Report: QUALITATIVE GROWTH. Fritjof Capra and Hazel Henderson. ICAEW, October 2009
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A conceptual framework for finding solutions to our current crisis that are economically sound, ecologically sustainable, and socially just.
From the foreword:
"how should we measure progress and towards what goal?
This is a fundamental question, for how do we know that we are getting closer to achieving a world that is sustainable as well as capturing everything that, as Kennedy argued, ‘makes life so precious and makes us proud to be citizens of our countries and planet’? High quality information about sustainability outcomes is essential if we are to understand how markets can and will operate to promote this. We need to know what success looks like and what works to achieve it.
These issues are also being addressed, for example, by the EU’s Beyond GDP project, by President Sarkozy’s Commission on the Measurement of Economic Performance and Social Progress and by the Sustainable Development Commission’s publication Prosperity without growth? This Briefing by Fritjof Capra and Hazel Henderson is a significant and timely addition to the debate and we are delighted to have the opportunity to publish it."
From the authors:
"It seems that our key challenge is how to shift from an economic system based on the notion of unlimited growth to one that is both ecologically sustainable and socially just. ’No growth’ is not the answer. Growth is a central characteristic of all life; a society, or economy, that does not grow will die sooner or later. Growth in nature, however, is not linear and unlimited. While certain parts of organisms, or ecosystems, grow, others decline, releasing and recycling their components which become resources for new growth.
In this Briefing, we want to define and describe this kind of balanced, multi-faceted growth, well known to biologists and ecologists, and apply its principles to the economy, and in particular to the current economic crisis. We propose to use the term ‘qualitative growth’ for this purpose in contrast to the concept of quantitative growth used by economists."
Concept 1: Quantities and qualities in Western science
"In order to gain a full understanding of the concepts of quantitative and qualitative growth, it will be useful to review briefly the roles played by quantities and qualities in the history of Western science.
At the dawn of modern science, in the Renaissance, Leonardo da Vinci declared that the painter, ‘with philosophic and subtle speculation considers all the qualities of forms.’3 He insisted that the ‘art’, or skill of painting must be supported by the painter’s ‘science’, or sound knowledge of living forms, by his intellectual understanding of their intrinsic nature and underlying principles. Leonardo’s science, like Galileo’s a hundred years later, was based on the systematic observation of nature, reasoning, and mathematics – the empirical approach known today as the scientific method – but its contents were quite different from the mechanistic science developed by Galileo, Descartes and Newton. It was a science of organic forms, of qualities, of patterns of organisation and processes of transformation.
In the seventeenth century, Galileo postulated that, in order to be effective in describing nature mathematically, scientists should restrict themselves to studying those properties of material bodies – shapes, numbers, and movement – which could be measured and quantified. Other properties, like colour, sound, taste, or smell, were merely subjective mental projections which should be excluded from the domain of science.
Galileo’s strategy of directing the scientist’s attention to the quantifiable properties of matter proved extremely successful in classical physics, but it also exacted a heavy toll. During the centuries after Galileo, the focus on quantities was extended from the study of matter to all natural and social phenomena within the framework of the mechanistic worldview of Cartesian-Newtonian science. By excluding colours, sound, taste, touch, and smell – let alone more complex qualities, such as beauty, health, or ethical sensibility – the emphasis on quantification prevented scientists for several centuries to understand many essential properties of life. In the twentieth century, the narrow mechanistic and quantitative approach led to major stumbling blocks in biology, psychology, and the social sciences.
The past three decades, however, have seen a renewed attention to quality. During these decades, a new systemic conception of life emerged at the forefront of science, which, in fact, shows many striking similarities with the views held by Leonardo 500 years ago. Today, the universe is no longer seen as a machine composed of elementary building blocks. We have discovered that the material world, ultimately, is a network of inseparable patterns of relationships; that the planet as a whole is a living, self-regulating system.
The view of the human body as a machine and of the mind as a separate entity is being replaced by one that sees not only the brain, but also the immune system, the bodily tissues, and even each cell as a living, cognitive system. Evolution is no longer seen as a competitive struggle for existence, but rather as a cooperative dance in which creativity and the constant emergence of novelty are the driving forces. And with the new emphasis on complexity, networks, and patterns of organisation, a new science of qualities is slowly emerging.
The nature of quality
The new systemic understanding of life makes it possible to formulate a scientific concept of quality. In fact, it seems that there are two different meanings of the term – one objective and the other subjective. In the objective sense, the qualities of a complex system refer to properties of the system that none of its parts exhibit. Quantities, like mass or energy, tell us about the properties of the parts, and their sum total is equal to the corresponding property of the whole, eg, the total mass or energy. Qualities, like stress or health, by contrast, cannot be expressed as the sum of properties of the parts. Qualities arise from processes and patterns of relationships among the parts. Hence, we cannot understand the nature of complex systems such as organisms, ecosystems, societies, and economies if we try to describe them in purely quantitative terms. Quantities can be measured; qualities need to be mapped.
As the attention shifted from quantities to qualities in the life sciences, there has been a corresponding conceptual shift in mathematics. In fact, this began in physics during the 1960s with the strong emphasis on symmetry, which is a quality, and it intensified during the subsequent decades with the development of complexity theory, or nonlinear dynamics, which is a mathematics of patterns and relationships. The strange attractors of chaos theory and the fractals of fractal geometry are visual patterns representing the qualities of complex systems.
In the human realm, the notion of quality always seems to include references to human experiences, which are subjective aspects. For example, the quality of a person’s health can be assessed in terms of objective factors, but it includes a subjective experience of well-being as a significant element. Similarly, the quality of a human relationship derives largely from subjective mutual experiences. The aesthetic quality of a work of art, as the saying goes, is in the eye of the beholder. Since all qualities arise from processes and patterns of relationships, they will necessarily include subjective elements if these processes and relationships involve human beings.
Accordingly, many of the new indicators of a country’s progress use multidisciplinary, systemic approaches with appropriate metrics for measuring the many aspects of quality of life. For example, the Calvert-Henderson Quality of Life Indicators measure such aspects and use monetary coefficients only where appropriate while rejecting the conventional macroeconomic tool of aggregating all these qualitatively different aspects into a single number, like GDP.8 Similarly, the UN’s HDI, launched in 1990, which has become the principle contender in complementing GDP, brings in such qualitative measures of poverty, health, gender equity, education, social inclusion and environment – none of which can be reduced to money-coefficients or aggregated into a simple number."
Concept 2: Growth and development
"The previous considerations about qualities and quantities can be applied to the concept of qualitative growth and the phenomenon of development, which is related to growth. Like ‘growth’, ‘development’ is used today in two quite different senses – one qualitative, as used by the UN’s HDI, and the other quantitative.
For biologists, development is a fundamental property of life. According to the new systemic understanding of life, every living system occasionally encounters points of instability where there is either a breakdown or, more frequently, a spontaneous emergence of new forms of order. This spontaneous emergence of novelty is one of the hallmarks of life. It has been recognised as the dynamic origin of development, learning, and evolution. In other words, creativity – the generation of new forms – is a key property of all living systems. This means that all living systems develop; life continually reaches out to create novelty.
The biological concept of development implies a sense of multi-faceted unfolding; of living organisms, ecosystems, or human communities reaching their potential. Most economists, by contrast, restrict the use of ‘development’ to a single economic dimension, usually measured in terms of per capita GDP. The huge diversity of human existence is compressed into this linear, quantitative concept and then converted into monetary coefficients. The entire world is thus arbitrarily categorised into ‘developed’, ‘developing’, and ‘less developed’ countries. Economists recognise only money and cash flows, ignoring all other forms of fundamental wealth – all ecological, social, and cultural assets.
It appears that this linear view of economic development, as used by most mainstream and corporate economists and politicians, corresponds to the narrow quantitative concept of economic growth, while the biological and ecological sense of development corresponds to the notion of qualitative growth. In fact, the biological concept of development includes both quantitative and qualitative growth.
A developing organism, or ecosystem, grows according to its stage of development. Typically, a young organism will go through periods of rapid physical growth. In ecosystems, this early phase of rapid growth is known as a pioneer ecosystem, characterised by rapid expansion and colonisation of the territory. The rapid growth is always followed by slower growth, by maturation, and ultimately by decline and decay or, in ecosystems, by so-called ‘succession’. As living systems mature, their growth processes shift from quantitative to qualitative growth.
When we study nature, we can see quite clearly that unlimited quantitative growth, as promoted so vigorously by economists and politicians, is unsustainable. An instructive example is the rapid growth of cancer cells, which does not recognise boundaries and is not sustainable because the cancer cells die when the host organism dies. Similarly, unlimited quantitative economic growth on a finite planet cannot be sustainable.9 Qualitative economic growth, by contrast, can be sustainable if it involves a dynamic balance between growth, decline, and recycling, and if it also includes development in terms of learning and maturing.
The distinction between quantitative and qualitative economic growth also sheds some light on the widely used but problematic concept of ‘sustainable development.’ If ‘development’ is used in the current narrow economic sense associated with the notion of unlimited quantitative growth, such economic development can never be sustainable, and the term ‘sustainable development’ would be an oxymoron. If, however, the process of development is understood as more than a purely economic process, including social, ecological, and spiritual dimensions, and if it is associated with qualitative economic growth, then such a multidimensional systemic process can indeed be sustainable. Many in business, government, and civic society now use the term ‘sustainability’ to examine these issues, along with hundreds of new academic programmes and consulting firms. Much work remains to be done in defining ‘sustainability’ in all these contexts, and it must be multi-disciplinary. Unfortunately, the economics profession is laying claim to this new field, as it has attempted to colonise other issues, including climate change and other disciplines, sociology, anthropology, psychology and most recently the neurosciences."
Concept 3: Qualitative Economic Growth
Qualitative economic growth and the global crisis
"Let us now return to the central challenge of our economic and ecological crisis: how can we transform the global economy from a system striving for unlimited quantitative growth, which is manifestly unsustainable, to one that is ecologically sound without generating human hardship through more unemployment?
The concept of qualitative economic growth will be a crucial tool in this task. Instead of assessing the state of the economy in terms of the crude quantitative measure of GDP, we need to distinguish between ‘good’ growth and ‘bad’ growth and then increase the former at the expense of the latter, so that the natural and human resources tied up in wasteful and unsound production processes can be freed and recycled as resources for efficient and sustainable processes. A step forward in this direction was the ‘Beyond GDP’ conference in the European Parliament in November 2007, spearheaded by the European Commission together with the World Wildlife Fund for Nature, the OECD, EUROSTAT (Europe’s statistical agency), and the Club of Rome.
From the ecological point of view, the distinction between ‘good’ and ‘bad’ economic growth is obvious. Bad growth is growth of production processes and services which externalise social and environmental costs, that are based on fossil fuels, involve toxic substances, deplete our natural resources, and degrade the Earth’s ecosystems. Good growth is growth of more efficient production processes and services which fully internalise costs that involve renewable energies, zero emissions, continual recycling of natural resources, and restoration of the Earth’s ecosystems. Climate change and the other manifestations of our global environmental crisis make it imperative that we shift from our destructive production processes to sustainable ‘green’, or ‘ecodesign’ alternatives; and it so happens that these alternatives will also solve our economic crisis in ways that are socially just. We see corresponding systemic policies in the UN’s Green Economy Initiative, launched in December 2008 in Geneva by the UN Environment Programme, the International Labor Organization, and the UN Development Programme, and keynoted by one of us.12 Other similar initiatives are the UK-based Green New Deal and the Global Marshall Plan for a socially just green economy, based in Germany.
In June 2009, the UN General Assembly adopted the financial reforms proposed by the Stiglitz Commission and endorsed the shift away from fossil fuels to low-carbon green growth. Member countries of the UN also viewed this green re-industrialisation as meshing with the UN Millennium Development Goals for alleviating poverty, investing in education while creating millions of new jobs. In recent years, there has been a dramatic rise in ecologically-oriented design practices and projects, all of which are now well documented.14 They include a worldwide renaissance in organic farming; the organisation of different industries into ecological clusters, in which the waste of any one organisation is a resource for another; the shift from a product-oriented economy to a ‘service-and-flow’ economy, in which industrial raw materials and technical components cycle continually between manufacturers and users; buildings that are designed to produce more energy than they use, emit no waste, and monitor their own performance; hybrid-electric cars achieving fuel efficiencies of 50mpg and more; and a dramatic rise in solar- and wind-generated electricity beyond the most optimistic projections.In fact, with the development of plug-in hybrids and wind farms, the cars of the future could run primarily on wind energy.
These ecodesign technologies and projects all incorporate basic principles of ecology and therefore have some key characteristics in common. They tend to be small-scale projects with plenty of diversity, energy efficient, non-polluting, and community oriented. Most importantly, they tend to be labour intensive, creating plenty of jobs. Indeed, the potential of creating local jobs through investment in green technologies, restoration of ecosystems, and redesigning of our infrastructure is enormous – a fact that has been clearly recognised by President Obama who has begun, together with Congress, to turn these ideas into realities in the American Recovery and Reinvestment Act of 2009.
A detailed roadmap for moving from quantitative to qualitative growth, and thus to find solutions to the global crisis that are ecologically sustainable and socially just, is beyond the scope of this Briefing. A few steps that seem to be critical are the following:
• Models of qualitative growth need to be formulated by multi-disciplinary teams, compared, and promoted in business, government, and the media. Accordingly, these sets of broader social/environmental indicators now need to be adopted. This will require political will, public pressure, and education of media editors and reporters.
• Tax systems need to be restructured by reducing taxes on work and raising them on various environmentally destructive activities, so as to ‘internalise’ and incorporate all such costs into prices in the market place. Such ‘green taxes’ are being adopted in many countries. They should include a carbon tax and a petrol tax, which can be gradually phased in, while offsetting them with reductions in income and payroll taxes. In shifting taxes from incomes and payrolls to waste, all pollution as well as carbon and non-renewable resources will gradually drive wasteful, harmful technologies and consumption patterns out of the market. This will raise the shareholder value of companies producing green alternatives.
• Beyond tax shifting, companies need to reassess their production processes and services to determine which ones are ecologically destructive and thus in need of being phased out. At the same time, they should diversify in the direction of green products and services. As new accounting protocols are adopted which fully account for social, environmental, and governance factors, companies are being steered toward these more sustainable products, services, and practices by their investors, including socially-responsible mutual funds, pension funds, labour unions, civic groups, and individual investors.
• Reforming international finance and monetary systems is still urgent. The G20 Summit in London, 2 April 2009, included debates about how to curb excessive leverage, risk-taking, pay and bonuses; and how to regulate speculation in currency markets ($3 trillion traded daily) and credit derivatives ($683 trillion now outstanding,16 as compared with global GDP of only $65 trillion). These new rules need to be global by agreements – the only way they can work in our globalised financial system. The UN members, the G192, agreed with most of these reforms in their summit at the General Assembly in New York, June 2009.
The G192 is now a more democratic group than the G20, and both are rendering the G8 obsolete.
• All these reforms will often involve shifts of perception from a product orientation to a service orientation and ‘dematerialising’ of our productive economies. For example, an automobile company should realise that it is not necessarily in the business of selling cars but rather in the business of providing mobility, which can be achieved by, among many other things, producing more buses and trains and by redesigning our cities. Similarly, countries, and especially the United States, should realise that fighting climate change is today’s most important and most urgent security issue. The Obama Administration should reduce the Pentagon’s budget accordingly, while increasing funds for diplomacy mitigating climaterelated threats to global security and building the new ‘green’ economy.
• At the individual level, a corresponding shift of perception will turn from finding satisfaction in material consumption to finding it in human relationships and community building. Such value shifts are now promoted by many civic groups as well as by some television series, such as ‘Ethical Markets.’17 A proposal to alter the favoured tax status for corporate advertising across the board aims at reducing advertising in a fair manner without jeopardising the rights of free speech.