Collision Course: Endless Growth on a Finite Planet (27 page)

First world leaders at Copenhagen ignored this point of view, insisting that everyone must sign up for cuts, especially China, already the world’s largest current emitter, and India, which is steadily industrializing. In his address to the conference, Bolivia’s President Morales spoke of “the use of atmospheric space by the developed countries. It’s not possible that atmospheric space be the exclusive property of just a few countries … that are
irrationally industrialized
” [my emphasis].
⁵⁴
Rather, he argued, the atmospheric space needs to be fairly distributed.

As early as Rio, third world leaders and critics from the Left, such as Middleton, O’Keefe, and Moyo (1993), saw environmental concerns as merely tactics of the prosperous, designed to hamper the development of poor countries and thus their ability to compete with the West. At Copenhagen, as the climate crisis pressed on the world, many of the leaders of the poorest countries took the same view as the Bolivians—that the rich must commit to drastic contraction. The US, however, offered only minor immediate cuts (3 percent) to the agreed-upon 1990 baseline. Although “contract and converge” seems the only strategy capable of yielding climate stability in particular and ecosystem protection in general, there is no sign that the United States, one of the world’s heaviest per capita polluters and responsible for some 30 percent of the existing atmospheric CO
₂
, will embark on drastic reductions in the near future. While this remains the case, China and India will also resist.

Thus, rather than a continuum, the relationship of wealth and poverty looks more like extraction. On the basis of
Forbes
magazine’s global wealth figures, the French journalist Hervé Kempf noted that the 793 billionaires listed in 2005 possessed assets worth US $2.6 trillion, equal to the entire third world debt, while, as already noted, the income of the richest five hundred individuals equaled the income of the poorest 416 million.
⁵⁵
Though most of the billionaires are American and many are European, China had eight and India ten. These latter billionaires are the men at the zenith of the elites who organize their nations’ resources and security to suit their own business interests and those of the ubiquitous TNCs.

Transnationals own and control much of the world’s mining, energy, transport, manufacturing, and even agriculture—a large part of the entire world’s productive apparatus. These corporations are multifaceted organizations able to contract out elements of their chains of production in different countries to take advantage of low wages, for example, permissive regulation, or low taxes, and that shower riches on the men who run them. Although a number of women do feature on the Forbes list, most are beneficiaries of inheritance or marriage.
⁵⁶
Control
of global wealth is even more concentrated than ownership. Stefania Vitali, James Glattfelder, and Stefano Battison at the Swiss Federal Institute of Technology studied the connections between 43,000 TNCs in 2011, using topological analysis. This network study revealed that 747 of these corporations controlled 80 percent of all TNCs worldwide, and that a core “super-entity” of just 147 tightly interlocking TNCs controlled 40 percent of all global revenue, the majority being financial institutions.
⁵⁷

The “trickle-down” effect mooted in neoliberal rhetoric did not eventuate; indeed, wealth trickled up. The billions who still live without clean water, sanitation, or adequate food or the Bolivians who live without electricity are hardly running in the same race as those who manage these entities. Arundhati Roy’s notion of the “secession” of the rich in India seems far closer to reality:

You have one India which has now seceded into outer space and has joined the elite of the world and is looking down at the old India and thinking, “Why are these tribals living on our bauxite and why is our water in their rivers and why is our furniture in their forests and how do we get them off the land?”
⁵⁸

Industry Sent South

Much of the third world’s growth in the past decades has occurred via industrial expansion in the numerous special economic zones (SEZs) and “free trade zones.” In these enclaves, TNCs and local corporations have established what Western people call sweatshops, characterized by long hours, low wages, poor safety, abusive treatment, and so-called flexible work arrangements (where the workers can be dismissed if they get involved with a union).
⁵⁹
Whether ownership is local or transnational, most of the output is bound for first world consumption. Corporate agriculture is also conducted in conditions Westerners would regard as totally unacceptable, from twenty-hour days on rubber plantations and the use of child labor to being sprayed with pesticides in the course of the working day.
⁶⁰

All this means that corporations can sell at prices that are very cheap from a Western consumer’s point of view—running shoes and television sets cost much less than they did only twenty years ago. This is the reality that lies at the base of the “free trade” era of globalized production that we are still in the midst of. It suits the ultra-rich, the chief beneficiaries of the profits, and it suits the employed Western consumer, who can buy stuff beyond the wildest dreams of his or her grandparents. “Employed” is a key term in this scenario, which depends on the export from our own countries of millions of manufacturing jobs chasing cheap labor. Just as most of the entire first world population qualifies as “rich” on a global scale, most of the manufacturing class of the world is now removed from the consumers it supplies. Instead, raw materials and components are imported into the SEZs of distant lands and shipped out as cheap goods, which are commonly thrown away within days or weeks of purchase. After the Western working class fought its way over two centuries to reasonable wages and conditions, much of what was gained has now been nullified.

Not only were the gains of manufacturing workers reversed, but so too were the beginnings of the environmental regulation that had emerged in the late 1960s and 1970s. Heavy industrial production was moved away from the first world to China in particular, avoiding wage gains, safety rules, and the regulation of air and water quality. Massive pieces of equipment such as second-hand blast furnaces, which were becoming environmentally unacceptable in the West, were dismantled and transferred to China. Chinese corporations became the world’s main makers of steel, coke, aluminum, cement, chemicals, leather, and paper—goods whose manufacture involves high wages and tough environmental rules elsewhere. The
New York Times
reported that an economist with China’s Ministry of Commerce conceded that “the shortfall of environmental protection is one of the main reasons why our exports are cheaper,” while a study conducted by the European Parliament found that “China’s less efficient steel mills, and its greater reliance on coal, meant that it emitted three times as much carbon dioxide per ton of steel as German steel producers.”
⁶¹
The Berkeley economist Richard Carson, co-author of a detailed assessment of China’s CO
₂
emissions,
⁶²
told the Environment News Service that from about 2000, Chinese “government officials turned away from energy efficiency as an objective, to expanding power generation as quickly as they can, and as cheaply as they can.… Many of the poorer interior provinces replicated inefficient Soviet technology.” Thus, China has been building power plants that are dirty, inefficient, and outdated at the outset and are intended to operate for another forty to seventy-five years.
⁶³

The transfer of heavy industry to China, with the concomitant rush to build the cheapest coal-burning power plants to service it, constituted a big step backward for the world as a whole as far as industrial efficiency, environmental protection, and climate safety are concerned. The manufacture of vast quantities of the Western consumer’s gewgaws in these conditions has added immense environmental penalties to our consumption. Though the emissions are reckoned as China’s, it is we who are the end consumers. Viewed through the corporate lens of price, profit, and growth, however, it rates as a grand success.

Livelihood or “Progress”?

The putative success of three decades of “development” and three more of “globalization” has always been measured in GDP and in GDP per capita, a technique that assumes, first, that GDP is a reliable gauge of national economic health, and second, that an average taken over any population will fairly represent the prosperity and well-being of most of its individual citizens. Neither is necessarily the case (box 9.4).

Box 9.4

Some Problems with GDP as a Measure of Prosperity

GDP is made up of the value of “all the good
s
and services sold in a country in the course of a year … supplemented by … the cost of producing the non-market services provided by government.”
^a
The critique of GDP as the measure of a country’s prosperity has existed since the concept’s inception in the early 1930s, when the architect of national accounting, the Nobel laureate Simon Kuznets, told the US Congress that social well-being cannot be inferred from national income and that the question “growth of what and for whom?” would always need to be asked.
^b
GDP remains, however, the accepted measure of wealth in mainstream economics and politics and is widely used as a proxy for well-being. Though economists sometimes retreat from such a claim, arguing that GDP is just a measure of cash flow and claims to be nothing else, the ills of the world recession that began in 2008 have been couched in terms of the failure of growth in GDP, confirming that GDP serves as the benchmark for things going well. But it is ill-fitted for that task.

First, the only items included in the calculations are market-based activities that can be quantified in monetary terms; this excludes the entire range of subsistence, household, and voluntary work described in chapter 6, which accounts for at least half the economic activity in the countries that still have a large rural sector and makes up a significant slice of economic activity in developed economies as well. Second, GDP does not subtract environmental or social costs from its total; these are negative externalities in mainstream accounting and rarely quantified in monetary terms. This is not to argue that environmental damage can or should necessarily be quantified in a monetized cost–benefit regime but to point out that GDP imposes a regime of measurement where items without a market price are excluded altogether, even when they are of immense value. Third, and compounding the second problem, many of the costs of ecological and social damage end up as
additions
to our supposed wealth. For example, the cost of cleaning up the Moreton Island oil slick of 2009 is counted on the plus side in Queensland’s and Australia’s 2009 GDP.

Under the guidance of Pan Yue as deputy director, China’s State Environmental Protection Administration (SEPA) worked for years in the early twenty-first century to produce a system, known as green national accounting (or “green GDP”), that would factor the immense costs of pollution and ecological damage into GDP, and account for the depletion of land, minerals, forests, water, and fisheries.
^c
This was intended to provide a more realistic assessment of the real progress involved in China’s extraordinary economic growth since 1979. In 2005, Pan Yue spoke openly with the German press, criticizing “the assumption that the economic growth will give us the financial resources to cope with the crises surrounding the environment, raw materials, and population growth.”

Spiegel
: Why can’t that work?

Pan: There won’t be enough money, and we are simply running out of time.
^d

In this interview with
Der Spiegel
, Pan Yue outlined the extent of the destruction of China’s agricultural land and the poisoning of its rivers in the pursuit of industrial growth up to that point. In June 2006, Zhu Guangyao, another senior official of SEPA, told
China Daily
that “damage to China’s environment is costing the government roughly 10 percent of the country’s gross domestic product.”
^e

The first report quantifying China’s green GDP was published in September 2006; it estimated that pollution alone was costing the equivalent of three percentage points of economic output while acknowledging that this was doubtless an underestimate.
^f
The second report, due for release in March 2007, was never published—its lead researcher told the
New York Times
that provincial officials had killed it off. According to the
Times
, “the early results were so sobering—in some provinces the pollution-adjusted growth rates were reduced almost to zero—that the project was banished to China’s ivory tower … and stripped of official influence.”
^g
The work was revived, however, in 2008 and results since then suggest that 3.5 percentage points of China’s GDP are swallowed up by environmental damage—but items such as depletion of groundwater and loss of arable land through erosion were still not fully included.
^h

Figure 9.2

Gross Production vs. Genuine Progress, 1950–2004 (in 2000 dollars).

Source:
Talberth, Cobb, and Slattery (2007, 19). Courtesy of Clifford Cobb.

GDP remains a worldwide convention that treats cash flow as if it represents genuine economic and social health. Numerous alternative measures have been put forward,
ⁱ
but none has even begun to rival GDP in daily discourse as an indicator of human well-being. Those who have devised indexes to incorporate actual well-being have found that the growth of GDP exceeds any increase in genuine social progress. Proponents of the Genuine Progress Indicator, which emphasizes sustainability, note that, while GDP per capita has grown continuously, the index of genuine progress has stagnated since the 1970s.

Notes

a
Gadrey 2005, 263.

b
Gadrey 2005, 263, 319.

c
State Environment Protection Administration of China (SEPA) 2006.

d
Lorenz 2005.

e
China Daily
2006.

f
SEPA 2006.

g
Kahn and Yardley 2007.

h
O’Rorke 2013.

i
See Nordhaus and Tobin (1973) for Measures of Economic Welfare (MEW); Daly and Cobb (1989, 401–416) for the Index of Sustainable Economic Welfare (ISEW); Talberth, Cobb, and Slattery (2007) for the Genuine Progress Indicator (GPI); Abdallah et al. (2009) for the Happy Planet Index (HPI); and UN Development Programme (2010) for its Human Development Index (HDI).