Part 0, Part 1, Part 2, Part 3
There’s more to economic exchange than a pure exchange of value. In fact, the more I think about what an economy is, the more I realise that nearly every aspect of our lives is mediated through capitalism.
I want to take a few steps back and consider what are the elements of an economic system. Today's excerpts are for getting the conversation started, but to be honest I'm not very satisfied with the analysis presented by these authors. As always, the links to the original articles are in the section headers.
But anyways, let’s start with asking, what exactly does ‘Sustainable’ mean?
The 'wrong' definition of sustainablility
The world's nations presently define their top economic goal in terms of Gross Domestic Product (GDP). This is the total amount of production produced within a nation, usually within one year. In 2010 GDP varied from $16 trillion for the European Union, $15 trillion for the US, and $6 trillion for China to $16 billion for Afghanistan, $7 billion for Haiti, and $105 million for the Falkland Islands.
The top economic goal of most nations is a constant, never ending rise in total GDP of several percent per year. It's their economic growth target. Nothing is more important except for war. If a country's GDP goes flat, that's stagnation. If it falls for more than two quarters is a row that's a recession. Both are to be avoided at all costs.
The official GDP growth targets for several countries are: (Data sources vary per nation)
Sustainability is what people want to happen indefinitely. No country has a GDP growth target less than about 2%, except when recovering from a recession. Thus the defacto definition of economic sustainability is steady growth in total national GDP of a minimum of about 2% per year.
But this is the wrong definition. Total national GDP doesn't tell you how much the average person's income is. Nor does it tell how many people are at the low end of the distribution of income and are thus starving. Nor is steady growth even possible forever. Steadily growing total GDP is thus a flawed goal that can lead a country, and the world, terribly astray.
The 'right' definition of Sustainablility?
Let's add a column to the table for average GDP per person. This takes us closer to what matters. (Data source for last column)
For a pillar of sustainability to be strong it must answer these questions with a yes:
1. Can it be sustainable?
2. Does it well support the goal of the system?
For the first question, can steady GDP growth be sustainable? No. But average GDP per person can, if it doesn't clash with the goals of the other pillars or the goal of the system.
Now for the second question. As Thwink.org sees it, the goal of Homo sapiens is (or should be) to optimize long term quality of life for those living and their descendants. That's the goal of the human system. Does average GDP per person support that goal? Not quite. There's nothing in average GDP per person that allows comparison to the goal of quality of life. To do that we need the so called poverty threshold.
The poverty threshold or poverty line is defined as “the minimum level of income deemed necessary to achieve an adequate standard of living in a given country.” 2 In poor countries the threshold is defined quite low, as low as $1.25 per day. Below the threshold a person suffers malnutrition and frequently dies. Developed countries define the poverty threshold so much higher that it's no longer a "poverty threshold." It's the preferred minimum standard of living level. For example, in the US it's $30 a day. 3 This is widely called the “national poverty line,” a confusing term. The more accurate term is "preferred minimum standard of living level," which is the one we will use.
Does the preferred minimum standard of living level (in monetary units) well support the goal of the system? Yes. So at last we have the correct definition. Economic sustainability occurs when a political unit, such as a nation, has the preferred percent of its population below its preferred minimum standard of living level. The percent needs to very low, somewhere around 5% or less, because everyone below the level is suffering, either physically due to poor health or psychologically.
Quick question tho: Why do the 5% still need to suffer in a sustainable economy?
Now, let’s talk about economic value. When exactly does something have economic value?
Economic value
Things have economic value only if they are functional or useful to people. All things that are of use to people ultimately are derived from nature by way of society. This is no other possible source. Economies are not capable of creating anything of value; they simply facilitate the process of extracting economic value from natural and human resources.
Economies are not absolutely necessary. The only alternative to an economy, however, is self-sufficiency. Once an individual decides to barter with someone else to get something they otherwise would have had to obtain from nature themselves, they have created an economic relationship.
Families, communities, and societies are not absolutely necessary. However, the only alternative to social relationships is individual isolation. Once an individual decides to relate to another person for purposes other than getting something from nature, a social relationship is formed. Economic and social relationships are both essential for economic sustainability.
Now, let’s talk about social principles, since human beings are a social species, not just a collection of individuals.
Social Principles
People need relationships with other people for reasons that are purely personal – meaning not economic.
Society, as a general concept, includes all direct and indirect relationships among people – within families, friendships, communities, societies, and nations. People obviously have banded together in families and communities or tribes, for purposes of security, trade, and reproduction.
They also have formed communities and societies for personal companionship. People need to love and be loved – without rationalization or justification.
Quick question: What are relationships built on?
Or, what is necessary for ‘positive personal relationships’?
Core Values of Humankind
People in different cultures obviously have different social values, but a common set of core values are shared across virtually all cultures of civilized society. These core values include such human characteristics as honesty, fairness, responsibility, respect, and compassion.
Such values reflect deeper underlying social principles that transcend societies. Social principles, like ecological principles, are defined at a higher level of organization beyond human observation or full understanding. Over time, however, humans have come to share a common sense of what is necessary for positive personal relationships. Positive relationships simply cannot be maintained among people who are dishonest, unfair, irresponsible, disrespectful, and uncaring. Such propositions do not need to be proven; they are matters of consensus or common sense.
Trust is Universal
Positive personal relationships must be built on trust. Trust is a “rule-based” principle of human behavior, meaning it is a universal standard of conduct deemed appropriate for all people under all conditions.
Rule-based principles do not consider the consequences of specific actions; good behavior ultimately is assumed to bring good results. The core values of honesty, fairness, and responsibility are all logical aspects of the principle of trust. To maintain positive personal relationships, people need be honest and truthful in words and actions. They need to be fair and impartial in their treatment of others, regardless of their race, age, gender, or any of the other particular social group to which they might belong. They need to do their share of whatever needs to be done and to follow through with their promises or commitment.
Whenever trusts are validated, relationships grow stronger. Whenever trusts are betrayed, relationships grow weaker. To sustain personal relationships, people must be willing to trust and be trustworthy in return.
Kindness & Empathy
Positive social relationships must also be based on kindness.
Sometimes, relationships can be sustained only through empathy, respect, and compassion. We all face the possibilities of ill health, natural disasters, and financial problems in our lives. We all make mistakes. Sometimes, we need mercy rather than justice.
Kindness is a care-based rather than rule-based principle. Kindness is situational: what is appropriate depends on the specific context or conditions. People should do for others as they would have others do for them, if they were in the other person’s situation and the other person was in theirs.
Empathy is a precondition for kindness. To be kind, a person first must be able to put themselves in the other person’s situation, under their conditions, with their unique obstacles and aspirations. We may not agree on how others should be treated, but to sustain personal relationships, we must treat others with compassion. We must be respectful of their beliefs and values as we would have them respect ours. This ideal of kindness, generally referred to as the “Golden Rule,” has been a fundamental aspect of virtually every enduring religion and philosophy throughout human history.
Moral Courage
Positive social relationships also require courage. It takes courage to be trustworthy and kind in the cynical cultures of today that consider trust and kindness to be idealistic and naive. It takes courage to act on personal convictions and to persevere in carrying out good intentions, even in the face of adversity and personal risks.
Courage is too often associated with acts of bravery or the willingness and ability to face great personal risks in carrying out commitments. However, some of the most evil and despicable acts in the history of humanity were carried out by people with great physical and mental courage. To strengthen human relationships, bravery must be guided by social and ethical values. Courage strengthens human relationships only when it gives people the ability to fulfill some positive purpose for the greater good of society and humanity.
Economics: From Utilitarianism To Ethics
Unfortunately, the global economy is dominated by a utilitarian or ends-based ethic that places no value of human relationships unless something of value is expected in return. The rightness or goodness of decisions and actions is judged solely by their consequences or results, and the economic consequences are the only ones that seem to matter.
The supposed objective of such intentions is to do the “greatest good for the greatest number of people.” But the “greatest good” has become synonymous with the “greatest wealth,” as measured by personal prosperity, regional economic development, or the value of national economic output.
The “greatest goods” arising from trust and kindness have no economic value, as explained in The Essentials of Economic Sustainability. It will take moral courage to speak the truth about the dependence of economic sustainability on the essential social principles of trust, kindness, and courage.
