Foundational Economy: The sustainability dimension

Ian Gough

London School of Economics

Socio-ecological economic transitions: making space for the foundational economy

The Second Colloquium of the Foundational Economy Collective

9 & 10 September 2019

Foundational Economy: The sustainability dimension

A. Sustainability

B. Human needs

C. Foundational economy

D. Routes to confront the dilemma

A. Sustainability

• Sustainability not easy to define; perhaps the most generic meaning is ‘that whatever is being considered has the capacity for continuance’ (Ekins)

• Key focus of much public policy: Fiscalsustainability of the public finances in the face of demographic and other pressures.

• Here - a much broader, existential idea of sustainability: the ability of the planet to sustain human habitats, livelihoods and wellbeing

Environmental sustainability

• Ekins (2014: 57):– The maintenance of critical environmental functions

that are not substitutable, whose loss is irreversibleand is likely to lead to ‘immoderate’ losses

• Distinguish:– Weak sustainability: maintain and expand total stock

of capital; where possible, substitute built and human capital for natural capital

– Strong sustainability: non-substitutability of critical natural capital, eg: waste absorption functions of the planet

Strong sustainability

• Standard economic approach assumes weak sustainability in calculating trade-offs between the goods and services provided by different forms of capital.

• This standard approach clearly inadequate where there are non-marginal, irreversible changes, or great uncertainty over the probability of certain outcomes, or a lack of agreement about valuing human life and welfare.

• An assumption of strong sustainability is important because it supports a more precautionary approach to managing climate change - and can link to prevention strategies.

The following diagrams

• The nine planetary limits• Introduce the ‘inner limit’ – human wellbeing

– The planetary boundaries remained unviolated in the Holocene for about 10 000 years until recently. But there have always been, and there remain, millions of people in dire need, hungry, sick, impoverished, threatened, insecure, harmed in numerous objective waysand suffering in innumerable personal and collective ways.

• Introduce global inequality• Then focus on the rich world, using UK as an

example

The Anthropocene: The era of escalating greenhouse gas emissions and global warming.

The imperative: drastic unprecedented decarbonisation of the global economy.

The later it is left the faster it must happen

Focus for now on GHG emissions.

Must turn from Production-based to

Consumption-based emissions

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Anthropocene + hyper-inequality =

PlutoceneWorld’s richest 10% account for 50% of consumption emissions

Global income deciles and associated lifestyle consumption emissions

The dilemma

• Thus the rich world dilemma: unsustainable wellbeing

• The environmental crisis questions the material foundations of current quality of life in the rich world.

• Inequality worsens the dilemma but redistribution not enough

• Nor is decoupling and eco-efficiency• Must move from efficiency to sufficiency, and

question consumption patterns directly

B. Human needs the only basis for conceiving sustainable consumption

Brundtland Report 30 years on

“Sustainable development…meets the needs of the present without compromising the ability of future generations to meet their own needs.” It contains within it two key concepts:

1. Needs

2. Limitations

Brundtland Report 1987

Core concepts in human need theory

• Basic needs: Universalisable prerequisites to avoid serious harm

• Three core elements in Doyal/Gough and Nussbaum:

– Participation/ Affiliation

– Health/ Bodily integrity

– Critical autonomy/ Practical reason

Universal Intermediate Needs

• Those properties of goods, services, activities and relationships that enhance health, autonomy and critical participation in all cultures

• Material – water, nutrition, shelter, secure and non-threatening work,

education and healthcare

• Non-material – security in childhood, significant primary relationships, physical

and economic security

• Environmental– A secure and sustainable planetary environment

This sort of list amenable to revision in light of cross-cultural research

Sustainable Development Goals, UN 2015

Screen Shot 2016-10-31 at 08.05.10

Five features of human needs crucial to idea of sustainable wellbeing

Human needs are:

• Universal

• Objective: extensional v intentional claims

• Plural and non-substitutable

• Satiable - sufficiency

• Cross-generational

They thus provides some firm foundations on which to build public policies pursuing sustainability

Needs differ from need satisfiers

• Need satisfiers: goods, services, activities and relationships that satisfy basic and intermediate needs in a given context

• So need satisfiers almost always vary according to culture, climate, institutions etc etc

• So need a quite distinct way of getting at need satisfiers in a given social setting – chapter 7

• Also distinguish individual and collective need satisfiers

Needs challenge consumer wants

If the 40 million SUVs in USA were ordinary cars,

all 1.6bn people in the world could have electricity without

more emissions.

“The world has enough for everyone's need, but

not enough for everyone's greed.”

Needs challenge consumer wants

Consumer

demand

Wants Incomes

Policies based on

needs

Recompose consumption: a new goal to prevent climate collapse

• Requires a new goal – recomposing consumption– To reduce consumption emissions by switching from high-

to low-carbon goods and services, without necessarily cutting overall consumption expenditure

• For this to be just requires distinguishing necessitiesfrom luxuries

• Brings human needs and ‘need satisfiers’ centre-stage• Interrogates consumer preferences and consumer

sovereignty• Distinguishes necessities and luxuries• Distinguish higher and lower carbon forms of

consumption

C. Foundational economy

• Rejects idea of the economy as a uniform space within which nameless and substitutable commodities are produced, exchanged and consumed.

• The idea of non-substitutable need satisfiers entails a different conception of the economy as a network of ‘systems of provision’

• Thus the ‘foundational economy’:– benefits are delivered through infrastructure, networks and

branches, as opposed to the purchase of individual commodities;

– relatively sheltered from international competition; – provide collective, shared services and other activities in the

public interest, for mutual benefit.

The ‘Manchester School’ conception

• Material foundational economy: – pipe and cable utilities (piped water, waste water and sewerage,

electricity supply, domestic piped gas and telecommunications - both copper wire and mobile); transport infrastructure comprising railways, roads, filling stations, car retailing and servicing and all public/social vehicles such as trains and buses; food production, processing and the distribution network including supermarkets; and retail banking services and payments systems.

• Providential foundational economy:– essentially the entire welfare state: health care, education, social care,

police and emergency services and public administration.

• Housing a critical sector that sits across both domains. • The entire foundational economy including the welfare state

accounts for about 50% of both employment and expenditure in the UK and across Europe.

Needs, satisfiers and the FE: Parallels

Clearly a parallel between the frameworks of human needs and FE:• Both recognise the irreducible heterogeneity of

consumption, the multi-faceted nature of human needs and the variety of systems on which we all depend.

• Both recognise the importance of shared systems and mutual benefits. Potentially they can both justify the idea of local economies under more local control.

• ‘The historical development of the foundational economy is … a kind of practical working out of the theory of human needs and capabilities, because foundational provision amounts to a kind of immanent (implicit) moral theory of citizenship’

Needs, satisfiers and FE: Conflicts

• The big 3: food, housing, transport

– Necessities, yet high carbon

• FE a realist understanding of contemporary livelihoods and wellbeing

• Yet these lives are unsustainable!

• Must introduce two new critical ideas:

– Lock-in

– Luxury

D. Resolving the dilemma:

a. Processes

How distinguish need-satisfiers and luxuries in a democratic society?

• Defila: peole act differently as citizens and consumers

• Bring together citizens and experts– Doyal/Gough ‘dual strategy’

• Citizens’ forums that are inclusive and empowering

• “Public engagement through reasoned deliberation”

• But knit into formal political processes

• A problem-solving process, not a way of aggregating people’s preferences.

Identifying ‘necessities’

1. UK Minimum Income Standards (MIS) (Loughborough)

– Groups representing different household types reach consensus on what consumption bundles are required to enable people to participate in British society

– Some expert input but light touch

– except for families with children, private cars are luxuries and not

necessary for a decent standard of living – citizens could use public

transport plus taxis instead

• A modified ‘reference budget’ approach now being adopted

across the EU

• The same methodology can be used to deliberate on low-carbon ‘decent living standards’ (Druckman and Jackson)

Decent living with lower carbon?

UK in 2004

Identifying ‘luxuries’

• Our new research in London• A group methodology: six citizen forums to discuss a

riches line via ‘consumption bundles’• These have generated a consensus on a threefold

division– Necessities– A ‘comfortable’ level of consumption permitting a

‘flourishing’ life– A ‘luxury’ or ‘riches’ level beyond this

• But so far no normative consensus that such riches are undesirable

• More research in other countries would be useful

D. Resolving the dilemma:b. Policies

• Cannot treat limits and wellbeing in separate boxes

• ‘Compensate the losers’ not viable

• Basic necessities are higher-carbon than luxuries– So redistribution may increase emissions

– Carbon policies must be fair

Instead develop eco-social policies:

• Integrating equity and sustainability goals

A further problem:

Most ‘necessities’ are high carbon:

Eco-social policies to help

recompose consumption (1)

• Promote and invest in co-benefits– Green New Deal for housing– cycling and walking– eating less meat

• Tax high-carbon luxuries – smart VAT – remove incentives for frequent flyers

• Control advertising and product placement• Trial carbon rationing

– introduce carbon cards?

Eco-social policies to help

recompose consumption (2)

• “Universal Basic Services” - expand and strengthen social provision– to include water, energy, transport,

housing – Public provision improves equity and

sustainability

• Decarbonise welfare states– shrink carbon footprint of public services– develop upstream prevention throughout

public policy

All this demands

a new social settlement

• The post-war settlement introduced redistributive welfare states

• Now ecological boundaries require a new sustainable social settlement

• Sustainability goals must be a central feature

– a new eco-welfare state

– a new focus on recomposing consumption

– new policies on time, goods and carbon

Thank you