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A New Economy & A New Politics

by Gus Speth


If America’s present system of political economy were performing well, there would be little need to question it or seek fundamental change. But that is not the case. Asked what the key goals of economic life should be, many would reply, “to enhance social well-being while sustaining democratic prospects and environmental quality.” Judged by this standard, today’s political economy is failing. It is a failure that reaches many spheres of national life—economic, social, political, and environmental. Indeed, America can be said to be in crisis in each of these four areas.

The economic crisis of the Great Recession brought on by Wall Street financial excesses has stripped tens of millions of middle class Americans of their jobs, homes, and retirement assets and plunged many into poverty and despair.

A social crisis of extreme and growing inequality has been unraveling  America’s social fabric for several decades. A tiny minority has experienced soaring incomes and accumulated grand fortunes, while wages for working people have stagnated despite rising productivity gains and poverty has risen to a near 30-year high. Social mobility has declined, record numbers of people lack health insurance, schools are failing, prison populations are swelling, employment security is a thing of the past, and American workers put in more hours than workers in other high-income countries.

An environmental crisis, driven by excessive human consumption and waste and a spate of terrible technologies, is disrupting Earth’s climate, reducing Earth’s capacity to support life, and creating large-scale human displacement that further fuels social breakdown.

And a political crisis is reflected in governmental paralysis and a democracy that is weak, shallow, and corrupted—the best democracy that money can buy.

The case for fundamental change is underscored especially by the urgency of environmental conditions. Here is one measure of that problem: All that human societies have to do to destroy the planet’s climate and biota and leave a ruined world to future generations is to keep doing exactly what is being done today, with no growth in the human population or the world economy. Just continue to release greenhouse gases at current rates, just continue to impoverish ecosystems and release toxic chemicals at current rates, and the world in the latter part of this century won’t be fit to live in. But, of course, human activities are not holding at current levels—they are accelerating dramatically. It took all of history to build the $7 trillion world economy of 1950; recently, economic activity has grown by that amount every decade. At typical rates of growth, the world economy will now double in size in less than 20 years. We are thus facing the possibility of an enormous increase in environmental deterioration, just when we need to move strongly in the opposite direction.

Accelerating environmental deterioration is most starkly revealed in the global trends—trends in which the U.S. economy and U.S. politics are deeply complicit. About half the world’s wetlands and a third of the mangroves are gone. An estimated 90 percent of the large predatory fish are gone, and 75 percent of marine fisheries are now overfished or fished to capacity. Twenty percent of the corals are gone, and another 20 percent severely threatened. Half the world’s temperate and tropical forests are gone. The rate of deforestation in the tropics continues at about one acre per second. Species are disappearing at rates about 1,000 times faster than normal. The planet has not seen such a spasm of extinction in 65 million years, since the dinosaurs disappeared. Over half the agricultural land in drier regions suffers from some degree of deterioration and desertification. Persistent toxic chemicals can now be found by the dozens in essentially each and every one of us.

Human impacts are now large relative to natural systems. The Earth’s stratospheric ozone layer was severely depleted before the change was discovered. Most importantly, human activities have pushed up atmospheric carbon dioxide by more than a third and increased other greenhouse gases as well, with the result that we have started, in earnest, the dangerous process of warming the planet and disrupting the climate. Everywhere, Earth’s ice fields are melting. Industrial processes are fixing nitrogen, making it biologically active, at the same rate that nature is; one consequence is the development of hundreds of dead zones in the oceans due to over-fertilization. Each year, human actions already consume or destroy about 40 percent of nature’s photosynthetic output, leaving too little for other species. Freshwater withdrawals doubled globally between 1960 and 2000 and now represent over half of accessible runoff. The Colorado, Yellow, Ganges, and Nile Rivers, among others, no longer reach the oceans in the dry season.

To seek something new and better, a good place to begin is to ask why today’s system of political economy is failing so broadly. Environmentally, the answer is that key features of the system work together to produce a reality that is highly destructive. An unquestioning society-wide commitment to economic growth at almost any cost; powerful corporate interests whose overriding objective is to grow by generating profit, including profit from avoiding the environmental costs they create and from replicating technologies designed with little regard for the environment; markets that systematically fail to recognize environmental costs unless corrected by government; government that is subservient to corporate interests and the growth imperative; rampant consumerism spurred by an addiction to novelty and by sophisticated advertising; economic activity now so large in scale that its impacts alter the fundamental biophysical operations of the planet—all combine to deliver an ever-growing world economy that is undermining the ability of the planet to sustain life.

This environmental reality is linked powerfully with growing social inequality and the erosion of democratic governance and popular control. Only a powerful democratic reality can guide and regulate the economy for environmental and social ends, and only a society that is cohesive and fair is likely to rise fully to shared challenges like the environment. Unfortunately, Americans today live and work in a system of political economy that cares profoundly about profits and growth and that cares about society and the natural world mainly to the extent it is required to do so. It is thus up to us as citizens to inject values of fairness, solidarity, and sustainability into this system, and government is the primary vehicle we have for accomplishing this. But typically, we fail at this assignment because our politics is too enfeebled and government is excessively under the thumb of powerful corporations and concentrations of great wealth. Consider the similarity between the recent financial collapse and the ongoing environmental deterioration. Both result from a system in which those with economic power are propelled, and not restrained by government, to take dangerous risks for the sake of great profit.

The prioritization of economic growth and economic values is at the root of the systemic failures and resulting crises America is now experiencing. Today, the reigning policy orientation holds that the path to greater well-being is to grow and expand the economy. Productivity, wages, profits, the stock market, employment, and consumption must all go up. This growth imperative trumps all else. It can undermine families, jobs, communities, the environment, and a sense of place and continuity because it is confidently asserted and widely believed that growth is worth the price that must be paid for it. Growth is measured by tallying GDP at the national level and sales and profits at the company level, and pursuit of GDP and profit is the overwhelming priority of national economic and political life.

But an expanding body of evidence is now telling us to think again. Economic growth may be the world’s secular religion, but for much of the world it is a god that is failing—underperforming for most of the world’s people and, for those in affluent societies, now creating more problems than it is solving. The never-ending drive to grow the overall U.S. economy undermines communities and the environment. It fuels a ruthless international search for energy and other resources; it fails at generating the needed jobs; and it rests on a manufactured consumerism that is not meeting the deepest human needs. Americans are substituting growth and consumption for dealing with the real issues—for doing things that would truly make the country better off. Psychologists have pointed out, for example, that while economic output per person in the United States has risen sharply in recent decades, there has been no increase in life satisfaction, and levels of distrust and depression have increased substantially.

Writing in Yes! A Journal of Positive Futures, psychologist David Myers sees this pattern of soaring wealth and shrinking spirit as “the American paradox.” He observes that at the beginning of the twenty-first century, Americans found themselves “with big houses and broken homes, high incomes and low morale, secured rights and diminished civility. We were excelling at making a living but too often failing at making a life. We celebrated our prosperity but yearned for purpose. We cherished our freedoms but longed for connection. In an age of plenty, we were feeling spiritual hunger. These facts of life lead us to a startling conclusion: Our becoming better off materially has not made us better off psychologically.”

Before it is too late, America should begin to move to a post-growth society where working life, the natural environment, our communities, and the public sector are no longer sacrificed for the sake of mere GDP growth; where the illusory promises of continuous growth no longer provide an excuse for neglecting to deal generously with compelling social needs; and where citizen democracy is no longer held hostage to the growth imperative.
For the most part, advocates for change have worked within the current system of political economy, but in the end, this approach will not succeed when what is needed is transformative change in the system itself. The case for immediate action on issues like health care and climate change is compelling, but the social and environmental challenges just reviewed will not yield to problem-solving incrementalism. Environmentalists and other progressives have gone down the path of incremental reform for decades, and the results of that experiment are in. The roots of our environmental and social problems are deeply systemic and thus require transformational change—the shift to a new, sustaining economy ushered in by a new politics. George Bernard Shaw famously said that all progress depends on not being reasonable. It’s time for a large amount of civic unreasonableness.

What circumstances might make transformational change and the birth of a sustaining economy possible? A decline in legitimacy as the system fails to deliver social and environmental well-being, together with a mounting sense of crisis and loss—both occurring at a time of wise leadership and accompanied by the articulation of a new American narrative or story and by the appearance across the landscape of new and appropriate models—were all these to come together, real change would be possible. Most of all, what is needed is a new politics and a new social movement, powerful and inclusive. The best hope for such a new political dynamic is a fusion of those concerned about environment, social justice, and political democracy into one progressive force. They all have a shared fate because they face the same reality: a political economy that does not prioritize sustaining human and natural communities.


Gus Speth is a Professor in the Practice of Environmental Policy at Yale University. He founded the World Resources Institute & co-founded the Natural Resources Defense Council. Artwork: Sam Francis, 1990, Untitled.

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