Fostering a Sustainable and Inclusive Economy: Rethinking the Role of the State, Ian Gough

Fostering a Sustainable and Inclusive Economy: Rethinking the Role of the State Ian Gough Presidential seminar Dublin 12 November 2019

3 quotes “We are moving from a ‘cowboy economy’ lived on limitless plains to a ‘spaceman economy’ lived within a capsule” (Kenneth Boulding) "It is some hardship to be born into the world and to find all nature's gifts previously engrossed" (John Stuart Mill, Principles of Political Economy) “We are all in the same boat, but some of us have much nicer cabins than others” (Bruce Ackerman)

Sustainability and Social Inclusion • Sustainability: • ‘that whatever is being considered has the capacity for continuance’ (Ekins) • Traditionally interpreted as fiscal sustainability in the face of demographic and other longer term pressures • But I focus on environmental sustainability, especially the threat of climate change • Social inclusion: – Equity/equality – Solidarity: feelings of sympathy and responsibility between people that promote mutual support.

• Put another way we need a just transition to a sustainable economy

Rethinking economics • Normative economics – Question central role of preferences – Counterpose human needs

• Political economy – New roles for state, including: • Ecological management • Recomposition of consumption • Integrated eco-social policies

Plan of lecture 1. Global dilemmas of the Plutocene 2. Universal human needs: rethinking value 3. Three meta-strategies a. Eco-efficiency and decoupling: green growth b. Recomposing consumption c. Post-growth

4. Conclusion

1. Global dilemmas of the Plutocene

Rising temperatures since 1884

Responsibilities: Anthropocene + hyper-inequality = Plutocene

Those nations, classes and groups least responsible for past embodied emissions are most likely to be adversely affected now and in the future

Brundtland Report 30 years on “Sustainable development… meets the needs of the present without compromising the ability of future generations to meet their own needs.”

It contains within it two key concepts: 1. Needs 2. Limitations Brundtland Report 1987

Rights and duties 3 obligations stemming from climate change: 1. A planetary emissions ceiling 2. A fair allocation of emissions: – Contract and converge

3. A fair funding of adaptation and compensation – Obligations of the global North – + justice within nations

The first imperative: drastic unprecedented decarbonisation of the global economy.

The later it is left the faster it must happen

The temporal and intergenerational dilemma • IPCC estimate of the available global carbon budget (that would offer a 66% chance of remaining within the 1.5°C warming target) is 420 GtCO2 (billion tonnes of CO2).

• Divide this figure equally between all 7.6bn humans today and divide by the years left this century, gives a global personal allowance of 0.7 tonnes per person.

• Present consumption in the UK is 12.1 tonne – Seveteen times higher than the sustainable level in an equal world. This is a vast gulf

• Jackson: UK’s carbon budget would be exhausted by 2023 to achieve its target – four years away

The spatial dilemma: Inequality v sustainability • All strategies to eliminate global poverty are untenable unless the poor get a bigger slice of the whole cake – and the cake cannot continue to expand because of global constraints on emissions.

– Woodward: if the business-as-usual model were used to eliminate poverty it would devastate the planet.

• Just to eliminate $1.25 a day poverty, global GDP would need to increase by 15 times to an average global income of $113 000 in 2115 (three times the top Western levels today).

• Thus new forms of redistribution + a shift to an alternative economic pathway

Feeble global responses • Climate collapse ups the need for social solidarity and protection, but does it undermine the pressure?

– Stern: ‘there is little point in equitable access to a train wreck’

• Put pursuit of global equity back on international climate agenda – Marginalised by Paris and Green Growth discourse

• The 2030 Agenda for Sustainable Development

Sources of hope? Goldemburg’s corner’ Consumption-based carbon and life expectancy:

2. Human need theory (Heat, Greed and Human Need) • Such obligations over time and space requires recognition of universal human needs • Normatively human needs, present and future, trump present (and future) consumer preferences.

• Henry Shue: ‘It is not equitable to ask some people to surrender necessities so that other people can retain luxuries . . . The costs ought to be partitioned . . . into costs that impinge upon necessities for the poor and costs that only impinge upon luxuries for the wealthy

Core concepts in human need theory • Basic needs: Universalisable prerequisites to avoid serious harm • Three core elements in Doyal/Gough and Nussbaum and eudaimonic psychology: – Participation/ Affiliation – Health/ Bodily integrity – Critical autonomy/ Practical reason

• These universal and cross-cultural

Need satisfiers • But need satisfiers almost always contextual and relative – Those goods, services, activities and relationships that satisfy needs in a specific context

• But can identify cross-cultural intermediate needs here: – Material • water, nutrition, shelter, secure and non-threatening work, education and healthcare

– Non-material • security in childhood, significant primary relationships, physical and economic security

– Environmental • A secure and sustainable planetary environment

This sort of list amenable to revision in light of cross-cultural research

Five features of human needs crucial to idea of sustainable and inclusive wellbeing Human needs are: • Universal • Objective: extensional v intentional claims • Plural and non-substitutable • Satiable - sufficiency • Cross-generational They thus provides some firm foundations on which to build public policies pursuing sustainability

Social and institutional preconditions • John O’Neill: – ‘Each generation needs to pass down the conditions for livelihood and good health, for social affiliation, for the development of capacities for practical reasoning, for engaging with the wider natural world and so on.’

• This relates to the SDGs adopted by the United Nations (UN) in 2015.

• Also relates to justice and rights discourse. Substantive economic and social rights – To a secure, flourishing life – To meeting basic needs for health, participation and critical autonomy for all

3. Equitable and sustainable wellbeing: A three–stage strategy C1. Green growth: Ramp up eco-efficiency of production C2. Recompose consumption, switch from • high to low carbon • luxuries to necessities C3. Post-growth: reduce absolute levels of consumer demand, move to steady-state economy Note: all must embrace fairness/ justice

C1. Paris climate conference 2015 • Goal: decoupling of output and emissions by ‘second half of 20c’ – UK target for zero net carbon now 2050 (2030??)

• Pursue efforts to limit temperature rise to 1.5C • Five yearly ‘Intended Nationally Determined Contributions’ (INDCs), but not legally binding • But commitments so far only ¼ of the way to a 2 degree target

C1. Carbon mitigation and just transition • Huge range of programmes, Michael Grubb distinguishes: – Carbon pricing – Regulation – Green investment

• But carbon pricing regressive: – Necessities (heating, food, basic transport) are almost everywhere more carbon intensive than prosperity goods/luxuries – Ditto BECCS

• This unjust and can be counter-productive

Compensation v. eco-social policy • The economists’ argument: compensate the losers – But compensation does not work

• So must move to integrated eco-social investment programmes that enhance both welfare and sustainability • A greater role for innovation and investment

CI eco-social policies • Green investment, Green New Deal’ – Retrofitting of entire housing stock – Public transport – Decarbonise food

• Social tariffs – For electricity, gas, water

• Realise potential synergies between health and climate: – Air pollution – Nutrition – Temperate homes and ending fuel poverty

Also create, rebuild and extend traditional welfare states • Despite everything welfare states provide safety nets, critical basic services and social investments • Enhance system resilience in the face of shocks • Aid climate adaptation – Hurricane Katrina: Cuba v New Orleans

• Social policy an important precautionary climate strategy in its own right

Why we must move beyond green growth Green growth the dominant strategy today 1. The pragmatic case – Increasing eco-efficiency, though essential, cannot be enough

2. The moral case – Issues of equity and justice are sidelined – Consumer preferences and spending power still determine what is produced

So C2: recompose consumption

C2. Recompose consumption • We must begin to ‘recompose consumption’: reduce consumption emissions by switching from high- to low-carbon goods and services – Twin goals: fairness; meet basic needs

• Example of excess consumption: SUVs – If the 40 million SUVs in USA were changed for ordinary cars, all 1.6bn people in the world could have electricity without more emissions.

– IEA: Between 2010 and 2018, SUVs were the secondlargest contributor to global carbon dioxide emissions, behind only the energy industry

Percentage change in territorial emissions to reflect impact of consumption of CO2

Must turn from Production-based to Consumption-based emissions

Needs challenge consumer wants Consumer demand Wants

Incomes

Policies based on needs

How define necessities in a finite yet democratic world?

How distinguish need-satisfiers and luxuries in a democratic society?

• Bring together citizens and experts – Doyal/Gough ‘dual strategy’

• Citizens’ forums that are inclusive and empowering • “Public engagement through reasoned deliberation” • But knit into formal political processes • A problem-solving process, not a way of aggregating people’s preferences.

A ‘Consumption Corridor’ • ‘If you have a limited total, and you also have a minimum income, then that implies a maximum somewhere’ (Herman Daly) • Minimum consumption and income standards well established • Now add maximum or riches line – The ‘Medeiros method’: – £150,000 a year in the UK (Hirsch)

A ‘riches’ line: the London research • New research by LSE E – Super rich and Loughborough explored whether there is D – Wealthy, a public consensus on this affluent, rich • Deliberative focus groups: explore C – (Securely) consensus, following Comfortable/well-off Minimum Income Standard method • A descriptive consensus - B – (Surviving) comfortably > • But no normative A – Minimum socially acceptable consensus standard of living (MIS) • • •

Consensus around different levels of living standards (A-E) While C seems to be ‘fully flourishing’, some identify this as D Links to security, choice, freedom

C2 Eco-social policies: Personal consumption • For personal consumption, move towards a sustainable ‘consumption corridor’ – between minimum standards, allowing every individual to live a satisfactory life, and maximum standards staying within ecological limits

• Policies: Tax high-carbon luxuries – ‘smart VAT’ – Tax frequent flyers – Tax and control advertising and product placement

C2 Eco-social policies: Expand public services • “Universal Basic Services” - expand and strengthen public provision – to include water, energy, transport, housing – Provide free or at low cost

• The arguments for: – Equality – Efficiency – Solidarity – Sustainability

C3. Challenge to endless growth • Two fundamental limits to growth: – Biophysical – Ethico-social: • Kasser: Pursuit of material goods bad for broader wellbeing

• ‘Post-growth by design’ • But at present the welfare state depends on tax state which depends on growth state • Big problem! Chapter 8 of my book

C3. Eco-social policies • Reduce: – Reduced work time: – Ecological + social (+ economic) benefits

• Redistribute: – Top down: socialise wealth – Sovereign Wealth Funds – Rebuild the social commons

Conclusions 1.

Must consider sustainability and justice/equity in the same box

 2.

Must recompose consumption as well as decarbonise production 

3.

A consumption corridor + universal basic services

This requires a new normative critique of preference theory 

4.

Eco-social programmes to tap synergies between wellbeing and sustainability

A theory of universal human need

And a new type of state: a ‘reflexive state’? 

Greta Thunberg: it will require ‘cathedral thinking: acting now, to lay the foundations where we may not know all the details about how to shape the ceiling’.

Thank you