Is a market driven economy capable of delivering “sustainable growth”?

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Is a market driven economy capable of delivering “sustainable growth”?

Poornima

20 February 2010

Sustainable living

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What changes does the system need to ensure that billions of people are not left behind in poverty?

Deforestation, desertification and water issues are at the heart of civil conflicts that have been ravaging in Darfur, Kashmir and many other parts of Africa, Asia ad Latin America for several decades.

According to Prof. Jeffery Sachs, Director of The Earth Institute at Colombia University, most of these issues are triggered due to a lack of equitable and sustainable development.

“When there is violence or terrorism we put it to political or ideological prisms, whereas often at the core are hungry and poor people and societies in disarray because they are already experiencing the leading edge of climate change or environmental degradation of other sorts,” he said at the recent Arrow Lecture Series, organized by the Stanford Center for Ethics in Society.

Can the current “market-oriented” system deal with these issues?

Prof. Sachs stressed that the current market driven economic model is insufficient to resolve these issues because

1) Poverty and environmental degradation are global problems : For example, green house gas emissions from anywhere uniformly mix in the atmosphere within about 30 days, Therefore in the end it doesn’t matter where the emissions come from. Climate change is the sum of a truly “global” phenomena.

2) The intensity and nature of the issues evolve over time: e.g.: – Habitat destruction and the loss of bio diversity has been accelerating for decades and in some cases the damage is irreversible once certain tipping points are crossed. E.g: – However, sometimes the vision of institutions particular the political apparatus, that designs policies to resolve these issues, operate from one election cycle to the next. Therefore, the long-term vision and consistent effort to address these global concerns are lacking.

3) The Problems involve ecosystems – an area that is ignored by the traditional notion of a market economy. “A market economy is all about well defined private property rights and separable individualist ownership. Nothing about an ecosystem is of that character,” Prof. Sachs said. “

4) Profound uncertainty: We do not still fully understand how earth’s systems work and how human behavior influences them. “It is almost by coincidence that we detected the Ozone depleting effects of chlorofluorocarbons,” Prof. Sachs said. “No one was looking for this at all until 1970 when someone asked the question whether the water vapor from supersonic jets would affect the ozone layer.”

5) Ramifications of population growth: The global population up to now has grown almost 10 times more than what it was during the industrial revolution. We are adding 75- 80 million new people to the population every year. The inability to limit fertility rates to a replacement level – i.e. enough births to replace the number dying – specially in the poorest quarters of the world are putting excessive pressure on the already stretched resources

6) Solutions involve large scale technological transformations: “Here too markets are not all effective because the economics of information and technological change shows that, markets fail to induce technological change where it is most needed (i.e. At the bottom of the income pyramid),” Prof. Sachs said.

Three Strategies to achieve sustainable growth

Containing population growth: the solution – NOT aid handouts by faith based NGOs -but better healthcare to cut down infant mortality, female literacy (the most potent tool for bringing down fertility rates) and access to family planning.
Sustainable agriculture: Ecological technical changes that intensifies agriculture while at the same time reducing the amount of nitrogen used (one of the biggest causes of greenhouse emissions) through better agricultural practices like micro-dozing. Technology to improve yields from existing cultivated land through better landscaping, soil and water management are also available. “But the poorest farmers who amount to over 1.5 billion people in the world cannot afford any of this technology. That is where the conventional market system fails them and alternative means have to be devised,” Prof. Sachs said.
Dietary and behavioral change: Changing the use and throw culture promoted by producers and changing from a mainly beef/ meat based diet that is too resource intensive for the earth to bear.

Jeffrey Sachs is the Director of The Earth Institute, Quetelet Professor of Sustainable Development, and Professor of Health Policy and Management at Columbia University. He is also Special Advisor to United Nations Secretary-General Ban Ki-moon. From 2002 to 2006, he was Director of the UN Millennium Project and Special Advisor to United Nations Secretary-General Kofi Annan on the Millennium Development Goals, the internationally agreed goals to reduce extreme poverty, disease, and hunger by the year 2015.