Before India gained freedom, Mahatma Gandhi was asked if he expected free India to achieve the same standard of living as Britain. It was a time when the sun never set on the British Empire. With that in mind, Gandhi joked, “It took Britain half of the planet’s resources to achieve prosperity. How many planets will a country like India need! “
On another occasion, Gandhi said: “The economic imperialism of one small island kingdom (Britain) today keeps the world in chains. If an entire nation of 300 million people (the population of India at the time) engaged in similar economic exploitation, it would rob the world like locusts. Behind these statements lies Gandhi’s experience in dealing with environmental and development issues. Natural resources, both renewable and non-renewable, are natural capital.
If we waste capital, the system becomes unsustainable. Expressing the contemporary relationship between modern man and nature, EF Schumacher rightly said: “Modern man does not feel himself as a part of nature but as an external force destined to dominate and conquer it. Indeed, modern human beings, under the illusion of unlimited powers fueled by astonishing scientific and technological achievements, regard all non-human species as “inferior” and exploit them as a captive resource for the material growth of society.
Basically, the Western model of development does not distinguish between income (interest) and capital. Behind such a development is the Keynesian model; and it failed because it is not viable. In his essay Economic Opportunities for Our Grandchildren, Lord Keynes said in 1930: “For at least a hundred years more we must pretend to everyone that right is wrong and scandal is right; for guilt is useful and justice is not.
Greed, usury and precaution must be our gods for a little longer. For they alone can lead us out of the tunnel of economic necessity and into the light of day. Science is reductionist in that it provides measures of increased productivity but ignores the side effects of the measures. It is one dimensional. The contemporary model of development was derived from the dehumanization that took hold during the industrial revolution and it remains unchanged. Its essence lies in maximizing profit by promoting consumerism and at the cost of reckless exploitation of natural resources.
The ideological hegemony of the West, established in the past by colonialism, is now perpetuated through the aid which is colonialism in a new guise. The world trading system is skewed in favor of rich countries, producers of manufactured goods. Poor countries, producers of primary products, are at a disadvantage. There is a constant transfer of resources from the poor (periphery) to the rich (core).
The application of science and technology, in particular biotechnology and genetic engineering, appears to be a double-edged sword because the increase in productivity is fraught with harmful side effects. The Green Revolution led to the chemization of agriculture, for example. In his book Unto This Last, John Ruskin argued that producing and owning can be not only wealth but also “bad,” a word he coined. Wealth, he argued, was “possession of useful items, which we can use.”
Conversely, producing unnecessary things or possessing things that we cannot use can be defined as “bad”. The so-called one-dimensional approach to development has had serious consequences for the environment. The most important of these is the increase in desertification and soil erosion. Globally, around 12 million hectares of land are lost each year due to desertification. It is an area that could produce around 20 million tonnes of grain.
Each year, 75 billion tonnes of fertile topsoil is lost due to land degradation. Then, global warming and the erratic and less predictable precipitation patterns associated with it lead to less frequent but greater showers, interrupting longer periods of deeper drought. Third, the increasing resistance of pests, weeds and plant diseases to pesticides, herbicides and other agricultural chemicals.
Fourth, the loss of biodiversity is increasing. When it comes to the environment, many industrialized countries will ultimately prove to be ecological security risks because they will not easily give up their unsustainable lifestyles. The principles of modern economics developed and refined since the start of the industrial revolution have not, in a fundamental sense, changed. The emphasis on either factor may have varied across growth models; economists tell us that if we have capital, labor, and knowledge, we can produce different goods and services from different combinations of these inputs.
The overwhelming emphasis of the modern economy on growth rather than development is the major problem today. Development is seen as a dynamic process that causes change or changes through human intervention to improve the quality of life in a society over a specified period of time, effecting quantitative improvement in the desired direction, respecting the sustainability of the development and protecting the deterioration of the environment.
Growth is often equated with development. But the point is that growth, at least in some parts of the world, has come to symbolize unhindered consumerism. Many modern technologies fuel consumerism rather than encourage development. In the process, resources are depleted faster than they are regenerated. The relationship between economic growth and the quality of the environment has evolved.
The “limits to growth” school has strongly argued that this relationship is negative, as economic growth is by definition bad for the environment because it leads to greater use of resources and more pollution. The Environmental Kuznets Curve (EKC) hypothesis also indicates that as per capita income increases, environmental impacts increase, peak, and then decrease. This implies an “inverted U” shape. Economics is also under pressure from ecological science.
Ecology focuses on the study of ecosystems and habitats. One of the biggest and most important achievements of the past decades is that the planet is a collection of many interconnected ecosystems such as oceans, forests, rivers, deserts, lakes, ponds and many more. . Complicated but poorly understood, these interconnections determine the state of life on Earth. If all fragmented ecosystems work in harmony, life will thrive, otherwise life on Earth will be in great danger.
The destruction of one ecosystem can lead to the end of the other, thus affecting the life forms that are supported by them. Now the vital question is what does this have to do with the economy? The principles of economics and ecology highlight the conflict between the concepts of “price” and “value”. It is easy to determine the price of a glass of water. It can be a bit of a relief. But what is its value?
We discover it when we are thirty years old or when there is a shortage of water. The economy focuses on market prices and the cost of products, goods and services. Ecology tells us that the prices of nature’s bounties are skewed because they do not reflect their true value. The problem is that the economy deals with marketable products and services. According to the principles of economics, the goods of nature, also called public goods, are free. Free products or products that are imperfectly priced – like water – are subject to indiscriminate exploitation.
These constitute fragile habitats and ecosystems. So, to protect these ecosystems, they must have proper price tags. Another major difference leading to a conflict of worldviews propagated by ecology and economics is that of the time scales on which the two disciplines examine problems. Economics deals with issues that need to be resolved in a short period of time. The analytical tools available today do not allow economists, scientists and technologists to predict and analyze the distant future.
In contrast, environmental problems are long lasting. The time periods involved can typically be of the order of decades or even centuries. Studies aimed at enhancing the environment are multiplying. In fact, environmental economics is one of the fastest growing branches of the economy, although its contribution is not yet so substantial. There are many links between two systems.
The environment provides the economic system with inputs of raw materials and energy resources, including minerals, metals, food, hydrocarbons and fibers. These resources are either non-renewable (such as coal and iron ore) or renewable (forest, fishing). Inputs are transformed by the economic system into outputs demanded by consumers. The economy uses the environment as a sink for waste. Waste can come either from production processes or from consumption activities.
The environment has a limited assimilation capacity to absorb and transform certain wastes into harmless substances. It is said that pollution occurs when emissions exceed the assimilative capacity and produce unwanted effects. The underlying assumption is that if the environment is treated as a commodity and given a price, it will create a market for environmental factors. And depending on the demand and supply of environmental goods, a price will be attached to each of them.
This will help bring the environment back into the fold of the economy. A group of environmental economists have also gone so far as to create property rights over environmental factors provided by nature. Of course, the commodification of the environment raises several moral and ethical issues. In addition, environmental goods cannot be divided. For example, how can we distribute clean air between two neighbors? The creation of property rights will also create haves and have-nots.
However, we are on the threshold of a major revolution of ideas. The environment is one of those areas. The guiding principle of the economy must be the satisfaction of needs, not greed. It is necessary to apply environmental economics rather than classical economics and remember Mahatma Gandhi’s prophetic statement: “The earth provides enough to meet the needs of every man, but not the greed of all.”
(The editor is a retired IAS officer)