequently on this blog is a realistic possibility already under consideration by policy-makers.
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What the Oil Bloom Bought Us

Greens are portrayed in the media as profits of doom, as though a fascination with the negative impacts of our lifestyle might be some sort of psychological flaw. My own view is that we are closer to reality than the vast majority of the population, who are trapped in denial about the ecological crisis, but none the less I think it is worth re-evaluating the extraordinary achivements of the 200-year oil bloom.

To focus our minds on the technological and social achievements of industrial society I suggest you watch the visualisation presented by Dr Hans Rosling during his BBC series The Joy of Stats. In spite of questions about what measuring wealth in US dollars over the past 200 years can actually mean, the achievements in terms of life expectancy are impressive and should not be sidelined. The impact on China of its turbulent political history, as it bounces up and down, argue strongly for evolutionary rather than revolutionary change.

Wonderful though these achievements are, they have been bought with a level of energy intensity that we can no longer afford. But the advances in knowledge and technology will stay with us. Our challenge now is to find ways of using them that achieve the maximum in human well-being with the minimum of resource and energy use. Here another recent visualisation is helpful.

Although the footprinting methodology is limited in terms of what it can offer policy-makers, it is a great asset in helping to communicate the message about over-use of resources in an intellectually and visually appealing way, as Jacob Houtman's global map, made freely available on Wikimedia Commons demonstrates.

As well as illustrating the situation facing us so vividly, these two visualisations also demonstrate another asset we have available: the creativity that was used to display these data can also be used to explore and implement solutions to the ecological and political problems we face. Tweet

No Stabilisation without Escalation

Here's something unusual: an opportunity to agree with the Tories. Media discussion has returned to the issue of the damaging results of volatility in the fuel price, a problem which affects citizens as well as businesses. Back in 2008, the Conservatives published a consultation paper on the question of using fuel taxation to stabilise the price, rather than raise revenue.

More surprisingly, the paper made reference to the need for 'stabilising the price of carbon'. This was the time when the Conservatives had changed their torch of enlightenment to a tree of sustainability and were trying to persuade us they would be the greenest government ever. Now that they are the government the link between stable fuel prices and sustainability appears to have been severed.

As I have already argued, in a long-term perspective, government would help business most by establishing a clear upward trajectory for fuel prices, making the direction of travel towards low-energy production and renewable sources of supply clear, and pushing managers towards building this in to their organisational planning.

Abandoning the link between stable fuel prices and the transition to a low-carbon economy is an example of the threadbare nature of the Tories' green clothes. But more seriously it demonstrates their failure to understand where the global economy is going. Far be it from me to provide business advice to capitalist corporations, but it doesn't take much insight to realise that relying on fossil fuels in the era of peak oil and climate change is a recipe for business failure.
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A Word in Your Shell-like

Today should surely see the hammering of the final nail into the coffin of the concept of CSR--corporate social responsibility. This trite phrase has always been a contradiction in terms and the implicit admission by oil-giant Shell of their collusion with the Nigerian government in the execution of 11 Ogoni activists including the writer Ken Saro-Wiwa tears away the remnants of the thin veil covering the naked greed of the global corporate elite.

Shell was a leading proponent of CSR, or a leading exponent of Greenwash , depending on your point of view. The global reach of the oil corporate's activities had left a similarly extensive trail of shame reaching all the way from the Niger delta to the North Sea, where Shell's attempt to dump the disused Brent Spar rig in the Atlantic was successfuly opposed by Greenpeace. Shell was also a founding member of the Global Climate Coalition, which fought against the evidence of climate change and may have ensured the extinction of the human species.

As a timely response of questionable scope Shell set up a Foundation and started distributing a tiny proportion of its profits to worthy causes, including environmental organisations naive enough to take the filthy lucre. Attempts to rebuild the company's reputation in Nigeria itself were particularly criticised. Health centres and schools were launched across the Niger delta, only to be left half finished when the TV cameras moved on.

The complaints by international leaders about the poor standards of governance that prevent African governments from improving the lives of their people are illuminated as the rankest hypocrisy by the story of the joint project by the Nigerian elite and Shell to serve their limited self-interest at the cost of the millions of Nigerians. The courage of Saro-Wiwa and his comrades in drawing the world's attention to these iniquities has been vindicated by the court judgment. Tweet

A Matter of Life and Death

I've been relying for some time on evidence of the disastrous decline in life expectancy in the Soviet Union as an indication of the negative effects of the rapid imposition of a market system. A detailed study published recently in The Lancet provides further underpinning for this case.

The key conclusion of the report is:

Rapid mass privatisation as an economic transition strategy was a crucial determinant of differences in adult mortality trends in post-communist countries; the effect of privatisation was reduced if social capital was high.

The authors are careful to avoid saying that a market system is intrinsically bad for your health. Rather it is the rapid move from one economic system to another that results in social, economic and consequently psychological dislocation. Other medical researchers, such as Richard Wilkinson and Kate Pickett, would disagree with this. Their new book has acres of graphs and tables indicating that the inequality inherent in a market economy itself is, literally, a killer.

If it is the rapid change that causes morbidity and mortality then we can predict a very unhealthy future for Western societies facing climate change and depleting oil supplies. What the research shows is that it isn't the lower living standards but the shock to the system of everything you have always known falling apart. Loss of meaning leaves human beings suffering from what Durkheim called 'anomie', resulting in aggressive behaviour and lack of self-respect and self-care.

By contrast, if offered a strong vision and when encouraged to co-operate to reach a shared goal people thrive, even if their material consumption falls. This is the message of the Transition movement, but one that is distressingly absent in the prescriptions of our politicians, who are still clining to an outmoded and unworkable social and economic model.

Let other folk make money faster
In the air of dark-roomed towns,
I don't dread a peevish master;
Though no man do heed my frowns,
I be free to go abroad,
Or take again my homeward road
To where, for me, the apple tree
Do lean down low in Linden Lea.

From Linden Lea by William Barnes, made famous as a song by Vaughan Williams (it's better with the music!) Tweet

Rip-off Britain?

The struggle between capital and labour over their shares of the national pie have become more overt recently. This is inevitable given that the environmental crisis has made it clear that the strategy of increasing the size of the pie has run up against the stops. In the Northern Rock fiasco the shareholders, who controlled around 1 per cent of the bank, attempted to extort money from the poor and middle-earners who pay taxes. The temporary nationalisation strategy represents a truce - since the ultimate decision about how much public subsidy will be given to the hedge funds is only delayed.

My recent visit to Portugal made clear the consequence in the transport sector of this commitment to business interests rather than people's interests - or a policy where the 'customer' (passenger) pays more of the costs of travel than the taxpayer, as the government prefers to phrase it. This is the explanation for a four-stop trip on the London tube costing £4 while a journey three times the length on the Paris Metro costs only E1.50. Meanwhile my trip from Irun to Lisbon, lasting 13 hours and including a bed and breakfast in the dining car, cost £99, while my 1.5-hour trip to London from Stroud was £108.

This is one of many examples of the way in which the poor subsidise the rich in a world where all the political parties have abandoned the interests of labour, or working people. Motorists are given huge subsidies in the form of free roads paid for from taxes which grow ever more regressive. Meanwhile bus and train companies are forced to fend for themselves - and pass the consequence on to passengers in the form of increasing prices and worsening service.


We see a similar picture in the world of energy - another key sector for price rises as oil supplies dwindle and competition for them increases. People who have run into arrears with electricity bills are put onto meters and then pay up to 45% more, subsiding the rich who can afford the cheap deals that come when you pay by direct debit. Save the Children identified that in most of the key consumption areas the poor are paying more than the rich.

The same applies in the debt/credit market, where small-time risk is penalised by high charges, whereas high-level risk is condoned. Years ago I wrote to my bank complaining that the £20 fine they had extracted for a £5 sally into the red was unreasonable. The letter justifying this extraction of money from the poor to be sent to the rich was signed by a 'Ms Swindell'. I intend to put this in a frame as a moral lesson. Tweet