11 Responses to “The dangers of living in a zero-sum world economy”

Comments

1. Edward Hadas (Guest): I think the basic distinction of positive-sum and zero-sum is profound and historically significant. If, for any reason, leaders start to feel that there is more to be gained from conflict than from prosperity, the possibilities are horrendous.

   Still, I have two issues.

   1)Your argument rather makes the bloody and destructive wars of the 20th century into exceptions to the historical trend. The relevant parts of the world were well into the positive-sum game of economic development by 1914, or even by 1870 or whenever you want to trace the starting point of WWI. Perhaps they were teething pains.

   More generally, people’s judgement of “modernity” seems to correlate closely with their judgement of the 20th century. Was it a period of unprecedented carnage and cruelty, or of unprecedented economic growth accompanied by the spread of good government and superior liberal values? Both, of course, with the good news on top at the end (somewhat less so for people who take a dark view of such liberal accomplishments as legalised abortion and easy divorce). .

   A case can be made that the 20th-century style of popular democracy is looking pretty feeble, what with the family dynasties in the US and electoral apathy almost everywhere. I am not sure that the last chapter of modern economic-political history has been written.

   2) More technically, Maddison’s numbers need to be treated with extreme caution. What does a 10-fold increase in per capita income really mean? There’s no question that we are much wealthier than our ancestors - whatever is meant by wealth - but I think the calculated numbers provide only spurious precision. There is no basket of goods and services which lasts through the whole period, there is no commensurate scale of values of economic goods (life expectancy, social security, nutrition, electric lights, paved roads, ABS brakes….) other than a largely arbitrary scale of imputed prices.

   I fear the reliance on numerical growth rates will lead to political mistakes. Maddison’s 6 per cent growth makes much more of a difference to the people when it reduces infant mortality significantly than when it builds faster video games. The marginal goods produced by incremental GDP growth in a sated consumer economy aren’t likely to be of as much interest as the numbers suggest.

   Edward Hadas is associate editor of Breaking Views

   Posted by: Edward Hadas | December 19th, 2007 at 12:35 pm | Report this comment
   

2. Brian Davey (guest): There is a kernel of truth in your article, Martin, but in my view you are trapped in the conventional economic paradigm and so it’s no surprise that you end up praying for human ingenuity to generate more techno-fixes. The trouble is that virtually all technological change over 200 years has been inventing new ways to use the energy derived from fossil fuels - and all the energy efficiency innovations led to new ways of using energy too, as Jevons discovered over a century ago and Khazzoom and Brooks more recently.

   From the different paradigm of ecological economics, I think it worth making these points: after supplying the essentials and some economic security, which is why development is still important in Africa and elsewhere, increased income does not automatically lead to increased welfare or happiness - particularly where increased incomes lead to obesity, lack of exercise, work stress, no time for personal relationships, so much traffic that children grow up battery reared rather then free range, light pollution from the christmas car park arc lights so no one can see the real stars…. The list could be extended considerably and suggests that what we have now is uneconomic growth. Many of the things that count for the quality of life do not count under what Martin (or Angus Maddison) calls “income growth” and are thus not taken into account in policy priorities. Nevertheless, because people are not forced to live as economists expect them to, research has found that over a recent 10 years period 23 per cent of UK citizens below retirement age voluntarily went for a lower income to bring their lives into a better balance. The comparable figure was 30 per cent of Australians and 19 per cent of US citizens.

   I daresay you are aware of the work of Richard Layard who has discovered mental health as an alternative way of thinking about human well being. As it happens, I trained as an economist but ended up working in voluntary sector and community mental health projects over many years, only recently returning to economics. In my experience people’s whose lives have been so out of balance that they have had a breakdown typically need a new lifestyle package to get back on their feet again - a minimum income is necessary for that but far more important are new friends, new activities and interests and something to get up in the morning for. It doesn’t have to be high-flying high-consuming lifestyle. Improving yields on a community garden can be much more satisfying as a life goal.

   That leads me to suspect that human ingenuity to help people adopt lifestyle packages that would grow and cook some of their own food, ride bikes to work, mend frayed collars before buying new and helping in the ecological re-design of their neighbourhoods, would leave them much happier than when they are trapped in the office in front of a computer screen trying to outperform their peers. Those adopting this energy light lifestyle will soon discover that many of the solutions for energy descent have already been worked out by permaculturists, intermediate technologists and green architects who work with nature, mimicking its ways to productivity in the design of living and cultivated habitats.

   There is a paradox buried in this debate. At the end of the second world war those British people who had not been involved in combat were healthier as a result of their privations. They were more resourceful and the society was in better shape and more resilient. The welfare state re-distributed resources in favour of those who were vulnerable but there was a social consensus that it should. In difficult times things can change in unexpected ways because people suffer together. The poor are often more generous than the rich as they understand the value of mutual help. Unfortunately, there is a point where inequality becomes so great that the wealthy and powerful are so disconnected from everyone else that they treat us as numbers to be managed. They are working away so hard at their money making agendas that everything else ceases to be seen at all.

   There is a danger of thinking in too narrow a way and there are other possibilities. The word paradise comes from an Arabic world meaning a walled garden. A hedge on an allotment site can substitute for a wall - though of course one does not want to keep out one’s friends.

   ….but then I was forgetting. The average household in the UK owes £56,000. So these ideas of downshifting and getting one’s life into a better balance will have to come after they have paid off their debts with interest…..and in any case, were everyone to do that the banking system would have very few customers. So I guess that we are going to have to divert our human ingenuity to getting energy out of algae, or tapping methane hydrates by CO2 injection on the edge of continental shelves, or perhaps underground coal gasification. Without growth the interest on loans can only be paid by redistribution in favour of the banking system. In a zero-sum game the banking systems profit is every one else’s loss. However, bankers can always take consolation in this - there is always plenty of money to be made when society breaks up - munitions manufacture, security companies and private armies, prisons … and PR of course.

   Brian Davey is an ecological economist and member of the Feasta Energy and Climate Working Group: www.feasta.org

   Posted by: Brian Davey | December 20th, 2007 at 8:51 am | Report this comment
   

3. Chris Johns (guest): Martin Wolf, of all people, should be aware of the trap offered by the existence of spurious correlation. The only Latin most economists know is, of course, post hoc ergo propter hoc.

   Just because the spoils of war go to the victors, it doesn’t necessarily mean that conflict is caused by the potential for spoils. The experience of the 20th Century might suggest that economic prosperity, far from removing the incentive for conflict, has merely offered us the opportunity to industrialise war.

   We might plausibly argue that conflict is something we always do, independently of our economic condition. And we do it because we like it. Dawkins would blame religion, not economics. Bin Laden would probably agree.

   Chris Johns is Head Of Equities at Bank of Ireland Asset Management

   Posted by: Chris Johns | December 20th, 2007 at 2:15 pm | Report this comment
   

4. Willem Buiter: A few comments on Martin’s provocative contribution.

   (1) I agree with Martin that the prosperity of mankind will depend in part on the outcome of the race between human ingenuity and the depletion of exhaustible resources, broadly defined to include environmental capital. Nothing pre-ordains that ingenuity will win out. We could end up living in a negative-sum world as easily as in a zero-sum or positive-sum world.

   (2) I would define ingenuity rather more broadly than the scientific/engineering or R&D ingenuity Martin emphasises. Equally important will be our capacity for coming up with political solutions to problems that require cross-border co-operation and co-ordination. Solving the collective action or free-rider problem of greenhouse gas emission control is an example. Striking a better balance in intellectual property rights between incentives for future private R&D and the widest possible use of the fruits of past R&D is another. I have seen little evidence that humanity is getting any better at global governance.

   (3) I believe that Martin’s use of GDP per capita involves a massive overstatement even of material standards of living - and not for the reasons favoured by Richard Layard, the High Priest of the Cult of the New Happiness. It’s much more basic than that. When land is abundant relative to people’s needs and wants, it is free and the rent from land is zero. When population increases in relation to the available (quality-adjusted) land, land will become scarce and the rents from land can become a sizeable and rising component (if substitution possibilities in production and consumption are limited) both of GDP and of a typical person’s consumption bundle. In densely populated advanced industrial countries today, rents (paid or imputed) can easily amount to 25 per cent of the consumption bundle.

   If there were a sudden miraculous expansion in the quality-adjusted quantity of land in the UK, large enough to drive the price of land and land rental rate to zero, we would certainly on average be better off, but our GDP and consumption per capita could well go down.

   Usable land really is a binding constraint on quality of life. I cannot see how a world with 6.6 billion people in it can ever be viable (world population was 2 billion in 1930). The further fact that the global population is not only enormous but also still growing, and is unlikely to peak at a number less than 9 billion, prompts further Christmas blues. With most of the land area of the earth unfit for human habitation, and with civilized living requiring both an apartment in the city and a country cottage with at least a couple of acres of land, getting the numbers down,one hopes peacefully and voluntarily, to 1 billion or so, would be necessary to give humanity the elbow room it needs to live the way evolution meant us to live.

   (4) I disagree with Martin’s proposition that world-wide productivity growth has contributed to peace and democracy through the mechanisms emphasised by him. As pointed out by Edward Hadas, some of the vilest political regimes were established last century in some of the richest (Germany) or fastest growing (Soviet Union) nations. Two World Wars were fought between the richest and fastest-growing nations of the time.

   Whether growing prosperity and the potential universal access to this growing prosperity through productive effort and voluntary exchange lowers or raises the likelihood of conflict depends on whether aspirations rise more slowly or more quickly that the means to satisfy them without conflict and conquest. I would like to see some evidence on that.

   Furthermore, rivalry between individuals, groups, communities and nations often involves conflict over “positional goods” like status and rank, which are by definition zero-sum. Young males appear to be especially powerfully motivated by the need for respect, prestige, status and rank - all attributes that are to some extent zero-sum in essence. The relative absence of violent conflict within and among the rich industrial countries today may have more to do with their demographics - especially the shrinking share and in some countries even a shrinking number of 15 - to 30-year-old males - than with rising per capita income per se. The same demographic explanatory variables correlate well with the prevalence of wars and other forms of conflict today in the Middle East, Afghanistan, Pakistan and parts of Africa, although in the poorest parts of Africa (e.g. Rwanda and Darfur) the conflict looks more like a Malthusian fight for physical survival. (1)

   There is, of course, a strong effect of rising productivity and per capita income on both the birth rate (negative, after a while) and on longevity (positive), so Martin may be correct even though he has left out the key component in the transmission mechanism.

   1 - There is an interesting 1997 Research Paper, “Population Age Composition and Male Coalitional Aggression” by two research psychologists at York University in Toronto, Christian G. Mesquida and Neil I. Wiener on this subject; they published a closely related paper a couple of years later as Mesquida, Christian G. and Neil I. Wiener (1999): “Male Age Composition and Severity of Conflicts”, Politics and the Life Sciences 18, 2 (September, 1999), pp. 181-189. There is also the recent book by Gunnar Heinsohn, Söhne und Weltmacht (Sons and World Power: Terror in the Rise and Fall of Nations; Zürich, Orell Füssli Verlag, 2003).

   Posted by: Willem H. Buiter | December 22nd, 2007 at 7:06 pm | Report this comment
   

5. Hermann Stern (guest): Environmental challenges are not new.
   Environmental challenges do not change the world fundamentally: They have always been there and countries had always to take care of nature in order to survive. This has been already true for the past 100 years as well documented in the political solutions to car emissions, nuclear energy, water plution and acid rain.

   Climate change is only larger in scale
   Climate change is not different from earlier environmental problems apart from its scale. It may require collaboration on a larger scale but that is about it. Even if only a limited number of countries cooperate to reduce carbon emissions and penalize the remaining countries with import charges, it is still prossible to solve the problem.

   Economic activity remains a positive-sum game
   The environment is only a restriction on economic activity. Within this restriction, economic activity works with its traditional benefits: comparative cost advantages, innovation and economics of scale, to name a view. It remains a positive sum game, even if the restrictions for economic activity are a little tighter with climate change.

   Hermann Stern is chief executive of the Swiss corporate finance research boutique CFO Intelligence Force Obermatt (www.obermatt.com)

   Posted by: Hermann Stern | December 26th, 2007 at 6:11 pm | Report this comment
   

6. John Booth (guest): While I find Martin’s comments interesting, I think he has missed a simple fact. Economic growth has come largely at the expense of environmental health. It has done so simply because the current economic model does not accurately value payment for ecosystem services. How many rivers and lakes are now so dirty that they will not support life, let alone provide potable water for the local human population? Acid rain knows no boundaries, nor do industrial effluent discharges (both air and waterborne). Smog alerts are now once again common occurences in many of the worlds cities and pulmonary health is being adversely impacted.

   Clean air, water and uncontaminated soil have hitherto been largely taken for granted by our society and its pricing models. The most basic economimc model of demand and supply implies a zero disposal cost into the common area - the tragedy of the commons.

   Sadly unlike land and many other finite resources, once scarcity starts to be priced into ecosystem services, it is likely to be at a point that has already past the tipping point of ecosystem survival - at least in the sense humankind knows of it. Just as one adds drops of acid to a buffer solution with little observable change until a tipping point is reached, a similar proprotion of incremental reversal has no observable effect once that point is reached. So too is it likely to be with our earthly paradise.

   Now, for some religious zealots, this is all irrelevant as they put all their stock in the afterlife, however for the vast majority of the population interested in living, propagating and prospering, and even those religious types who believe in good stewardship of the earthly portion of their life, this will become a huge problem.

   I read recently with interest that the current Chinese leader had commissioned a Green GDP report, but when the result showed 0.5% growth when environmental cost was internalized in the process, the report was shelved.

   This to me is of interest for two reasons. First, 0.5% Green GDP does show that economic growth still occurs when we more accurately start to price in payment for ecosystem services. It is not therefore a zero sum game. Seondly, it shows that political ends are better served by obfuscating what if properly disseminated could be vital asset allocation information.

   The challenge for us all will be to find the mechanisms and measurement systems that will correctly identify and price all the costs including those to our ecosystem. The challenge to do this when so many of those benefits are not even properly understood is nebulous to say the least! However, once we can do that, we can all set about allocating our capital - both intellectual and physcial - in the most efficient manner.

   If we do not rise to this challenge and soon, we run a very great risk that capital will be misapplied with dire consequences for all of humanity and the ecosystem it inhabits.

   John G. Booth BSc LLB JD LLM - Lawyer, Banker, Entrepreneur, Investment Manager, Public Company Director and Partner at Conservation Finance International

   Posted by: John G. Booth | December 27th, 2007 at 11:19 am | Report this comment
   

7. Martin Wolf: I thank all those who commented on my last and possibly most important column of the year (at least in my view). For the question I am addressing is what sort of civilisation might survive the 21st century. I will not be around to see what happens (which I find very frustrating, since I would really like to know how it all turns out). Edward (and Willem, too) ask whether I am right to take the two world wars out of the long-term historical trend. The honest truth is that I am not sure, but hope so. I would make four arguments in favour of this proposition. First, the ideologies of Hitler’s Reich, as well as that of Second World War Japan were territorial: Lebensraum and the Greater East Asia Co-Prosperity Sphere. These views of the preconditions for national prosperity were clearly mistaken, as the post-war flourishing of Germany and Japan proved. Again, prior to the First World War, Germany sought empire, in imitation of the other imperial powers, notably Britain. Yet the Victorian empire had nothing to British prosperity, as Germany’s own remarkably successful post-1870 catch-up demonstrated. Late 19th century imperialism was a dreadful mistake. The Imperialists gained nothing from seizing vast swathes of Africa. On the contrary, it was a diversion of useful effort. Second, if I remember correctly Joseph Schumpeter argued that the catastrophe of the late 19th century rivalries in Europe was caused, in part, by the continued political domination of military (and feudal) aristocracies, whose views of international relations were anti-commercial, imperial and militaristic. These attitudes and the power of the class (caste) that held them was a throw- back to the pre-modern era. Third, there is the remarkable and, I believe, historically unprecedented collapse of the Soviet empire, without war. This happened overwhelmingly because of its economic failure. The Soviet system failed to give the people under its sway the standard of living they aspired to. It was also, of course, repressive and highly unpleasant – the evil empire, in fact. No doubt, as I argued, nuclear weapons kept the peace. But the economic failure seems to me to have been crucial in explaining the collapse. Finally, China and India are, as I argued, trying to develop internally on the basis of peaceful commerce, not territorial expansion. They seem to understand what living in our sort of world means, in terms of the opportunities for giving their peoples what they want. So far at least, the West is accommodating, even encouraging, this development. So I am moderately optimistic that the long transition to a positive sum world can bring substantial improvements in international relations. It certainly brought democracy to m. I agree with Edward that democracy is not perfectly healthy. But it still seems to me better than the alternatives. I remain convinced that the positive-sum society is a necessary condition for sustainable universal-suffrage democracy. Edward and Willem both ask whether the Maddison numbers give a reasonable picture of the improvements in standard of living over the past two centuries. Willem’s view is that these data exaggerate the improvements in standards of living over the period. I share the scepticism about the precise numbers, but disagree with their conclusions. I think the idea that standards of living have improved, say, 20-fold in advanced countries over the past two centuries is an understatement. Consider the range of products and services that did not exist two centuries ago (trains, cars, aeroplanes, modern pharmaceuticals, anaesthetics, indoor plumbing, sewage treatment, electricity, refrigeration, washing machines, telephones, computers, the internet, etc, etc, etc). Consider the massive increased in life expectancy and collapse in infant mortality. Ask women what difference it makes to them that they can have two children with virtual certainty that they and their children will survive against having 12 pregnancies, in the knowledge that half of their children will not survive to maturity and they themselves have a good chance of dying in childbirth or, exhausted, in their 40s or 50s. Consider the relief from physical drudgery in factories, mines and, not least, the home. Moreover, much of the meticulous work on price indices suggests that inflation has, if anything, been exaggerated when one takes account of new products and services and improvements in quality, too. I can accept that further rises in measured living standards will bring modest improvements in welfare. But I really do not believe this has been the case over the past two centuries. Chris Johns brings up a related point about warfare. (By the way, since I spent many years of my life studying the classical languages, including at Oxford, I know a little more Latin than “post hoc ergo propter hoc”.) I would argue that we like conflict because, on the whole, it has been in our interests to do so. It is, in other words, part of our evolutionary heritage. We seek plunder. Jared Diamond argues that stone-age tribes fought (still fight) over women. But I would argue that the pleasure in conflict is not unbridled and, shorn of motives beyond love of violence, can be contained. We can learn. Indeed, we have to. Domestically, our societies are largely disarmed and, by historical standards, exceptionally peaceful. The same is now true of relations among advanced states: just look at contemporary Europe. So I would argue that in the absence of motive, the propensity to violence, both individual and collective, is containable. What is required is both greater fear of conflict (nuclear weapons does that!) and reduced incentive for conflict (the positive-sum economy does that). I find the view that conflict is inevitable and uncontainable, because it is what we do, not just depressing, but futile. What do we do with such knowledge? Throw up our hands and wait for Armageddon? Willem raises some further points. Let me comment on a few of them. I agree with him that we are not terribly good at global governance. But I would argue that the progress we have made in this regard since the Second World War is enormous. We have got better at global governance, though maybe not fast enough. But it is true that it is difficult to achieve co-ordination without a dominant power. Historically, ordered societies that stretch over large parts of the globe have been empires, as several scholars have noted. Whether it is possible to provide global order without a global empire is one of the great questions of the 21st century. As I indicated above, I do not believe that the increases in GDP per head massively overstate material standards of living. We agree that happiness is not the issue here (on which more below). We agree, too, that land is a constraint, but only if it is broadly enough defined to include all natural resources. But I would disagree that the density of settlement in, say, contemporary Europe is a severe constraint on standards of living. The reason for this is that living in dense conurbations gives huge economic, social and cultural benefits: a man who is tired of London is tired of life. Most of humanity seems to feel the same way: people do not flood from towns to the countryside, but in the opposite direction. Just look at what is happening in China. So if we had the physical resources (of which cheap energy is far and away the most important) to sustain urban living for everybody on the planet, we might find even 9bn people living quite happily on a small proportion of the world’s land area. By the way, the main reason land prices are quite so high in the UK is artificial, not actual, scarcity. We could double the area taken by cities and still leave 80 per cent of the land area for rural and recreational uses. The rental value of agricultural land is also very low in the UK. I am more confident that the rising productivity has contributed to the rise of democracy than it has to the emergence of a more peaceful world, though I remain convinced that the arguments I made on both points are broadly correct. Germany’s move to National Socialism followed directly on the Great Depression. That seems to me no small fact. Hitler would almost certainly not have come to power without that economic calamity. The Soviet Union was established as a result of a disastrous war, entered into by a Tsarist regime that rejected commercial values altogether, and collapsed when the economy ceased to function successfully. I don’t think the latter was in any way an accident. I agree that demography is one reason for the growing peacefulness of the advanced countries. But is it the only one? Are societies with huge numbers of young people (India, for example) bound to go to war. Not, I would argue, if there are other ways to satisfy people’s aspirations. I agree that status is indeed one of the things people desire. But it is not all they desire. With rising material prosperity, people have something solid to lose and young people have hope of a better life. Both points are important. Moreover, conflict and conquest are, in any case, no longer ways of satisfying people’s aspirations for a better material life. Finally, let me comment on what Brian Davey says. My view is that if people voluntarily choose a lower material income that is fine. It is an expression of free choice (which is good) and the result of the enormous prosperity we now enjoy (which is also good). A voluntary reduction in a subsistence income would leave one dead! I have written a column on Richard Layard’s happiness economics and remain unpersuaded that it tells us much useful about policy. The big point Mr Davey makes is that we would all be happier if we lived frugal, natural community-bound lives. I agree that some of us would. But many of us most definitely would not (I for one). Among the types of human being are those with fierce ambition and restless desires. If you stick them in closed communities they will soon organise the village to wage war on the next one. Thus rose the feudal estates and territorial despotisms of old. So, no, I do not believe in the return to Eden. It is one of humanity’s oldest myths. But it is just that – a myth. Of course, Mr Davey may prove right that the challenge of replacing fossil fuels is one we are unable to meet. If so, at some point, our civilisation will collapse. It will not be fun. Of that I am sure. May I take this opportunity to thank all those who have contributed to the FT’s economists’ forum over the past year. Many of the comments have been brilliant. It has been an immense pleasure to participate. I apologise for my failure to react to everybody’s thoughts as they deserved.

   Posted by: Martin Wolf | December 27th, 2007 at 4:29 pm | Report this comment
   

8. Andrew Oswald: I enjoyed reading everyone’s reactions to this inportant article by Martin Wolf. And many things in the article seem to me right.

   But if we want to understand nations’ true prosperity, then I think we need to look at the data more and draw upon habits of thought less.

   If I can be forgiven for saying so, it seems to me that it is easy to fall back upon emotions and preconceptions. It would be better if we could all - that goes for me as well - discard our pet hypotheses before breakfast, as Konrad Lorenz suggested to young scientists.

   I wonder whether participants have read Richard Easterlin’s work on happiness and modern life (it was Easterlin who started the economics of happiness). His classic 1974 article can easily be found, but a good introduction to the ideas is in: “Explaining Happiness,” Proceedings of the National Academy of Sciences, 100:19, September 16, 2003, 11176-11183. It is a pdf on Easterlin’s website. If you have not read this material, it is going to be hard to form sound judgments about society’s future, in my view.

   The data suggest that happiness and psychological health have run flat, or even declined a little if we look at GHQ scores in countries such as Britain, the Netherlands and Belgium (the countries where the best mental health data are available) since the 1970s.

   This flatness is arguably the most important fact to be discovered by late-20th century social-science. It seems to have major implications for economic and social policy. Eventually, politicians in the rich nations are going have to ask themselves WHY they pursue economic growth.

   As we look forward to the new year, and the remainder of the century, Easterlin’s fact is the one that I reckon should be at the front of our minds. And if your immediate reaction is to brush it away then I ask you to ask yourself: have you read the evidence and are you in danger of falling back on habits of thought regardless of the facts?

   [I hope I remain open to data that would make me change my mind about all this.]

   Compliments of the season to all.

   Posted by: Andrew Oswald, Professor of Economics, University of Warwick | December 27th, 2007 at 7:45 pm | Report this comment
   

9. Brian Davey (guest): I did not argue that ” we would *all* be happier if we lived frugal, natural community-bound lives”. I argued that there is a lot of reason to suppose that a good many of us might be because, and you missed out the list of benefits and concentrated instead on a list of costs in summarising my response, we might be less stressed, less obese, less lonely and isolated… and so on.

   Another way of putting this is to say: let us at least make a virtue out of necessity. Since we have to live within limits, let us at least be graceful about it, and work out the benefits in order to make sure that we get them - otherwise our economic hubris is positively inviting punishment by an ecological Nemesis.

   A key point here is that a post growth economy would be one in which people would live a different “lifestyle package” and it is far from self evident that for most people, even in the (over)developed world, that this “lifestyle package”, taken as whole, would be inferior to that of their current arrangements dominated as they are by the agendas of the supermarket and consumer debt corporations. For example, the loss of more rapidly obsolescent consumer goods might turn out to be much more durable human relationships, less worries about our debts, or more time to be spent parenting and enjoying the company of children.

   The point about lifestyle packages is that most of the time people manage their lives in largely stable routines in which they more or less hold in some kind of balance an age-related job with a pattern of skills and abilities, a level of income (and debt), a habitat and domestic arrangements including their diet, a state of health and disability, a network of emotional and instrumental relationships. All of these reflect and give rise to a corresponding mindset of assumptions, aspirations, expectations as well as social and community values that are interrelated with the larger economic and social process.

   Inside each lifestyle package there is a short term inertial weight which bestows on certain behaviours quasi-addictive features. For example, our network of relationships and geographical habitat often make it difficult to break consumption patterns that are shared by peers without risking damaged relationships - e.g. meal routines and rituals with close relations provide security in a changing world or, again, a routine weekend leisure journey may provide the binding features to a close relationship. To change these routines and the mindset that goes with them typically involves a transition into the unknown.

   A transition to a de-growth economy caused by oil and gas peaks, responses to climate change and the credit crisis are therefore likely to create radical disjunctures and a break up of these work-, shopping- and consumption-driven routines for millions of people in a way that will be frightening, disturbing and disorientating for many. This will especially be the case for a rather large number of single people in our society who do not have sufficient “social capital” to draw upon. In fact, if the “human ingenuity” that you want, Martin, does not turn up in sufficient measure, or simply if the credit structure implodes because it cannot go on growing for ever - society will have to find an alternative way forward - whether we like it or not. In those circumstances since we cannot all have, as Willem Buiter wants, “an apartment in the city and a country cottage with at least a couple of acres of land” then we will have to find passable substitutes - like a flat and an allotment in the city with a hut on it to meet our friends in and to grow some of our own fruit and vegetables… like friendship circles who show each other how to sew and mend, like group meal arrangements, like a volunteer circle to construct a community building, like community arts events… none of which require big spending in a supermarket but which do provide a different set of satisfactions for otherwise lonely, frightened, stressed and isolated people.

   If we do not find such psychologically satisfying substitutes there is a danger when people find that the consumer society is not delivering what they have been led to expect as a right they will channel their anger at scapegoats - perhaps led by demagogic thugs with simple explanations for the crisis that blame vulnerable people and foreigners. These would be the restless sorts of people that you describe, Martin - or Willem Buiter’s angry young men who feel that they have got insufficient respect, and insufficient chance with young women, unless they start working on their own account against an arrogant world that flaunts its wealth and power - a world that has marketed them an alternative model in gangster movies, aggressive computer games and rap, made in the US of A.

   Fortunately practical movements are already getting under way like that of the UK Transition Towns which provide people with new models for their lifestyles. The Transition Towns are beginning to provide a social network in which people support each other to develop new skills to conserve resources and supplement their means of living close to their habitats. They help collectively develop alternative energy and resource-light lifestyle packages and community focused value systems. A movement like this will be needed to provide people with an alternative basis for self respect and dignity as more and more recognise the futility and destructiveness of living according to the values and goals of the debt burdened consumer society.

   I accept that you may be not be happy with this kind of life, Martin… but before you write off these ideas I invite you to have a look at this 20 minute internet video to see that there are entirely different ways of seeing the world in which it is highly plausible that if not you, most other people, will be much better off after the growth economy: http://www.storyofstuff.com/

   Brian Davey is an ecological economist and member of the Feasta Energy and Climate Working Group: www.feasta.org

   Posted by: Brian Davey | December 27th, 2007 at 9:12 pm | Report this comment
   

10. Tony Curzon Price (guest): I hugely enjoyed the column and the comments.

    But, Martin, what exactly is your view on man’s state of nature, and does it really support your rejection of Davey? On the one hand, you reject the “return to simplicity” view of well-being on the grounds that:

    “Among the types of human being are those with fierce ambition and restless desires. If you stick them in closed communities they will soon organise the village to wage war on the next one. Thus rose the feudal estates and territorial despotisms of old.”

    On the other hand, you extol the containment of conflict we know today:

    “We like conflict because, on the whole, it has been in our interests to do so. It is, in other words, part of our evolutionary heritage. We seek plunder. Jared Diamond argues that stone-age tribes fought (still fight) over women. But I would argue that the pleasure in conflict is not unbridled and, shorn of motives beyond love of violence, can be contained.”

    So your picture is of a naturally quite violent species that is contained through social arrangements.

    But can’t we ask further what are the inputs to the production of sociable behavior, and whether those inputs are necessarily carbon-rich?

    Your suggestion that ambition needs to find its object doesn’t mean it must find it in unsustainable, carbon-hungry social games. Indeed, sport seems to be a model of a practice that even today consumes the ambition of young men without requiring they build energy-hungry corporate empires.

    Alongside engineering research into renewable energy sources that would allow liberal democracy to survive, we should also be engaged in social research into forms of life that will accommodate sociality while consuming less carbon - just in case we don’t get the renewables in time.

    Tony Curzon Price is currently Editor-in-Chief of openDemocracy.net and was previously at the Centre for Economic Learning and Social Evolution, University College London

    Posted by: tony curzon price | December 31st, 2007 at 4:15 pm | Report this comment
    

11. Ben Deering (guest): As someone who works in the energy security field from more of a zero-sum perspective, I think this article is immensely important for reminding us that energy is, like money, the most fungible of commodities, with the most important function its ability to, like money, assist in turning ideas in realities, and to make dreams a little more tangible.

    In all the debate above I felt too much time was spent arguing with insignificant aspects of the story, such as the exact amount of the rise in individuals’ incomes. The point was that regarding energy, it is not just the ability to procure it that matters, but the ability to use it. The ability to use it to lighten our daily load.

    While liberal democracy may not be as stable and entrenched worldwide as we may like, that is not due to its unattractiveness relative to other forms of government but due to one of its basic tenets, that rules of behavior or rules (policies) of any kind, cannot be imposed upon unwelcoming majorities. Support for authoritarian/ totalitarian/ extremist ideologies flourishes only when growing numbers come to see a political system, be it democratic or otherwise, as fundamentally incapable of or unwilling to address their rights, grievances and desires.

    What Mr Wolf is pointing out is that energy consumption (and thus carbon dioxide emissions) have enabled rights to be expanded and protected, grievances to be addressed and desires to be at least partially fulfilled, thus avoiding popular discontent and mass domestic and international conflict. But, if we do not find an equitable solution to necessary emissions restrictions and people again turn to fighting to maintain what they have instead of cooperating to expand what is possible, the strong will again do what they can while the weak suffer what they must.

    Posted by: Ben Deering | January 3rd, 2008 at 5:13 am | Report this comment
    

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