SUSTAINABLE DEVELOPMENT: Reflections on Japan's Role
December 3, 1991David C. Korten
The People-Centered Development Forum
The world's official development institutions are currently pursuing policies based on invalid assumptions about economic growth, a globalized world economy, and international assistance. These policies are the antithesis of those appropriate to sustainable development. Our new orientation must recognize that the current level of human economic activity has filled the earth's available ecological space.
Further improvements in human well-being must be achieved without increasing the economic system's physical throughput. A dramatic reduction in wasteful consumption in the North is essential if the world's poor are to have a decent life. The global economic system must be transformed to curb the power of transnational capital and establish a strong connection between capital, place and people. Loan funded international assistance and the organizations that administer it will need to be phased out.
Japan has a special role, in part because there are so many positive lessons from its own domestic development experience, and in part because its aid and investment policies in the South have been so at odds with both that experience and the requirements of sustainable development.
It is an honor to be invited to address this important symposium on the "Significance and Implications of Sustainable Development." I'm greatly reassured to know that key leaders in the Japanese development assistance program are taking up this important topic. I believe that how the world addresses the topic of sustainable development during this decade will determine the quality of the lives of all our children for many generations to come.
The two countries likely to play the most influential roles in making the choices we currently face are Japan--your country--and the United States--mine. Unfortunately, both countries have committed the full weight of their political and economic resources to policies that seriously threaten the future of our planet and its people. These policies, shared by most of the world's official development institutions, are built on three premises:
Sustained economic growth is the key to human progress.
Total integration of the world economy is a key to growth and beneficial to all but a few narrow special interests.
International assistance and investment work to build strong economies in less fortunate nations and are important to the progress of their people, especially the poor.
Policies based on these assumptions are actively exacerbating poverty, environmental destruction and the disintegration of the social fabric in nearly every country of the world. They are the antithesis of the policies required in support of sustainable development.(1)
In my brief presentation I will explain the reasoning behind this conclusion. I will also point to significant positive aspects of Japan's own development experience from which the world would greatly benefit. Allowing others to apply the lessons of your experience, however, will require a basic reorientation of your foreign assistance policies.
The crux of the dilemma of sustainable development is starkly revealed in a collection of essays by prominent economists quietly released by the Environment Department of the World Bank in July of this year.(2) It is interesting that this piece has been produced by a group within the World Bank, as it implicitly challenges the most fundamental premises of the Bank's current policies and commitments.
According to the authors of the working paper, society has built its economic theory and institutions on the premise that the total demand that human economic activity places on the environment is inconsequential relative to the scale of the ecology's regenerative capacities. In short, contemporary economic theory and policy assume an "empty world." We now face a new reality. The available data regarding global warming, ozone shield rupture, land degradation, and human appropriation of earth's biomass and hydrology indicate that the aggregate scale of human economic activity has grown to the point at which it virtually fills the available ecological space. We now live in a "full world." Indeed, in some areas we are already making demands that significantly exceed the ecology's sustainable limits--such as its ability to absorb greenhouse gases.
This new reality forces us to face some very uncomfortable truths.
- Economic growth based on increasing the physical throughput of the economic system by depleting earth's store of natural capital has reached or exceeded its natural limits.
- The high consumption life style enjoyed by approximately twenty percent of earth's population and held out as a promise to the other eighty percent is unsustainable and forever out of reach of those to whom it has been promised.
- The price of the resources consumed by the fortunate twenty percent is the displacement, deprivation, and marginalization of the least fortunate twenty percent.
Development can no longer be defined primarily in terms of economic growth. Development and growth are not the same. Growth means more. Development means better. Historical we have based human advancement on the ever expanding colonization of ecological space. Now our primary concern must be to reallocate how we use the space already appropriated to assure that all inhabitants of the planet, present and future, have the opportunity to live a full and human life. This is the task of sustainable development.
Two priorities emerge at the top of the sustainable development agenda.
- We must dramatically reduce the demands placed on the available ecological space by the wasteful extravagance of the world's one billion overconsumers.
- We must curb the explosive population growth that is expected to double the number of people competing for our planet's available ecological space by the middle of the next century.
Unless we are successful on both of these priorities, we may expect that at least half the world's population--including quite possibly many of our own grandchildren--will be living in absolute poverty in the mid-21st century.
Global Economic Integration
After growth itself, the major policy commitments of the Bretton Woods institutions [the World Bank, the International Monetary Fund, and the General Agreement on Trade and Tariffs (GATT)], the regional development banks, and most of the OECD governments and bilateral assistance agencies is to the total integration of the world economy. Their goal is to remove all barriers to the free flow of trade, investment, and services. Both the arguments and the reality are too complex to cover fully in a presentation this brief. I will try, however, to present the basic issues as briefly and succinctly as possible.
As goods and money move freely across national borders at great speed and in enormous quantities, governments find they are losing their ability to manage their own economies. Many governments are negotiating away their right and means to determine their own trade, investment, and monetary policies--often under pressure from the World Bank and IMF. In their place, economic decisions become vested in gigantic corporations that lack attachment or responsibility to people, place, or nation and are virtually unaccountable for the social and ecological consequences of their activities.
Free to grow without limit through mergers and acquisitions, a few of the more successful corporations are gaining increasingly oligopolistic or even monopolistic positions in world markets. This limits the possibility for smaller and possibly more efficient competitors to become established. If they do become established they are absorbed by acquisition.
The fiercest competition in a globalized market turns out to be not between firms but between governments competing for the investment capital of these free roaming corporations. The winners are generally those governments able to offer the cheapest most compliant labor, the weakest environmental, health, and safety standards, the lowest taxes, and the most fully subsidized infrastructure. Individual corporations find it difficult not to respond to such offers for fear of becoming non-competitive against those that do.
Originally created for the purpose of expanding international trade and investment, the Bretton Woods institutions are fulfilling their functions beyond the most optimistic dreams of their founders. Structural adjustment, probably the number one priority of the international assistance community during the 1980s, has been a major instrument for forcing this agenda on debt burdened countries. The major beneficiaries have been the institutions of transnational capital, which have found the restraints to their growth and power falling away at every hand.
There is an important role for the market in sustainable development, but not for the unrestrained markets of a lawless cowboy economy. One reason that national governments are becoming increasingly powerless is because economic power is being centralized at the global level, while the political power of government remains decentralized to national or sub-national levels. The balance of forces essential to democratic pluralism is lost, resulting in a market tyranny every bit as destructive as the state tyranny that characterized the Communist empire of Eastern Europe.
In our search for environmental sustainability we must work toward an institutional framework based on economic decentralization that attaches economic power to place and assures its accountability to societal interests. This probably means a system of relatively small self-reliant regionalized economies geared to living within their ecological means and featuring local control of productive assets, strong local civic institutions, an effective framework of regulations, market incentives, and community norms that internalize full social and environmental costs in product pricing, encourage virtual one hundred percent recycling, and assure a just allocation of available ecological resources.
Anti-trust measures that keep corporate power in check and maintain the competitiveness of international and local markets will need to be institutionalized in international treaties. Strong, democratically accountable governments will be needed to manage regional and local economies for sustainability and social justice. These governments will need the technical ability and authority to implement a wide range of measures intended to balance economic activity with the regenerative capacities of the region's natural capital.
In recent years substantial attention has been directed to the social and environmental failures of individual development projects. In the name of development, large-scale dams, export-processing zones, mono-culture tree plantations, large-scale commercial fishing, export-oriented agricultural estates, and mining projects have displaced tens of millions of people and devastated the ecology of vast areas. Often these projects benefit from official funding. Commonly they support major international commercial interests. A few benefit. The many suffer.
Growing numbers of civic organizations concerned with poverty and environmental issues are coming to the conclusion that on balance international assistance as currently practiced has become enormously damaging to both the poor and the environment. I believe they are correct. Failing to recognize that the fundamental issue is the increasingly intense competition for available ecological space, most bilateral and multilateral "assistance" agencies continue to promote policies and projects that have the primary consequence of assuring continued supplies of cheap resources and labor to sustain the unsustainable high consumption lifestyles of the world's over-consumers. The South's debt burden, to which loan funded official assistance has made a major contribution, has given bilateral and multilateral agencies enormous leverage in imposing policies that transfer control of the economies of borrowing countries to the institutions of transnational capital.
Vandana Shiva points out that national governments are being subordinated to a new superstate governed by the Bretton Woods institutions and committed to advancing the rights and power of transnational capital. The growing power of this institutional alignment, defended as a necessary engine of global economic growth, is rapidly weakening, if not eliminating, democratic accountability and society's institutional capacity to implement policies that protect the interests of community and ecology.
Flows of financial assistance from North to South have helped mask the reality of a highly unequal system of North-South economic relations that allows the one billion people of the North to consume two-thirds of the world's production of important metals, three-fourths of its energy and the products of far more than its share of the earth's cultivatable land area. And furthermore to generate two-thirds of the greenhouse gases that are altering the global climate.(3)
Southern poverty is not caused by the insufficiency of financial charity from the North. Money is nothing more than an accounting figure. The problem is the North's extraction of real resources from the poor of the South to support its own extravagance. Until the international economic system is restructured in ways that allow the people of the South to retain their own real resources to meet their own needs Southern poverty can only increase. This restructuring must include ending loan funded development "assistance" and dismantling the agencies that exist primarily to disburse it.
There is much in Japan's development experience that is highly relevant to the world's search for a sustainable development model. You achieved a zero population growth rate early in your development process. You have developed strong networks of rural organizations. You have achieved strong and universal basic education. You implemented radical land reform that broke up rural power monopolies, distributed asset control, and established the basis for a thriving rural economy based on high value added per hectare of land. This strengthened rural communities and established strong, broadly based local markets for local products. You have continued to give preferential treatment to your small farmers and small businesses, protecting them against predatory foreign or domestic competition, as the backbone of your local communities and domestic economy. You have also protected your own environment and your forests, and maintained the beauty and ecological vitality of your country.
Your policies have assured national ownership and control of your land, your economy, and your capital assets. Government has set and maintained a strong framework for market based economic development in the community interest. Domestic capital and products have been favored by public policy over foreign capital and imported products. You have held down the salaries of top corporate executives to realistic levels. Your workers have enjoyed good wages, benefits and job security. You have gained full command and control over advanced technologies and virtually eliminated the dependence of your economy on foreign owned or controlled technology.
You've developed strong domestic markets for your own products and made them the foundation for your successful export efforts. You have push energy prices up to a level that has provided necessary incentives to achieve a high level of energy efficiency. You have further maintained your cultural identity and values, including, at least until quite recently, a commitment to frugal lifestyles. These accomplishments are all consistent with the requirements of sustainability.
Perhaps this is a slightly idealized outsiders view. There are many problem that you know better than I. Japan is not itself a sustainable society. The point, however, is that you have a very great deal of value to share with the rest of the world in the quest for a path to sustainable global development.
The tragedy of Japan's role in the world economy is that what Japan has exported to the rest of the world, particularly the Southern countries that are recipients of its aid and investment, is something quite different.
Japan has aggressively advanced a development model for others that transfers the national resources of assisted countries to foreign control, keeps them dependent on foreign technology, and leaves them deeply in debt to foreign institutions. The percentage of Japanese international assistance devoted to population programs is only about half the average for OECD countries. Japan's investment projects, both publicly and privately funded, have driven rural people off of their land, destroyed their forests and fisheries, dumped toxic wastes on their land and in their waters, mined their natural resources, and otherwise ravaged their ecology for the short-term profit of Japanese corporations. In many respects, Japan's foreign aid and investment have actively served to transfer the environmental and social costs of Japan's development onto others. Japan's aid programs, including the Japanese funds channeled through the Asian Development Bank, have been major instruments of this travesty.
One may argue that Japanese aid and investment have been doing to Southern countries exactly what other Northern countries have been doing to them since the beginning of the colonial era--though it seems to an outside observer that Japan has been among the more single minded and successful at it. The result is the antithesis of sustainable development.
The particular tragedy in the Japanese case is that Japan has so much to offer from its own national experience that is positive and is needed desperately by others, especially in the South. Sharing the positive lessons of your experience with other countries, however, will require fundamentally transforming your relationships with them in ways that allow them to learn about the real Japan, meld the lessons of your experience with their own reality, and work together toward the creation of a more just and sustainable global partnership.
1. See David C. Korten, Getting to the 21st Century: Voluntary Action and the Global Agenda (West Hartford, CT: Kumarian Press, 1990).
2. Robert Goodland, Herman Daly, and Salah El Serafy, Environmentally Sustainable Development: Building on Brundtland, working paper, Environment Department, World Bank, Washington, D.C., July 1991.
3. For example, the Dutch consume food, wood, natural fibers and other products of the soil that require the exploitation of five times as much land outside the country as inside--much of it in Southern countries. These statistics are all from Alan Durning, "Asking How Much is Enough," in Lester R. Brown, et. al, State of the World 1991 (New York: W. W. Norton, 1991), pp. 153-169.