From Global Thinker No. 29 Paul Collier, an examination of the divide between environment and economy, and a plea for reconciliation.
BY PAUL COLLIER | FOREIGN POLICY, DECEMBER 2010
Environmentalists and economists have been cat and dog. Environmentalists see economists as the mercenaries of a culture of greed, the cheerleaders of an affluence that is unsustainable. Economists see environmentalists as romantic reactionaries, wanting to apply the brakes to an economic engine that is at last reducing global poverty.
The argument of my book, The Plundered Planet, is that environmentalists and economists need each other. They need each other because they are on the same side in a war that is being lost. The natural world is being plundered: natural assets are being depleted and natural liabilities accumulated in a manner that both environmentalists and economists would judge to be unethical. But the need for an alliance runs deeper than the practical necessities of preventing defeat. Environmentalists and economists need each other intellectually.
In 2009 Sir Partha Dasgupta, an economist at Cambridge, comprehensively reviewed how the profession has analyzed the natural world. His conclusion was that it “remains isolated from the main body of contemporary economic thinking.” Even when economists incorporate nature, they treat it as they do any other asset: natural capital is simply part of the capital stock, to be exploited for the benefit of mankind.
Since the Stern Review of the Economics of Climate Change of 2006 one aspect of the natural world — that it is warming — has suddenly slammed into the economic mainstream. Lord Stern commanded sufficient respect to force the profession to pay attention to the costs of global warming and the options for mitigation. The result has been an acrimonious battle among economists as different models have produced widely differing results. Yet as Stern has stressed, the key issues are not technical, they are ethical. Policy choices should turn on the responsibilities of the present generation to the future. Yet mainstream economics has blundered into climate change guided only by an ethical framework that is simply inadequate to deal with nature because it ignores rights. Rights are central to the ethics of the natural world: the rights of the present versus the future, and my rights versus yours. Environmentalists bring a fundamental insight that economists have missed. Nature is special: our rights over the natural world are not the same as our rights over the man-made world. Economists need that insight in rethinking the ethical assumptions made in their models.
It will come as no surprise to most people that economists need an injection of ethics. Survey evidence finds that economics students tend to me more self-interested than other students. Either economics attracts the selfish, or worse, it inculcates greed. Economists indeed assume that people are interested only in their own consumption, yet paradoxically, economists judge the world according to an ethical framework that is selfless in the extreme: Utilitarianism. As adopted by economists, Utilitarianism is an austere, universal value system that is impossibly demanding; according to its judgments even noneconomists are selfish. Given the gulf between the values economists use to judge the world and the values they assume ordinary people to hold, many economists conclude that ordinary people cannot be trusted adequately to protect the interests of the future: they are ostriches. Economists share Plato’s view that the ideal government would be comprised of wise Guardians, although, of course, those Guardians should be economists rather than philosophers. In advocating an override of democracy, economists dig themselves deeper into ethical trouble. Nor is their approach realistic: government priorities will inevitably reflect the preferences of their citizens.
Yet in this, too, economists can learn much from environmentalists. One of the founding texts of modern environmentalism is Our Plundered Planet, by Fairfield Osborn. Originally published in 1948, Osborn — who was then president of the New York Zoological Society — sought to awaken ordinary citizens to the unsustainable exploitation of nature.
The Plundered Planet proposes a synthesis in the practical value systems used by environmentalists and economists. Environmentalists are right that each generation has responsibilities for natural assets that it does not have toward other assets. But economists are right that nature is an asset, to be used for the benefit of mankind. We are not curators of the natural world, preserving nature as an end in itself. We are not ethically obliged to preserve every tiger, or every tree. We are custodians of the value of natural assets. We are ethically obliged to pass on to future generations the equivalent value of the natural assets that we are bequeathed by the past. The natural world indeed presents us with distinct obligations, but those obligations are essentially economic.
In the proposed alliance between environmentalists and economists the common enemies are the ostriches and the romantics. The ostriches will plunder the natural world. Sometimes plunder takes a form that is instantly recognizable as unethical. But more often the true consequences of an apparently legitimate action have to be teased out from a chain of decisions. As a result, plunder goes largely unrecognized. In the countries of the bottom billion there is a complex chain of decisions the end result of which is that natural assets are being extracted without sustainable benefit to ordinary citizens. In the rich countries activities that until recently were innocuous, now accumulate natural liabilities. The romantics will leave the potential of the natural world untapped; preserved rather than harnessed. The lifeline for the bottom billion will not be seized.
The poorest countries need rapid economic growth and this creates tension between poverty reduction and the preservation of nature. Environmentalists have been right to stress that economic development must be sustainable, but economists bring the insight that sustainability need not imply preservation. If environmentalists insist on the preservation of each aspect of the natural world they are liable to find themselves on the wrong side in the struggle against global poverty.
Plunder and romanticism are so rife precisely because ordinary citizens are insufficiently informed about the opportunities and threats that nature poses to have forced governments into effective regulation. In the task of building an informed citizenry the starting point is an ethics of nature that people in societies with widely different value systems can understand and accept. Neither the romantic variant of environmentalism that sees nature as an end in itself, nor the austere universalism of economic Utilitarianism, can provide such a foundation. The most difficult wars to win are those that must be fought on two fronts. It is more straightforward, psychologically more satisfying and dramatic to have only a single enemy. The romantics among environmentalists and the Utilitarian Platonic Guardians among economists see nature as a single-front war. The romantics regard economic growth as the enemy; the Platonic Guardians regard the values of ordinary citizens as the enemy. But most struggles in development are not like that: sanity lies in the middle rather than at the extremes. Aid provides an example. It is neither a panacea nor a menace.
In this book I am going to try to turn the exploitation of nature and its assets into a two-front war, expanding what is currently no-man’s land into a place where all but the romantics and the ostriches can feel at home. The romantics and the ostriches each tap into a rage of emotions: the romantics on guilt, fear and nostalgia; the ostriches on greed and optimism. But the devil need not have all the best tunes: effective solutions to vital problems that have been intractable lay where they always have — in the center.
Paul Collier is a professor of economics at Oxford University and the author of The Plundered Planet, from which this essay is excerpted. Reprinted with permission from Oxford University Press, Inc. Copyright 2010