A feature of the People-Centered Development Forum,   Revised July 18, 1995

By David C. Korten

An important starting point in any discussion of sustainable development is to
clarify the basic assumptions we each bring to the table. While the views on
sustainable development cover a broad spectrum, the following contrast of the
conventional wisdom and the emergent alternative wisdom on this subject helps to
define the range. Most of the economists, governments and official agencies
(including the World Bank, IMF, and the GATT) that define national and global
policies profess the conventional wisdom. A growing number of alternative
economists, independent thinkers, and citizen organizations concerned with
economic justice and environmental issues are engaged in articulating and
elaborating the alternative wisdom as the foundation for policies they hope will
prove to be more people and environment friendly. Which best captures your view
of sustainable development?

Sustainable Development

Conventional: Sustainable development is about achieving
the sustained economic growth needed to meet human needs, improve living
standards, and provide the financial resources that make environmental
protection possible.

Little of the growth of the past twenty years has improved the
quality of human life. Most of the benefit has gone to the very wealthy and the
remainder has been offset by the costs of resource depletion, social stress, and
environmental health and other problems caused by growth. Sustainable
development is about creating: 1) sustainable economies that equitably meet
human needs without extracting resource inputs or expelling wastes in excess of
the environment’s regenerative capacity; and 2) sustainable human institutions
that assure both security and opportunity for social, intellectual, and
spiritual growth.

Sustainable Lifestyles

Conventional: Adopting less resource intensive lifestyles
means going backwards, accepting a lowered standard of living. Given the current
trend toward declining rates of population growth, any apparent limits to growth
will be eliminated by continuing technological advance and the operation of
market mechanisms. Responding to ill advised calls to end growth is not
necessary and would be a tragic error condemning billions of people to perpetual

Consumption of environmental resources already exceeds sustainable
limits. The central task of development must be to reallocate the use of
sustainable resource flows. This will require that current high consumers
significantly reduce their per capita resource consumption. This may reduce
their standard of living as defined purely by physical consumption, but it also
offers opportunities for an improved quality of personal, family, and community
life. Necessary reductions can be accomplished in part by reforming production
systems to maximize recycling and minimize dependence on inputs from and waste
disposal to the environment. Some nonessential forms of consumption may need to
be eliminated.

Helping Poor Countries Become Sustainable

Conventional: Once poor countries are
on the path to sustainable growth an expanding economic pie will allow them to
address a wide range of needs, including environmental protection and the
elimination of poverty. Achieving sustainable growth in the South depends on
accelerating economic growth in the North to spur demand for Southern exports
and thus stimulate Southern economies. Of course, if it is to fully benefit the
South, accelerated growth in the North must be combined with the removal of
trade barriers and increases in foreign investment and foreign aid including
environmental lending.

Environmental problems are in large part a consequence of Northern
countries exporting their ecological deficits to the South through trade and
investment. The appropriation of environmental resources and sinks to service
Northern over-consumption limits the per capita shares of these resources
available in Southern countries to meet domestic needs and pushes the
economically weak to marginal ecological areas. Much of existing foreign aid,
loans and investment, create Southern economies that are deeply in debt to the
North and dependent on the continuing import of Northern technology and
products. This creates demands for ever greater foreign exchange earnings for
imports, debt service and repatriation of profits by foreign investors that can
be obtained only through further depletion and export of environmental
resources. Sustainable development in poor countries depends on: 1) increasing
the availability, accessibility, and quality of sustainable natural resource
flows to meet the basic human needs of their own people: and 2) the political,
institutional, and technical capacity to use their resources efficiently and
sustainable and to distribute the benefits equitably among all members of
current and future generations. Northern countries best contribute to achieving
this outcome in Southern countries by: 1) limiting their own consumption to
reduce Northern dependence on environmental subsidies extracted from the South
and release resources for use by the poor to meet their basic needs; and 2)
facilitating unrestricted Southern access to socially and environmentally
beneficial technologies.

Responsibility for Environmental Problems

Conventional: Poverty is the primary
cause of environmental problems. Because of lack of education and economic
opportunities the poor have too many children and lack the sensitivity and
resources to provide the care for their environment that wealthier people and
countries do. Environmental quality is a low priority among people whose
survival is in question. They will become concerned about and invest in
environmental conservation only once a certain level of income is attained.
Stimulating economic growth to increase employment opportunities and incomes
must be the foundation of environmental protection.

[There is not a clear alternative consensus. Alternative 1 is the more prevalent
among alternative thinkers, particularly in the South.]

Alternative 1: The overconsumption of Northern countries is the problem.
Therefore Northern population growth is an issue because of the substantial
consumption each additional Northerner adds. The poor consume very little so
their numbers are not environmentally important and Southern population growth
is not a consequential issue.

Alternative 2:
Inequality is the fundamental cause of environmental problems.
Because of their much greater relative power in a market economy, the wealthy
are able to pass on the social and ecological costs of their overconsumption to
the poor. Since the poor are the first to suffer from environmental degradation,
they are in many localities becoming leading advocates of more environmentally
responsible resource management practices. Where poverty appears to be the cause
of environmental destruction it is usually because the poor have been deprived
of other means of livelihood and thus have been pushed in desperation to over
exploit environmentally fragile lands. Often their lack of any other source of
security creates an incentive to have many children. Eliminating inequality by
distributing resource control more equitably is a fundamental condition for


Population will stabilize naturally at somewhere between 12 and 15
billion people. While this will create some strains, with adequate economic
growth it should not be a consequential problem.

Alternative: In the absence of radical economic reforms intended to rapidly
accelerate reductions in fertility by increasing equity, social security, and
investment in female education, female livelihood opportunities, health, and
family planning services, the global population will be naturally stabilized
well below 12 billion by catastrophic events as social and ecological stress
result in mass starvation and violence. Given current dependence on the
depletion of nonrenewable ecological reserves, it is doubtful that even the
world’s current population is truly sustainable if minimum acceptable levels of
consumption are to be maintained.

Economic Management Goals 

Conventional: The primary goal of economic policy is
the efficient allocation of resources. The internalization of production costs
is a precondition to efficient allocation by markets and therefore must also be
a goal of policy. Equity is a secondary by-product of economically efficient

There are three basic goals that economic policy must seek to
optimize. In order of relative importance these are: a scale of resource use
consistent with ecological regenerative capacities, a fair distribution of
resources, and the economically efficient allocation of resources. Efficient
market allocation requires the internalization of all costs of production,
including the social and environmental costs.


Conventional: Jobs are created through economic growth.

We have entered an era of jobless growth in which technology and
reorganizations are eliminating good jobs faster than growth is creating them.
The new jobs being created are often low paying, temporary, and without benefits
creating an underlying sense of insecurity throughout society that deeply
stresses the social fabric. Furthermore, many of the jobs provided by the
conventional economy are based on unsustainable rates of resource extraction and
are therefore temporary in nature. We must begin to think in terms of providing
people with sustainable livelihoods based on sustainable production for
sustainable markets to support sustainable lifestyles. There is a great deal of
useful, environmentally friendly work that needs to be done that could readily
eliminate involuntary unemployment if we chose to do so. Furthermore, in most
instances sustainable production methods and technologies provide more
livelihood opportunities than do their alternatives.

Trade and the Environment 

Conventional: Free (unregulated) trade increases
economic efficiency through comparative advantage. Economic efficiency means
better use of resources, which is environmentally advantageous. Increased trade
also increases overall economic growth, thereby producing the resources needed
for environmental protection. The greater the volume of trade the greater the
benefit to the environment.

Trade is useful where gains from comparative advantage are real.
More than half of all international trade involves exchanges of the same goods,
which suggests there is little or no comparative advantage involved. To be fair
and economically efficient, trade must be carried out within a clear framework
of rules that: 1) internalize total costs (production, social and environmental
costs, including the full costs of transport); and 2) maintain balanced trade
relations. Free (unregulated) trade leads to competition between localities in
need of jobs to reduce costs of local production by suppressing wages and
allowing maximum externalization of environmental, social, and even production
costs which is both inefficient and highly damaging to the environment and to
social standards.

Markets and Governments

Markets allocate resources most efficiently when there is the
least government interference. Consumers express their preferences through their
purchasing decisions, with the consequence that in the aggregate the market
reflects the value preferences of the society as to how scarce resources are
best allocated. When governments intervene they distort the price signals and
allocative efficiency is reduced. In performing most any given function markets
tend to be more efficient than governments. Therefore it is desirable to
privatize functions where ever possible, while providing incentives to private
investors to create jobs and increase foreign exchange earnings.

The market is an essential institution in any workable economic
allocation system. However, by its nature, the market reflects only the
preferences for private goods of those who have money. Without the intervention
of government and a vigilant civil society, a free (unregulated) market takes no
account of optimal scale or of the needs of those without money, neglects
essential needs for public goods, externalizes a significant portion of real
production costs, and tends toward monopoly control of allocation decisions by
the market’s winners. When conventional wisdom calls for incentives for private
investors, it is in fact calling for subsidies that commonly take the form of
agreeing to let firms increase its private gain by transferring a larger portion
of its production costs to the public. To achieve social justice and
environmental sustainability, government must intervene to set a framework that
assures full costs are internalized, competition is maintained, benefits are
justly distributed, and necessary public goods are provided. A vigilant and
vigorous civil society is required to assure the accountability of both
government and market to the public interest and to provide leadership in
advancing social innovation processes.

Scientific Foundations 

Conventional: The conventional wisdom is grounded in
accepted theory that has stood the test of time and been validated by extensive
historical observation and measurement.

The conventional wisdom represents an ideology, not a science, and
largely contradicts both the theoretical foundations of market economics and
empirical experience which contrary to the claims of the conventional wisdom
strongly favor the alternative wisdom. Indeed, the conventional wisdom may
itself be the single greatest barrier we face to progress toward sustainability.

Originally prepared for the Office of Technology Assessment, United States
Congress, Washington, DC

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