5.3 Eco economy

When discarding a system, we need a new to replace it. What do we want with this new system that the old is not giving us? What are the goals?


Most people want prosperity. In other words, they want a sense of wellbeing and a sense of continuity, a feeling of security for tomorrow. The present system might give a sense of wellbeing for a few. The problem is that most of us have an uneasy feeling that we systematically erode the basis for tomorrow’s wellbeing. A main driving force is inequality. The rich are getting super-rich while middle and lower class incomes are stagnant or reduced.

The perception of wealth is always relative. Perceived injustices can be corrected by the only reward monetarism can give: more money to enable you to buy the goods that the rich have. In order to reduce prices for these goods, monetarism promotes deregulation of markets and a constant stimulation of consumer demand. In monetarism or neo-liberalism thinking, natural resources and environmental sinks are regarded as free. If there is a cost connected to these, the trend is to externalize these costs: the general public or those living adjacent to production, transport and waste have to pay the costs.

The system as a rule fails to protect the environment as long as the rich can protect themselves by moving elsewhere, while the less wealthy have to pick up the bill. The super-rich may increase their quality of life while the poor increase their quantity of unnecessary stuff in a futile quest for a feeling of “justice” – both at the expense of the environment and their own wellbeing.

Prosperity must therefore be redefined. Ruthless greed can no longer be a basis for respect and admiration.

Prosperity must provide the necessities of life. However, the rule of “diminishing marginal utility” entails that obtaining more of the same gives less satisfaction. The first piece of chocolate tastes very good. The 20th piece of chocolate gives less pleasure, and might even have a detrimental effect. In other words: subjective well-being diminishes at higher income levels, especially if the higher income erodes the basis for future security and well-being (Jackson, 2011, lecture).

How we grow matters. Depending on the options and priorities we choose, there is an all-too-real danger of worsening social conflicts and environmental degradation fueled by deepening inequality. This is a particular risk if today’s distribution of income between rich and poor countries is not made more equal. Clearly the prudent way forward must be based on promoting a development path that integrates economic growth with environmental responsibility and social equity (World Bank 2004)

The crux is to find the balance between short-term subjective well-being and long-term security. Monetarism simply does not provide for this. In the new eco-economic system, the question of finding the optimal balance is vital.

Flourish or the happiness index
Prosperity must include another factor: the capability people have to flourish (Jackson, p.43). People need to be well fed and free from avoidable diseases. They need a decent place to live and keep warm. They need to be able to take part in the life of the community, visit friends and relatives. They also need equal access to good education. A good social context is vital for most people to flourish. The new eco-economy must therefore consider building local resilience and social cohesion. Instead of amassing stuff, the emphasis should perhaps be on happiness, as in “Gross National Happiness” (GNH) expressed briefly in seven points:

1. Economic Wellness: Indicated via direct survey and statistical measurement of economic metrics such as consumer debt, average income to consumer price index ratio and income distribution
2. Environmental Wellness: Indicated via direct survey and statistical measurement of environmental metrics such as pollution, noise and traffic
3. Physical Wellness: Indicated via statistical measurement of physical health metrics such as severe illnesses
4. Mental Wellness: Indicated via direct survey and statistical measurement of mental health metrics such as usage of antidepressants and rise or decline of psychotherapy patients
5. Workplace Wellness: Indicated via direct survey and statistical measurement of labor metrics such as jobless claims, job change, workplace complaints and lawsuits
6. Social Wellness: Indicated via direct survey and statistical measurement of social metrics such as discrimination, safety, divorce rates, complaints of domestic conflicts and family lawsuits, public lawsuits, crime rates
7. Political Wellness: Indicated via direct survey and statistical measurement of political metrics such as the quality of local democracy, individual freedom, and foreign conflicts


Freedom is an important value, but must have its limits. Certain freedoms are immoral or unsustainable. Endless accumulation of material goods, unethical exploitation of other human beings and natural resources causing depletion of biodiversity or polluting the environment at the expense of others are examples.

Ecological resources such as fossil fuels, freshwater, fish stocks, timber, land, minerals must be managed responsibly, not irresponsibly exploited by short-term greed. The regenerative capacity of the ecosystems: atmosphere, soils, diversity of species, forests, water and oceans must be preserved.

UIA studenter i mangrove Sri Lanka1b

If not, we deplete our natural capital and impoverish our planet. More stuff cannot compensate for a destroyed environment.

In our new economy, extraction, production, transport and consumption cannot externalize environmental costs (Leonard, 2011).

Eco-communities can not accept being dictated by multinational companies. The freedom such companies take to dismantle and move production facilities built by a local community, or require the freedom to externalize negative production costs and put them on the community, means that the freedom of the people in the community is jeopardized. This kind of unethical business practice is not acceptable.

Corporations must have duties, not just benefits. One duty is to ensure that their activities do not violate human rights. Multinational corporations must also have a responsibility for ensuring that the local community benefits. Local employment opportunities, technology transfer and cooperation with local businesses should be part of the corporate social responsibility. There should be clear rules against tax evasions and speculation in tax havens. Trade deals should be worked out in collaboration with civil society and trade unions, not just with the business community.

The freedom to procreate endlessly is problematic. The bigger the human population, the faster we deplete the ecological buffers and smash into the absolute limits to growth.

Another two billion people will be added to global population over the next 25 years, the vast majority in poorer nations, which will add huge demands for energy and economic growth. If that growth is not achieved in an environmentally sustainable way, its effects on poverty and human well-being will be disastrous. It will be too late 25 years from now to make the right choices. For the sake of our children and our children’s children, we must act now (World Bank 2004).

A smaller population means less pressure on our ecological resources. The current liberalized economic system needs growth in the population. A stagnant or reducing population means a stagnant or reducing economy – in other words crisis. The new eco-economy must give incentives for population control and thrive in a physically diminishing but otherwise flourishing population.

Trust, security and sense of community
Social well-being requires trust, security and a good community. “Relationships, meaningful employment and the ability to participate in the life of society appear to be important almost everywhere” (Jackson, p. 47). Neo-liberalism tries to make us believe that prosperity equals material wealth. Material wealth is vital because it provides a language with which we can communicate with others and participate in society. However, if participation is the crux, the richer societies should be able to give evidence of that. However, it seems that in many cases it is possible to register “rising rates of anxiety and clinical depression, increased alcoholism and binge drinking, and a decline in moral at work…breakdown of community, a loss of trust across society and rising political apathy” (Jackson, p. 144). The Sheffield loneliness index (SLI, 2009) indicates that the sense of loneliness in Europe is sharply increasing.

If social progress depends on the self-reinforcing cycle of novelty and anxiety, the problem can only get worse, as materialistic values such as popularity, image and financial success are psychologically opposed to intrinsic values like self-acceptance, affiliation, a sense of belonging in the community. Yet these latter are the things that contribute to our well-being (Jackson, p. 147-148)
It seems that those with high intrinsic values are happier and live more sustainably than those with materialistic values. There are several communities based on such intrinsic values.


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Chapter 4 4 Ecosystems
Chapter 5 5. Green economy
5.1 Green economy games
5.2 Throughput
5.3 The eco economy
5.4 Towards a green economy
Chapter 6 6. Greener future?