Sustainability and the Political Economy of Welfare

Max Koch, Oksana Mont

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317407416
• Edition: 1
• Topic: Economics
• Subtopic: Economic Theory
• Index: Economics

Welfare is commonly conceptualized in socio-economic terms of equity, highlighting distributive issues within growing economies. While GDP, income growth and rising material standards of living are normally not questioned as priorities in welfare theories and policy making, there is growing evidence that Western welfare standards are not generalizable to the rest of the planet if environmental concerns, such as resource depletion or climate change, are considered.

Sustainability and the Political Economy of Welfare raises the issue of what is required to make welfare societies ecologically sustainable. Consisting of three parts, this book regards the current financial, economic and political crisis in welfare state institutions and addresses methodological, theoretical and wider conceptual issues in integrating sustainability. Furthermore, this text is concerned with the main institutional obstacles to the achievement of sustainable welfare and wellbeing, and how these may feasibly be overcome. How can researchers assist policymakers in promoting synergy between economic, social and environmental policies conducive to globally sustainable welfare systems?

Co-authored by a variety of cross-disciplinary contributors, a diversity of research perspectives and methods is reflected in a unique mixture of conceptual chapters, historical analysis of different societal sectors, and case studies of several EU countries, China and the US. This book is well suited for those who are interested in and study welfare, ecological economics and political economy.

Part II Policies towards establishing sustainable welfare

5 Green political economy

Policies for and obstacles to sustainable welfare

Jamil Khan and Eric Clark

DOI: 10.4324/9781315683850-6

Introduction

Clean air; clean water; nutritious food; health; education; adequate housing; meaningful work; security: welfare brings these to mind. Climate change; land degradation; the ‘sixth mass extinction’ of life forms; premature deaths caused by pollution and inequality; extravagant consumption and accumulation of wealth for the few while many do not have adequate water, food, healthcare, education, or secure housing and livelihoods: sustainability brings these challenges to mind. Green political economy aims to grasp the complex social relations that generate sustainability challenges, and uses this understanding to form policies conducive to sustainable welfare. That the issues are politically potent bears repeating (Asara et al., 2015), as ‘green’, ‘eco’ and ‘sustainable’ have become highly diluted value-enhancing signifiers. In this chapter we first summarize the dominant strands of green political economic thought, then present an analysis of obstacles to implementation of their core policies and finally evaluate their potential for achieving sustainable welfare.

Policy narratives for a sustainable economy

There are currently two predominant perspectives on transitioning to a sustainable economy and society: pro-growth and no-growth. These perspectives differ fundamentally in their views on the possibility of combining economic growth with sustainability. According to the pro-growth perspective, absolute decoupling between environmental impacts and economic growth can be achieved through investment in green innovation and technology and by regulating polluting technologies and by changes in environmental behaviour. The economy can continue to function much as it does today, as policies for meeting sustainability challenges make market forces compatible with ecological concerns. The no-growth perspective argues that sustainability requires social and economic relations of production and consumption that can secure stable throughput of materials, and energy that is capable of providing welfare within ecologically determined limits, and that this, in turn, requires zero economic growth. While the pro-growth perspective suggests ‘a reconfiguration of the current global economy’, the no-growth perspective ‘implies a total transformation of the global economic system’ (Urhammer and Røpke, 2013: 62).

Casting a wide net, Urhammer and Røpke conducted a discourse analysis of green macroeconomic narratives, based on policy documents from leading international organizations and associated research literature. Within the pro-growth perspective, they distinguish between ‘green growth’ and ‘green economy’ narratives, represented by the Organisation for Economic Co-operation and Development (OECD, 2011a, 2011b) and the United Nations Environment Programme (UNEP, 2011), respectively. They share a positive view on the possibilities of combining economic growth with long-term ecological sustainability, while they differ on issues such as government intervention and poverty reduction. Four distinct no-growth narratives are identified: the great transition (New Economics Foundation, NEF, 2010), prosperity without growth (Sustainable Development Commission, see Jackson, 2009), steady-state economy (Centre for the Advancement of the Steady State Economy, CASSE, see Dietz and O’Neill, 2013) and degrowth (see Assadourian, 2012; Martinez Alier, 2009; Kallis, 2011). Although they differ in some respects, they share an underlying critique of economic growth and seek to achieve similar systemic change.

Urhammer and Røpke relate a diverse set of policies and measures advocated by each perspective, bringing these together under the two main directions of pro-growth and no-growth. We build on this work, focusing our analysis of policy measures into five spheres: mitigation and technology development, financial and business sector, distribution of income and wealth, labour and work, and consumption. Policies of the pro-growth and no-growth perspectives are presented below and summarized in Table 5.1.

Table 5.1 Policy focus of pro-growth and no-growth perspectives

	Pro-growth	No growth
Mitigation and technology development	Market-based instruments (green taxes, cap and trade) Technology policies Government intervention	Market-based instruments (green taxes, cap and trade) Technology policies Government intervention Caps should be distributed equally
Financial and business sector	Financial sector plays a major role to invest in green technology Policies to give incentives to green investments Development of property rights, from undefined and incomplete to fully defined and complete	Financial sector fuelling debt-financed economic growth is the root cause of environmental problems Policies to control financial sector and reduce economic growth Non-profit business models Strengthening commons and alternatives to private property
Distribution of income and wealth	Distribution not a main issue Poverty reduction important but not equal distribution	Equal distribution a basic precondition for no-growth economy Minimum income; maximum income; redistributive taxes
Labour and work	Policies to prepare labour market for changes in economy	Reduction in labour time is the central policy to share work and reduce material consumption
Consumption	Policies to change consumer behaviour towards green products and services Information; economic incentives; labelling Weak sustainable consumption	Reduced consumption a major goal Non-materialist lifestyles; regulation of advertising; sharing economy Strong sustainable consumption
Sources: Synthesis based on Dietz and O’Neill, 2013; Jackson, 2009; Kallis et al., 2012; Martinez Alier, 2009; OECD, 2011a, 2011b; UNEP, 2011; Urhammer and Røpke, 2013

Of these five spheres, policies for mitigation and technology development appear to be those about which there is most consensus across pro-growth and no-growth perspectives. Both perspectives call for price-based instruments (taxes, cap and trade) and more specific technology policies (subsidies, public procurement, favourable loans), but weigh these differently. The OECD emphasizes market-based instruments, which are deemed most cost effective and least intrusive on markets (OECD, 2011b); other instruments can be necessary but should be used with care. The UNEP presents a more balanced focus on market-based instruments and more active government intervention, signalling the view that market mechanisms are not sufficient to secure green transition (UNEP, 2011). No-growth perspectives also emphasize the need for measures such as taxes, cap and trade and green technology incentives, but place this in the context of the need for much more fundamental change. A common view among no-growth proponents is that there should be scientifically determined caps on emissions and on the use of natural resources, and that these should be distributed equally among citizens (Jackson, 2009; Kallis et al., 2012; Dietz and O’Neill, 2013).

Consistent with ascribing leading roles in green transitioning to private enterprise and finance capital, pro-growth perspectives argue that the substantial financial resources required for transitioning should come primarily from private funding. From this perspective, the main challenge is redirecting financial flows towards green investment. The UNEP report, for instance, refers to the last two decades as an era of ‘gross misallocation of capital’, financial investments pouring ‘into property, fossil fuels and structured financial assets with embedded derivatives’ and relatively little into ‘renewable energy, energy efficiency, public transportation, sustainable agriculture, ecosystem and biodiversity protection, and land and water conservation’ (UNEP, 2011: 14). Suggested policy measures include green bonds, public–private partnerships and concessionary financing (OECD, 2011b; UNEP, 2011). Measures are limited to enabling and facilitating, while more direct control over and the regulation of financial resources and activities are not considered. The strong regulation of property rights, however, is considered essential for resource efficiency. ‘Undefined’ or ‘incomplete property rights’ (OECD, 2011a: 27, 29) and ‘lack of full property rights’ are seen as barriers to green growth, and there are calls for ‘development of property rights’ to facilitate the ‘emergence of green property as an asset class’ (UNEP), thereby providing financial institutions with incentives to invest in ‘responsible property’ (UNEP, 2011: 97, 139, 596, 362).

No-growth perspectives see the current financial system as a root cause of ecological problems. Debt-fuelled economic growth, driven by a financial sector swelling well beyond the productive capacities of the ‘real economy’ (production of goods and services), is seen as underpinning unsustainable resource extraction and exploitation of what ecological economists call the ‘real-real economy’ – flows of energy and materials (Kallis et al., 2009; Martinez Alier, 2009). Policies proposed from this perspective include measures to regulate finance (e.g. state monopoly on money creation, taxes on financial transactions, barriers to tax evasion in tax havens) and to design a financial system conducive to a steady-state or no-growth economy in the long run. Another focus of no-growth policies is on supporting alternative business models such as cooperatives and non- or low-profit liability companies (see Chapter 10) and strengthening legal and institutional conditions to support alternatives to private property, such as communal property, land trusts and other forms of commons (Kallis et al., 2012; Bollier, 2003, 2014).

Pro-growth narratives include discussion on the need to address the distributional impacts of policies that adversely affect the poor. However, distribution of income and wealth is not seen as an essential issue for green transition. Adverse impacts on distribution are best addressed by general tools such as lower income tax, tax credits and social benefits (OECD, 2011b: 25). Reducing poverty is a major goal for the UNEP, claiming that ‘pro-poor orientation must be superimposed on any green economy initiative’ (UNEP, 2011: 20). The focus is on poverty eradication, and there is little recognition of the wider issues and impacts associated with inequalities.

This contrasts starkly with no-growth perspectives, which see policies geared to equalizing distribution of income and wealth as crucial to a sustainable economy. In order to curtail growth, it is necessary to establish incentive structures that limit concentrations of wealth and gaps in income. No-growth is seen as necessitating a more egalitarian sharing of resources. Extensive research suggests that more equal societies fare better than unequal societies across a broad register of variables associated with welfare and with sustainability (Wilkinson and Pickett, 2009). Suggested policies include classical social democratic measures such as redistributive taxes, as well as more radical measures such as basic income, maximum income and maximum pay differentials (Jackson, 2009; Dietz and O’Neill, 2013).

In the pro-growth perspective, labour and work policies focus mainly on how to prepare labour markets for changes brought about by the transition to a green economy, whereby some jobs are lost and others are created. Flexible labour markets are considered important. Policies are geared for labour market inclusiveness (e.g. re-employment support, vocational training), labour market dynamism (e.g. moderate employment protection and labour taxes, strong product market competition) and adapting workforce skills (e.g. new skills in education) (OECD, 2011b).

No-growth perspectives acknowledge the major challenge of maintaining full employment in a steady-state economy. Channelling gains from technological progress and increasing efficiency and productivity of labour towards reducing work time – rather than increasing wages and profits – facilitates work sharing, a key policy for reducing unemployment. Another policy is that the state should be the employer of last resort in order to reduce labour insecurities (Dietz and O’Neill, 2013). This is linked to the proposal for a guaranteed basic income. No-growth narratives seek to redefine the meaning of work and advocate less division between paid and non-paid work.

Regarding consumption, pro-growth perspectives emphasize policies for changing consumer behaviour towards reduced wastefulness, for example more energy-efficient appliances and transport modes with lower emissions. Again, price-based measures in combination with softer policies such as labelling, information and education are the main policies on the agenda for ensuring that consumption stays within the limits of sustainability (OECD, 2011b; UNEP, 2011).

No-growth perspectives see substantial reductions in material consumption in rich countries as necessary, especially in view of the prospect of these consumption patterns on the global scale. Lorek and Fuchs (2013) distinguish between weak and strong sustainable consumptio...

Table of contents

• Cover Page
• Table Of Contents
• Sustainability and the Political Economy of Welfare
• Foreword
• Acknowledgements
• IPerspectives on sustainable welfare
• IIPolicies towards establishing sustainable welfare
• IIIEmerging practices of sustainable welfare
• Index