SUSTAINABILITY REQUIRES NEW ECONOMIC CONCEPTS

PCDForum Column #49,   Release Date June 25, 1993

by Winifred Armstrong

Sustainability--of people and resources--is unlikely to be achieved using either current capitalist or socialist economic models. Both models have been posited on assumptions of limitless economic growth. Both measure increased prosperity by growth, and growth by consumption. Many people now recognize that the global economy has already grown to such a size that it is consuming resources and disposing wastes at a faster rate than the planet's ecology can sustain. Yet a substantial portion of the world's population is growing poorer.

Trying harder using current economic premises clearly is not working. Faced with the possibility of collective impoverishment--of earth and people--we have both incentive and opportunity to think anew about organizing our productive systems in ways that are sustainable.

Goals, strategies and indicators must be altered to attain an integrated system that will balance use with replenishment of resources in ways that allow people the opportunity to sustain themselves. These are not the goals of current economic policy: thus current indicators (which show whether we are achieving the goals we've set out) do not reveal sustainability.

What can we alter? The obsolescence and replacement that characterize current modes of production can be shifted by providing incentives to reduce the resources used in production and the wastes generated. More goods can be designed to be repaired, recycled, reutilized--with consequent reorganization of work and materials. Access and use rather than ownership and consumption can become measures of prosperity. Access to transportation, for instance, can be substituted for the number of cars per capita as both a planning goal and a prosperity measure.

A second arena for alternative conceptualizing deals with what we economists do and don't count in the calculations that underlie policy formulation. Prevailing models do not aim for achieving sustainability of people. Thus when Ghana is proclaimed a success after undertaking a decade of the World Bank's structural adjustment program (SAP), the fact that the majority of Ghanaians are living at a standard of living far lower than they were 20 years ago is not "counted" or even mentioned.

We economists don't count subsistence agriculture or informal economic activities. Yet in Africa, 50 to 90 percent of people (depending on the country) gain much of their livelihood from what they grow and eat or make and barter. And in countries as diverse as Peru and Italy, a substantial portion of the population is engaged in the informal sectors. But if goods and services don't enter the cash economy, we economists don't count them. It is increasingly clear that disregarding what half or more of people do to sustain themselves seriously skews both economic policy and human potential.

Neither the North nor the South is sustainable in the present economic framework in my view. Northern countries, which include approximately 25 percent of the world's people, consume roughly 75 percent of the world's production and overproduce waste products that further damage the resource base from which future production must come. Yet the U.S. Congressional Budget Office reports that the standard of living for 80 percent of Americans is lower than it was 10 years ago. Poverty seems increasingly widespread in Eastern Europe and other regions as well. The majority of Africans I talked with on a recent trip through 17 African countries noted their countries were getting poorer--yet nearly all felt their countries could be viable, that is, could provide their people a satisfactory and sustainable lifestyle based on the use of their own resources under an alternative economic framework.

Many of the alternative theories and tools needed for sustainable economic management are already developed and ready for application. Environmental cost and benefit accounting, and indicators of informal economic activity and human development are available, but have yet to be effectively applied by the U.S., the World Bank and the many others who have contributed to their development.

Decisions to organize projects, programs and institutions in alternative ways do not need to wait for a mandate from elsewhere. We can begin wherever we are to set out sustainable objectives and apply the growing body of new concepts while contributing through application to evolving them. And we can insist and assist the governmental and international bodies that represent us to go beyond the current restrictive framework that so clearly no longer meets our needs.

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Winifred Armstrong is an international economist, a principal organizer of TOES/North America, and a contributing editor of the People-Centered Development Forum. She is currently working on a book on Getting to an Economics that Will Work for People and will appreciate comments on ideas presented in this column. Her address is 400 Central Park West, New York 10025. This column was distributed by the PCDForum based on her article in Development Forum, March-April 1992.

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