A feature of the People-Centered Development Forum, Release Date July 6, 1995
by David C. Korten
In a world of stagnant economies, Asia’s record of economic growth has made it
the envy of the world. The economies of Korea, Taiwan, Singapore, Hong Kong, and
more recently Malaysia, Thailand, and Indonesia have been pointed to as
providing the models of successful economic management others are urged to
emulate. Department stores filled with luxuries from around the world, urban
skylines defined by modern high rise buildings, streets crowded with late model
luxury cars, skies filled with jumbo jets featuring services that are the envy
of the industry, and buoyant stock markets all contribute to defining one face
of Asia and confirm the thesis that history is moving inexorably eastward to now
again favor the region that gave birth to many of the world’s earliest
civilizations.
Yet Asia also has a second face that projects quite a different image one of
deep and massive poverty, social violence, and environmental destruction. Africa
is often contrasted with Asia as the basket case of development. Yet 675 million
Asians live in absolute poverty, more than twice the 325 million absolute poor
in Sub-Saharan Africa. More millions of Asian’s live in constant fear of the
ethnic and social violence of those who strike out against family and neighbor
for the injustices and deprivation of a social system that seems impervious to
their needs. Military forces set on containing the violence only succeed in
adding to it. The second face of Asia reveals a society poised on the brink of
ecological devastation. Its once endless forests are disappearing. Its vast
fertile agricultural lands are being eroded, impoverished, and paved over. Its
rivers are filling with poisons. Drought prone areas are expanding, even as
floods and typhoons take greater tolls due to over crowding and loss of forest
cover.
Asia’s two faces mirror the pervasive contrasts of a larger world in which the
gap between rich and poor is growing at an alarming rate and earth’s ecological
life support system is being placed in ever greater jeopardy. We are being
forced to recognize that the favored face of wealth and luxury is little more
than an unsustainable illusion.
The contrasts that define these two faces are a product of the conflux of two
dominant contemporary realities: Earth’s ecological space has been filled, and
the human future is being dictated by unrestrained and humanly unaccountable
market forces.
- A Full-World. Economic thought and policy have been based on the premise of
an empty world, i.e., an assumption that the scale of human economic activity is
inconsequential relative to the scale of earth’s ecology. While historically
true, the amount of physical material extracted from nature, processed through
the economic system, and then dumped back on nature for disposal has now grown
beyond the absorptive limits of earth’s ecology. Human economic activity now
basically fills the available ecological space of the planet. It is inevitable
that growth in the physical throughput of the human economy will stop within the
life times of people already born. Either society will chose to stop it as an
act of collective human intelligence, or the natural processes of a disrupted
ecology will stop it possibly by eliminating the species that persists in
violating its natural limits. - Unrestrained Market Forces. Long term trends toward market deregulation and
integration of the global economy accelerated over the past decade as a
consequence of international trade negotiations, policies imposed on Southern
countries by structural adjustment, ideological commitments to deregulation, and
the growing political power of transnational corporations. One result is a rapid
erosion of the ability of governments to manage national economies in the
national interest and of the attachment of power to place and people. Power is
being inexorably concentrated in the rootless institutions of transnational
capital, weakening democratic accountability and speeding a long term process by
which the non-economic values that bind family, community and nation are
displaced by purely economic values of market relationships. While previous
corporate competitors form "strategic alliances" to share technology,
markets, and production facilities, the most vigorous of market competition is
found among national governments vying with one another to attract investors
with offers of compliant, low-wage labor, weak environmental standards, tax
holidays, and subsidized infrastructure. The processes of deregulation and
market integration being advanced in the name of democratic pluralism, market
competition, and private ownership make a mockery of all three.
These two realities have produced powerful institutional dynamics that intensify
resource competition and accelerate community breakdown. In combination they
account in substantial measure for the sharply growing gap between rich and
poor, the environmental devastation, and the disintegration of the social fabric
being experienced almost everywhere in our world. The commitment of the G-7
governments and the Bretton Woods institutions (the World Bank, IMF, and GATT)
to accelerated economic growth through removal of all remaining restraints on
market forces calls into serious question their capacity to provide the kind of
leadership that is desperately needed in rethinking the global economy.
Sustainable development will not be achieved by economic fine tuning or by
policy changes at the margin. We face the need for a rapid and far reaching
transformation of thought and institutions. This transformation will require a
commitment to policies that in many instances run directly counter to the
wisdom, values and institutional forces of the prevailing Western development
model.
An important part of the challenge will be to eliminate the systemic bias of the
conventional market system toward: allocating resources to their "highest
value use" things people with money are prepared to pay high prices to
obtain to the neglect of basic needs; and converting the common heritage of
earth’s ecological resources into personal financial wealth.
REDISCOVERING SPIRITUAL VALUES
The world now needs a new vision of human progress. Technology must play an
important role in the new vision. It cannot, however, resolve the crisis of
values that has led human society to grossly and irresponsibly abuse the power
of its technology. There is a great need here for the profound wisdom of Eastern
culture and religion with regard to spirituality, community, and harmonious
living. However, even in Asia these values have been badly debased by a quest
for money, fashion, and glittering technical gadgets that will forever remain
beyond the reach of all but a favored few.
While economists the world over look for new sources of money to "kick-start"
the global economy, growing numbers of more thoughtful people are being pressed
by the social and ecological crisis to reach into their own inner being for
answers to basic questions about the nature and meaning of life, nature and
community. The pursuit of such questions rather quickly reveals the shallowness
of a society dedicated to the worship and pursuit of money as the ultimate
value. It is bringing many of us back into contact with the deep spiritual
mysteries of life in all its diverse yet inter-related forms. Herein we may find
the spiritual insight required to re-establish the nurturing bonds of sharing on
which human community and life itself depend.
A terrifying realization often comes hand in hand with this spiritual awakening.
There is no invisible hand, protective god, or man on a white horse to save us
from our compulsive obsession with money. As with any addiction, change comes
only through accepting responsibility for our own actions. Perhaps we might
think of our current potentially terminal crisis as God’s final dramatic effort
to get our attention before canceling a failed evolutionary experiment.
As this yet nearly invisible spiritual awakening grows in scope and power, such
insights may prepare us, as an act of collective survival, to recreate the
political and economic structures of human society in ways that free our world
from the grip of greed, waste, and exploitation. So prepared, we might recognize
that contrary to our fears, the path to sustainability is also the long sought
path to human social and spiritual liberation.
THE SEARCH FOR LIBERATING STRUCTURES
Recreating the institutions of human society around a new values base is no
small undertaking. Even as we support one another in our mutual spiritual
awakening, we must advance an institutional agenda that seeks:
- A comprehensive revision of policies and practices that perpetuate growth
in material consumption and in population. - A rapid and drastic increase in the efficiency with which materials and
energy are used. - A reallocation of existing uses of ecological resources to give first
priority to assuring all people a humanly adequate standard of food, clothing,
shelter, education, basic medical care, and decently remunerated employment. - A redistribution of ownership and control of productive assets to broaden
the base of individual and community participation in their ownership and
control.
The required changes have far reaching social and technical implications
touching on every aspect of human society. The following presents an
illustrative sample of what might readily be characterized as a radical agenda.5
At another level it is nothing more than the application of common sense to a
very serious problem a not so radical agenda. The motivating force is not
idealism. It is mutual survival.
SUSTAINABLE AGRICULTURE
To support projected increases in population, each nation must prepare to
optimize the use of its land and water resources to provide a nutritionally
adequate diet, fiber, and energy for its people. This challenge is particularly
acute for Southern countries that account for most of the world’s population
growth and must face the need to feed from two to four times their present
populations if growth rates are not sharply and immediately curtailed. This must
be done using technologies and modes of organization that achieve sustainable
high levels of production and contribute to generating livelihoods for a major
portion of the national labor force. Predominantly vegetarian diets will be a
necessity.
This suggests a need to develop food/agriculture systems oriented to domestic
needs based on intensively managed small farms that: 1) rely on natural
ecological processes (bio-dynamic agriculture) to maintain natural soil
fertility and water retention, and to eliminate use of non-renewable inputs; 2)
produce a diverse range of food, fiber, livestock, and energy products to meet
basic domestic needs; 3) limit, contain and recycle their own contaminants; and
4) depend primarily on renewable solar generated energy sources including animal
power and bio-gas for preparation, production, processing, storage, and
transport.6 These should be integrated into a system of small and medium
agro-related industries that generate additional employment and local value
added.
Movement toward a sustainable agricultural system would be advanced by:
- Implementing comprehensive agrarian reform to divide virtually all arable
land into small farm units. - Removing subsidies from chemical inputs and investing in research and
facilities to support bio-dynamic farming methods. - Creating farmer based research and extension systems oriented to
bio-technology. Make formal research stations farmer-accountable. - Taxing meat production and using the proceeds to encourage predominantly
vegetarian diets and build marketing systems for organic foods. - Increasing costs of food transport through taxation and regulation to
localize markets, encourage local food self-reliance, and facilitate nutrient
recycling. Use proceeds from food transport tax to subsidize nutrient recycling. - Limiting agricultural exports to high value crops grown by small producers
using labor intensive methods on lands not required to produce for domestic
needs. - Creating locally accountable watershed management authorities to coordinate
measures for soil and water protection.
ENERGY CONSERVATION AND SOLAR CONVERSION
Sustainability requires virtually eliminating the modern economy’s dependence on
burning ever larger quantities of high polluting, nonrenewable fuels; and on
large hydropower projects that displace millions of people and flood vast areas
of productive land. A sound energy policy gives first priority to conservation,
eliminating non-essential uses, increasing efficiency in essential uses, and
reorienting living patterns to reduce energy requirements for transportation and
such uses as heating/cooling. It simultaneously phases out dependence on high
polluting, non-renewable fuels in favor of renewable, predominantly solar,
sources.
A comprehensive sustainable energy policy would:
- Phase in a carbon emissions tax on fossil fuels at their source sufficient
to double or triple costs to the end user. - Use revenues from carbon emissions taxes for research and investment in
solar technologies solar thermal, wind, mini-hydro, photovoltaics, and biomass
to dramatically bring down their costs relative to fossil fuels; and to purchase
rights to such technologies and place them in the public domain. - Plan and control the use of urban space: to increase urban density and the
proximity of work, residence, and recreation; and to localize markets and
production for meeting basic needs. - Virtually eliminate the use of private automobiles except in relatively
remote rural areas by banning them from urban centers, sharply restricting
parking facilities, taxing fuels, and investing in public transit and facilities
for pedestrians and cyclists. - Invest in high speed rail in dense urban corridors and move toward an
eventual ban on airline flights of less than 1,000 kilometers. Eliminate first
and business class seats on airplanes. - Invest in electronic communications as substitutes for travel and mail.
- Require that industrial and other investment proposals internalize the full
social and ecological costs of their energy requirements.
A FRUGAL, RECYCLING ECONOMY
Perhaps one of the best indicators of sustainability is the "garbage index."
In a full world, sustainability requires the virtual elimination of waste, i.e.,
zero garbage (including pollution). This requires that all productive activities
be organized as closed systems. All non-biological resources, once taken from
the ground, should become a part of society’s permanent capital stock and be
recycled in perpetuity. Organic materials may be disposed into the natural
ecosystem, but only in ways that facilitate their natural reprocessing and
productive use.
Suggested actions include :
- Tax the use of virgin materials to subsidize the use of recyclables.
- Tax manufacturers at the point of production for the disposal costs of
products that are non-repairable and/or non-recyclable. - Prohibit the production of any material that cannot be readily broken down
by natural processes or economically recycled. Encourage manufacturers to
recycle their own products. - Tax advertising to fund consumer education that encourages frugal living
and the use of recycled products. Create a social ethic that recognizes
overconsumption as a sign of an anti-social psychological dysfunction. - Prohibit the use of disposable products and throwaway containers.
- Convert waste disposal into a labor intensive recycling industry that
virtually eliminates land fill and incineration as disposal methods. - Assess a luxury tax on nonessential, particularly fashion conscious,
consumption goods such as expensive designer clothes and accessories. - Eliminate the use and destruction of ecological resources for military
purposes.
ECONOMIC DEMOCRACY
An economy divided between the extravagant and the deprived is inherently
unstable and unsustainable especially once it becomes evident to one and all
that the physical pie is not going to get any larger. Economic justice, combined
with the discipline and efficiency of private ownership and the market
mechanism, is an essential cornerstone of a sustainable society in a resource
scarce world. This can be achieved by democratizing the ownership and control of
productive assets, breaking up national and international monopolies, and
decentralizing economic activity to create a globally linked system of localized
self-reliant, recycling economies.
One model for worker ownership in the industrial sector is that of the Mondragon
association of some two hundred cooperative enterprises in Spain (mostly
industrial factories manufacturing durable goods, intermediate goods, capital
equipment, and electronic and high technology products, schools, and farms owned
and managed by over 20,000 owner workers. A promising model for the commercial
sector is the 200,000 member Sekatsu consumer cooperative in Japan known for the
application of rigorous social and environmental standards to the products it
sells.
Several of the measures outlined above, such as agrarian reform and high taxes
on luxury goods, would advance this agenda. In addition, the following
implementing measures are suggested.
- Negotiate and implement international anti-trust agreements and mechanisms
to break up transnational monopolies, restore market competition, and increase
the market niche of smaller firms. - Legislate and aggressively enforce strict national anti-trust laws for the
same purpose. - Give tax credit, licensing, infrastructure and tariff preferences to small
and medium labor intensive worker owned enterprises and cooperatives. Require
large corporations to operate primarily through licensing and franchising
agreements with independent, locally-owned businesses. - Through taxation, licensing, and tariff regulations, keep costs of bulk
shipping high to encourage reliance on smaller scale production units close to
markets. - Place renewable productive resources fisheries, forests, watersheds, etc.
under democratic community control and management. - Place a cap on executive and professional salaries and benefits in any
given organization at no more than 20 times the salary of that organization’s
lowest paid worker. - In any given country, apply an 80 percent tax to incomes above ten times
the national average and to inheritances above twenty times that average.
STABILIZING POPULATION: THE JAPANESE EXPERIENCE
Japan built its modern economy on a foundation of radical land reform, massive
investments in basic education, and dense networks of rural organization that
broke up rural power monopolies, distributed asset control, contributed to
increased rural household incomes, and established the basis for a thriving
rural economy. Japan continues to recognize its small farmers and businesses as
the backbone of local communities and the domestic economy, giving them
preferential treatment and protecting them against foreign or domestic
competition. Strict enforcement of environmental regulations and the protection
of Japanese forests has preserved much of Japan’s natural beauty and ecological
vitality.
The Japanese government has taken a strong hand in economic management,
combining market forces with government direction to assure national ownership
of Japan’s land, economy, and capital assets and to build a strong base of
domestically controlled technology. The salaries of top level managers have been
held in check. Japanese workers have enjoyed good wages, benefits and job
security. A strong domestic market for domestically produced goods has served as
a foundation for export success.
Zero population growth has been achieved and a policy of keeping energy prices
high has encouraged energy efficiency. Military expenditures have been confined
to maintaining a modest self-defense force that is constitutionally prohibited
from foreign adventurism.
Unfortunately, in its overseas aid and business ventures Japan has aggressively
advanced a development model for other countries that bears little relation to
the policies it favors for itself. Its overseas development projects, both
public and private, have built dependence on Japanese technology and capital,
driven people off their land, destroyed their forests and fisheries, dumped
toxic wastes on their land and in their water, mined their natural resources,
and otherwise ravaged their ecology for Japanese corporate profits.
The productive power of earth’s ecosystem is the natural heritage of all living
creatures. Each individual has a right to no more than his or her equitable
share of the renewable surplus created by that system. The most optimistic of
current projections forecast that the earth’s present population of 5.2 billion
will at least double before it stabilizes. Each such doubling cuts in half each
person’s just share of that surplus. It is unlikely that we can achieve
universally the levels of physical consumption consistent with optimal human
well-being and preserve essential wild spaces unless the human population of the
planet is stabilized substantially below its current level probably somewhere
between 2.5 billion (its 1950 level) or 4 billion (its 1975 level).
There are several essential steps toward speeding stabilization.
- Give an absolute priority in the allocation of productive resources to
assuring everyone the opportunity meet their basic needs. - Through measures such as those proposed through this agenda, strengthen
ties to place and community and nurture a sense of collective community
responsibility that reduces the individual’s dependence on children for basic
economic security. - Provide basic universal social security benefits adequate to provide for
old age, with preferential benefits for the poor and those who limited their
family size. - Increase the range of educational and economic opportunities available to
women. - Carry out massive public education campaigns on the social, economic,
health, and spiritual advantages of a stable population. - Assure universal access to the complete range of fertility control
services.
TRADE, AID, AND FOREIGN INVESTMENT
From the earliest days of colonialism, the international trade and investment
system has served as an instrument by which those who control capital,
technology, and state power concentrate their control over the earth’s
ecological resources to satisfy their tastes for conspicuous consumption. In
earlier days their favored instruments were armies. In the post-colonial era,
the same ends are accomplished through transnational corporations, the Bretton
Woods institutions (World Bank, IMF, and GATT), and development assistance. Each
works to increase dependence on the international trade system, mortgage
national economies to outside interests, and gain unrestrained access to local
resources and markets for transnational corporations. Creating a sustainable
global economy will require a thorough going reform of the international trade
and investment system to shift the balance of economic forces back toward people
and community. A continuation of international trade and investment is essential
to human progress and well being. However, rather than serving the interests of
overconsumption based on the exploitation of other people’s ecological
resources, the international system must provide incentives and support for
economic and ecological self-reliance especially in meeting the basic needs of
its people and facilitate the unrestrained sharing of socially and ecologically
beneficial technology. The optimal level of international trade and investment
are probably substantially below those that currently prevail.
A number of actions are suggested.
- Export only those ecological resources that are surplus to the needs of
local people and only at prices that fully compensate for their depletion.
Invest a portion of the proceeds from the sale of resource depletion in
acquiring control of technologies that will reduce future national and
international dependence on those resources. - Manage imports to eliminate use of foreign exchange for purchases that
cater to extravagant consumption, protect local small producers, and encourage
both economic and ecological self-reliance especially in meeting basic needs. - Give a substantial preference to local capital, especially local small
investors. As a general rule, welcome only foreign investors who come for the
long-term to produce for domestic markets, contribute to building local
technical capacity, and pay their full share of local taxes. - Negotiate the repudiation of all odious international debts (debts
negotiated by illegitimate parties and often involving fraud and
misappropriation), and official international debts extended for non-performing
projects undertaken on the basis of faulty donor analysis and projections. - Place a permanent moratorium on long-term international borrowing except
for productive activities that will recover the foreign exchange to repay them. - Dismantle the World Bank and other multilateral development banks engaged
primarily in the business of creating international indebtedness. - Make the IMF and GATT transparent and democratically accountable. Redefine
their mandates to compel them to work for fair and balanced trade and investment
relationships consistent with the above principles. - Create an international fund responsible for identifying and negotiating
the purchase of socially and ecologically beneficial technologies to be placed
in the public domain. - Continue only small scale, grant funded foreign aid that supports mutual
capacity building, problem solving, and technology sharing. - Stop the consolidation of large countries into integrated regional economic
blocks. - Merge the economies of small neighboring countries that are too small to be
economically viable without substantial dependence on external trade and
resources.
None of these are simple or politically expedient proposals. Most fall so far
outside of prevailing policy orthodoxy as to justify calling them radical and
dismiss them as the idealistic and nostalgic nonsense.
Yet there are strong arguments for each of these proposals as an essential
element of a sustainable human future.7 Each is grounded in a common sense
understanding of what must be done to reverse our current course toward assured
mutual social and ecological destruction.
My own experience in meetings around the world suggests that this common sense
understanding is far more widely shared by professionals and lay people from
across the political spectrum than is evident in the prevailing media discourse
and the studies and policy pronouncements of official agencies. Indeed the
analyses and proposals presented here are a product of the lively citizen
dialogue taking place all around the world. The world’s people are moving out
ahead of their institutions in their understanding and commitments relating to
the issues of sustainable development.
Perhaps the radical agenda outlined above is less radical than it first appears.
Indeed, there is a real and growing prospect that an agenda much like the one
outlined above could attract a consequential and growing mainstream political
constituency.
This paper was prepared under the Environmental Management Program of the Asian
Institute of Management based on a presentation to the Third Pacific
Environmental Conference in Bangkok, Thailand, 13-15 February 1992. It is
distributed by the People-Centered Development Forum information Service as a
public service and may be freely reprinted or otherwise reproduced and
distributed with appropriate credits to the author and the PCDForum.
Dr. David C. Korten is president of the People-Centered Development Forum and a
visiting professor at the Asian Institute of Management. He holds M.B.A. and
Ph.D. degrees from the Graduate School of Business at Stanford University. In
his earlier career he served as a Captain in the United States Air Force, helped
establish management schools in Africa and Latin America, taught at the Harvard
University Graduate Schools of Business and Public Health, and conducted
research at the Harvard Institute for International Development. He has served
on the staff of the Ford Foundation in Manila and as Asia Regional Advisor on
Development Management with the U.S. Agency for International Development. His
most recent book is Getting to the 21st Century: Voluntary Action and the Global
Agenda (West Hartford, CT, USA: Kumarian Press, 1990).