Wellbeing Economy: Success in a World Without Growth

WELLBEING ECONOMY

To my wife and my children, who live in the wellbeing economy with me.

LORENZO FIORAMONTI

WELLBEING ECONOMY

Success in a World Without Growth

MACMILLAN

First published in 2017

by Pan Macmillan South Africa

Private Bag X19, Northlands

Johannesburg, 2116

www.panmacmillan.co.za

ISBN 978-1-77010-517-1

eBook ISBN 978-1-77010-518-8

© Lorenzo Fioramonti 2017

All rights reserved. No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording or otherwise) without the prior written permission of the publisher. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages.

All photographs supplied are courtesy of the author and from his personal collection.

Editing by Russell Martin

Proofreading by Kelly Norwood-Young

Design and typesetting by Triple M Design, Johannesburg

Cover design by MR Design

CONTENTS

(Un)acknowledgements

Introduction: The time for a wellbeing economy is now

1. Welcome to the world without growth

2. Business for wellbeing: Unmasking the ‘invisible foot’ and other common mystifications

3. Politics for wellbeing: From passive consumers to active change makers

4. Society for wellbeing: The ‘visible hand’ and the transformative power of education

Conclusion: How you and I can build the wellbeing economy

Achieving sustainable and equitable wellbeing in South Africa: A manifesto for change

Notes

Pictures

(UN)ACKNOWLEDGEMENTS

Books normally begin with a list of thanks. But often the intellectual and research journey of writing a book is paved with obstacles and unhelpful people too. So, for this book, I’d like to start with the hurdles that undermine the development of a wellbeing economy every single day.

Many people around me hold behaviours and follow routines that are simply irrational. Many of my neighbours refuse to install a solar panel or a water harvesting system, even as we have frequent blackouts and water shortages. They pride themselves on being masochistic and self-destructive. The same applies to many administrators at my university (and most universities), who seem intent on sabotaging any new idea, not because they don’t like it, but because they think that new is bad. For them, things must be done as they always have been, even when their rules suppress free thinking among students, support large service providers at the expense of small businesses, and result in wastage of resources and alienation of the workforce.

I would also like to ‘unacknowledge’ all those businesses that try to undermine any efforts at changing the way we produce. In particular, I would like to point out the fossil fuel companies and the mining industry, especially those that ‘pretend’ to care about the environment and society. And the many organisations and academics that happily accept funding from them. Then I would single out most commercial banks, which prey on consumers to get more indebted, luring them with all sorts of dubious financial products, which many people simply don’t understand. Finally, I would like to ‘unacknowledge’ the politicians and public administrators who, despite their sheer ignorance about the dark sides of growth, believe they know better than the thousands of innovators, social entrepreneurs, scientists and activists who are already building the wellbeing economy described in this book. If it weren’t for the opposition of such political systems, the actions of these innovators would have a much greater and systemic impact.

Now it’s time for the good guys. I want to thank my friends at the Global Wellbeing Lab, some of whom I have explicitly cited in this book (with their consent). I would also like to acknowledge the phenomenal contribution made by my colleagues at the Alliance for Sustainability and Prosperity (www.asap4all.org), especially Robert Costanza, Enrico Giovannini, Katherine Trebeck, Ida Kubiszewski, Dirk Philipsen, Kate Pickett, Kristín Vala Ragnarsdóttir, Lars Fogh Mortensen, Roberto de Vogli and Richard Wilkinson. The top leadership of the University of Pretoria has always been on my side, even when my disruptive style made many colleagues unhappy; I’m grateful for their support. My final thanks go to my team at the Centre for the Study of Governance Innovation of the University of Pretoria, to the Centre for Complex Systems in Transition at Stellenbosch University, to my fellow change makers at WE-Africa.org and to the Future Africa team.

You are all welcome to the wellbeing economy.

INTRODUCTION

The time for a wellbeing economy is now

Look around you. What do you see? You see a world in debt. People are struggling to make ends meet. Jobs are being lost; currencies crumble and life becomes more expensive every day. Financial markets have become casinos, with speculation continuing unabated despite the disaster of repeated crises. You see, as well, exorbitant amounts of wealth being amassed by a few individuals, while the middle classes shrink and the poor fall into extreme deprivation. The richest 1% owns as much wealth as the remaining 99%, while the wealthiest 62 individuals worldwide have more than the poorest 50% of the global population. Among the hundred richest entities on the globe, there are more private individuals and companies than nations. Millions of desperate people risk their lives every day, migrating away from lands that have been exploited and impoverished, only to find their deathbed in the abysses of our seas or on the barbed wire of our borders. At the same time, millions of tourists crisscross the skies hopping from one exotic holiday destination to another.

Human beings have lost a sense of purpose. They simply repeat irrational routines every day and too many have lost the compass, which explains one of the most miserable untold truths of our time: more people die from suicides than wars and natural disasters combined, especially among the youngest, who have no confidence in the future.¹

What else do you see? A broken planet. Climate change. Ecological mayhem, natural disasters, biodiversity loss. A small minority consumes more than 75% of all planetary resources. Every minute, 41 hectares of trees are felled, the equivalent of 50 football fields. Most land has been replaced by concrete, with more people living in urbanised areas than in rural localities. Water is running out. Food is trashed rather than made available to hungry mouths. In some countries, the air is so dirty that people have to wear masks when outdoors. Have you ever heard of plastiglomerates? These are stones containing sedimentary grains and natural debris that are held together by hardened molten plastic. They are like fossils created by plastic, which will last for millions of years and potentially turn human pollution into a main factor in geological records. And the Great Pacific garbage patch? This is a trash vortex trapped in the middle of the ocean, extending for twice the size of the United States. Waste is everywhere. In Hong Kong beaches are so filthy that they look like dumping grounds. We throw away enough stuff to fill a line of trucks from New York to Los Angeles, or the distance between Cape Town and Nairobi, every single day.²

This is the world we have built in our blind pursuit of something called ‘economic growth’. We have sacrificed all other important aspects of life to gain another notch in the gross domestic product (GDP). The countries championing this development model, from the United States to Europe and China, have been rewarded with power, prestige and influence. The pursuit of growth has become more than a national policy: it is a global beauty contest. We have done this intentionally, because we have been told (by economists, financiers, political advisers, bankers and others) that the pursuit of growth is the only way to develop. It is the magic bullet for building a great future for all.

Of course, it’s not all bad around us. Many people have been lifted out of poverty, life expectancy has increased, and more and more kids have been given access to formal education. The conventional belief is that we have achieved this progress thanks to growth, but the evidence is much more nuanced. As a matter of fact, countries that succeeded at achieving high levels of human development, from Scandinavia to South Korea, did so because of purposeful restrictions on the unbridled powers of growth. They imposed limits on corporate profits, pursued income and wealth redistribution, protected families and communities, guaranteed a good work–life balance and invested heavily in social welfare. Even if we were to believe the conventional ‘story’ that growth brings about a better quality of life for all, the simple fact that growth is responsible for an unprecedented and potentially catastrophic social and environmental crisis compels us to rethink this development approach. More recently, we have learned that economic recessions (that is, phases in which growth disappears) can coexist with the creation of good-quality jobs if embedded in a system of social cohesion whereby communities help each other, while growth can pick up steam amid high unemployment (hence the term ‘jobless recovery’). Japan, which has been in a prolonged economic depression for over two decades, has one of the world’s highest levels of human development and longevity. According to Harvard University, Japan is also the most diversified and mature economy in the world.³ As indicated in The New York Times, ‘people in Japan are beginning to wonder whether those two lost decades really were lost after all. Perhaps those years were simply the prelude to a new post-growth era’.⁴ As a consequence, the commonplace assumption that growth and development (or employment) go together needs some serious questioning.

Obviously, the idea that the ‘pie’ can grow indefinitely is alluring. It means everybody can have a share without limiting anybody’s greed, which is the underlying driving force of modern societies. A rising tide lifts all boats: while the rich get richer, the poor are also expected to benefit from what trickles down. Rampant inequality thus becomes socially acceptable because we hope the growth of the economy will eventually make everybody better off. We are thus coaxed into the false dream that growth is a win-win. The reality is that very little trickles down from the rich to the poor. In fact, it mostly works the other way around: wealth trickles up from the poor to the rich, because economic growth turns common resources that everybody can use, from land to water, into private goods that must be sold in markets. Informal settlements are replaced by shopping malls and public spaces are privatised. The result is that the poor, who struggle to operate in the new ‘growth economy’ where everything has a price and money dominates social relations, are kicked out of the system.

South Africa, the country where I live, has been a poster child of the growth mantra. Its system of racial segregation, known as ‘apartheid’, was designed as a growth machine. Taking the cue from colonialism, apartheid built a powerful system of extractive industries, exploiting both workers and nature to achieve economic growth. Neither the human suffering nor the environmental destruction that accompanied this policy was ever a concern for lawmakers and global investors. With the end of apartheid, under the charismatic leadership of Nelson Mandela, many expected the country to take a U-turn in its development trajectory. Mandela and his fellow freedom fighters had indeed defeated racism and exclusion, upholding social justice and inclusivity as their principles. The establishment of a welfare-based approach soon after the first democratic elections in 1994 seemed to indicate that social development would take precedence over economic growth. Yet, it was short-lived. The Reconstruction and Development Programme (RDP), which prioritised housing, education and social welfare, was soon replaced with a plan titled Growth, Employment and Redistribution (GEAR), which put economic growth firmly at the centre of policy planning, while all other preoccupations, from social justice to healthcare and education, were subordinated to it. ‘Growth first, the rest later’ became the new maxim.

During the first decade of democracy, the South African economy experienced its all-time highest growth rates. A new class of black millionaires emerged, while growth demanded that land and the key levers of economic power remain concentrated in a few (mostly white) hands to ensure continuity and foreign direct investment. Inequality kept rising, with the country topping global rankings. Life expectancy plummeted, because the ‘rest later’ approach delayed investments in healthcare, triggering the HIV-AIDS pandemic. Education lagged behind too. The most recent available statistics tell us that poor, mostly male black South Africans between the age of 25 and 34 are less skilled and employable today than they were during apartheid.⁵ Life expectancy in the country began to increase only very recently, at a time of low growth, mostly due to civil society campaigns demanding that antiretroviral medicines be made available to people affected by HIV. The average was 52 years in 2005, when growth was at its peak; it bumped to 61 years in 2014, amid the worst economic contraction the country has experienced since the advent of democracy.⁶

‘Growth first’ has been the rule dominating the world since the early 20th century. No other ideology has ever been so powerful. Indeed, the obsession with growth cuts through both capitalist and socialist societies. But what is growth? Strangely enough, the notion of growth has never been reasonably developed. It has remained as problematic and fuzzy while at the same time acquiring unparalleled political influence.

For commonsense people, like you and me, there is growth when – all things being equal – our overall wealth increases. In this vein, growth happens when we generate value that wasn’t there before: for instance, through the education of children, the improvement of our health or the preparation of exquisite, tasty food. A more educated, healthy and well-nourished person is certainly an example of growth. If any of these activities generate some costs, either for us individually or for society, we should deduct them from the value we have created. In this logical approach, growth equals all gains minus all costs.

Think now of a hypothetical case in which I decide to sell a kidney to earn some money. As a matter of fact, this case is not so hypothetical for many people, mostly in poor countries, who resort to selling organs to survive in our deeply unjust world. As the World Health Organization estimates, over 10 000 black market operations involving human organs take place every year and many economists, including the Nobel Prize winner Alvin Roth, have publicly proposed a free market of organs.⁷ Regardless of how we feel about organ trading, let’s assume I can do it legally in a hospital. I get a cheque: US$50 000. Has the sale of my organ generated growth? Common sense would prompt a negative answer. Indeed, I have, at best, exchanged a type of pre-existing natural wealth (my kidney) for financial wealth (the monetary compensation I got for it). This is not something to be too proud of and certainly not a model to scale up to the entire nation (except for Roth and his colleagues). It is in truth a morally deplorable decision, and it could even backfire economically, especially if taking care of my physiological functions now requires seeing doctors and buying medicines that will take a toll on my finances (a problem I would have not faced had I kept the kidney).

Paradoxically, our model of economic growth does exactly the opposite of what common sense suggests. If I sell my kidney for some cash, then the economy grows. If I educate my kids, prepare and cook food for my family, improve the health conditions of my people, growth doesn’t happen. If a country cuts and sells all its trees, it gets a boost in GDP. But nothing happens if it nurtures and grows its forests. If a country preserves open spaces like parks and nature reserves for the benefit of everybody, it does not see this increase in human and ecological wellbeing reflected in its economic performance. But if it privatises them, commercialising the resources therein and charging fees to users, then growth happens. Preserving our infrastructure, making it durable, long-term and free adds nothing or only marginally to growth. Destroying it, rebuilding it and making people pay for using it gives the growth economy a bump forward. Keeping people healthy has no value. Making them sick does. Wars, conflicts, crime and corruption are friends of growth in so far as they force societies to build and buy weapons, to install security locks and to push up the prices of what government pays for tenders. Peace, transparency and social cohesion are non-qualities for growth. And the list of paradoxes continues.

We constantly hear leaders and the media talk about the importance of consumption. In many ways, the very category of consumer has replaced that of citizen as the dominant characteristic of our modern civilisation. We exist because we consume. When we stop consuming, the entire social edifice starts unravelling. The growth economy has borrowed the concept of consumption from medicine, in particular the branch called epidemiology. The term consumption was introduced in the scientific jargon by researchers studying the behaviour of bacteria in the development of infectious diseases, particularly tuberculosis in the 1800s. Like bacteria, we have been instructed to consume everything around us, ultimately undermining the very basis sustaining our own life. A consumption-based development model is inevitably doomed to destroy itself, at least in a closed system like planet Earth, just as a colony of bacteria destroys itself by killing the infected organism, unless it can migrate somewhere else, thus spreading the infection further afield. When resources are scarce and frantic consumption patterns are incentivised by a vast array of state policies, corporate strategies, mass-scale advertising and social pressures, it becomes almost impossible to avoid overuse and, ultimately, destruction.

We have witnessed plenty of these ‘tragedies’ in the past few decades: air pollution, contamination of ecosystems, land degradation, biodiversity loss, mass extinctions and climate change. The list is probably endless. There is a sector, however, in which