In arguing for the need to reconcile sustainable development with capitalism, Jonathan Porritt in his book, Capitalism as if the World Matters, makes a startling assumption which must be challenged. He claims that the vast majority of people in both the rich and poor world are content with the current economic order. Does he really think that several billion people are sufficiently well versed in the intricacies of global political economy to be able to make an informed judgment? The fact that most people have no idea how to change the system under which they struggle does not imply they support it.
Even among the educated middle-classes of the rich nations, understanding of the forces and factors which have shaped current global economic arrangements is limited. Today's capitalism does not have majority support, it is just that traditional Marx-inspired socialist economic policy has been seen to fail, and people have been too easily persuaded that there is no alternative.
For most people it is a matter of resigned acquiescence; they may have no alternative personally but this does not mean that no alternative exists, and it certainly does not mean they are happy with the status quo. The majority in poor countries want economic security and this depends on their having access to adequate economic opportunities. There is little sign that capitalism, in anything like its current form, is able to deliver those opportunities in sufficient numbers.
Porritt asks if it is possible to come up with an alternative model of capitalism which addresses the threat to our planet's capacity to sustain life, and argues that the case for sustainable development must be reframed for that to happen. We need, he suggests a politics that goes with the grain of peoples lives and interests before the moral argument for saving the planet is able to force the transformation of economic arrangements.
I believe this is only likely to happen if we address another moral issue - the issue of poverty and growing economic insecurity. Although global warming is beginning to impinge quite dramatically on some people's lives in certain parts of the world, the effects are not yet sufficiently acute or widespread to persuade large numbers of the need for change. For most people, the problem is in the future - not far in the future - but far enough for it not to register on their radar of immediate concerns. Poverty, on the other hand, is a pressing issue for all those for whom life is a constant struggle to feed, clothe and house their loved ones.
Only when people are relieved of the burden of poverty are they able to think beyond the hardship of their own lives and consider larger issues such as the plight of those less fortunate than themselves, or the situation likely to be faced by future inhabitants of an over-heated, polluted and resource-depleted planet. Only when they feel reasonably secure do people have the time and brain-space to think about why we are in such a mess, and how we might get ourselves out of it. Not everyone thinks in these terms even when they feel secure, but security is a prerequisite if we want people to extend the scope of their moral concern, and start working for change.
By addressing poverty we could make progress on two fronts: Much ecological damage is done by the poor who are forced into unsustainable farming practices which destroy fragile eco-systems. Reducing poverty would help stop immediate damage to the environment, and would create conditions in which more people are likely to reflect on the failings of the prevailing economic order in respect of sustainable development.
But what shape will that new economic order take? Porritt tells us what the outcomes should be: interdependence, equity, personal responsibility and intergenerational justice, but as Tony Juniper justifiably complains, he remains short on ideas for precisely how capitalism can be rendered sustainable.
This objective requires us to get to grips with the underlying economic causes of poverty. Common sense tells us that if people are denied access to viable economic opportunities then they will be poor. In industrialised nations the welfare state has emerged to relieve the poverty of the economically excluded; in poor countries only the patchy efforts of aid agencies provide any such safety net.
Access to economic opportunities will be severely restricted as long as control over the economic resources which are the raw material of wealth creation remains in the hands of a small minority. If we are to address poverty, and create the conditions in which the principles of sustainable development can direct economic advance, then we need a means of spreading access to economic resources more widely.
In his law of rent, enlightenment economist David Ricardo described how, as the economy advances and more wealth is created, a disproportionate share of that wealth ends up as economic rent: the income enjoyed by landowners which is a product not of their own labour, but of the collective labour effort of all members of a society. Ricardo's thesis was developed by an American economist named Henry George who was concerned by deepening poverty in the United States at a time, in the mid-19th century, when the economy was growing at an unprecedented rate.
Like Adam Smith and Ricardo, George believed that free markets and free trade were essential to economic progress. He identified the root cause of poverty not in the market mechanism, but in the accumulation of wealth as economic rent in the hands of land owners. That accumulation, which he believed had no moral justification, caused land ownership to become concentrated into the hands of fewer and fewer people, thus denying viable economic opportunities to the majority, and leaving a sizeable minority destitute.
Today, the economic rent enjoyed by landowners is reflected principally in the ever-rising value of land. George suggested that the value of land be taxed on an annual basis, and that all other taxes be abolished. This, he argued, would reverse the concentration of land ownership; would end the right of the land-owning minority to keep that wealth which is the product of society's collective efforts; would obviate the need for taxes on incomes, profits and trade which currently constrain the process of wealth generation; would provide a steady revenue stream for the government which would grow as the economy became more productive; and would widen access to economic opportunities. George believed such a strategy would go some considerable way to reducing poverty and inequality.
Porritt argues that advocates of sustainable development must find a way of working with the grain of markets and free choice. He is right to identify two key aspects of capitalism which must be maintained if the economy is to be reshaped to deliver equity and sustainability. The market mechanism cannot be bettered as the arbiter of the millions of consumption and production decisions which are made every day at all levels of the economic. But as George pointed out, in order for the market to maximise efficiency in the production of wealth, and maximise equity in its distribution, certain conditions have to be met. The first of these is equality of access to economic resources and opportunities. As for free choice, it is worth very little without economic security. A economic system which holds up freedom as its forming principle, but which actively denies that freedom to the majority of citizens is clearly in need of root and branch reform.
Followers of George's interpretation of classical economic theory have extended his proposal to tax land values into a potential solution to the environmental problem. By charging for the right to pollute, and for the right to exploit and consume finite mineral resources, they have formulated a streamlined mechanism for reversing poverty and exclusion and for addressing the environmental problem. German economist Jurgen Backhaus sums up the application of George's ideas: 'it provides incentives for an optimal use of environmental resources in the interests of both present and future generations in which the automatic adjustment of rents constantly pushes economic agents to make the most judicious use of environmental resources'.
Porritt is overly harsh in his criticisms of environmentalists who have succeeded against immense odds in largely winning the arguments over global warming and resource depletion. He is more justified in his attack on the left for its failure to come up with any new thinking at a time of great opportunity. The only remedy offered by the left is to increase traditional taxation, but this reduces the capacity of the economy to generate wealth, and acts as a disincentive to those who do have access to economic opportunities.
This vacuum of ideas from the left is depressing. Taxing the rich to help the poor was always an unambitious response to the problem of economic exclusion. It suggests that nothing much can be done about poverty. We need to be more ambitious and to embrace the idea of an economy in which everybody is able to take responsibility for their own economic well being. Coupled with the left's strange silence on the environment, those of us concerned with social justice and the fate of the planet have no choice but, armed with a more accurate understanding of economic realities than that which currently prevails, to cast a new world view; one that is adequate to the challenges of the twenty-first century.
