Making but not Painting the Economy Green

2 April 2012

Alexander Likhotal is the President of Green Cross Internationl and a member of the Club of Rome.

The world finds itself at an important inflection point. The choice is between a perfect storm of a progressively deepening set of crises or expanding perspectives of unprecedented opportunities. 
 
The root causes of the crises we are witnessing rest on outmoded theoretical concepts, values and institutions. The remedies lie in the formulation of a new model appropriate to the conditions of the 21st century; the commitment to progressive values that integrate individual freedom and equitable cooperation to maximize the welfare and wellbeing of all; and the establishment of more effective institutions at all levels. For these reasons, practical experiments, such as the Bhutan’s wellbeing and sustainability-based economic model, deserve to be thoroughly studied and widely discussed and disseminated.  
 
How can we maximize our chances for the transition towards a sustainable, equitable and "happier" world? We can do this by:
 
1. Developing a new economy, not just in theory but also in practice, so that:
Natural and social capital are correctly valued;
New financial markets deliver the goods and services humankind needs in and for a sustainable world;
Sufficient opportunities for suitable work are made available to allow a decent income for all.
2. Creating appropriate governance institutions on global, national and local levels.
 
Five steps can trigger the response to the current economic and “unsustainable” development crises wrecking the world today.
 
1: Values-based approach to development.
 
Humanity's future and prosperity will depend on our understanding that universal and equitable distribution of all aspects of social capacity, opportunity and security is the most essential and effective means for promoting peace, prosperity and maximum welfare and well-being going forward. 
 
2: Reconsider productivity.
 
Our economies incorrectly measure and value a wide range of goods and services essential to maintaining a safe, secure and sustainable planet. This systematic miss-valuation (both under and over) is causing major problems, including the destabilization of the climate, the degradation of ecosystems and depletion of biodiversity, and it even undermines the social fabric of families and communities. Natural and social capital must be properly valued in economic terms, and the economy must become "real" and be built on real values. 
 
3: Increase energy prices.
 
This must be done to re-orient our markets so that real values are reflected in decisions. Elevated energy prices need not hurt the economy. Japan blossomed during the 15 years of highest energy prices. Energy policy must focus on integrated solutions to both climate, energy and global sustainability. 
 
4: Create an alliance of sustainability winners.
 
Create an alliance of the “early birds”, the speedy frontrunners who will be the “game winners” of tomorrow; there is no need to wait as everybody (including traditional energy suppliers) will wake up to this call. 
 
The “carbon justice” approach can propel low carbon technologies to the South. An alliance of champions on effective climate policy from America, Europe, Asia and leading “developing countries” (90% of the world’s population) can help provide the revolutionary shift needed to recalibrate our economy, protect our environment and achieve a truly sustainable development. 
 
5: Re-balance private rights and public interests.
 
A prosperous and stable society requires a proper balance between, on the one hand, the role of the market to stimulate innovation and foster the healthy competition needed for the effective use of resources and, on the other, the role of government as the custodian of the common interest. Governments must provide a clear and predictable legal & regulatory framework and the control & supervision within which the markets could operate to achieve a balance between private rights & benefits and the wellbeing and prosperity of the community. Strong regulatory mechanisms are urgently needed to safeguard common public interests. 
 
We face the need to evolve towards the higher social systems required to effectively manage new levels of technological capability, globalization of society, greater human mobility, etc. We should not focus on what seems to have been lost but on what humanity has until now never possessed. Society is evolving. Understanding the present in the light of the past, we see only the problems, resulting in gloom. Understanding the present in the light of the future compels us to evolve, to see the opportunities within our reach.
 
Green Cross International, founded in 1993 by Nobel Peace Prize laureate Mikhail Gorbachev, is an independent non-profit and nongovernmental organization working to address the inter-connected global challenges of security, poverty eradication and environmental degradation through a combination of advocacy and on-the-ground projects. GCI is headquartered in Geneva and is present in over 30 countries. 
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