Prosperity without growth?

The transition to a sustainable economy 2009

www.sd-commission.org.uk

England
Prosperity
without
0DLQRIßFH
55 Whitehall
London SW1A 2HH
020 7270 8498

growth ?
enquiries@sd-commission.org.uk

Scotland
Osborne House
1 Osbourne Terrace, Haymarket
Edinburgh EH12 5HG
0131 625 1880
Scotland@sd-commission.org.uk
www.sd-commission.org.uk/scotland

Wales
Room 1, University of Wales,
University Registry, King Edward VII Avenue,
Cardiff, CF10 3NS
Sustainable Development Commission

029 2037 6956

Wales@sd-commission.org.uk
www.sd-commission.org.uk/wales

Northern Ireland
Room E5 11, OFMDFM The transition to a
Castle Buildings, Stormont Estate,
Belfast BT4 3SR sustainable economy
028 9052 0196
N.Ireland@sd-commission.org.uk
www.sd-commission.org.uk/northern_ireland
Prosperity without growth?
The transition to a sustainable economy

Professor Tim Jackson

Economics Commissioner
Sustainable Development Commission
Acknowledgements
This report was written in my capacity as Economics Commissioner for the Sustainable Development Commission
at the invitation of the Chair, Jonathon Porritt, who provided the initial inspiration, contributed extensively
throughout the study and has been unreservedly supportive of my own work in this area for many years.
For all these things, my profound thanks.
The work has also inevitably drawn on my role as Director of the Research group on Lifestyles, Values
and Environment (RESOLVE) at the University of Surrey, where I am lucky enough to work with a committed,
enthusiastic and talented team of people carrying out research in areas relevant to this report. Their research
is evident in the evidence base on which this report draws and I’m as grateful for their continuing intellectual
VXSSRUWDV,DPIRUWKHßQDQFLDOVXSSRUWRIWKH(FRQRPLFDQG6RFLDO5HVHDUFK&RXQFLO*UDQW1R5(6
which keeps RESOLVE going.
Though written as an individually authored thinkpiece, this study builds on work from right across the
Commission. In particular, it draws extensively from the work programme on Redefining Prosperity which has
EHHQGHYHORSHGDWWKH6'&RYHUWKHODVWßYH\HDUVVHH$SSHQGL[IRUDVXPPDU\RIUHFHQWZRUN7KURXJKRXW
WKLVSHULRGP\IHOORZFRPPLVVLRQHUVSDVWDQGSUHVHQWt-DQ%HEELQJWRQ%HUQLH%XONLQ/LQGVH\&ROERXUQH$QQD
&RRWH3HWHU'DYLHV6WHZDUW'DYLHV$QQ)LQOD\VRQ7HVV*LOO$ODQ.QLJKW7LP/DQJ$OLFH2ZHQ$QQH3RZHU
Hugh Raven, Tim O’Riordan, Waheed Saleem and Becky Willis – have been generous with their time, attending
workshops, offering critical commentary and reviewing various drafts of this document.
Special thanks are owed to all those who contributed directly to the Redefining Prosperity workshops, in
SDUWLFXODU6LPRQHGp$OHVVDQGUR)UHGHULF%RXGHU0DGHOHLQH%XQWLQJ,DQ&KULVWLH+HUPDQ'DO\$ULN'RQGL
3DXO(NLQV7LP.DVVHU0LULDP.HQQHW*X\/LX7RPPDVR/X]]DWL-HVVH1RUPDQ$YQHU2IIHU-RKQ2p1HLOO(ONH
3LUJPDLHU7RP3UXJK+LOGH5DSS-RQDWKDQ5XWKHUIRUG-LOO5XWWHU=LD6DUGDU.DWH6RSHU6WHYH6RUUHOO1LFN
Spencer, Peter Victor, Derek Wall, David Woodward and Dimitri Zenghelis.
$QXPEHURIRWKHUFROOHDJXHVDQGIULHQGVKDYHKHOSHGDQGDGYLVHGtVRPHWLPHVZLWKRXWHYHQNQRZLQJLW
3DUWLFXODUWKDQNVDUHGXHWR0LFN&RPPRQ$QG\'REVRQ$QJHOD'UXFNPDQ,DQ*RXJK%URQZ\Q+D\ZDUG/HVWHU
+XQW1LF0DUNV0LULDP3HSSHU$OLVRQ3ULGPRUHDQG-RKQ8UU\
Finally, my thanks are due to the SDC Secretariat for their boundless expertise and enthusiasm throughout the
SURMHFW6XH'LEE6DUD(SSHO$QGUHZ/HH5KLDQ7KRPDV-DFRSR7RUULWL-RH7XUUHQWDQG.D\:HVWLQSDUWLFXODU
KDYHEHHQDFRQVWDQWVRXUFHRILQYDOXDEOHDGYLFHWKURXJKRXW,RZHDVSHFLDOGHEWRIJUDWLWXGHWR9LFWRU$QGHUVRQ
whose wealth of intellectual experience and unswerving personal support have been indispensable at every turn.
Contents

)RUHZRUG 
Summary 6

1 Introduction 15
2 The Age of Irresponsiblity 19
3 5HGHßQLQJ3URVSHULW\ 29
4 The Dilemma of Growth 37
5 The Myth of Decoupling 47
6 Confronting Structure 59
7 Keynesianism and the ‘Green New Deal’ 67
8 Macro-economics for Sustainability 75
9 Flourishing – within limits 85
10 *RYHUQDQFHIRU3URVSHULW\ 93
11 Steps towards a Sustainable Economy 101

Appendix 17KH6'&o*UHHQ6WLPXOXVp3DFNDJH 

Appendix 27RZDUGVD6XVWDLQDEOH0DFUR(FRQRP\ 

5HIHUHQFHV 
(QGQRWHV 
Foreword
Every society clings to a myth by which it lives. Ours
LV WKH P\WK RI HFRQRPLF JURZWK )RU WKH ODVW ßYH
decades the pursuit of growth has been the single
most important policy goal across the world. The
JOREDOHFRQRP\LVDOPRVWßYHWLPHVWKHVL]HLWZDV
half a century ago. If it continues to grow at the
VDPHUDWHWKHHFRQRP\ZLOOEHWLPHVWKDWVL]H
E\WKH\HDU
This extraordinary ramping up of global economic
activity has no historical precedent. It’s totally at
RGGV ZLWK RXU VFLHQWLßF NQRZOHGJH RI WKH ßQLWH
resource base and the fragile ecology on which
ZH GHSHQG IRU VXUYLYDO $QG LW KDV DOUHDG\ EHHQ
accompanied by the degradation of an estimated
RIWKHZRUOGpVHFRV\VWHPV
For the most part, we avoid the stark reality
of these numbers. The default assumption is that
t ßQDQFLDO FULVHV DVLGH t JURZWK ZLOO FRQWLQXH
LQGHßQLWHO\1RWMXVWIRUWKHSRRUHVWFRXQWULHVZKHUH
a better quality of life is undeniably needed, but
even for the richest nations where the cornucopia
of material wealth adds little to happiness and
is beginning to threaten the foundations of our
wellbeing.
The reasons for this collective blindness are easy
HQRXJKWRßQG7KHPRGHUQHFRQRP\LVVWUXFWXUDOO\
reliant on economic growth for its stability. When
growth falters – as it has done recently – politicians
panic. Businesses struggle to survive. People lose
WKHLU MREV DQG VRPHWLPHV WKHLU KRPHV $ VSLUDO RI
recession looms. Questioning growth is deemed to
be the act of lunatics, idealists and revolutionaries.
But question it we must. The myth of growth
has failed us. It has failed the two billion people
ZKR VWLOO OLYH RQ OHVV WKDQ  D GD\ ,W KDV IDLOHG
the fragile ecological systems on which we depend
for survival. It has failed, spectacularly, in its own
terms, to provide economic stability and secure
people’s livelihoods.
7RGD\ZHßQGRXUVHOYHVIDFHGZLWKWKHLPPLQHQW
end of the era of cheap oil, the prospect (beyond the
recent bubble) of steadily rising commodity prices,
WKHGHJUDGDWLRQRIIRUHVWVODNHVDQGVRLOVFRQàLFWV
RYHUODQGXVHZDWHUTXDOLW\ßVKLQJULJKWVDQGWKH
momentous challenge of stabilising concentrations
RI FDUERQ LQ WKH JOREDO DWPRVSKHUH $QG ZH IDFH
these tasks with an economy that is fundamentally
broken, in desperate need of renewal.
In these circumstances, a return to business
as usual is not an option. Prosperity for the few
founded on ecological destruction and persistent
social injustice is no foundation for a civilised society.
Economic recovery is vital. Protecting people’s jobs –
and creating new ones – is absolutely essential. But
we also stand in urgent need of a renewed sense
RIVKDUHGSURVSHULW\$FRPPLWPHQWWRIDLUQHVVDQG
àRXULVKLQJLQDßQLWHZRUOG
Delivering these goals may seem an unfamiliar
or even incongruous task to policy in the modern
age. The role of government has been framed so
narrowly by material aims, and hollowed out by a
misguided vision of unbounded consumer freedoms.
The concept of governance itself stands in urgent
need of renewal.
But the current economic crisis presents us with
a unique opportunity to invest in change. To sweep
DZD\ WKH VKRUWWHUP WKLQNLQJ WKDW KDV SODJXHG
society for decades. To replace it with considered
policy capable of addressing the enormous challenge
of delivering a lasting prosperity.
For at the end of the day, prosperity goes beyond
material pleasures. It transcends material concerns.
It resides in the quality of our lives and in the health
and happiness of our families. It is present in the
strength of our relationships and our trust in the
community. It is evidenced by our satisfaction at
work and our sense of shared meaning and purpose.
It hangs on our potential to participate fully in the
life of society.
3URVSHULW\ FRQVLVWV LQ RXU DELOLW\ WR àRXULVK
as human beings – within the ecological limits of
D ßQLWH SODQHW 7KH FKDOOHQJH IRU RXU VRFLHW\ LV WR
create the conditions under which this is possible. It
is the most urgent task of our times.
Tim Jackson
Economics Commissioner
Sustainable Development Commission, March 2009
Summary

Economic growth is supposed to deliver prosperity. Higher incomes should mean better
choices, richer lives, an improved quality of life for us all. That at least is the conventional
wisdom. But things haven’t always turned out that way.

*URZWKKDVGHOLYHUHGLWVEHQHßWVDWEHVWXQHTXDOO\ urgent need of economic development.

$ ßIWK RI WKH ZRUOGpV SRSXODWLRQ HDUQV MXVW  RI
global income. Inequality is higher in the OECD
QDWLRQV WKDQ LW ZDV  \HDUV DJR $QG ZKLOH WKH
ULFK JRW ULFKHU PLGGOHFODVV LQFRPHV LQ :HVWHUQ
countries were stagnant in real terms long before
the recession. Far from raising the living standard
%XWLWDOVRTXHVWLRQVZKHWKHUHYHUULVLQJLQFRPHVIRU
WKHDOUHDG\ULFKDUHDQDSSURSULDWHJRDOIRUSROLF\LQ
a world constrained by ecological limits.
Its aim is not just to analyse the dynamics of
an emerging ecological crisis that is likely to dwarf
the existing economic crisis. But also to put forward
for those who most needed it, growth let much of
the world’s population down. Wealth trickled up to
the lucky few.
Fairness (or the lack of it) is just one of several
reasons to question the conventional formula for
DFKLHYLQJSURVSHULW\$VWKHHFRQRP\H[SDQGVVRGR
the resource implications associated with it. These
impacts are already unsustainable. In the last quarter
of a century the global economy has doubled, while
DQ HVWLPDWHG  RI WKH ZRUOGpV HFRV\VWHPV KDYH
EHHQ GHJUDGHG *OREDO FDUERQ HPLVVLRQV KDYH ULVHQ
FRKHUHQWSROLF\SURSRVDOV%R[WKDWZLOOIDFLOLWDWH
the transition to a sustainable economy.
In short, this report challenges the assumption
of continued economic expansion in rich countries
DQGDVNVLVLWSRVVLEOHWRDFKLHYHSURVSHULW\ZLWKRXW
JURZWK"
The Age of Irresponsibility
Recession throws this question into sharp relief.
E\VLQFHWKH.\RWR3URWRFROoEDVH\HDUp
6LJQLßFDQWVFDUFLW\LQNH\UHVRXUFHVtVXFKDVRLOtPD\
be less than a decade away.
$ ZRUOG LQ ZKLFK WKLQJV VLPSO\ JR RQ DV XVXDO
is already inconceivable. But what about a world
in which nine billion people all aspire to the level
RIDIàXHQFHDFKLHYHGLQWKH2(&'QDWLRQV"6XFKDQ
HFRQRP\ ZRXOG QHHG WR EH  WLPHV WKH VL]H RI
WKLVRQHE\DQGWLPHVELJJHUE\WKHHQGRI
WKHFHQWXU\:KDWGRHVVXFKDQHFRQRP\ORRNOLNH"
:KDWGRHVLWUXQRQ"'RHVLWUHDOO\RIIHUDFUHGLEOH
YLVLRQIRUDVKDUHGDQGODVWLQJSURVSHULW\"
These are some of the questions that prompted
this report. They belong in a long tradition of serious
UHàHFWLRQRQWKHQDWXUHRISURJUHVV%XWWKH\DOVR
UHàHFW UHDO DQG LPPHGLDWH FRQFHUQV &OLPDWH
change, fuel security, collapsing biodiversity and
global inequality have moved inexorably to the
forefront of the international policy agenda over
the last decade. These are issues that can no longer
be relegated to the next generation or the next
electoral cycle. They demand attention now.
$FFRUGLQJO\ WKLV UHSRUW VHWV RXW D FULWLFDO
examination of the relationship between
prosperity and growth. It acknowledges
at the outset that poorer nations stand in
6 Prosperity without Growth?
7KH EDQNLQJ FULVLV RI  OHG WKH ZRUOG WR WKH
EULQNRIßQDQFLDOGLVDVWHUDQGVKRRNWKHGRPLQDQW
HFRQRPLFPRGHOWRLWVIRXQGDWLRQV,WUHGHßQHGWKH
boundaries between market and state and forced
XVWRFRQIURQWRXULQDELOLW\WRPDQDJHWKHßQDQFLDO
sustainability – let alone the ecological sustainability
– of the global economy.
This may seem an inopportune moment to
question growth. It is not. On the contrary, this crisis
RIIHUV WKH SRWHQWLDO WR HQJDJH LQ VHULRXV UHàHFWLRQ
,W LV D XQLTXH RSSRUWXQLW\ WR DGGUHVV ßQDQFLDO DQG
HFRORJLFDOVXVWDLQDELOLW\WRJHWKHU$QGDVWKLVUHSRUW
argues, the two things are intimately related.
&KDSWHU  DUJXHV WKDW WKH FXUUHQW WXUPRLO LV QRW
the result of isolated malpractice or simple failures
of vigilance. The market was not undone by rogue
individuals or the turning of a blind eye by incompetent
regulators. It was undone by growth itself.
The growth imperative has shaped the
architecture of the modern economy. It motivated
WKH IUHHGRPV JUDQWHG WR WKH ßQDQFLDO VHFWRU ,W
stood at least partly responsible for the loosening
of regulations and the proliferation of unstable
ßQDQFLDOGHULYDWLYHV&RQWLQXHGH[SDQVLRQRIFUHGLW
was deliberately courted as an essential mechanism
to stimulate consumption growth.
Sustainable Development Commission
 This model was always unstable ecologically. It
has now proven itself unstable economically. The
age of irresponsibility is not about casual oversight
or individual greed. If there was irresponsibility it
was systematic, sanctioned widely and with one
FOHDUDLPLQPLQGWKHFRQWLQXDWLRQDQGSURWHFWLRQ
of economic growth.
The failure of this strategy is disastrous in all sorts
RIZD\V1RWOHDVWIRUWKHLPSDFWVWKDWLWLVKDYLQJ
across the world, in particular in poorer communities.
But the idea that growth can deliver us from the
crisis is also deeply problematic. Responses which
aim to restore the status quo, even if they succeed
in the short term, simply return us to a condition of
ßQDQFLDODQGHFRORJLFDOXQVXVWDLQDELOLW\
5HGHßQLQJ3URVSHULW\
$ PRUH DSSURSULDWH UHVSRQVH LV WR TXHVWLRQ WKH
underlying vision of a prosperity built on continual
JURZWK $QG WR VHDUFK IRU DOWHUQDWLYH YLVLRQV t LQ
ZKLFKKXPDQVFDQVWLOOàRXULVKDQG\HWUHGXFHWKHLU
material impact on the environment. In fact, as
&KDSWHUPDNHVFOHDUWKHYROXPLQRXVOLWHUDWXUHRQ
human wellbeing is replete with insights here.
Prosperity has undeniable material dimensions.
It’s perverse to talk about things going well where
freedoms, but as a range of ‘bounded capabilities’
WROLYHZHOOtZLWKLQFHUWDLQFOHDUO\GHßQHGOLPLWV
$IDLUDQGODVWLQJSURVSHULW\FDQQRWEHLVRODWHG
from these material conditions. Capabilities are
bounded on the one hand by the scale of the global
SRSXODWLRQ DQG RQ WKH RWKHU E\ WKH ßQLWH HFRORJ\
of the planet. To ignore these natural bounds to
àRXULVKLQJLVWRFRQGHPQRXUGHVFHQGHQWVtDQGRXU
fellow creatures – to an impoverished planet.
Conversely, the possibility that humans can
àRXULVK DQG DW WKH VDPH WLPH FRQVXPH OHVV LV DQ
intriguing one. It would be foolish to think that it
is easy to achieve. But it should not be given up
lightly. It offers the best prospect we have for a
lasting prosperity.
The Dilemma of Growth
Having this vision to hand doesn’t ensure that
prosperity without growth is possible. Though
formally distinct from rising prosperity, there
remains the possibility that continued economic
growth is a necessary condition for a lasting
SURVSHULW\$QGWKDWZLWKRXWJURZWKRXUDELOLW\WR
àRXULVKGLPLQLVKHVVXEVWDQWLDOO\
&KDSWHUH[SORUHVWKUHHUHODWHGSURSRVLWLRQVLQ
GHIHQFHRIHFRQRPLFJURZWK7KHßUVWLVWKDWPDWHULDO
there is inadequate food and shelter (as is the case
for billions in the developing world). But it is also
plain to see that the simple equation of quantity with
quality, of more with better, is false in general.
When you’ve had no food for months and the
harvest has failed again, any food at all is a blessing.
:KHQ WKH $PHULFDQVW\OH IULGJH IUHH]HU LV DOUHDG\
stuffed with overwhelming choice, even a little
extra might be considered a burden, particularly if
you’re tempted to eat it.
$QHYHQVWURQJHUßQGLQJLVWKDWWKHUHTXLUHPHQWV
of prosperity go way beyond material sustenance.
Prosperity has vital social and psychological
dimensions. To do well is in part about the ability
to give and receive love, to enjoy the respect of
your peers, to contribute useful work, and to have
RSXOHQFH LV DIWHU DOO QHFHVVDU\ IRU àRXULVKLQJ
The second is that economic growth is closely
correlated with certain basic ‘entitlements’ – for
health or education, perhaps – that are essential to
prosperity. The third is that growth is functional in
maintaining economic and social stability.
There is evidence in support of each of these
SURSRVLWLRQV 0DWHULDO SRVVHVVLRQV GR SOD\ DQ
important symbolic role in our lives, allowing us
to participate in the life of society. There is some
statistical correlation between economic growth and
NH\KXPDQGHYHORSPHQWLQGLFDWRUV$QGHFRQRPLF
resilience – the ability to protect jobs and livelihoods
and avoid collapse in the face of external shocks –
really does matter. Basic capabilities are threatened
when economies collapse.
a sense of belonging and trust in the community.
In short, an important component of prosperity is
the ability to participate meaningfully in the life
of society.
This view of prosperity has much in common
ZLWK $PDUW\D 6HQpV YLVLRQ RI GHYHORSPHQW DV
oFDSDELOLWLHVIRUàRXULVKLQJp%XWWKDWYLVLRQQHHGVWR
EHLQWHUSUHWHGFDUHIXOO\QRWDVDVHWRIGLVHPERGLHG
Sustainable Development Commission
*URZWK KDV EHHQ XQWLO QRZ WKH GHIDXOW
mechanism for preventing collapse. In particular,
market economies have placed a high emphasis
on labour productivity. Continuous improvements in
technology mean that more output can be produced
for any given input of labour. But crucially this also
means that fewer people are needed to produce the
same goods from one year to the next.
Prosperity without Growth? 7
 $VORQJDVWKHHFRQRP\H[SDQGVIDVWHQRXJKWR
offset labour productivity there isn’t a problem. But
if the economy doesn’t grow, there is a downward
pressure on employment. People lose their jobs.
With less money in the economy, output falls, public
spending is curtailed and the ability to service
SXEOLF GHEW LV GLPLQLVKHG $ VSLUDO RI UHFHVVLRQ
ORRPV*URZWKLVQHFHVVDU\ZLWKLQWKLVV\VWHPMXVW
to prevent collapse.
This evidence leads to an uncomfortable and
GHHSVHDWHGGLOHPPDJURZWKPD\EHXQVXVWDLQDEOH
EXWoGHJURZWKpDSSHDUVWREHXQVWDEOH$WßUVWWKLV
looks like an impossibility theorem for a lasting
prosperity. But ignoring the implications won’t make
them go away. The failure to take the dilemma of
growth seriously may be the single biggest threat to
sustainability that we face.
The Myth of Decoupling
The conventional response to the dilemma of growth
LVWRFDOOIRUoGHFRXSOLQJpFRQWLQXHGHFRQRPLFJURZWK
with continually declining material throughput.
KDYHLQFUHDVHGE\VLQFHRQO\WKH.\RWR
base year).
There are rising global trends in a number of other
resources – a range of different metals and several
QRQPHWDOOLF PLQHUDOV IRU H[DPSOH :RUU\LQJO\
in some cases, even relative decoupling isn’t
happening. Resource productivity in the use of some
structural materials (iron ore, bauxite, cement) has
EHHQGHFOLQLQJJOREDOO\VLQFHDVWKHHPHUJLQJ
economies build up physical infrastructures, leading
to accelerating resource throughput.
The scale of improvement required is daunting.
In a world of nine billion people, all aspiring to a
OHYHORILQFRPHFRPPHQVXUDWHZLWKJURZWKRQ
the average EU income today, carbon intensities
(for example) would have to fall on average by
RYHUSHU\HDUWRVWDELOLVHWKHFOLPDWHWLPHV
IDVWHU WKDQ LW KDV GRQH VLQFH  %\  WKH
global carbon intensity would need to be only six
JUDPVSHUGROODURIRXWSXWDOPRVWWLPHVORZHU
than it is today.
Substantial economic investment will be needed
to achieve anything close to these improvements.
Lord Stern has argued that stabilising atmospheric
6LQFH HIßFLHQF\ LV RQH RI WKH WKLQJV WKDW PRGHUQ
capitalist economies are supposed to be good at,
decoupling has a familiar logic and a clear appeal as
a solution to the dilemma of growth.
$V&KDSWHUSRLQWVRXWLWpVYLWDOWRGLVWLQJXLVK
between ‘relative’ and ‘absolute’ decoupling.
Relative decoupling refers to a situation where
UHVRXUFHLPSDFWVGHFOLQHUHODWLYHWRWKH*'3,PSDFWV
may still rise, but they do so more slowly than the
*'37KHVLWXDWLRQLQZKLFKUHVRXUFHLPSDFWVGHFOLQH
in absolute terms is called ‘absolute decoupling’.
1HHGOHVV WR VD\ WKLV ODWWHU VLWXDWLRQ LV HVVHQWLDO LI
economic activity is to remain within ecological
limits.
Evidence for declining resource intensities
(relative decoupling) is relatively easy to identify.
The energy required to produce a unit of economic
output declined by a third in the last thirty years, for
LQVWDQFH *OREDO FDUERQ LQWHQVLW\ IHOO IURP DURXQG
one kilo per dollar of economic activity to just under
JUDPVSHUGROODU
Evidence for overall reductions in resource
throughput (absolute decoupling) is much harder
FDUERQDWSDUWVSHUPLOOLRQSSPZRXOGPHDQ
LQYHVWLQJRI*'3HDFK\HDULQFDUERQHPLVVLRQ
UHGXFWLRQV$FKLHYLQJSSPVWDELOLVDWLRQZRXOG
require even higher levels of investment. Factor
LQ WKH ZLGHU FDSLWDO QHHGV IRU UHVRXUFH HIßFLHQF\
material and process substitution and ecological
protection and the sheer scale of investment
EHFRPHVDQLVVXH7KHPDFURHFRQRPLFLPSOLFDWLRQV
RIWKLVDUHDGGUHVVHGLQ&KDSWHU
0RUHWRWKHSRLQWWKHUHLVOLWWOHDWWHPSWLQH[LVWLQJ
scenarios to achieve an equitable distribution of
incomes across nations. Unless growth in the richer
nations is curtailed, the ecological implications of a
truly shared prosperity become even more daunting
to contemplate.
The truth is that there is as yet no credible,
socially just, ecologically sustainable scenario of
continually growing incomes for a world of nine
billion people.
In this context, simplistic assumptions that
FDSLWDOLVPpV SURSHQVLW\ IRU HIßFLHQF\ ZLOO DOORZ XV
to stabilise the climate and protect against resource
scarcity are nothing short of delusional. Those who
WRßQG7KHLPSURYHPHQWVLQHQHUJ\DQGFDUERQ promote decoupling as an escape route from the
intensity noted above were offset by increases dilemma of growth need to take a closer look at
in the scale of economic activity over the same the historical evidence – and at the basic arithmetic
SHULRG *OREDO FDUERQ HPLVVLRQV IURP HQHUJ\ XVH of growth.

1
De-growth (décroissance in the French) is an emerging term for (planned) reductions in economic output.

8 Prosperity without Growth? Sustainable Development Commission

The ‘Iron Cage’ of Consumerism
In the face of the evidence, it is fanciful to suppose
that ‘deep’ resource and emission cuts can be
achieved without confronting the nature and
structure of market economies. Chapter 6 exposes
two interrelated features of modern economic
OLIH WKDW WRJHWKHU GULYH WKH JURZWK G\QDPLF WKH
production and consumption of novelty.
7KH SURßW PRWLYH VWLPXODWHV D FRQWLQXDO VHDUFK
by producers for newer, better or cheaper products
and services. This process of ‘creative destruction’,
according to the economist Joseph Schumpeter, is
what drives economic growth forwards.
)RUWKHLQGLYLGXDOßUPWKHDELOLW\WRDGDSWDQG
to innovate – to design, produce and market not just
survival. The ‘iron cage of consumerism’ is a system
in which no one is free.
It’s an anxious, and ultimately a pathological
system. But at one level it works. The system
remains economically viable as long as liquidity is
preserved and consumption rises. It collapses when
either of these stalls.
Keynesianism and the Green New Deal
Policy responses to the economic crisis are more or
OHVVXQDQLPRXVWKDWUHFRYHU\PHDQVUHLQYLJRUDWLQJ
FRQVXPHU VSHQGLQJ VR DV WR NLFNVWDUW HFRQRPLF
JURZWK'LIIHUHQFHVRIRSLQLRQDUHPDLQO\FRQßQHG
to how this should be achieved. The predominant
cheaper products but newer and more exciting ones
– is vital. Firms who fail in this process risk their own
survival.
But the continual production of novelty would be
RIOLWWOHYDOXHWRßUPVLIWKHUHZHUHQRPDUNHWIRUWKH
consumption of novelty in households. Recognising
the existence, and understanding the nature, of this
demand is essential.
It is intimately linked to the symbolic role that
material goods play in our lives. The ‘language of
goods’ allows us to communicate with each other
– most obviously about social status, but also about
LGHQWLW\VRFLDODIßOLDWLRQDQGHYHQtWKURXJKJLYLQJ
and receiving gifts for example – about our feelings
for each other.
1RYHOW\ SOD\V DQ DEVROXWHO\ FHQWUDO UROH KHUH
for a variety of reasons. In particular, novelty has
always carried important information about status.
But it also allows us to explore our aspirations for
ourselves and our family, and our dreams of the
good life.
Perhaps the most telling point of all is the
DOPRVWSHUIHFWßWEHWZHHQWKHFRQWLQXDOSURGXFWLRQ
RIQRYHOW\E\ßUPVDQGWKHFRQWLQXRXVFRQVXPSWLRQ
of novelty in households. The restless desire of the
consumer is the perfect complement for the restless
innovation of the entrepreneur. Taken together
WKHVH WZR VHOIUHLQIRUFLQJ SURFHVVHV DUH H[DFWO\
what is needed to drive growth forwards.
'HVSLWH WKLV ßW RU SHUKDSV EHFDXVH RI LW WKH
relentless pursuit of novelty creates an anxiety that
can undermine social wellbeing. Individuals are at
the mercy of social comparison. Firms must innovate
or die. Institutions are skewed towards the pursuit
of a materialistic consumerism. The economy itself
is dependent on consumption growth for its very
Sustainable Development Commission
.H\QHVLDQUHVSRQVHLVWRXVHDPL[WXUHRISXEOLF
spending and tax cuts to stimulate consumer
demand.
Chapter 7 summarises some of the more
interesting variations on this theme. It highlights
in particular the emerging international consensus
around a very simple idea. Economic recovery
demands investment. Targeting that investment
FDUHIXOO\ WRZDUGV HQHUJ\ VHFXULW\ ORZFDUERQ
infrastructures and ecological protection offers
PXOWLSOHEHQHßWV7KHVHEHQHßWVLQFOXGH
% freeing up resources for household spending
and productive investment by reducing
energy and material costs
% reducing our reliance on imports and our
exposure to the fragile geopolitics of
energy supply
% SURYLGLQJDPXFKQHHGHGERRVWWR
employment in the expanding ‘environmental
industries’ sector
% making progress towards demanding global
carbon reduction targets
% protecting valuable ecological assets
and improving the quality of our living
environment for generations to come.
In short, a ‘green stimulus’ is an eminently
sensible response to the economic crisis. It offers
jobs and economic recovery in the short term,
energy security and technological innovation in
the medium term, and a sustainable future for our
children in the long term.
1RQHWKHOHVV WKH GHIDXOW DVVXPSWLRQ RI HYHQ
WKH oJUHHQHVWp .H\QHVLDQ VWLPXOXV LV WR UHWXUQ WKH
economy to a condition of continuing consumption
growth. Since this condition is unsustainable, it is
Prosperity without Growth? 9
GLIßFXOWWRHVFDSHWKHFRQFOXVLRQWKDWLQWKHORQJHU
WHUP VRPHWKLQJ PRUH LV QHHGHG $ GLIIHUHQW NLQG
RI PDFURHFRQRPLF VWUXFWXUH LV HVVHQWLDO IRU DQ
HFRORJLFDOO\FRQVWUDLQHGZRUOG
Macroeconomics for Sustainability
There is something odd about the modern refusal to
countenance anything but growth at all costs. Early
HFRQRPLVWV VXFK DV -RKQ 6WXDUW 0LOO DQG LQGHHG
protecting both people’s jobs and their capabilities
IRU àRXULVKLQJ %XW WKLV FRQGLWLRQ ZLOO QHHG WR
be supplemented by conditions that ensure
distributional equity, establish sustainable levels of
resource throughput and emissions, and provide for
the protection of critical natural capital.
In operational terms, there will be important
differences in the way that the conventional
YDULDEOHV SOD\ RXW LQ WKLV QHZ PDFURHFRQRP\
The balance between consumption and investment,
the split between the public and the private sector
.H\QHV KLPVHOI IRUHVDZ D WLPH LQ ZKLFK JURZWK
would have to stop.
+HUPDQ 'DO\pV SLRQHHULQJ ZRUN GHßQHG WKH
HFRORJLFDOFRQGLWLRQVRIDVWHDG\VWDWHHFRQRP\LQ
terms of a constant stock of physical capital, capable
of being maintained by a low rate of material
throughput that lies within the regenerative and
assimilative capacities of the ecosystem.
spending, the nature of productivity improvements,
WKHFRQGLWLRQVRISURßWDELOLW\DOORIWKHVHZLOOKDYH
WREHUHQHJRWLDWHG
The role of investment is particularly crucial.
Sustainability will need enhanced investment in
public infrastructures, sustainable technologies
and ecological maintenance and protection.
These investments will operate differently from
:KDWZHVWLOOPLVVIURPWKLVLVDYLDEOHPDFUR
economic model in which these conditions can be
achieved. There is no clear model for achieving
HFRQRPLFVWDELOLW\ZLWKRXWFRQVXPSWLRQJURZWK1RU
do any of the existing models account fully for the
GHSHQGHQF\ RI WKH PDFURHFRQRP\ RQ HFRORJLFDO
variables such as resources and emissions. In short
WKHUHLVQRPDFURHFRQRPLFVIRUVXVWDLQDELOLW\DQG
there is an urgent need for one.
&KDSWHU  H[SORUHV WKH GLPHQVLRQV RI WKLV
call in more detail. It presents results from two
VSHFLßF DWWHPSWV WR GHYHORS D PDFURHFRQRPLFV
of sustainability. One of these suggests that it is
possible, under certain assumptions, to stabilise
economic output, even within a fairly conventional
PDFURHFRQRP\ $ FUXFLDO UROH LV SOD\HG E\ ZRUN
time policies in this model, to prevent rising
unemployment.
7KH VHFRQG PRGHO DGGUHVVHV WKH PDFUR
economic implications of a shift away from fossil
fuels. It shows that there may only be a narrow
‘sustainability window’ through which the economy
can pass if it is to make this transition successfully.
But crucially, this window is widened if more of
the national income is allocated to savings and
investment.
7KHVH H[HUFLVHV UHYHDO WKDW D QHZ PDFUR
economics for sustainability is not only essential,
but possible. The starting point must be to identify
FOHDUO\ WKH FRQGLWLRQV WKDW GHßQH D VXVWDLQDEOH
economy.
These conditions will still include a strong
requirement for economic stability as the basis for
10 Prosperity without Growth?
FRQYHQWLRQDOFDSLWDOVSHQGLQJ$SSHQGL[DQGZLOO
have to be judged and managed accordingly.
$ERYH DOO D QHZ PDFURHFRQRPLFV IRU
sustainability must abandon the presumption of
growth in material consumption as the basis for
economic stability. It will have to be ecologically
and socially literate, ending the folly of separating
economy from society and environment.
Flourishing – within Limits
Fixing the economy is only part of the problem.
$GGUHVVLQJ WKH VRFLDO ORJLF RI FRQVXPHULVP LV DOVR
vital. This task is far from simple – mainly because
of the way in which material goods are so deeply
implicated in the fabric of our lives.
%XWFKDQJHLVHVVHQWLDO$QGVRPHPDQGDWHIRU
WKDW FKDQJH DOUHDG\ H[LVWV $ QDVFHQW GLVDIIHFWLRQ
with consumerism and rising concern over the
‘social recession’ have prompted a number of
initiatives aimed at improving wellbeing and
pursuing an ‘alternative hedonism’ – sources of
identity, creativity and meaning that lie outside the
realm of the market.
$JDLQVW WKH VXUJH RI FRQVXPHULVP WKHUH DUH
already those who have resisted the exhortation to
‘go out shopping’, preferring instead to devote their
time to less materialistic pursuits, to their family, or
to the care of others.
Small scale ‘intentional’ communities (like the
Findhorn community in Scotland or Plum Village in
France) are exploring the art of the possible. Larger
Sustainable Development Commission
social movements (such as the ‘transition town’
movement) are mobilising people’s desire to live
more sustainably. These initiatives don’t appeal
to everyone. But they do provide an invaluable
learning ground, giving us clues about the potential
for more mainstream social change.
&KDSWHUGLVFXVVHVWKHLUVWUHQJWKVDQGOLPLWDWLRQV
It explores why people may turn out both to be
happier and to live more sustainably when they
favour intrinsic goals that embed them in family
and community rather than extrinsic ones which
tie them into display and social status. Flourishing
within limits is a real possibility, according to this
evidence.
On the other hand, those at the forefront of social
FKDQJHDUHRIWHQKDXQWHGE\WKHFRQàLFWRIWU\LQJWR
live, quite literally, in opposition to the structures
and values that dominate society. These structures
represent a culture of consumption that sends all
the wrong signals, penalising ‘good’ environmental
choices and making it all but impossible, even for
KLJKO\PRWLYDWHGSHRSOHWROLYHVXVWDLQDEO\ZLWKRXW
SHUVRQDOVDFULßFH
In this context, simplistic exhortations for people
to resist consumerism are destined to failure.
Urging people to insulate their homes, turn down
the thermostat, put on a jumper, drive a little less,
walk a little more, holiday at home, buy locally
produced food (and so on) will either go unheard
or be rejected as manipulation for as long as all the
messages about high street consumption point in
the other direction.
For this reason, structural change must lie at the
heart of any strategy to address the social logic of
FRQVXPHULVP$QGLWPXVWFRQVLVWLQWZRPDLQDYHQXHV
7KHßUVWLVWRGLVPDQWOHWKHSHUYHUVHLQFHQWLYHVIRU
unproductive status competition. The second must be
to establish new structures that provide capabilities
IRUSHRSOHWRàRXULVKtDQGLQSDUWLFXODUWRSDUWLFLSDWH
meaningfully and creatively in the life of society – in
less materialistic ways.
The advantages in terms of prosperity are likely
WR EH VXEVWDQWLDO $ OHVV PDWHULDOLVWLF VRFLHW\ ZLOO
HQKDQFH OLIH VDWLVIDFWLRQ $ PRUH HTXDO VRFLHW\
ZLOO ORZHU WKH LPSRUWDQFH RI VWDWXV JRRGV $ OHVV
JURZWKGULYHQ HFRQRP\ ZLOO LPSURYH SHRSOHpV
ZRUNOLIH EDODQFH (QKDQFHG LQYHVWPHQW LQ
public goods will provide lasting returns to the
nation’s prosperity.
Sustainable Development Commission
Governance for Prosperity
$FKLHYLQJWKHVHJRDOVLQHYLWDEO\UDLVHVWKHTXHVWLRQ
of governance – in the broadest sense of the word.
How is a shared prosperity to be achieved in a
SOXUDOLVWLF VRFLHW\" +RZ DUH WKH LQWHUHVWV RI WKH
individual to be balanced against the common
JRRG":KDWDUHWKHPHFKDQLVPVIRUDFKLHYLQJWKLV
EDODQFH"
Particular questions arise about the role of
JRYHUQPHQW LWVHOI &KDSWHU  LGHQWLßHV DQ DOPRVW
XQGLVSXWHGUROHIRUWKHVWDWHLQPDLQWDLQLQJPDFUR
economic stability. For better or worse, government
DOVRoFRFUHDWHVpWKHFXOWXUHRIFRQVXPSWLRQVKDSLQJ
WKH VWUXFWXUHV DQG VLJQDOV WKDW LQàXHQFH SHRSOHpV
EHKDYLRXU$WWKHVDPHWLPHRIFRXUVHJRYHUQPHQW
has an essential role to play in protecting the
‘commitment devices’ that prevent myopic choice
DQGVXSSRUWORQJWHUPVRFLDOJRDOV
History suggests a cultural drift within government
towards supporting and encouraging a materialistic
and individualistic consumerism. This drift is not
entirely uniform across all countries. For example,
different ‘varieties of capitalism’ place more or less
HPSKDVLVRQGHUHJXODWLRQDQGFRPSHWLWLRQ%XWDOO
varieties have a structural requirement for growth,
and rely directly or indirectly (eg in export markets)
on consumerism to achieve this.
*RYHUQPHQWLWVHOILVFRQàLFWHGKHUH2QWKHRQH
hand, it has a role in ‘securing the future’ – protecting
ORQJWHUPVRFLDODQGHFRORJLFDOJRRGVRQWKHRWKHU
LW KROGV D NH\ UHVSRQVLELOLW\ IRU PDFURHFRQRPLF
VWDELOLW\ )RU DV ORQJ DV PDFURHFRQRPLF VWDELOLW\
depends on economic growth, government will
have an incentive to support social structures that
undermine commitment and reinforce materialistic,
QRYHOW\VHHNLQJ LQGLYLGXDOLVP 3DUWLFXODUO\ ZKHUH
that’s needed to boost high street sales.
&RQYHUVHO\ IUHHLQJ WKH PDFURHFRQRP\ IURP D
structural requirement for growth will simultaneously
free government to play its proper role in delivering
VRFLDODQGHFRORJLFDOJRDOVDQGSURWHFWLQJORQJWHUP
interests.
The narrow pursuit of growth represents a
horrible distortion of the common good and of
underlying human values. It also undermines the
OHJLWLPDWHUROHRIJRYHUQPHQWLWVHOI$WWKHHQGRI
the day, the state is society’s commitment device,
par excellence, and the principal agent in protecting
RXUVKDUHGSURVSHULW\$QHZYLVLRQRIJRYHUQDQFH
that embraces this role is urgently needed.
Prosperity without Growth? 11
The Transition to a Sustainable Economy
7KH SROLF\ GHPDQGV RI WKLV DQDO\VLV DUH VLJQLßFDQW
&KDSWHUSUHVHQWVDVHULHVRIVWHSVWKDWJRYHUQPHQWV
could take now to effect the transition to a sustainable
HFRQRP\ %R[  VXPPDULVHV WKHVH VWHSV 7KH\ IDOO
LQWRWKUHHPDLQFDWHJRULHV
% EXLOGLQJDVXVWDLQDEOHPDFURHFRQRP\
% SURWHFWLQJFDSDELOLWLHVIRUàRXULVKLQJ
% respecting ecological limits.
7KH VSHFLßF SURSRVDOV àRZ GLUHFWO\ IURP WKH
analysis in this report. But many of them sit within
longer and deeper debates about sustainability,
ZHOOEHLQJDQGHFRQRPLFJURZWK$QGDWOHDVWVRPH
of them connect closely with existing concerns of
government – for example over resource scarcity,
climate change targets, ecological taxation and
social wellbeing.
$ SDUW RI WKH DLP RI WKLV UHSRUW LV WR SURYLGH D
coherent foundation for these policies and help
strengthen the hand of government in taking them
forward. For at the moment, in spite of its best
12 Prosperity without Growth?
efforts, progress towards sustainability remains
SDLQIXOO\ VORZ $QG LW WHQGV WR VWDOO HQGOHVVO\ RQ
WKHRYHUDUFKLQJFRPPLWPHQWWRHFRQRPLFJURZWK
$VWHSFKDQJHLQSROLWLFDOZLOOtDQGDUHQHZHGYLVLRQ
of governance – is essential.
But there is now a unique opportunity for
government – by pursuing these steps – to
demonstrate economic leadership and at the
same time to champion international action on
sustainability. This process must start by developing
ßQDQFLDODQGHFRORJLFDOSUXGHQFHDWKRPH,WPXVW
also begin to redress the perverse incentives and
damaging social logic that lock us into unproductive
status competition.
$ERYH DOO WKHUH LV DQ XUJHQW QHHG WR GHYHORS
D UHVLOLHQW DQG VXVWDLQDEOH PDFURHFRQRP\ WKDW LV
no longer predicated on relentless consumption
JURZWK 7KH FOHDUHVW PHVVDJH IURP WKH ßQDQFLDO
FULVLVRILVWKDWRXUFXUUHQWPRGHORIHFRQRPLF
VXFFHVVLVIXQGDPHQWDOO\àDZHG)RUWKHDGYDQFHG
economies of the Western world, prosperity without
JURZWKLVQRORQJHUDXWRSLDQGUHDP,WLVDßQDQFLDO
and ecological necessity.
Sustainable Development Commission
 Box 1: 6WHSV7RD6XVWDLQDEOH(FRQRP\

Building a Sustainable Macro-Economy

'HEWGULYHQPDWHULDOLVWLFFRQVXPSWLRQLVGHHSO\XQVDWLVIDFWRU\DVWKHEDVLVIRURXUPDFURHFRQRP\7KHWLPHLV
QRZULSHWRGHYHORSDQHZPDFURHFRQRPLFVIRUVXVWDLQDELOLW\WKDWGRHVQRWUHO\IRULWVVWDELOLW\RQUHOHQWOHVV
JURZWKDQGH[SDQGLQJPDWHULDOWKURXJKSXW)RXUVSHFLßFSROLF\DUHDVDUHLGHQWLßHGWRDFKLHYHWKLV

 'HYHORSLQJPDFURHFRQRPLFFDSDELOLW\
 ,QYHVWLQJLQSXEOLFDVVHWVDQGLQIUDVWUXFWXUHV
 ,QFUHDVLQJßQDQFLDODQGßVFDOSUXGHQFH
 5HIRUPLQJPDFURHFRQRPLFDFFRXQWLQJ

Protecting Capabilities for Flourishing

The social logic that locks people into materialistic consumerism is extremely powerful, but detrimental ecologically
DQGSV\FKRORJLFDOO\$ODVWLQJSURVSHULW\FDQRQO\EHDFKLHYHGE\IUHHLQJSHRSOHIURPWKLVGDPDJLQJG\QDPLFDQG
SURYLGLQJFUHDWLYHRSSRUWXQLWLHVIRUSHRSOHWRàRXULVKtZLWKLQWKHHFRORJLFDOOLPLWVRIWKHSODQHW)LYHSROLF\DUHDV
address this challenge.

 6KDULQJWKHDYDLODEOHZRUNDQGLPSURYLQJWKHZRUNOLIHEDODQFH
6. Tackling systemic inequality
 0HDVXULQJFDSDELOLWLHVDQGàRXULVKLQJ
 6WUHQJWKHQLQJKXPDQDQGVRFLDOFDSLWDO
 5HYHUVLQJWKHFXOWXUHRIFRQVXPHULVP

Respecting Ecological Limits

7KHPDWHULDOSURàLJDF\RIFRQVXPHUVRFLHW\LVGHSOHWLQJQDWXUDOUHVRXUFHVDQGSODFLQJXQVXVWDLQDEOHEXUGHQVRQ
the planet’s ecosystems. There is an urgent need to establish clear resource and environmental limits on economic
activity and develop policies to achieve them. Three policy suggestions contribute to that task.

,PSRVLQJFOHDUO\GHßQHGUHVRXUFHHPLVVLRQVFDSV
,PSOHPHQWLQJßVFDOUHIRUPIRUVXVWDLQDELOLW\
3URPRWLQJWHFKQRORJ\WUDQVIHUDQGLQWHUQDWLRQDOHFRV\VWHPSURWHFWLRQ

For further details see pages 103-107

Sustainable Development Commission Prosperity without Growth? 13

 1

Introduction
“I think all of us here today would acknowledge
that we’ve lost that sense of shared prosperity.”

Barack Obama
March 20081
Prosperity is about things going well for us – in accordance with (pro- in the Latin) our
hopes and expectations (speres). Wanting things to go well is a common human concern.
It’s understood that this sense of things going well includes some notion of continuity.
:HDUHQRWLQFOLQHGWRWKLQNWKDWOLIHLVJRLQJZHOOLIZHFRQßGHQWO\H[SHFWWKLQJVWRIDOODSDUW
tomorrow. There is a natural tendency to be at least partly concerned about the future.

There is also a sense in which individual prosperity
is curtailed in the presence of social calamity.
That things are going well for us personally is of
little consolation if our family, our friends and our
community are in dire straits. In both these senses
– of caring about the future and of caring about
others – prosperity has something in common with
the concept of sustainability. The broad aim of this
report is to explore that relationship – between
prosperity and sustainability – in more detail.
$WWKHKHDUWRIWKLVH[SORUDWLRQLVDVLPSOHTXHVWLRQ
ZKDWFDQSURVSHULW\SRVVLEO\PHDQLQDßQLWHZRUOG
with a rising population that is expected to exceed
QLQHELOOLRQSHRSOHZLWKLQGHFDGHV"
the depletion of natural resources and the degradation
of the environment, impoverishing both present and
future generations. Climate change, depletion of oil
UHVRXUFHV ZDWHU VFDUFLW\ WKH FROODSVH RI ßVK VWRFNV
and the chronic loss of biodiversity are a few of these
material concerns.
Particular urgency pertains to the twin challenges
of climate change and ‘peak oil’.i,QWKHßUVWFDVH
we can probably keep the economy going for a
while even as we head towards the cliff. But as Sir
1LFKRODV6WHUQKDVDUJXHGFRVWVZLOOEHSXQLVKLQJO\
high when the crunch comes. Early investment in
the transition to a low carbon society is vital to
avoid economic collapse later on.

One response – perhaps the most familiar one
– is to cast prosperity in economic terms and to
recommend a continual rise in national (and global)
economic output, with a corresponding increase in
people’s incomes. This response has an appealing
ORJLFIRUWKHZRUOGpVSRRUHVWQDWLRQVZKHUHRI
WKHSRSXODWLRQHDUQMXVWRIWKHZRUOGpVLQFRPH
$PHDQLQJIXODSSURDFKWRSURVSHULW\PXVWFHUWDLQO\
address the plight of the one billion people across
WKHZRUOGZKRDUHOLYLQJRQOHVVWKDQDGD\tKDOI
the price of a small cappuccino in Starbucks.
But prosperity is not synonymous with income or
wealth. Rising prosperity is not the same thing as
economic growth. Until quite recently, prosperity
ZDVQRWFDVWVSHFLßFDOO\LQWHUPVRIPRQH\DWDOOLW
ZDVVLPSO\WKHRSSRVLWHRIDGYHUVLW\RUDIàLFWLRQ
The concept of economic prosperity – and the elision
of rising prosperity with economic growth – is a
modern construction. It is a construction that has
come under considerable criticism.
Economic growth, claim its critics, doesn’t always
increase our prosperity. On the contrary, it can detract
from it in various ways. Perhaps most relevant here,
the material implications of economic growth lead to
In the second case, oil price hikes have already
shown they have the potential to destabilise the
global economy and threaten basic securities. Fears
SHDNHGLQ-XO\ZKHQRLOSULFHVUHDFKHG
a barrel. Though prices fell sharply in the following
months, the threat of peak oil hasn’t gone away.
7KH ,QWHUQDWLRQDO (QHUJ\ $JHQF\ HVWLPDWHV WKDW
WKH oSHDNp FRXOG DUULYH DV HDUO\ DV  2WKHU
commentators believe it could be even sooner.6
Beyond these ecological concerns lie social ones.
7KHUHLVGLVWXUELQJHYLGHQFHWKDWERWKWKHEHQHßWV
and the costs of economic growth are unevenly
distributed. The continuing disparities between
rich and poorer nations are unacceptable from a
humanitarian point of view and generate rising social
WHQVLRQVUHDOKDUGVKLSVLQWKHPRVWGLVDGYDQWDJHG
FRPPXQLWLHVKDYHDVSLOORYHUHIIHFWRQVRFLHW\DV
a whole.7
Finally, the continued pursuit of economic growth
(beyond a certain point at least) does not appear to
advance and may even impede human happiness.
Talk of a growing ‘social recession’ in advanced
economies has accompanied the relative economic
success of the last decade.

i
Peak oil is the term used to describe the point at which global oil output reaches a peak, before entering a terminal decline.

16 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission

These three related arguments – ecological, social
DQGSV\FKRORJLFDOtDUHQRZZHOOUHKHDUVHGLQWKH
literature on sustainability (and on happiness). It is
not the aim of this study to dwell on them in detail.
Rather the intention is to turn the relationship
between rising prosperity and economic growth on
its head. If economic growth and rising prosperity
are not the same thing, and since growth can
damage both people and planet, should we not
perhaps think about doing without growth, at least
LQWKHULFKHUQDWLRQV"
Clearly such a prospect is problematic in the
poorest countries. But the conditions of living in
FRVPRSROLWDQ(XURSHRUWKH86$DUHDIDUFU\IURP
WKHDEMHFWSRYHUW\RIUXUDO$IULFDDQGSDUWVRI6RXWK
$VLDDQG/DWLQ$PHULFD
,QDZRUOGRIßQLWHUHVRXUFHVFRQVWUDLQHGE\VWULFW
environmental limits, still characterised by ‘islands
of prosperity’ within ‘oceans of poverty’, are
HYHULQFUHDVLQJ LQFRPHV IRU WKH DOUHDG\ULFK UHDOO\
a legitimate focus for our continued hopes and
H[SHFWDWLRQV" ,V WKHUH VRPH RWKHU SDWK WRZDUGV
a more sustainable, a more equitable form of
SURVSHULW\"
In short, this report challenges the assumption of
continued economic expansion in rich countries and
DVNV LV LW SRVVLEOH WR DFKLHYH SURVSHULW\ without
JURZWK"
Some would say it’s ironic to be asking such
questions when economic stability is itself
under threat and the world struggles with global
recession. Raising deep, structural questions about
the nature of prosperity in this climate might seem
inopportune if not insensitive. ‘That is not what
SHRSOHDUHLQWHUHVWHGLQZKHQßQDQFLDOPDUNHWVDUH
LQWXUPRLOpDGPLWV*HRUJH6RURVRIKLVRZQDWWHPSW
to dig deeper into the global credit crisis. But there
are several reasons not to postpone this inquiry until
the economy looks brighter.
7KHßUVWLVWKDWWKHFXPXODWLYHLPSDFWVRIHFRQRPLF
growth – climate change, resource depletion, social
recession, for example – are unlikely to go away,
just because growth slows down in the advanced
economies. Some may get better, temporarily. But
some of them may even get worse.
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK"
The second is that the current state of the economy
and the concerns of this report are not unrelated.
2QWKHFRQWUDU\DVZHVHHLQ&KDSWHULWLVLPSRVVLEOH
WR LJQRUH WKH LQàXHQFH RI ßQDQFLDO PDUNHWV DQG
commodity prices in the relationship between
growth and prosperity. This interrelatedness has not
gone unnoticed amongst world leaders. Speaking on
WKHRSHQLQJGD\RIWKH*6XPPLWLQ+RNNDLGR
81 6HFUHWDU\ *HQHUDO %DQ .L0RRQ UHIHUUHG WR WKH
problems of climate change, soaring food prices and
development as ‘deeply interconnected’ crises that
need to be addressed simultaneously.
The economist Peter Victor, one of the contributors to
the SDC’s Redefining Prosperity project, has argued
that our overriding challenge is to build economies
which are ‘slower by design, not by disaster’.
But if the current economic crisis really does indicate
(as some predict) the end of an era of easy growth,
then the concerns of this report are doubly relevant.
Prosperity without growth is a very useful trick to
have up your sleeve when the economy is going
down the pan.
Perhaps most telling of all is the clear window of
opportunity – and overwhelming imperative – that
now exists for change. In the face of economic
collapse, governments have an undisputed duty
to intervene. Public investment is essential.
Restructuring is inevitable. Targeting these
interventions towards sustainability makes obvious
sense.
In short, there is no better time to make progress
towards a more sustainable society. To invest in
renewable technologies that will reduce both carbon
HPLVVLRQVDQGRXUGHSHQGHQFHRQßQLWHUHVRXUFHV
7R UHQHZ RXU ßQDQFLDO DQG VRFLDO LQVWLWXWLRQV DQG
create a fairer world. To invest in the jobs and skills
that these tasks demand. To initiate the transition to
a sustainable economy.
Whatever the state of the economy, the central
question addressed in this report is undiminished.
It has haunted debates on sustainable development
IRUVHYHUDOGHFDGHV$QGLQDYHU\UHDOVHQVHQRZ
may be the best possible time to make some clear
progress in answering it. That at any rate is the
intention of the following pages.
17
18 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
 2

The Age of
Irresponsibility
“This has been an age of global prosperity.
It has also been an era of global turbulence.
And where there has been irresponsibility,
we must now clearly say: the age of
irresponsibility must be ended.”
Gordon Brown
6HSWHPEHU
The conventional formula for achieving prosperity relies on the pursuit of economic growth.
Higher incomes will increase wellbeing and lead to prosperity for all, in this view.
This report challenges that formula. It questions whether economic growth is still
a legitimate goal for rich countries like the UK, in the context of the huge disparities in
LQFRPHDQGZHOOEHLQJWKDWSHUVLVWDFURVVWKHJOREHDQGWKHFRQVWUDLQWVRIOLYLQJZLWKLQßQLWH
HQYLURQPHQWDO OLPLWV ,W H[SORUHV ZKHWKHU WKH EHQHßWV RI FRQWLQXHG HFRQRPLF JURZWK VWLOO
outweigh the costs and scrutinises the assumption that growth is essential for prosperity.
In short, it asks: is it possible to have prosperity without growth?

This question was thrown into sharp relief during LQàDWLRQtIRUWKHßUVWWLPHLQWKLUW\\HDUV2LOSULFHV

the course of writing the report. The banking crisis
RI  OHG WKH ZRUOG WR WKH EULQN RI ßQDQFLDO
disaster and shook the dominant economic model
WR LWV IRXQGDWLRQV ,W UHGHßQHG WKH ERXQGDULHV
between market and state and forced us to confront
RXU LQDELOLW\ WR PDQDJH WKH ßQDQFLDO t OHW DORQH
social or environmental – sustainability of the global
economy.
&RQVXPHU FRQßGHQFH KDV EHHQ VKDWWHUHG
Investment has stalled and unemployment is rising
VKDUSO\$GYDQFHGHFRQRPLHVDQGVRPHGHYHORSLQJ
countries) are faced with the prospect of a deep and
ORQJODVWLQJUHFHVVLRQ3XEOLFVHFWRUßQDQFHVZLOOEH
VWUHWFKHG IRU D GHFDGH RU PRUH 7UXVW LQ ßQDQFLDO
markets will suffer for some considerable time to
FRPH 1RW WR VWDQG EDFN QRZ DQG TXHVWLRQ ZKDW
KDSSHQHGZRXOGEHWRFRPSRXQGIDLOXUHZLWKIDLOXUH
failure of vision with failure of responsibility.
GRXEOHGLQWKH\HDUWR-XO\ZKLOHIRRGSULFHV
URVH E\  VSDUNLQJ FLYLO XQUHVW LQ VRPH SRRUHU
nations.
$OORIWKHVHFDQEHFRXQWHGDVFRQWULEXWRU\IDFWRUV
1RQHRQWKHLURZQRIIHUVDQDGHTXDWHH[SODQDWLRQ
IRU KRZ ßQDQFLDO PDUNHWV PDQDJHG WR GHVWDELOLVH
entire economies. Why loans were offered to people
who couldn’t afford to pay them off. Why regulators
IDLOHGWRFXUELQGLYLGXDOßQDQFLDOSUDFWLFHVWKDWFRXOG
bring down monolithic institutions. Why unsecured
debt had become so dominant a force in the
HFRQRP\ $QG ZK\ *RYHUQPHQWV KDG FRQVLVWHQWO\
turned a blind eye or actively encouraged this ‘age
of irresponsibility’.
Political response to the crisis provides us with some
FOXHV %\ WKH HQG RI 2FWREHU  JRYHUQPHQWV
across the world had committed a staggering $7
WULOOLRQRISXEOLFPRQH\tRYHUWKUHHWLPHVWKH*URVV
In search of villains
The causes of the crisis were complex. The most
prominent villain was taken to be subprime lending
in the US housing market. Some highlighted the
unmanageability of the ‘credit default swaps’ used
to parcel up ‘toxic debts’ and hide them from the
EDODQFHVKHHW2WKHUVSRLQWHGWKHßQJHURIEODPHDW
greedy speculators and unscrupulous investors intent
on making a killing at the expense of vulnerable
institutions.
$ GUDPDWLF ULVH LQ EDVLF FRPPRGLW\ SULFHV GXULQJ
'RPHVWLF 3URGXFW *'3 RI WKH 8. t WR VHFXULWLVH
risky assets, underwrite threatened savings and
recapitalise failing banks. 1R RQH SUHWHQGHG WKDW
WKLVZDVDQ\WKLQJRWKHUWKDQDVKRUWWHUPDQGGHHSO\
UHJUHVVLYHVROXWLRQ$WHPSRUDU\ß[WKDWUHZDUGHG
those responsible for the crisis at the expense of the
taxpayer. It was excused on the grounds that the
alternative was simply unthinkable.
&ROODSVH RI WKH ßQDQFLDO PDUNHWV ZRXOG KDYH
led to a massive and completely unpredictable
global recession. Entire nations would have been
bankrupted. Commerce would have failed en
masse. Livelihoods would have been destroyed.
DQGHDUO\)LJXUHFHUWDLQO\FRQWULEXWHG Homes would have been lost. The humanitarian
WR HFRQRPLF VORZGRZQ E\ VTXHH]LQJ FRPSDQ\ cost of failing to save the banking system would
margins and reducing discretionary spending. have been enormous. Those who resisted the US’s
$W RQH SRLQW LQ PLG DGYDQFHG HFRQRPLHV 7URXEOHG $VVHWV 5HOLHI 3URJUDP 7$53 RQ LWV ßUVW
ZHUH IDFLQJ WKH SURVSHFW RI oVWDJàDWLRQp t D reading through Congress appeared oblivious to
VLPXOWDQHRXV VORZGRZQ LQ JURZWK ZLWK D ULVH LQ WKHVH FRQVHTXHQFHV LQàDPHG DV WKH\ ZHUH ZLWK

20 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission

understandable indignation over the unjustness of HFRQRPLVWV DQG HYHQ ßQDQFLHUV DFFHSW WKH SRLQW
the solution. 7KH VXVSHQVLRQ RI SUDFWLFHV OLNH VKRUWVHOOLQJ
LQFUHDVHG UHJXODWLRQ RI ßQDQFLDO GHULYDWLYHV
But the harsh reality was that politicians had no EHWWHU VFUXWLQ\ RI WKH FRQGLWLRQV RI OHQGLQJ DOO RI
choice but to intervene in the protection of the these became widely accepted as inevitable and
banking sector. In the language of the media, Wall necessary responses to the crisis. There was even
6WUHHWLVWKHOLIHEORRGRI0DLQ6WUHHW7KHKHDOWKRI a grudging acceptance of the need to cap executive
the modern economy hangs on the health of the UHPXQHUDWLRQLQWKHßQDQFLDOVHFWRU
ßQDQFLDOVHFWRU$Q\WKLQJOHVVWKDQWRWDOFRPPLWPHQW
to its survival would have been unthinkable. The $GPLWWHGO\WKLVZDVERUQPRUHRISROLWLFDOQHFHVVLW\
appropriate goal of policy at that point in time was in the face of huge public outcry over the bonus
LQFRQWHVWDEO\ WR VWDELOLVH WKH V\VWHP WR UHDVVXUH culture than through recognition of a point of
savers, to encourage investors, to assist debtors, principle. In fact, huge executive bonuses were still
WRUHVWRUHFRQßGHQFHLQWKHPDUNHW9HU\PXFKDV EHLQJSDLG*ROGPDQ6DFKVSDLGRXWELOOLRQLQ
governments around the world tried to do. HQGRI\HDUERQXVHVLQVSLWHRILWVELOOLRQ
dollar bailout by the US government, justifying
They were only partially successful – halting an these on the basis that they helped to ‘attract and
immediate slide into chaos but failing to avert the motivate’ the best people.
prospect of a deep recession across the world. This
prompted a further round of economic recovery %XWHYHQWKHVHUHVSRQVHVZHUHVHHQDVVKRUWWHUP
SDFNDJHVHDUO\LQZKLFKDLPHGWRoNLFNVWDUWp interventions, designed to facilitate the restoration
consumer spending, protect jobs, and stimulate RI EXVLQHVV DV XVXDO 6KRUWVHOOLQJ ZDV VXVSHQGHG
economic growth again. In Chapter 7 we explore IRU VL[ PRQWKV UDWKHU WKDQ EDQQHG 7KH SDUW
some of these ‘stimulus packages’ in more detail. QDWLRQDOLVDWLRQRIßQDQFLDOLQVWLWXWLRQVZDVMXVWLßHG
on the basis that shares would be sold back to
It was abundantly clear, by the time the World the private sector as soon as reasonably possible.
(FRQRPLF )RUXP PHW LQ 'DYRV LQ )HEUXDU\  The capping of executive remuneration was
WKDWDOLWWOHUHàHFWLRQZDVLQRUGHU3ROLWLFDOOHDGHUV ‘performance related’.

Figure 1 Global Commodity Prices: Jan 2003 – Feb 20094

500

450
Metals
400

350

300
Jan 2003 = 100

Oil
250

200

150

100 Food

50

0
Jan 2003

JUL 2003

Jan 2004

JUL 2004

Jan 2005

Jul 2005

Jan 2006

Jul 2006

Jan 2007

Jul 2007

Jan 2008

Jul 2008

Jan 2009

Figure 1: Global Commodity Prices: Jan 2003 – Feb 2009

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 21
 Extraordinary though some of these interventions LQFUHDVLQJOHYHOVRIGHEW%R[2QHDVSHFWRIWKLV
were, they were largely regarded as temporary was the rise and rise of consumer indebtedness.
PHDVXUHV 1HFHVVDU\ HYLOV LQ WKH UHVWRUDWLRQ RI D Over the course of more than a decade consumer
free market economy. Their declared aim was clear. debt served as a deliberate mechanism for freeing
By pumping equity into the banks and restoring personal spending from wage income and allowing
FRQßGHQFHWROHQGHUVWKHZRUOGpVOHDGHUVKRSHWR consumption to drive the dynamics of growth.
UHLQYLJRUDWHGHPDQGDQGKDOWWKHUHFHVVLRQ
1RWDOOHFRQRPLHVZHUHHTXDOO\VXVFHSWLEOHWRWKLV
Their ultimate goal was to protect the pursuit of dynamic. Indeed it’s a feature of the system of debt
economic growth. Throughout the crisis, this has that for one part of the global economy to be highly
500
EHHQ WKH RQH QRQQHJRWLDEOH WKDW JURZWK PXVW indebted, another part must be saving hard. During
continue
450 at all costs. Renewed growth was the WKHßUVWGHFDGHRIWKHst Century, the savers were
HQGWKDWMXVWLßHGLQWHUYHQWLRQVXQWKRXJKWRIRQO\D largely inMetals
the emerging economies. The savings rate
400 PRQWKV SUHYLRXVO\ 1R SROLWLFLDQ VHULRXVO\
IHZ LQ&KLQDGXULQJZDVDURXQGRIGLVSRVDEOH
questions
350
it. LQFRPHZKLOHLQ,QGLDLWZDVHYHQKLJKHUDW

<HWTXHVWLRQLWZHPXVW$OOHJLDQFHWRJURZWKZDV
300 7KHUHZHUHDOVRFOHDUGLIIHUHQFHVEHWZHHQWKHVR
Jan 2003 = 100

Oil
the single most dominant feature of an economic called ‘liberal’ and ‘coordinated’ market economies’,
250
and political system that led the world to the brink with the former typically showing higher levels of
of 200
disaster. The growth imperative has shaped the consumer indebtedness than the latter.67KH8.DQG
architecture of the modern economy. It motivated the US were particularly vulnerable to the problem.
150IUHHGRPV JUDQWHG WR WKH ßQDQFLDO VHFWRU
WKH
It stood
100
at least partly responsible for the loosening 3HUVRQDOGHEWLQWKH8.PRUHWKDQGRXEOHGLQOHVV
Food
RI UHJXODWLRQV WKH RYHUH[WHQVLRQ RI FUHGLW DQG WKDQ D GHFDGH (YHQ GXULQJ  DV UHFHVVLRQ
the50proliferation of unmanageable (and unstable) ORRPHGLWZDVJURZLQJDWWKHUDWHRI€PHYHU\
ßQDQFLDOGHULYDWLYHV minutes. Though the rate of growth slowed down –
0
DVLWWHQGVWRGRLQDUHFHVVLRQtE\WKHHQGRI
Jan 2003

JUL 2003

Jan 2004

JUL 2004

Jan 2005

Jul 2005

Jan 2006

Jul 2006

Jan 2007

Jul 2007

Jan 2008

Jul 2008

Jan 2009
the cumulative personal debt still stood at almost
The labyrinth of debt € WULOOLRQ KLJKHU WKDQ WKH *'3 IRU WKH VHFRQG
year running.7 Savings, on the other hand, had
In fact, it is generally agreed that the unprecedented SOXPPHWHG 'XULQJ WKH ßUVW TXDUWHU RI  WKH
Figure 1: Global Commodity Prices: Jan 2003 – Feb 2009
FRQVXPSWLRQ JURZWK EHWZHHQ  DQG  KRXVHKROGVDYLQJVUDWLRLQWKH8.IHOOEHORZ]HURIRU
was fuelled by a massive expansion of credit and WKHßUVWWLPHLQIRXUGHFDGHV)LJXUH

Figure 2 UK Consumer Debt and Household Savings 1993–20088

12% 120%
Personal debt

10% 100%
Savings as % of disposable income

Personal debt as % of GDP

8% 80%

6% 60%

4% 40%
Household savings ratio

2% 20%

0% 0%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

-2% -20%

Figure 2: UK Consumer Debt and Household Savings 1993-2008

 Box 2: Debt in Perspective

Lending and borrowing money is (in normal times at least) a fundamental feature of the modern economy (see
Chapter 6). Households, companies and governments all participate both in lending (e.g. through savings and
investments) and in borrowing (e.g. through loans, credit accounts and mortgages). Financial debts (sometimes
FDOOHGOLDELOLWLHVDUHWKHDFFXPXODWHGPRQH\RZHGDWDQ\RQHSRLQWLQWLPHE\DSHUVRQDßUPDJRYHUQPHQWRU
indeed the nation as a whole.
$IXQGDPHQWDOSULQFLSOHRIFDSLWDOLVPLVWKDWWKHVHDFFXPXODWHGOLDELOLWLHVDWWUDFWLQWHUHVWFKDUJHVRYHUWLPH
'HEW ULVHV LQ WZR ZD\V ßUVWO\ E\ ERUURZLQJ PRUH PRQH\ HJ IRU LQFUHDVHG SXEOLF VSHQGLQJ DQG VHFRQGO\
through interest accumulated on the debt. For any given interest rate, a higher level of debt places a greater
demand on people’s income to pay off the interest and stop the debt accumulating.
6RPHRIWKLVUHTXLUHPHQWFRXOGEHPHWIURPUHYHQXHVJHQHUDWHGE\SHRSOHpVRZQßQDQFLDOoDVVHWVpRUVDYLQJV
%\ SDUWLFLSDWLQJ LQ WKH HFRQRP\ ERWK DV VDYHUV DQG DV ERUURZHUV SHRSOH FDQ WU\ DQG EDODQFH WKHLU ßQDQFLDO
OLDELOLWLHV PRQH\ ERUURZHG DJDLQVW WKHLU ßQDQFLDO DVVHWV PRQH\ OHQW 7KH H[WHQW WR ZKLFK LW oPDWWHUVp KRZ
PXFKGHEWZHKROGGHSHQGVLQSDUWRQWKLVEDODQFHEHWZHHQDVVHWVDQGOLDELOLWLHV$QGDVWKHFXUUHQWFULVLVKDV
VKRZQRQWKHßQDQFLDOUHOLDELOLW\RIWKHDVVHWV
7KUHH DVSHFWV RI GHEW KDYH DWWUDFWHG PHGLD DQG SROLF\ DWWHQWLRQ RYHU WKH ODVW GHFDGH SHUVRQDO GHEW WKH
national debt and the gross external debt. Though all are concerned with money owed, these debts are quite
different and have different policy implications. The following paragraphs set out the key elements of each and
their relevance for economic sustainability.

Personal Debt
3HUVRQDORUFRQVXPHUGHEWLVWKHDPRXQWRIPRQH\RZHGE\SULYDWHFLWL]HQV,WLQFOXGHVKRPHORDQVFUHGLWFDUG
GHEWDQGRWKHUIRUPVRIFRQVXPHUERUURZLQJ3HUVRQDOGHEWLQWKH8.LVFXUUHQWO\GRPLQDWHGE\KRPHORDQV
ZKLFKDWWKHHQGRIFRPSULVHGRIWRWDO)RUDVORQJDVWKHYDOXHRIKRPHVFRQWLQXHGWRULVHSHRSOHpV
ßQDQFLDOOLDELOLWLHVKRPHORDQVZHUHRIIVHWE\WKHYDOXHRIWKHLUSK\VLFDODVVHWVKRPHV3UREOHPVDULVHZKHQ
house values collapse. Liabilities are no longer balanced by assets. When this is compounded (as in a recession)
E\IDOOLQJLQFRPHVGHEWtDQGWKHßQDQFLDOYLDELOLW\RIKRXVHKROGVtEHFRPHVKLJKO\XQVWDEOH/LNHPXFKRIWKH
JURZWKHFRQRP\&KDSWHUVDQGßQDQFLDOVWDELOLW\WXUQVRXWWREHGHSHQGHQWLQDQXQVXVWDLQDEOHZD\RQ
growth – in this case growth in the housing market.

National Debt
The national (or public sector) debt is the money that government owes to the private sector. When a government
FRQWLQXDOO\ UXQV D GHßFLW LH VSHQGV PRUH WKDQ LW UHFHLYHV LQ UHYHQXHV WKH QDWLRQDO GHEW ULVHV -XVW DV IRU
households, reducing the debt is only possible when the public sector runs a surplus (i.e. it spends less than it
UHFHLYHV,QFUHDVHGGHEWLVDFRPPRQIHDWXUHRISXEOLFßQDQFHVGXULQJUHFHVVLRQ%XWVHUYLFLQJWKLVGHEWtZLWKRXW
compromising public services – depends heavily on future government revenues increasing. This can happen in
RQO\WKUHHZD\V)LUVWE\DFKLHYLQJWKHGHVLUHGDLPRIJURZWK6HFRQGE\LQFUHDVLQJWKHWD[UDWH$QGWKLUGE\
XVLQJWKHGHEWWRLQYHVWLQSURGXFWLYHDVVHWVZLWKSRVLWLYHUHWXUQVWRWKHSXEOLFSXUVH$FRQWLQXDOO\ULVLQJSXEOLF
debt in a shrinking economy is a recipe for disaster.

External debt
The total debt held outside the country by government, business and households is called the external debt.
The sustainability of this debt depends on a complex mix of factors, including the extent to which it is balanced
by external ‘assets’, the form of both assets and liabilities (including the currency in which they are held) and the
relative strength of domestic currency on the international market. Particular pressure is placed on an economy
ZKHQLWVHFRQRP\LVVKULQNLQJDQGLWVFXUUHQF\LVORVLQJYDOXH,QH[WUHPHFLUFXPVWDQFHVDFRXQWU\PD\ßQGLWVHOI
unable to attract investors willing to support its spending and unable to liquidate its assets to compensate for this.
$WWKLVSRLQWWKHOHYHORIH[WHUQDOGHEWUHODWLYHWRWKH*'3EHFRPHVFULWLFDO&DOOLQJLQGHEWVZRUWKDOPRVWßYHWLPHV
WKHQDWLRQDOLQFRPHDVLQWKH8.ZRXOGEHFDWDVWURSKLF

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 23

People are encouraged into debt by a complex
mix of factors including (Chapter 6) the desire for
social status and the drive to boost high street
sales. But when this strategy becomes unstable –
DV LW GLG GXULQJ  t LW SODFHV ODUJH VHFWLRQV RI
WKHSRSXODWLRQDWULVNRIODVWLQJßQDQFLDOKDUGVKLS
Inevitably, that risk falls mainly on those who are
most vulnerable already – the lower income groups
ZKR SURßWHG OHVV IURP WKH ODVW WZR GHFDGHV RI
growth. Far from delivering prosperity, the culture
of ‘borrow and spend’ ends up detracting from it.
7KH VDPH YXOQHUDELOLW\ FDQ DIàLFW WKH QDWLRQ DV D
whole. There are different kinds of indebtedness at
result of the increased borrowing needed to protect
the banks and fund economic recovery. By the
HQGRIWKHQDWLRQDOGHEWZDVDOUHDG\KLJKHU
WKDQDWDQ\WLPHVLQFHWKHHDUO\VZHOODERYH
WKH 7UHDVXU\pV VHOILPSRVHG FHLOLQJ RI  RI WKH
*'3 DQG ULVLQJ IDVW 7KH 8. *RYHUQPHQWpV RZQ
calculations had public sector borrowing rising
IURPRI*'3LQWRZLWKLQD\HDURU
VR $QG WKH *RYHUQPHQW DFFHSWHG WKDW WKLV ZRXOG
SXVKQDWLRQDOGHEWWRDOPRVWRI*'3E\
&UXFLDOO\WKLVßJXUHH[FOXGHGWKHFRVWVRISXUFKDVLQJ
HTXLW\LQWKHSDUWQDWLRQDOLVHGEDQNV
Public sector debt is not in itself a bad thing. It simply
WKHQDWLRQDOOHYHO%R[2QHRIWKHNH\PHDVXUHV
is the national – or public sector – debt which
measures how much government owes to the
private sector. This can vary widely across nations.
)UDQFH*HUPDQ\&DQDGDDQGWKH86DOOKDYHSXEOLF
VHFWRUGHEWVDERYHRI*'3,WDO\DQG-DSDQKROG
UHàHFWVWKHDPRXQWRIPRQH\WKDWJRYHUQPHQWRZHV
to the private sector. This includes money saved by
LWV RZQ FLWL]HQV $QG WKH LGHD WKDW FLWL]HQV KROG D
ßQDQFLDOLQWHUHVWLQWKHSXEOLFVHFWRUKDVVRPHFOHDU
advantages. It can be thought of as part of the ‘social
FRQWUDFWpEHWZHHQFLWL]HQDQGVWDWH%XWZKHQWKH
SXEOLFVHFWRUGHEWVWKDWDUHKLJKHUWKDQWKHLU*'3 KRXVHKROGVDYLQJVUDWHFROODSVHV)LJXUHDQGWKH
1RUZD\E\FRQWUDVWKROGVQRSXEOLFGHEWDWDOODQG QDWLRQDO GHEW ULVHV )LJXUH  IXUWKHU ERUURZLQJ
RQWKHFRQWUDU\KDVHQRUPRXVßQDQFLDODVVHWV LQFUHDVHVZKDWLVFDOOHGWKHH[WHUQDOGHEW%R[t
the money a country borrows from outside its own
,Q WKH 8. SXEOLF VHFWRU GHEW URVH VKDUSO\ WKURXJK boundaries. This inevitably exposes the nation to
WKH ßQDQFLDO FULVLV )LJXUH  7KLV ZDV LQ SDUW D the volatility of international markets.

Figure 3 The UK Net Public Sector Debt: 1993–200812

60%
Projected on basis
PBR 2008 forecast

50% UK Treasury ceiling

on national debt

40% Includes the cost

of financial sector
% of GDP

interventions

30%

Increase largely due to

higher spending on
20% health and education

10%

0%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Figure 3: The UK Net Public Sector Debt: 1993-2008

24 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission

16
 Some countries may be better placed than others free market perspective but it was considerably
to weather this volatility. External debt varied more progressive than simply pumping in cash or
ZLGHO\ DFURVV QDWLRQV )LJXUH  GXULQJ  JXDUDQWHHV WR HQVXUH OLTXLGLW\ $W OHDVW LW DOORZHG
IURPDVOLWWOHDVRI*'3LQ&KLQDDQG,QGLDIRU IRUWKHSRVVLELOLW\RIDßQDQFLDOUHWXUQWRWKHSXEOLF
60%
H[DPSOHWRRYHURI*'3LQ,UHODQG,QWKH purse. Projected on basis
8.WKHJURVVH[WHUQDOGHEWLQFUHDVHGVHYHQDQGD PBR 2008 forecast
half times in the space of just two decades. By the $W WKH VDPH WLPH ZKDW EHFDPH FOHDU WKURXJK WKH
50% UK Treasury ceiling
HQGRILWZDVHTXLYDOHQWWRDOPRVWßYHWLPHV
on national debt
crisis was the extent to which economic policy over
WKH*'3DQGUDQNHGDVWKHVHFRQGKLJKHVWDEVROXWH WZRGHFDGHVKDGSRVLWLRQHGWKH8.VODSEDQJDFURVV
level of external debt in the world after the US. DQ HPHUJLQJ IDXOW OLQH LQ WKH ßQDQFLDO VHFWRU +LJK
40% levels of consumer debt and the second highest level
Includes the cost
These external liabilities were set off – at least of external debt in the world were of notfinancial
just accidental
sector
% of GDP

in part – by a higher than usual level of external
DVVHWV%XWLQDQXQVWDEOHPDUNHWWKLVSODFHGWKH8.
30%
LQDYXOQHUDEOHßQDQFLDOSRVLWLRQ0RUHWRWKHSRLQW
DVWKH,QWHUQDWLRQDO0RQHWDU\)XQGSRLQWVRXWWKLV
Increase largely due
SRVLWLRQ ZDV GHOLEHUDWHO\ FRXUWHG E\ WKH higher
8. LQspending
LWV
20% health and education
UROHDVDQLQWHUQDWLRQDOFHQWUHRIßQDQFH
7KH DUFKLWHFWXUH RI ßQDQFLDO UHFRYHU\ LQ WKH ZDNH
RIWKHFULVLVtDQGLQSDUWLFXODUWKHUROHRIWKH
10%
SXEOLFVHFWRUDVDQHTXLW\KROGHULQWKHEDQNVtRZHG
PXFK WR WKH 8. 3ULPH 0LQLVWHU *RUGRQ %URZQ ,Q
WKLVUHVSHFWWKH8.*RYHUQPHQWDWWUDFWHGGHVHUYLQJ
0%
SUDLVHIRULWVUHVSRQVHWRWKHFULVLV3DUWQDWLRQDOLVLQJ
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
the banks may have been suboptimal from a
IHDWXUHV RI HFRQRPLF OLIH EXW WKHinterventions
UHVXOW RI VSHFLßF
policies to increase liquidity and boost spending. The
RQH DUHD RI ßVFDO SUXGHQFH LQ WKH 8. t D UHODWLYHO\
ORZtoOHYHO RI SXEOLF VHFWRU GHEW t EHFDPH WKH ßUVW
on
casualty of the collapse.
7KLVLVQRWWRVXJJHVWWKDWWKH8.LVDORQHLQIDFLQJ
the severity of the current crisis. On the contrary,
LQDQLQFUHDVLQJO\JOREDOLVHGZRUOGLWZDVGLIßFXOW
for any country to escape this recession. Even those
HFRQRPLHVtOLNH*HUPDQ\-DSDQDQG&KLQDtZKLFK
retained strong manufacturing sectors, largely
avoided2003consumer
2004 2005 debt and2007
2006 delivered
2008 strong public
2009 2010
sector surpluses – suffered. During the last quarter

Figure 3: The UK Net Public Sector Debt: 1993-2008

Figure 4 Gross External Debt across Nations (2007/8)13

16

Absolute value of external debt ($ trillion)

14
External debt as multiple of GDP

12

10

0
US UK Germany France Ireland Japan Norway China India

Figure 4: Gross External Debt across Nations (2007/8)

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 25
RI*HUPDQ\pVHFRQRP\VDQNIDVWHUWKDQDQ\
RWKHU(XURSHDQQDWLRQFRQWUDFWLQJE\
Ironically, these economies built their stability not on
domestic consumption growth but on consumption
growth abroad. Unable to persuade their own
consumers to spend rather than save, they achieved
growth by exporting to countries like the US and
WKH 8. ZKHUH FRQVXPHUV ZHUH VWLOO SUHSDUHG WR
spend rather than save. When credit collapsed and
consumer spending slowed everywhere, there were
NQRFNRQLPSDFWVIRUHYHU\RQH
6RWKHVHQVHWKDWHFRQRPLFSROLF\FRQVFLRXVO\àLUWHG
ZLWK ßQDQFLDO ULVN JRHV PXFK ZLGHU WKDQ WKH 8.pV
dalliance in the banking sector. In fact, the roots of
the crisis lie at least in part in a concerted effort
to free up credit for economic expansion across the
world.
In The New Paradigm for Financial Markets*HRUJH
Soros traces the emergence of what he calls a
oVXSHUEXEEOHpLQJOREDOßQDQFLDOPDUNHWVWRDVHULHV
of economic policies to increase liquidity as a way
of stimulating demand. Loosening restraints on the
86)HGHUDO5HVHUYHGHUHJXODWLQJßQDQFLDOPDUNHWV
and promoting the securitisation of debts through
FRPSOH[ ßQDQFLDO GHULYDWLYHV ZHUH DOVR GHOLEHUDWH
interventions. Their overriding aim was to promote
economic growth.
In other words, the market was not undone by
isolated practices carried out by rogue individuals.
Or even through the turning of a blind eye by
less than vigilant regulators. It was undone by
growth itself.
The enemy within
Securitisation of mortgage debts (for example) was
championed at the highest level, spearheaded by
$ODQ *UHHQVSDQ IRUPHU FKDLUPDQ RI WKH )HGHUDO
Reserve. In The Age of Turbulence *UHHQVSDQ
defends the practice explicitly, arguing that
‘transferring risk away from… highly leveraged loan
originators can be critical for economic stability,
especially in a global environment.’
underlines the point that these interventions were
GHOLEHUDWH$OODORQJWKHZD\GHFLVLRQVWRLQFUHDVH
liquidity were made with a view to expanding the
HFRQRP\ o$PLG WKH FULVLV RI p UHPDUNHG DQ
Economist leader article, ‘it is easy to forget that
OLEHUDOLVDWLRQ KDG JRRG FRQVHTXHQFHV DV ZHOO E\
making it easier for households and businesses to
get credit, deregulation contributed to economic
growth.’
)RU RYHU WZR GHFDGHV GHUHJXODWLRQ RI ßQDQFLDO
markets was championed under monetarism as
the best way to stimulate demand. The monetarists
may have been reacting against the levels of public
GHEWLQFXUUHGE\.H\QHVLDQVSHQGLQJSURJUDPPHVLQ
WKHV But a strategy that ended up replacing
public debt with private debt was always a risky one.
‘When the music stops, in terms of liquidity, things
will be complicated,’ the CEO of Citibank reportedly
remarked, just before the bubble burst. ‘But as long
as the music is playing, you’ve got to get up and
dance. We’re still dancing.’
%\WKHHQGRI&LWLEDQNZDVQRORQJHUGDQFLQJ
1REDQNZDV7KHPXVLFKDGFOHDUO\VWRSSHGtDQGWKLQJV
ZHUH GHßQLWHO\ FRPSOLFDWHG Just how complicated
ZDV LQGLFDWHG E\ WKH VKHHU VL]H RI WKH LQWHUQDWLRQDO
EDLORXW$QGWKHIDFWWKDWHYHQDQHVWLPDWHGWULOOLRQ
RIWD[SD\HUVpPRQH\SURYHGLQVXIßFLHQWWRJXDUDQWHH
stability and avoid recession.
In short, the message from this chapter is that the
‘age of irresponsibility’ is not about casual oversight
or individual greed. The economic crisis is not a
consequence of isolated malpractice in selected
parts of the banking sector. If there has been
irresponsibility, it has been much more systemic,
sanctioned from the top, and with one clear aim in
PLQGWKHFRQWLQXDWLRQDQGSURWHFWLRQRIHFRQRPLF
growth.
The realisation that the credit crisis and the ensuing
recession were part of a systemic failure in the
current economic paradigm is reinforced by an
understanding of the resource and environmental
implications of economic growth.
The commodity price ‘bubble’ that developed over
VHYHUDO \HDUV DQG SHDNHG LQ PLG KDG FOHDUO\
,Q WHVWLPRQ\ WR 86 &RQJUHVV LQ ODWH 2FWREHU  EXUVW E\ WKH HQG RI WKH \HDU )LJXUH  ,W QRZ
*UHHQVSDQ DGPLWWHG WR EHLQJ oVKRFNHGp WKDW seems likely that the very high prices attributed to
markets hadn’t worked as expected. But this only NH\FRPPRGLWLHVLQPLGZHUHLQSDUWWKHUHVXOW

26 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission

RIVSHFXODWLRQDQGLQSDUWWKHUHVXOWRILGHQWLßDEOH
VXSSO\VLGH SUREOHPV VXFK DV OLPLWHG UHßQHU\
capacity in the face of high demand.
%XW WKLV VKRUWWHUP EXEEOH VDW RQ WRS RI D ULVLQJ
trend in commodity prices that cannot entirely
be explained away in these terms. Environmental
factors, resource and land scarcities, also played a
key part and will inevitably continue to do so as the
economy recovers. Concerns around peak oil and gas
are already gathering momentum. The natural rate
RIGHFOLQHLQHVWDEOLVKHGRLOßHOGVLVQRZEHOLHYHGWR
EHDVKLJKDVD\HDU
Economic expansion in China and the emerging
economies has accelerated the demand for fossil
IXHOV PHWDOV DQG QRQPHWDOOLF PLQHUDOV VHH
To protect economic growth we have been prepared
to countenance – and have even courted – unwieldy
ßQDQFLDO DQG HFRORJLFDO OLDELOLWLHV EHOLHYLQJ WKDW
these are necessary to deliver security and keep us
from collapse. But this was never sustainable in the
ORQJWHUP7KHßQDQFLDOFULVLVKDVVKRZQXVWKDWLW
LVQpWHYHQVXVWDLQDEOHLQWKHVKRUWWHUP
The truth is that we have failed to get our economies
ZRUNLQJ VXVWDLQDEO\ HYHQ LQ ßQDQFLDO WHUPV )RU
this reason, responses to the crisis which aim to
restore the status quo are deeply misguided and
doomed to failure. Prosperity today means nothing
if it undermines the conditions on which prosperity
WRPRUURZGHSHQGV$QGWKHVLQJOHELJJHVWPHVVDJH
IURP WKH ßQDQFLDO PHOWGRZQ RI  LV WKDW
tomorrow is already here.
&KDSWHU  DQG ZLOO LQHYLWDEO\ UHGXFH WKH UHVHUYH
OLIH RI ßQLWH UHVRXUFHV 7KH FRPSHWLWLRQ IRU ODQG
between food and biofuels clearly played a part in
ULVLQJIRRGSULFHV$QGWKHVHGHPDQGVLQWKHLUWXUQ
are intimately linked to accelerating environmental
LPSDFWV ULVLQJ FDUERQ HPLVVLRQV GHFOLQLQJ
ELRGLYHUVLW\ UDPSDQW GHIRUHVWDWLRQ FROODSVLQJ ßVK
stocks, declining water supplies and degraded soils.

The material and environmental impacts of growth

were paramount in prompting this inquiry. The
HFRQRPLFFULVLVPD\DSSHDUWREHXQUHODWHGEXWLWLV
QRW7KHDJHRILUUHVSRQVLELOLW\GHPRQVWUDWHVDORQJ
term blindness to the limitations of the material
world. This blindness is as evident in our inability
WRUHJXODWHßQDQFLDOPDUNHWVDVLWLVLQRXULQDELOLW\
to protect natural resources and curtail ecological
damage. Our ecological debts are as unstable as our
ßQDQFLDOGHEWV1HLWKHULVSURSHUO\DFFRXQWHGIRULQ
the relentless pursuit of consumption growth.

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 27

28 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
 3
Zia Sardar
November 20071

“The good life of the good person

can only be fully realised in the
good society. Prosperity can
only be conceived as a condition
that includes obligations and
responsibilities to others.”

Redefining Prosperity
The prevailing vision of prosperity as a continually expanding economic paradise has come
unravelled. Perhaps it worked better when economies were smaller and the world was less
SRSXODWHG%XWLILWZDVHYHUIXOO\ßWIRUSXUSRVHLWFHUWDLQO\LVQpWQRZ

Climate change, ecological degradation and the
spectre of resource scarcity compound the problems
RI IDLOLQJ ßQDQFLDO PDUNHWV DQG OHQJWKHQLQJ
UHFHVVLRQ 6KRUWWHUP ß[HV WR SURS XS D EDQNUXSW
system aren’t good enough. Something more is
QHHGHG $Q HVVHQWLDO VWDUWLQJ SRLQW LV WR VHW RXW D
coherent notion of prosperity that doesn’t rely on
default assumptions about consumption growth.
$FFRUGLQJO\WKLVFKDSWHUVHDUFKHVIRUDGLIIHUHQWNLQG
RIYLVLRQIRUSURVSHULW\RQHLQZKLFKLWLVSRVVLEOH
IRU KXPDQV EHLQJV WR àRXULVK WR DFKLHYH JUHDWHU
VRFLDO FRKHVLRQ WR ßQG KLJKHU OHYHOV RI ZHOOEHLQJ
and yet still to reduce their material impact on the
environment.
$SDUWRIWKHDLPRIWKH6'&pVRedefining Prosperity
VWXG\ZDVWRH[SORUHWKLVSRVVLELOLW\$NH\ßQGLQJ
from the study was that, beyond the narrow
economic framing of the question, there are some
strong competing visions of prosperity. Some of
Some approaches suggest a ‘transcendental’ need in
human beings. For the more religious perspectives
this may entail belief in some higher power. But
even secular understandings accept that the human
psyche craves meaning and purpose in life.
Some perspectives – particularly from the wisdom
traditions – add in an important moral or ethical
component to prosperity. Islamic commentator
Zia Sardar makes this point very clearly in his
contribution to Redefining Prosperity. ‘Prosperity
can only be conceived,’ he writes, ‘as a condition
that includes obligations and responsibilities to
others’. The same principle is enshrined in the
Quaker’s Moral Economy Project. 0\ SURVSHULW\
hangs on the prosperity of those around me, these
traditions suggest, as their’s does on mine.
There is an interesting overlap between components
of prosperity and the factors that are known to
LQàXHQFH VXEMHFWLYH ZHOOEHLQJ RU oKDSSLQHVVp
WKHVH YLVLRQV KDLO IURP SV\FKRORJ\ DQG VRFLRORJ\
others from economic history. Some draw on
VHFXODURUSKLORVRSKLFDOYLHZSRLQWVRWKHUVIURPWKH
religious or ‘wisdom’ traditions.
There are differences between these approaches.
%XWWKHUHDUHDOVRVRPHVWULNLQJVLPLODULWLHV0DQ\
perspectives accept that prosperity has material
dimensions. It is perverse to talk about things going
well if you lack the basic material resources required
WRVXVWDLQ\RXUVHOIIRRGDQGZDWHUWREHDGHTXDWHO\
nourished or materials for clothing and shelter.
Security in achieving these aims is also important.
%XWIURPDWOHDVWWKHWLPHRI$ULVWRWOHLWKDVEHHQ
clear that something more than material security is
QHHGHGIRUKXPDQEHLQJVWRàRXULVK3URVSHULW\KDV
vital social and psychological dimensions. To do well
is in part about the ability to give and receive love, to
enjoy the respect of your peers, to contribute useful
work, and to have a sense of belonging and trust in
the community. In short, an important component
of prosperity is the ability to participate freely in the
life of society.
30
)LJXUH,QGHHGWRWKHH[WHQWWKDWZHDUHKDSS\
when things go well and unhappy when they don’t,
there is clearly some connection between prosperity
and happiness. This doesn’t necessarily mean that
prosperity is the same thing as happiness. But the
connection between the two provides a useful link
into recent policy debates about happiness and
subjective wellbeing.6
In fact, there are at least three different candidates
on offer here as concepts of prosperity. It’s useful
to distinguish carefully between them. Perhaps the
HDVLHVW ZD\ WR GR WKLV LV WR ERUURZ IURP $PDUW\D
Sen, who set out the distinctions very clearly in
D ODQGPDUN HVVD\ RQ oWKH OLYLQJ VWDQGDUGp ßUVW
SXEOLVKHG LQ  One of Sen’s concepts was
characterised by the term opulence DQRWKHU E\
the term utility DQG D WKLUG WKURXJK WKH LGHD RI
capabilities for flourishing.
3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
Figure 5 )DFWRUVLQàXHQFLQJVXEMHFWLYHZHOOEHLQJKDSSLQHVV7

Work fulfilment 2%

Don’t know/other 1%
Community and Friends 5%

Religious/spiritual life 6%

Money and financial situation 7%

Partner/spouse
A nice place
to live 8% and family
relationships
47%

Health
24%

Figure 5: Factors influencing subjective wellbeing (happiness)

Prosperity as opulence When you’ve had no food for months and the harvest
has failed again, any food at all is a blessing. When
%URDGO\ VSHDNLQJ 6HQpV ßUVW FRQFHSW t RSXOHQFH t WKH $PHULFDQ VW\OH IULGJHIUHH]HU LV DOUHDG\ VWXIIHG
corresponds to a conventional understanding that with overwhelming choice, even a little extra might
prosperity is about material satisfactions. Opulence be considered a burden, particularly if you’re tempted
refers to the ready availability and steady throughput to eat it. Once my appetite for strawberries, say, is
RIPDWHULDOFRPPRGLWLHV$QLQFUHDVHLQWKHYROXPH sated, more of them provide no further joy at all.
àRZ RI FRPPRGLWLHV UHSUHVHQWV DQ LQFUHDVH LQ On the contrary, they may even make me feel ill.
100The more we have the better off we are,
prosperity. $QGLI,pPWHPSWHGWRLJQRUHWKHVHERGLO\IHHGEDFN
in this view. PHFKDQLVPVDJDLQVWH[FHVV,ZLOOßQGP\VHOIRQWKH
URDG WR REHVLW\ DQG LOOKHDOWK
Netherlands RXWFRPHV
Iceland
ZKLFK LW LV
N. Ireland
Mean of Percent Happy and Percent Satisfied with Life as a Whole

Denmark Switzerland
The logic 90of abundance as the basis for doing well nonsensical to describe
Ireland Finland
as desirable
Sweden or satisfying.
Norway
Australia United States
Puerto Rico
GDWHVEDFNWR$GDP6PLWK,QWKRVHGD\VSURYLGLQJ New Zealand Britain Belgium

material commodities to meetColombia the necessities of life Prosperity as utility Italy Canada
Taiwan South Korea France
was a priority. But it is pretty straightforward toVenezuela see Japan Austria
80 Philippines Brazil Argentina
that this simple equation Ghana of quantity
China with quality, of
Uruguay Quantity is not
Spain the same thing as quality. Opulence
Mexico Chile
more with better,Nigeria
is false Pakistan
in general. Even
Dom. economic
Rep Czech is not the
Portugal
same thing as satisfaction. Sen’s
Bangladesh Poland Republic
theory recognises Indiathis limitation. The ‘diminishing
Turkey second characterisation of prosperity – as utility –
marginal 70utility’ of goods (indeed of income itself) Slovenia recognises this. Rather than focusing on the sheer
South Africa
UHàHFWV WKH IDFW WKDWSlovakia
KDYLQJ PRUH RI VRPHWKLQJ volume of commodities available to us, this second
Croatia Hungary
usually provides less additional satisfaction. version relates prosperity to the satisfactions which
60 Macedonia Peru
commodities provide.
The sense that Azerbaijan
more can sometimes be less
Latvia
provides the beginnings of an understanding of the Though it is easy enough to articulate this difference,
GLVVDWLVIDFWLRQVRIWKHFRQVXPHUVRFLHW\&KDSWHU
50 Georgia
Estonia LWLVPRUHGLIßFXOWWRGHßQHH[DFWO\KRZFRPPRGLWLHV
It also offers a strongLithuania
humanitarianRomania argument for relate to satisfaction, as many people have noted.
redistribution. Bulgaria 7KHRQHWKLQJWKDWpVSUHWW\HDV\WRßJXUHRXWLVWKDW
Armenia
WKHUHODWLRQVKLSLVKLJKO\QRQOLQHDU(YHQVRPHWKLQJ
40 Russia

Belarus
Ukraine
Sustainable Development Commission
Moldova 3URVSHULW\ZLWKRXW*URZWK" 31
30
1000 5000 9000 9000 17000 21000 25000
as basic as food doesn’t follow a simple linear
pattern in which more is always better.
There’s a particularly important complexity here.
Increasingly, the uses to which we put material
commodities are social or psychological in nature
rather than purely material. In the immediate
SRVWZDU \HDUV LW ZDV D FKDOOHQJH WR SURYLGH IRU
EDVLFQHFHVVLWLHVHYHQLQWKHPRVWDIàXHQWQDWLRQV
Today, consumer goods and services increasingly
furnish us with identity, experience, a sense of
belonging, perhaps even meaning and a sense of
hope (Chapter 6).
0HDVXULQJ XWLOLW\ LQ WKHVH FLUFXPVWDQFHV LV HYHQ
PRUH GLIßFXOW :KDW LV WKH oSV\FKLF VDWLVIDFWLRQp
IURPDQL3KRQH"$QHZELF\FOH"$KROLGD\DEURDG"
$ ELUWKGD\ SUHVHQW IRU D ORYHU" 7KHVH TXHVWLRQV
are practically impossible to answer. Economics
JHWVURXQGWKHGLIßFXOW\E\DVVXPLQJWKHLUYDOXHLV
equivalent to the price people are prepared to pay
for them in freely functioning markets. It casts utility
as the monetary value of market exchanges.
7KH *'3 VXPV XS DOO WKHVH PDUNHW H[FKDQJHV
Broadly speaking, it measures the total spending
DFURVVWKHQDWLRQRQDOOWKHFRPPRGLWLHVWKDWàRZ
through the economy. In this way, total spending is
WDNHQDVDSUR[\IRUXWLOLW\$QGWKLVLQDQXWVKHOO
LV WKH FDVH IRU EHOLHYLQJ WKDW WKH *'3 LV D XVHIXO
measure of wellbeing.
But the case is deeply problematic at best. There
LV D KXJH OLWHUDWXUH FULWLTXLQJ WKH YDOXH RI *'3 DV
a wellbeing measure. Obvious limitations include
LWV IDLOXUH WR DFFRXQW IRU QRQPDUNHW VHUYLFHV OLNH
household or voluntary labour) or negative utilities
(externalities) like pollution. Critics point to the
IDFW WKDW WKH *'3 FRXQWV ERWK oGHIHQVLYHp DQG
‘positional’ expenditures even though these don’t
contribute additionally to wellbeing.$QGSHUKDSV
PRVWFULWLFDOO\WKH*'3IDLOVWRDFFRXQWSURSHUO\IRU
changes in the asset base which affect our future
consumption possibilities.
Some have argued that the underlying concept of
utility as exchange value is itself fundamentally
àDZHG $ NH\ ßQGLQJ KHUH LV WKH VRFDOOHG
KDSSLQHVVRUOLIHVDWLVIDFWLRQSDUDGR[,I*'3UHDOO\
GRHV PHDVXUH XWLOLW\ LWpV D P\VWHU\ WR ßQG WKDW
reported life satisfaction has remained more or
less unchanged in most advanced economies over
32 3URVSHULW\ZLWKRXW*URZWK"
VHYHUDO GHFDGHV LQ VSLWH RI VLJQLßFDQW HFRQRPLF
growth. Real income per head has tripled in the US
VLQFHEXWWKHSHUFHQWDJHRISHRSOHUHSRUWLQJ
themselves very happy has barely increased at all,
DQG KDV GHFOLQHG VLQFH WKH PLGV ,Q -DSDQ
WKHUHKDVEHHQOLWWOHFKDQJHLQOLIHVDWLVIDFWLRQRYHU
VHYHUDOGHFDGHV,QWKH8.WKHSHUFHQWDJHUHSRUWLQJ
WKHPVHOYHVoYHU\KDSS\pGHFOLQHGIURPLQ
WRWRGD\HYHQWKRXJKUHDOLQFRPHVKDYHPRUH
than doubled.
$FWXDOO\ DV )LJXUH  LOOXVWUDWHV WKH VRFDOOHG OLIH
satisfaction paradox is largely a malaise of the
advanced economies. It is only after an income
OHYHO RI DERXW  SHU FDSLWD WKDW WKH OLIH
satisfaction score barely responds at all even to
TXLWH ODUJH LQFUHDVHV LQ *'3 ,Q IDFW WKH DVVXPHG
UHODWLRQVKLS EHWZHHQ LQFRPH DQG OLIHVDWLVIDFWLRQ
can be turned on its head here. Denmark, Sweden,
,UHODQG DQG 1HZ =HDODQG DOO KDYH KLJKHU OHYHOV RI
OLIHVDWLVIDFWLRQWKDQWKH86$EXWVLJQLßFDQWO\ORZHU
income levels.
By contrast, at very low incomes there is a huge
spread in terms of life satisfaction, but the general
WUHQGLVDTXLWHVWHHSO\ULVLQJFXUYH$VPDOOLQFUHDVH
LQ*'3OHDGVWRDELJULVHLQOLIHVDWLVIDFWLRQ
These data underline one of the key messages of this
report. There is no case to abandon growth universally.
But there is a strong case for the developed nations
to make room for growth in poorer countries. It is
in these poorer countries that growth really does
make a difference. In richer countries the returns on
further growth appear much more limited. In the
language of economics, marginal utility (measured
here as subjective wellbeing) diminishes rapidly at
higher income levels.
0RUHLPSRUWDQWO\LWEHFRPHVFOHDUIURPWKLVDQDO\VLV
WKDW D KDSSLQHVVEDVHG PHDVXUH RI XWLOLW\ DQG DQ
H[SHQGLWXUHEDVHG PHDVXUH RI XWLOLW\ EHKDYH LQ
YHU\ GLIIHUHQW ZD\V $QG VLQFH WKH\ ERWK FODLP WR
measure utility we can conclude that there is a
problem somewhere. One or other – perhaps both
– of these measures appears not to be doing its job
properly.
7KHZHOOEHLQJSURWDJRQLVWVFODLPLWpVWKH*'3WKDWpV
IDLOLQJ%XWWKHVHOIUHSRUWPHDVXUHVDOVRKDYHWKHLU
critics. In their contributions to Redefining Prosperity,
ERWK3DXO2UPHURGDQG-RKQ2p1HLOOSRLQWHGWRWKH
Sustainable Development Commission
 Figure 5: Factors influencing subjective wellbeing (happiness)

Figure 6 Happiness and average annual income15

100

Netherlands Iceland
N. Ireland
Mean of Percent Happy and Percent Satisfied with Life as a Whole

Denmark Switzerland
90 Ireland Finland
Sweden
Norway
Australia United States
Puerto Rico New Zealand Belgium
Britain

Colombia Italy Canada

Taiwan South Korea France
Japan Austria
80 Philippines Brazil Argentina
Venezuela
China Uruguay Spain
Ghana
Mexico Chile
Nigeria Dom. Rep
Pakistan Czech
Bangladesh Poland Portugal
Republic
India Turkey
70 Slovenia
South Africa
Slovakia
Croatia Hungary

60 Macedonia Peru

Azerbaijan
Latvia

Estonia
50 Georgia
Lithuania Romania

Bulgaria
Armenia

40 Russia

Belarus
Ukraine
Moldova
30
1000 5000 9000 9000 17000 21000 25000

GDP per person (Purchasing Power Parity, 1995 dollars)

Figure 6: Happiness and average annual income

fact that people are known to be inconsistent in WKHDVVHVVPHQW,WLVLPSOLFLWLQWKHGHßQLWLRQRIWKH
assessments of their own happiness. VHOIUHSRUWVFDOHWKDWXWLOLW\LWVHOILVERXQGHG

1REHOSUL]H ZLQQHU 'DQLHO .DKQHPDQ KDV VKRZQ Here we come close to the crux of the matter.
that if you ‘add up’ people’s assessments of Obviously the two measures presume fundamentally
subjective wellbeing over time you don’t get the different concepts of utility. In one interpretation
same answer as you would if you ‘take all things there is no limit to the satisfaction that humans
together’. This may partly be because people adapt can achieve. The other is more circumspect in its
quickly to any given level of satisfaction and this view of the human psyche. Whatever else we may
changes their future valuations. Even something VD\ DERXW WKH UHODWLRQVKLS EHWZHHQ *'3 DQG OLIH
simple like a change in the order of events can satisfaction, it’s clear they are not measuring the
alter our assessment of how well things have same kind of utility.
gone overall.
:KHQ LW FRPHV WR ßQGLQJ D UHOLDEOH FRQFHSW RI
2QHRIWKHGLIßFXOWLHVLQFRPSDULQJWKHVHOIUHSRUW prosperity, we appear to be no further forwards.
PHDVXUH DJDLQVW WKH *'3 LV WKDW WKH\ DUH VLPSO\ $UJXDEO\ WKHUH DUH DV PDQ\ UHDVRQV IRU QRW
GLIIHUHQWNLQGVRIVFDOHV7KH*'3LVLQSULQFLSOHDW equating prosperity with happiness as there are
least) unbounded. It can (politicians hope) go on for not equating prosperity with exchange values.
JURZLQJ LQGHßQLWHO\ 7KH OLIHVDWLVIDFWLRQ PHDVXUH For one thing, the overriding pursuit of immediate
on the other hand is a bounded scale. You can only pleasure is a very good recipe for things not going
VFRUHIURPWRKRZHYHURIWHQ\RXJRRQPDNLQJ well in the future. This was a point highlighted

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 33

FOHDUO\E\$YQHU2IIHUpVLQFLVLYHFRQWULEXWLRQWRWKH
Redefining Prosperity project. ‘True prosperity is a
JRRGEDODQFHEHWZHHQVKRUWWHUPDURXVDODQGORQJ
term security,’ he writes. the community – as the capabilities or freedoms
1HLWKHU WKH *'3 t ZKLFK FRXQWV PDLQO\ SUHVHQW
FRQVXPSWLRQtQRUVHOIUHSRUWPHDVXUHVZKLFKFRXQW
mainly present happiness – provide an accurate
UHàHFWLRQ RI WKLV EDODQFH -XVW EHFDXVH KXPDQV
VXIIHUIURPP\RSLFFKRLFHDQGßQGLWKDUGWRPDNH
D VDFULßFH QRZ HYHQ IRU WKH VDNH RI VRPHWKLQJ
better later doesn’t justify taking a view of
prosperity based on more or less instantaneous
JUDWLßFDWLRQ
0RUH IXQGDPHQWDOO\ WR HTXDWH SURVSHULW\ ZLWK
happiness goes against our experience of what
it means to live well. People can be unhappy for
all sorts of reasons, some of them genetic, even
when things do go well. Equally, they may be
undernourished, poorly housed, with no prospect
of improvement and yet declare themselves
(some might say foolishly) completely content with
their lot.
3URVSHULW\DVFDSDELOLWLHVIRUàRXULVKLQJ
Sen uses these distinctions to argue (with a nod to
In his later work, Sen stresses not so much the
functionings themselves – whether people actually
live long, have a worthwhile job or participate in
they have to do so. His point is that in a liberal
society, people should have the right to choose
whether or not to participate in society, to work in
paid employment, and perhaps even whether to
live a healthy life. It is the capabilityWRàRXULVKWKDW
is important.
1RQHWKHOHVVWKHUHDUHVRPHFOHDUUHDVRQVWRUHWDLQ
the central importance of functionings themselves.
,Q WKH ßUVW SODFH DEVWUDFW FDSDELOLWLHV DUH SUHWW\
XQLQIRUPDWLYH $Q\ DWWHPSW WR RSHUDWLRQDOLVH WKLV
idea of development ends up needing to specify
what the important functionings are. This point is
HPSKDVLVHG LQ D UHFHQW UHSRUW WR WKH 1HWKHUODQGV
(QYLURQPHQWDO$VVHVVPHQW$JHQF\RQWKHIHDVLELOLW\
of a capabilities approach within public policy. Even
when it is the freedom to function that people value
most, argues the report, this is largely because the
functionings themselves are valued too.
There is another reason not to take the focus on
freedom too far. In a world of limits, certain kinds
of freedoms are either impossible or immoral. The
freedom endlessly to accumulate material goods is
one of them. Freedoms to achieve social recognition
$ULVWRWOHIRUDWKLUGFRQFHSWRIWKHOLYLQJVWDQGDUG
based on the capabilities that people have to
flourish. The key questions we should be asking, he
insists, are to do with how well people are able to
function in any given context.
o$UH WKH\ ZHOO QRXULVKHG" $UH WKH\ IUHH IURP
DYRLGDEOH PRUELGLW\" 'R WKH\ OLYH ORQJ"p KH DVNV
o&DQWKH\WDNHSDUWLQWKHOLIHRIWKHFRPPXQLW\"&DQ
they appear in public without shame and without
IHHOLQJ GLVJUDFHG" &DQ WKH\ ßQG ZRUWKZKLOH MREV"
&DQ WKH\ NHHS WKHPVHOYHV ZDUP" &DQ WKH\ XVH
WKHLU VFKRRO HGXFDWLRQ" &DQ WKH\ YLVLW IULHQGV DQG
UHODWLRQVLIWKH\FKRRVH"p
There is a clear resonance between Sen’s questions
DQG WKH GLPHQVLRQV RI SURVSHULW\ LGHQWLßHG DW WKH
beginning of this chapter. In fact, the functionings
he cites in this extract – nutritional health, life
expectancy, participation in society – coincide closely
ZLWKFRQVWLWXHQWVRISURVSHULW\LGHQWLßHGIURPWLPH
immemorial in a wide range of writings.
34 3URVSHULW\ZLWKRXW*URZWK"
at the expense of child labour in the supply chain, to
ßQGPHDQLQJIXOZRUNDWWKHH[SHQVHRIDFROODSVH
in biodiversity, or to participate in the life of the
community at the expense of future generations
may be others.
Bounded capabilities
This is the most important lesson that sustainability
brings to any attempt to conceptualise prosperity.
&DSDELOLWLHVIRUàRXULVKLQJDUHDJRRGVWDUWLQJSRLQW
IURPZKLFKWRGHßQHZKDWLWPHDQVWRSURVSHU%XW
WKLVYLVLRQQHHGVWREHLQWHUSUHWHGFDUHIXOO\QRWDV
a set of disembodied freedoms, but as a range of
‘bounded capabilities’ to live well – within certain
FOHDUO\GHßQHGOLPLWV
These limits are established in relation to two critical
IDFWRUV7KHßUVWLVWKHßQLWHQDWXUHRIWKHHFRORJLFDO
resources within which life on earth is possible.
7KHVHUHVRXUFHVLQFOXGHWKHREYLRXVPDWHULDORQHV
fossil fuels, minerals, timber, water, land – and so on.
Sustainable Development Commission
They also include the regenerative capacity of
ecosystems, the diversity of species and the integrity
of the atmosphere, the soils and the oceans.
1RQH RI WKHVH UHVRXUFHV LV LQßQLWH (DFK VWDQGV
in a complex relationship to the web of life on
earth. We may not yet know exactly where all the
limits lie. But we know enough to be absolutely
Sen has tended to stop short of clear prescriptions,
even though some are implicit in his writing.
7KH SKLORVRSKHU 0DUWKD 1XVVEDXP KDV JRQH
furthest in this direction. Her list of ‘central human
capabilities’ bears a striking resemblance to the
FRPSRQHQWVRISURVSHULW\LGHQWLßHGLQWKLVFKDSWHU
DQGLQFOXGHV
% life (being able to live to the end of a human
sure that in most cases, even the current level of
economic activity is destroying ecological integrity
and threatening ecosystem functioning – perhaps
irreversibly. To ignore these natural bounds to
àRXULVKLQJ LV WR FRQGHPQ RXU GHVFHQGHQWV t DQG
our fellow creatures – to an impoverished planet.
The second limiting factor on our capability to live
well is the scale of the global population. This is
VLPSOH DULWKPHWLF :LWK D ßQLWH SLH DQG DQ\ JLYHQ
level of technology, there is only so much in the
way of resources and environmental space to go
around. The bigger the global population the faster
we hit the ecological buffers. The smaller the
population the lower the pressure on ecological
resources. This basic tenet of systems ecology is the
reality of life for every other species on the planet.
$QGIRUWKRVHLQWKHSRRUHVWQDWLRQV
The point is that a fair and lasting prosperity
cannot be isolated from these material conditions.
Capabilities are bounded on the one hand by
the scale of the global population and on the
RWKHU E\ WKH ßQLWH HFRORJ\ RI WKH SODQHW ,Q WKH
SUHVHQFH RI WKHVH HFRORJLFDO OLPLWV àRXULVKLQJ
itself becomes contingent on available resources,
on the entitlements of those who share the
planet with us, on the freedoms of future generations
and other species. Prosperity in this sense has
ERWK LQWUDJHQHUDWLRQDO DQG LQWHUJHQHUDWLRQDO
GLPHQVLRQV $V WKH ZLVGRP WUDGLWLRQV VXJJHVW
there is an irredeemably moral dimension to the
good life.
$SURVSHURXVVRFLHW\FDQRQO\EHFRQFHLYHGDVRQH
in which people everywhere have the capability to
àRXULVKLQFHUWDLQEDVLFZD\V
Deciding on those basic ‘entitlements’ is not a trivial
WDVN :KDW GRHV LW PHDQ IRU KXPDQV WR àRXULVK"
What are the functionings that society should value
DQGSURYLGHIRU"+RZPXFKàRXULVKLQJLVVXVWDLQDEOH
LQßQLWHZRUOG"
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK"
OLIHRIQRUPDOOHQJWKERGLO\KHDOWK
% bodily integrity (to be secure against
violent assault)
% having opportunities for sexual satisfaction
and choice in matters of reproduction
% practical reason (being able to form a
conception of the good life)
% DIßOLDWLRQEHLQJDEOHWROLYHZLWKDQG
toward others)
% play, and control over one’s environment.
Ultimately, as the Dutch report cited above recognises,
any such list needs to be negotiated in open dialogue
before it can be taken as the basis of policy. But in
practice, there is a surprisingly strong overlap between
the components in such lists and the constituents of
SURVSHULW\LGHQWLßHGKHUH
Physical and mental health matter. Educational and
democratic entitlements count in many societies.
Trust, security and a sense of community are vital
to social wellbeing. Relationships, meaningful
employment, and the ability to participate in
the life of society appear to be important almost
everywhere. People suffer physically and mentally
when these things are absent. Society itself is
threatened when they decline.
The challenge for society is to create the conditions
in which these basic entitlements are possible.
This is likely to require a closer attention to the social,
psychological and material conditions of living – for
example, to people’s psychological wellbeing and
to the resilience of communities – than is familiar in
free market societies.
Crucially though, this doesn’t mean settling for a
YLVLRQRISURVSHULW\EDVHGRQFXUWDLOPHQWDQGVDFULßFH
Capabilities are inevitably bounded by material and
social conditions. Some ways of functioning may
even be forestalled completely, particularly where
they rely heavily on material throughput. But social
and psychological functionings are not in any case
best served by materialism, as we shall see more
35
FOHDUO\ LQ &KDSWHU  $V 7LP .DVVHU KLJKOLJKWHG LQ
his contribution to Redefining Prosperity, this new
vision of prosperity may serve us better than the
narrow materialistic one that has ensnared us.

7KH SRVVLELOLW\ WKDW KXPDQV FDQ àRXULVK DFKLHYH

JUHDWHU VRFLDO FRKHVLRQ ßQG KLJKHU OHYHOV RI
wellbeing and still reduce their material impact
on the environment is an intriguing one. It would
be foolish to think that it is easy to achieve – for
reasons that will be discussed in more detail in the
next chapter. But it should not be given up lightly.
It may well offer the best prospect we have for a
lasting prosperity.

36 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission

 4

The Dilemma of Growth

“One of the ‘paradoxes of prosperity’

is that people in rich countries don’t
realise how good things really are.”

William Baumol, Robert Litan and Carl Schramm


3URVSHULW\ LV QRW MXVW DERXW LQFRPH 7KDW PXFK LV FOHDU 5LVLQJ SURVSHULW\ LV QRW WKH VDPH
thing as economic growth. But this doesn’t in itself ensure that prosperity without growth is
possible. A distinct possibility remains that growth is functional for prosperity: that continued
economic growth is a necessary condition for a lasting prosperity. And that without growth
RXUDELOLW\WRàRXULVKGLPLQLVKHVVXEVWDQWLDOO\
Evidence for this would certainly need to be taken
seriously. Perhaps the growth model is, after all,
as good as it gets in terms of delivering prosperity.
$UHZHJXLOW\DV%DXPRODQGKLVFROOHDJXHVFODLPLQ
the quote on the previous page, of not realising how
JRRGWKLQJVUHDOO\DUHXQGHUIUHHPDUNHWFDSLWDOLVP"
This chapter explores that possibility.
It examines three closely related propositions
LQ GHIHQFH RI HFRQRPLF JURZWK 7KH ßUVW LV WKDW
opulence – though not synonymous with prosperity
tLVDQHFHVVDU\FRQGLWLRQIRUàRXULVKLQJ7KHVHFRQG
is that economic growth is closely correlated with
certain basic entitlements – for health or education,
perhaps – that are essential to prosperity. The third
is that growth is functional in maintaining economic
and social stability.
$Q\RIWKHVHSURSRVLWLRQVLIVXSSRUWHGFRXOGWKUHDWHQ
our prospects for achieving prosperity without growth
and would place us instead between the horns of a
rather uncomfortable dilemma. On the one hand,
FRQWLQXHGJURZWKORRNVHFRORJLFDOO\XQVXVWDLQDEOHRQ
the other, it appears essential for lasting prosperity.
0DNLQJ SURJUHVV DJDLQVW VXFK DQ oLPSRVVLELOLW\
theorem’ would be vital.
Material opulence as a condition
RIàRXULVKLQJ
$W ßUVW VLJKW LW PLJKW VHHP RGG WR UHRSHQ WKH
relationship between opulence and prosperity.
&KDSWHUGLVSRVHGRIDQ\VLPSOHOLQHDUUHODWLRQVKLS
EHWZHHQ PDWHULDO àRZ DQG àRXULVKLQJ 0RUH
isn’t always better, even in something as basic as
nutrition.
$GPLWWHGO\ RXU DELOLW\ WR àRXULVK GHFOLQHV UDSLGO\
if we don’t have enough food to eat or adequate
VKHOWHU$QGWKLVPRWLYDWHVDVWURQJFDOOIRULQFUHDVLQJ
incomes in poorer nations. But in the advanced
economies, aside from some pernicious inequalities,
ZH DUH ODUJHO\ SDVW WKLV SRLQW 0DWHULDO QHHGV DUH
38 3URVSHULW\ZLWKRXW*URZWK"
broadly met and disposable incomes are increasingly
GHGLFDWHGWRGLIIHUHQWHQGVOHLVXUHVRFLDOLQWHUDFWLRQ
experience. Clearly though, this hasn’t diminished
our appetite for material consumption.
Why is it that material commodities continue to be
so important to us, long past the point at which
PDWHULDOQHHGVDUHPHW"$UHZHUHDOO\QDWXUDOERUQ
VKRSSHUV" +DYH ZH EHHQ JHQHWLFDOO\ SURJUDPPHG
as the psychologist William James believed, with an
oLQVWLQFW IRU DFTXLVLWLRQp" :KDW LV LW DERXW FRQVXPHU
goods that continues to entrance us even beyond the
SRLQWRIXVHIXOQHVV"
7KH FOXH WR WKH SX]]OH OLHV LQ RXU WHQGHQF\ WR
imbue material things with social and psychological
PHDQLQJV $ ZHDOWK RI HYLGHQFH IURP FRQVXPHU
research and anthropology now supports this
SRLQW $QG WKH LQVLJKW LV GHYDVWDWLQJ &RQVXPHU
goods provide a symbolic language in which we
communicate continually with each other, not just
DERXWUDZVWXIIEXWDERXWZKDWUHDOO\PDWWHUVWRXV
family, friendship, sense of belonging, community,
identity, social status, meaning and purpose in life.
$QG FUXFLDOO\ WKHVH VRFLDO FRQYHUVDWLRQV SURYLGH
in part, the means to participate in the life of
society. Prosperity itself, in other words, depends
on them. ‘The reality of the social world’, argues
sociologist Peter Berger, ‘hangs on the thin thread of
conversation.’ $QG WKLV FRQYHUVDWLRQ KDQJV LQ WXUQ
on the language of material goods.
There’s a lovely illustration of the power of this
seductive relationship in a study led by consumer
researcher Russ Belk. He and his colleagues explored
the role of desire in consumer behaviour across three
different cultures. Commenting on what fashion
PHDQWWRWKHPRQHRI%HONpVUHVSRQGHQWVUHPDUNHG
o1RRQHpVJRQQDVSRW\RXDFURVVDFURZGHGURRPDQG
VD\q:RZ1LFHSHUVRQDOLW\rp
7KHJRDORIWKLVUHVSRQGHQWLVLPPHGLDWHO\LGHQWLßDEOH
as a basic human desire to be noticed, to be included,
Sustainable Development Commission
WREHOLNHGWRßQGIULHQGVKLStSRVVLEO\PRUHDVWKH subtlety provides a vital clue as to how we might
VLQJOHVDGVSXWLW$OORIWKHVHWKLQJVDUHIXQGDPHQWDO
components of participating in the life of society, of
àRXULVKLQJ
It’s tempting to think that this is a predominantly
western (and relatively modern) phenomenon.
Belk’s study and numerous others suggest otherwise.
The objective of the consumer, quite generally,
DFFRUGLQJWRDQWKURSRORJLVW0DU\'RXJODVLVoWRKHOS
FUHDWH WKH VRFLDO ZRUOG DQG ßQG D FUHGLEOH SODFH LQ
it.’ The symbolic role of material commodities has
EHHQ LGHQWLßHG E\ DQWKURSRORJLVWV LQ HYHU\ VLQJOH
society for which records exist.
It is of course abundantly true in consumer society.
0DWWHUPDWWHUVWRXV$QGQRWMXVWLQPDWHULDOZD\V
But this is no longer unique to the West. ‘One of the
GHßQLQJIHDWXUHVRI,QGLDpVPLGGOHFODVVHVDWWKHWXUQ
of the millennium,’ argues anthropologist Emma
0DZGVOH\oLVWKHLUDSSHWLWHIRUoJOREDOpFXOWXUHDQG
their pursuit of ‘western’ lifestyles, possessions and
values.’6 Very similar values and views are clearly
GLVFHUQLEOH LQ &KLQD LQ /DWLQ $PHULFD DQG HYHQ LQ
SDUWVRI$IULFD
The consumer society is now, to all intents and
purposes, a global society. One in which, for sure,
there are still ‘islands of prosperity, oceans of poverty’.
But in which the ‘evocative power of things’7
increasingly creates the social world and provides the
dominant arbiter of personal and societal progress.
,Q VKRUW WKH PDWHULDO DQG WKH QRQPDWHULDO
dimensions of prosperity are inextricably intertwined
with each other through the language of goods.
Though it is essentially a social rather than a material
task, our ability to participate in the life of society
GHSHQGVRQWKLVODQJXDJH$Q\RQHZKRKDVHYHUIHOW
– or watched their kids feel – the enormous pressure
of the peer group to conform to the latest fashion
will understand how access to the life of society is
mediated by sheer stuff.
Little wonder then that people regard income as one
confront – and get beyond – our dependency on
material things.
The importance of income in wellbeing is largely
played out (within nations) through relative effects.
What matters – more than the absolute level of
income – is having more or less than those around
us. This is particularly true in highly unequal
VRFLHWLHVZKHUHLQFRPHGLVSDULWLHVVLJQDOVLJQLßFDQW
differences in social status. Income levels speak
GLUHFWO\ RI VWDWXV DQG VRPHWLPHV RI DXWKRULW\
power and class as well. But, in addition, as we now
see, income provides access to the ‘positional’ or
status goods that are so important in establishing
our social standing.
$QGWKHUHLVOLWWOHGRXEWWKDWDWWKHLQGLYLGXDOOHYHO
VRFLDO SRVLWLRQ FRXQWV o$ SRVLWLYH VRFLDO UDQNLQJ
produces an inner glow that is also matched with
a clear advantage in life expectation and health,’
DUJXHV HFRQRPLF KLVWRULDQ $YQHU 2IIHU $QG WKLV
claim is backed up by persuasive evidence on the
pernicious health effects of income inequality.
+HDOWK\OLIHH[SHFWDQF\IRU(QJOLVKIHPDOHVZDV
years higher for those in the top decile in the late
VWKDQLWZDVIRUWKRVHLQWKHERWWRPGHFLOH
The importance of social position is reinforced
E\ 'HIUDpV UHFHQW JURXQGEUHDNLQJ VWXG\ RI WKH
GLVWULEXWLRQRIVXEMHFWLYHZHOOEHLQJLQWKH8.)LJXUH
7 shows reported satisfactions with different life
‘domains’ across different ‘social grades’. Those in
WKHKLJKHUVRFLDOJUDGHVWHQGWRUHSRUWVLJQLßFDQWO\
higher levels of satisfaction than those in the lower
social grades.
Being at or near the top of the pile matters, it seems,
both in terms of health and in terms of happiness or
subjective wellbeing.
$WWKHVRFLHWDOOHYHOWKRXJKWKHUHLVDFOHDUGDQJHU
that this positional race doesn’t contribute much to
overall prosperity. ‘The stock of status, measured as
positive advantages, showed a sustained increase
RIWKHIDFWRUVLPSRUWDQWWRWKHLUZHOOEHLQJ)LJXUH LQ WKH SRVWZDU \HDUVp DFNQRZOHGJHV 2IIHU o0XFK
Incomes after all provide the material means for RIWKHSD\RIIKRZHYHUZDVDEVRUEHGLQSRVLWLRQDO
àRXULVKLQJ competition.’

Prosperity depends more on opulence, it would This reasoning suggests that, at the level of society
VHHP WKDQ LV REYLRXV DW ßUVW JODQFH %XW WKHUH LV as a whole, income growth – and the associated
DQLPSRUWDQWVXEWOHW\LQWKLVUHODWLRQVKLS$QGWKLV PDWHULDO WKURXJKSXW t PD\ EH D o]HURVXP JDPHp

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 39

Figure 7 Wellbeing Inequalities in England (2007)14

AB C D E

Relationships

Accommodation

Standard of living

Day to day activities

Health
Aspect of Life

Leisure

Control

Achievement of goals

Future financial security

Community

-15 -10 -5 0 5 10 15

Percentage point difference from overall average

Notes: Social grade is a classification based on occupation developed from the National Readership Survey
Examples1RWHV6RFLDOJUDGHLVDFODVVLßFDWLRQEDVHGRQRFFXSDWLRQGHYHORSHGIURPWKH1DWLRQDO5HDGHUVKLS6XUYH\
of occupation in each grade include:
AB: doctor, solicitor, accountant, treacher, nurse, police oficer
([DPSOHVRIRFFXSDWLRQLQHDFKJUDGHLQFOXGH
C: Junior manager, student, clerical worker, foreman, plumber, bricklayer
$%
D: Manual GRFWRUVROLFLWRUDFFRXQWDQWWHDFKHUQXUVHSROLFHRßFHU
workers, shop workers, apprentices
E: Casual labourers, state pensioners, unemployed
& -XQLRUPDQDJHUVWXGHQWFOHULFDOZRUNHUIRUHPDQSOXPEHUEULFNOD\HU
Separate grades A and B and C1 and C2 have ben joined (to AB and C) due to very similar distributions
' 0DQXDOZRUNHUVVKRSZRUNHUVDSSUHQWLFHV
The results presented here show the difference between each group and the overall average presented on the previous graph
 ( &DVXDOODERXUHUVVWDWHSHQVLRQHUVXQHPSOR\HG
6HSDUDWHJUDGHV$DQG%DQG&DQG&KDYHEHHQMRLQHGDV$%DQG&GXHWRYHU\VLPLODUGLVWULEXWLRQV
The results presented here show the difference between each group and the overall average.

40 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission

Figure 7: Wellbeing Inequalities in England (2007)
The population as a whole gets richer. Some people Income and basic entitlements
are better off than others and positions in society
may change. But overall this positional competition This is where the second proposition comes in.
adds little or nothing to the levels of wellbeing in The possibility that certain basic entitlements – such as
the nation. This is one of the arguments that has life expectancy, health and educational participation –
been used to explain the life satisfaction paradox rely inherently on rising income, would cast a serious
&KDSWHU GRXEWRQRXUDELOLW\WRàRXULVKZLWKRXWJURZWK

If it’s right it suggests the possibility that a different The following graphs test this proposition using
form of social organisation – perhaps a more equal FURVVFRXQWU\ FRUUHODWLRQV EHWZHHQ LQFRPH DQG
society – in which social positioning is either less FHUWDLQ NH\ FRPSRQHQWV RI KXPDQ àRXULVKLQJ 7KH
important or signalled differently – could change analysis uses data collected over several decades by
things. We would need to confront the social logic that WKH8QLWHG1DWLRQV'HYHORSPHQW3URJUDPPH7KHVH
conspires to lock people into positional competition data in themselves can neither prove nor disprove a
(Chapter 6). We would also have to identify less causal link between income and prosperity. But they
materialistic ways for people to participate in the provide a useful starting point in understanding how
OLIH RI VRFLHW\ &KDSWHU  %XW LQ SULQFLSOH WKHVH LPSRUWDQW*'3PLJKWEHLQKXPDQàRXULVKLQJ
strategies could allow us to distinguish prosperity
from opulence and reduce our dependency on )LJXUH  IRU H[DPSOH PDSV OLIH H[SHFWDQF\ DJDLQVW
material growth. In other words, this particular DYHUDJHDQQXDOLQFRPHOHYHOVLQGLIIHUHQWQDWLRQV
aspect of the dilemma of growth may just turn out 7KHSDWWHUQLVVLPLODUWRWKHRQHLQ)LJXUH&KDSWHU
to be avoidable. which looked at the relationship between life
satisfaction and income. But now the ‘dependent
But relative (or distributional) effects don’t exhaust variable’ is life expectancy rather than satisfaction.
the relationship between income and human
àRXULVKLQJ 7KHUH UHPDLQV D GLVWLQFW SRVVLELOLW\ The difference between the poorest and the richest
that rising levels of income are required in and countries is striking, with life expectancies as low as
of themselves to establish and maintain absolute  \HDUV LQ SDUWV RI $IULFD DQG DOPRVW GRXEOH WKDW
levels of capability for functioning. in many developed nations. But the advantage of

Figure 8 Life expectancy at birth vs average annual income16

90

Japan Iceland
New Zealand
80 Costa Rica Ireland Norway
Malta
Cuba Chile United States
United Kingdom
Bahrain

70
Life expectancy at birth (years)

India
Russian Federation

60
Gabon

50 South Africa
Botswana
Mozambique

Swaziland
40

30
0 5000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000
GDP per capita (PPP $2005)

Figure 8: Life expectancy at birth vs average annual income

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 41
 90
being richer as a nation shows diminishing returns. SHUFDSLWDZKRVHLQIDQWPRUWDOLW\UDWHVDUH
$VLQFRPHULVHVWKHDGGLWLRQDOEHQHßWVLQWHUPVRI PXFKZRUVHWKDQWKRVHLQ&XED(TXDWRULDO*XLQHD
Japan Iceland
New Zealand
increased
80 life expectancy are reduced.
Costa Rica is a striking example, with a perNorway
Ireland capita income of
Malta
Chile
Cuba DQGLQIDQWPRUWDOLW\RIGHDWKVSHU
United Kingdom
United States

6RPH ORZLQFRPH FRXQWULHV KDYH OLIH H[SHFWDQFLHV Bahrainlive births.

that are70on a par with developed nations. Chile
ZLWKDQDYHUDJHDQQXDOLQFRPHRIKDVD The ambivalent relationship between income and
Life expectancy at birth (years)

India
Russian Federation
OLIH H[SHFWDQF\ RI  \HDUV JUHDWHU WKDQ WKDW RI health indicators is echoed in the relationship
60
Denmark (whose average income is almost three between income and education. The Human
WLPHVKLJKHUDW%XWLWLVDOVRSRVVLEOHWRßQG
Gabon Development Report’s Education Index – based
countries with incomes in the same range
South Africa
as Chile on a composite of educational participation rates
50
6RXWK$IULFDDQG%RWVZDQDIRULQVWDQFHZKHUHOLIH
Mozambique
Botswana – illustrates the same disparity between the very
H[SHFWDQF\LV\HDUVORZHU poor and the very rich. It also shows the familiar
40 Swaziland pattern of diminishing returns with respect to
$VLPLODUVWRU\HPHUJHVIURPWKHGDWDRQLQIDQWPRUWDOLW\ LQFRPHJURZWK)LJXUH
)LJXUH,QVXE6DKDUDQ$IULFDRIFKLOGUHQGLH
EHIRUHWKHLUßIWKELUWKGD\ZKHUHDVLQ2(&'FRXQWULHV
30 2QFHDJDLQLWLVSRVVLEOHWRßQGORZLQFRPHFRXQWULHV
WKHSURSRUWLRQLV%XWDVLQFRPHVLQFUHDVHWKH
0 5000 10,000 15,000 20,000 providing
25,000 educational
30,000 35,000participation
40,000 rates
45,000that50,000
are as
gains from growth again diminish quite rapidly. Infant KLJK
GDP per capita (PPPDV WKH PRVW GHYHORSHG QDWLRQV .D]DNKVWDQ
$2005)
PRUWDOLW\LQ&XEDLVVL[GHDWKVSHUOLYHELUWKVDV ZLWKLQDYHUDJHLQFRPHRIOHVVWKDQVFRUHV
low as it is inFigure
the US – even
8: Life though
expectancy Cubans,
at birth with an
vs average KLJKHURQWKHLQGH[WKDQ-DSDQ6ZLW]HUODQGRUWKH
annual income
DYHUDJHSHUFDSLWDLQFRPHRIHQMR\OHVVWKDQ 86FRXQWULHVZLWKLQFRPHOHYHOVIRXUDQGßYHWLPHV
RIWKHLQFRPHHQMR\HGE\$PHULFDQV KLJKHU(TXDOO\WKRXJKLWLVQpWKDUGWRßQGFRXQWULHV
ZLWK LQFRPH OHYHOV RI  ZKRVH HGXFDWLRQDO
$W WKH VDPH WLPH LW LV SRVVLEOH WR ßQG FRXQWULHV SDUWLFLSDWLRQ UDWHV DUH RQO\ WZRWKLUGV RI WKRVH LQ
with an average income somewhat higher than most developed nations.

Figure 9 Infant mortality vs per capita income17

180

Sierra Leone
160
Angola

140
Infant mortality (per 1000 live births)

Equatorial Guinea
120

100

Botswana
80

India
60
South Africa

40
China

40 Saudi Arabia
Qatar
New Zealand United Kingdom
United States
Cuba Chile Norway
0
0 5000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000

GDP per capita (PPP $2005)

Figure 9: Infant mortality vs per capita income

42 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission

 Interestingly, there is no hard and fast rule here
on the relationship between income growth and
LPSURYHGàRXULVKLQJ7KHSRRUHVWFRXQWULHVFHUWDLQO\
suffer extraordinary deprivations in life expectancy,
infant mortality and educational participation.
%XW DV LQFRPHV JURZ EH\RQG DERXW  SHU
capita the returns to growth diminish substantially.
Some countries achieve remarkable levels of
àRXULVKLQJ ZLWK RQO\ D IUDFWLRQ RI WKH LQFRPH
available to richer nations.
0RUHH[SORUDWLRQRIWKHVHUHODWLRQVKLSVLVZDUUDQWHG
Understanding the structural dependencies between
LQFRPHDQGKXPDQàRXULVKLQJLVDYLWDOVXEMHFWIRU
study. One of the questions that needs answering
is how things change over time, within countries.
)LJXUHLOOXVWUDWHVWKHLPSRUWDQFHRIWKLVTXHVWLRQ
for changes in life expectancy.
$JDLQWKHUHLVQRVLQJOHSDWWHUQ7KUHHRUIRXUGLIIHUHQW
modes of development emerge. One belongs to
gradually but very consistently over the last few
decades in spite of short periods of recession.
Japan offers an even more interesting example.
7KHFRXQWU\ZDVKLWTXLWHVHYHUHO\GXULQJWKH$VLDQ
FULVLV LQ WKH ODWH V DQG VXIIHUHG D SURORQJHG
SHULRG RI HFRQRPLF WXUEXOHQFH $QG \HW OLIH
expectancy subsequently increased faster than at
any time in the preceding two decades.
The ability to improve life expectancy despite a
faltering economy is also in evidence in another
JURXS RI FRXQWULHV H[HPSOLßHG E\ &KLOH DQG
$UJHQWLQDLQWKHJUDSK+HUHULVHVLQOLIHH[SHFWDQF\
appear much less dependent on income growth. In
$UJHQWLQDLQSDUWLFXODUHFRQRPLFRXWSXWKDVEHHQ
highly erratic over the last three decades, but the
gains in life expectancy have been substantial and
consistent.
)LQDOO\WKRXJKWKHUHDUHVRPHFRXQWULHVH[HPSOLßHG
WKH GHYHORSHG QDWLRQV t H[HPSOLßHG LQ )LJXUH 
E\WKH8.DQG-DSDQ,QWKHVHFRXQWULHVWKHUHLVD
very strong but quite ‘shallow’ correlation between
income growth and increased life expectancy. In the
8.IRUH[DPSOHOLIHH[SHFWDQF\KDVLQFUHDVHGTXLWH
LQ)LJXUHE\5XVVLDDQG6RXWK$IULFDZKLFKVKRZ
VLJQLßFDQW GHFOLQHV LQ OLIH H[SHFWDQF\ ZKHQ WKH
economy falters. In fact, almost all the former Soviet
bloc countries experienced reduced life expectancy
LQWKHSRVW6RYLHWHUD,Q5XVVLDLWVHOIOLIHH[SHFWDQF\

Figure 10 Participation in education vs income per capita18

1.20

New Zealand United Kingdom

1.00 Cuba Norway
Chile United States

Hong Kong
India
China
0.80 UAE
HDR Education Index

South Africa

0.60
Equatorial Guinea

Lesotho

0.40

Sierra Leone

0.20

0.00
0 5000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000
GDP per capita (PPP $2005)

Figure 10: Participation in education vs income per capita

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 43

 1.20

UHPDLQHGPRUHRUOHVVFRQVWDQWEHWZHHQDQG But one recent study suggests that there were

New Zealand United Kingdom

1.00EXW IHOO E\ 
Cuba IROORZLQJ WKH FROODSVH RI WKH VLJQLßFDQW KHDOWK LPSURYHPHQWVNorway LQ WKH DIWHUPDWK
Chile United States
Soviet Union. Perhaps most strikingly, this decline &DORULßF LQWDNH ZDV UHGXFHG E\ RYHU D WKLUG
Hong Kong
continued, India
even after the economy started to But obesity was halved and the percentage of
China
recover.
0.80 physically
UAE active adults more than doubled.
%HWZHHQ  DQG  oWKHUH ZHUH GHFOLQHV LQ
HDR Education Index

South Africa
The same phenomenon – decline in spite of GHDWKVDWWULEXWHGWRGLDEHWHVFRURQDU\KHDUW
economic
0.60 recovery – is visible in the case of South GLVHDVH>DQG@VWURNHp
$IULFD+HUHWKHFRQWH[WDQGWKHFRQWULEXWLQJIDFWRUV
Equatorial Guinea

DUH UDWKHU GLIIHUHQW

Lesotho $ VWULNLQJ IHDWXUH RI KXPDQ

GHYHORSPHQWDFURVV$IULFDVLQFHLVWKHFROODSVH
0.40 Income growth and economic stability
in life expectancy irrespective of growth rates. This
LVODUJHO\GRZQWRWKHGHYDVWDWLQJLPSDFWRI$LGV
Sierra Leone 7KLV EULQJV XV RQ WR WKH WKLUG SURSRVLWLRQ LGHQWLßHG
0.20 DERYH WKDW JURZWK LV IXQFWLRQDO LQ PDLQWDLQLQJ
Clearly growth doesn’t guarantee improved prosperity, economic and social stability. It is clear from the
HYHQ LQ VXFK EDVLF FRPSRQHQWV RI àRXULVKLQJ DV evidence here that collapsing economies do present
life0.00
expectancy. Incremental improvements have a risk of humanitarian loss. Economic stability or,
been possible
0 in most
5000 developed
10,000 nations,
15,000 alongside
20,000 at the 30,000
25,000 very least, some form
35,000 of social
40,000 resilience,
45,000 50,000is
more or less continuous economic growth. GDPBut
per capitaimportant
(PPP $2005)for prosperity.
there are also examples where life expectancy has
increasedFigure
much10:faster than income
Participation andvsone
in education or two
income per capitaEven so there are interesting differences between
where it has increased even in the face of prolonged countries faced with economic hardship. Some
or severe recession. FRXQWULHVtQRWDEO\&XED-DSDQ$UJHQWLQDtKDYHEHHQ
able to ride out quite severe economic turbulence
,Q &XED QRW VKRZQ LQ )LJXUH  WKH IRUPDO and yet maintain or even enhance national health.
HFRQRP\ *'3 PRUH RU OHVV FROODSVHG DIWHU WKH Others have watched life expectancy tumble in the
EUHDNXSRIWKH6RYLHW8QLRQLQSDUWO\EHFDXVH face of economic recession.
of the sudden removal of subsidised Soviet oil.

Figure 11 Changes in average life-expectancy and income over time21

85
2003
Japan 1995 2000
80 1985
1990
2003 1980
Chile 2000
1975
75 1995 2003
2000 United Kingdom
1990
Life expectancy at birth

1995
1985 1990 y = 0.0005x + 64.982
70 1985 R2 = 0.9638
1980 1990 1980 Argentina
Russia
1975
1995
65 1975
2000 2003

1990
1995
60 1985

1980
55 South Africa
2000 1975

50
2003

45
0 5000 10,000 15,000 20,000 25,000 30,000 35,000

GDP per capita (PPP $2005)

Figure 11: Changes in average life-expectancy and income over time

44 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
Some of the explanation for these differences must
OLH LQ VRFLDO VWUXFWXUH 7KH WUDQVLWLRQ RI H[6RYLHW
states to a market economy was characterised by
very profound changes in social structure, not the
least of which was a collapse in state provision
of health and social care. Little surprise, in these
circumstances, that life expectancy faltered. In Cuba
E\FRQWUDVWFRQWLQXLQJVWDWHOHGVRFLDOSURYLVLRQZDV
almost certainly a contributing factor in the health
improvements that followed the economic collapse.
Humanitarian loss in the face of economic turbulence,
in other words, may be more dependent on social
structure than on the degree of economic instability
that is encountered. There are some interesting
If the economy slows for any reason – whether
WKURXJK D GHFOLQH LQ FRQVXPHU FRQßGHQFH WKURXJK
commodity price shocks, or through a managed
attempt to reduce consumption – then the systemic
trend towards improved labour productivity leads to
unemployment. This in its turn, leads to diminished
VSHQGLQJSRZHUDORVVRIFRQVXPHUFRQßGHQFHDQG
further reduces demand for consumer goods.
From an environmental point of view this may be
desirable if it leads to lower resource use and fewer
polluting emissions. But it also means that retail
falters and business revenues suffer. Incomes fall.
Investment is cut back. Unemployment rises further
and the economy begins to fall into a spiral of
SROLF\OHVVRQVKHUH&KDSWHUIRUWKHSURVSHFWRI
prosperity without growth.
But the risk of humanitarian collapse is enough
to place something of a question mark over the
possibility that we can simply halt economic growth.
If halting growth leads to economic and social
collapse, then times look hard indeed. If it can be
achieved without collapse, prospects for maintaining
prosperity are considerably better.
Critical here is the question of whether a growing
economy is essential for economic stability. Is growth
IXQFWLRQDOIRUVWDELOLW\"'RZHQHHGHFRQRPLFJURZWK
DIWHUDOOVLPSO\WRNHHSWKHHFRQRP\VWDEOH"
The conventional answer is certainly that we do.
To see why, we need to explore a little further how
VXFKHFRQRPLHVZRUN$GHWDLOHGGLVFXVVLRQRIWKLVLV
deferred to Chapter 6. But the broad idea is simple
enough to convey.
0DUNHW HFRQRPLHV SODFH D KLJK HPSKDVLV RQ
WHFKQRORJLFDOHIßFLHQF\&RQWLQXRXVLPSURYHPHQWVLQ
technology mean that more output can be produced
for any given input of labour, capital and resources.
(IßFLHQF\ LPSURYHPHQW VWLPXODWHV GHPDQG E\
driving down costs and contributes to a positive cycle
of expansion. But crucially it also means that fewer
people are needed to produce the same goods from
one year to the next.
$VORQJDVWKHHFRQRP\JURZVIDVWHQRXJKWRRIIVHW
this increase in ‘labour productivity’, there isn’t
a problem. But if it doesn’t, then increased labour
productivity means that someone loses their job.
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK"
recession.
5HFHVVLRQKDVDFULWLFDOLPSDFWRQWKHSXEOLFßQDQFHV
Social costs rise with higher unemployment. But tax
revenues decline as incomes fall and fewer goods
are sold. Lowering spending risks real cuts to public
services. Cutting spending affects people’s capabilities
IRUàRXULVKLQJtDGLUHFWKLWRQSURVSHULW\
*RYHUQPHQWVPXVWERUURZPRUHQRWMXVWWRPDLQWDLQ
SXEOLFVSHQGLQJEXWWRWU\DQGUHVWLPXODWHGHPDQG
But in doing so, they inevitably increase the national
debt. Servicing this debt in a declining economy –
DV ZH QRWHG LQ &KDSWHU  t LV SUREOHPDWLF DW EHVW
Just maintaining interest payments takes up a larger
proportion of the national income.
The best that can be hoped for here is that demand
does recover and it’s possible to begin paying off the
debt. This could take decades. It took Britain almost
half a century to pay off public debts accumulated
through the Second World War. The Institute for
Fiscal Studies has estimated that the ‘debt overhang’
IURP WKH FXUUHQW FULVLV FRXOG ODVW LQWR WKH V
On the other hand, if the debt accumulates and the
economy fails to recover, the country is doomed to
bankruptcy.
Crucially, there is little resilience within this system.
Once the economy starts to falter, feedback
mechanisms that had once contributed to expansion
begin to work in the opposite direction, pushing the
economy further into recession. With a growing (and
aging) population these dangers are exacerbated.
Higher levels of growth are required to protect the same
OHYHO RI DYHUDJH LQFRPH DQG WR SURYLGH VXIßFLHQW
revenues for (increased) health and social costs.
45
In short, modern economies are driven towards
economic growth. For as long as the economy is
growing, positive feedback mechanisms tend to
push this system towards further growth. When
consumption growth falters the system is driven
towards a potentially damaging collapse with a
NQRFNRQLPSDFWRQKXPDQàRXULVKLQJ3HRSOHpVMREV
and livelihoods suffer.
There is of course, something of an irony here. Because
at the end of the day the answer to the question of
ZKHWKHU JURZWK LV IXQFWLRQDO IRU VWDELOLW\ LV WKLV LQ
D JURZWKEDVHG HFRQRP\ JURZWK LV IXQFWLRQDO IRU
stability. The capitalist model has no easy route to
DVWHDG\VWDWHSRVLWLRQ,WVQDWXUDOG\QDPLFVSXVKLW
WRZDUGVRQHRIWZRVWDWHVH[SDQVLRQRUFROODSVH
% *URZWKLVXQVXVWDLQDEOHtDWOHDVWLQLWVFXUUHQW
form. Burgeoning resource consumption and
rising environmental costs are compounding
profound disparities in social wellbeing
% o'HJURZWKpii is unstable – at least under
present conditions. Declining consumer
demand leads to rising unemployment, falling
competitiveness and a spiral of recession.
7KLV GLOHPPD ORRNV DW ßUVW OLNH DQ LPSRVVLELOLW\
theorem for a lasting prosperity. But it cannot be
avoided and has to be taken seriously. The failure
to do so is the single biggest threat to sustainability
that we face.

/DWHU &KDSWHU  ZH H[SORUH WKH SRVVLELOLWLHV IRU

amending this conclusion. In the meantime, we
appear to have returned to the dilemma with
which this chapter started. Or at least to a more
precise incarnation of it. Put in its simplest form the
‘dilemma of growth’ can now be stated in terms of
WZRSURSRVLWLRQV

ii De-growth (décroissance in the French) is an emerging term for (planned) reductions in economic output.

46 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission

 5

The Myth of Decoupling

“From 1981 to 2005 the global economy
more than doubled, but 60 percent of
the world’s ecosystems were either
degraded or over-used.”

8QLWHG1DWLRQV(QYLURQPHQW3URJUDPPH
2FWREHU
The conventional response to the dilemma of growth is to appeal to the concept of
oGHFRXSOLQJp 3URGXFWLRQ SURFHVVHV DUH UHFRQßJXUHG *RRGV DQG VHUYLFHV DUH UHGHVLJQHG
Economic output becomes progressively less dependent on material throughput. In this way,
it is hoped, the economy can continue to grow without breaching ecological limits – or running
out of resources.

It’s vital here to distinguish between ‘relative’ and
‘absolute’ decoupling. Relative decoupling refers
to a decline in the ecological intensity per unit of
economic output. In this situation, resource impacts
GHFOLQHUHODWLYHWRWKH*'3%XWWKH\GRQpWQHFHVVDULO\
decline in absolute terms. Impacts may still increase,
EXWGRVRDWDVORZHUSDFHWKDQJURZWKLQWKH*'3
The situation in which resource impacts decline
in absolute terms is called ‘absolute decoupling’.
1HHGOHVV WR VD\ WKLV ODWWHU VLWXDWLRQ LV HVVHQWLDO LI
economic activity is to remain within ecological
limits. In the case of climate change, for instance,
absolute reductions in global carbon emissions of
DUHUHTXLUHGE\LQRUGHUWRPHHWWKH
,3&&pVSSPVWDELOLVDWLRQWDUJHW
The aim of this chapter is to explore the evidence for
both relative and absolute decoupling. It concentrates
LQSDUWLFXODURQWUHQGVLQWKHFRQVXPSWLRQRIßQLWH
resources and the emission of carbon. These
examples don’t exhaust the concerns associated
familiar logic and a clear appeal as a solution to the
dilemma of growth.
Resource inputs represent a cost to producers. So the
SURßWPRWLYHVKRXOGVWLPXODWHDFRQWLQXLQJVHDUFKIRU
HIßFLHQF\ LPSURYHPHQW LQ LQGXVWU\ WR UHGXFH LQSXW
costs. Some evidence supports this hypothesis. For
example, the amount of primary energy needed to
produce each unit of the world’s economic output
has fallen more or less continuously over most of the
last half century. The global ‘energy intensity’ is now
ORZHUWKDQLWZDVLQ
These gains have been most evident in the advanced
economies. Energy intensities have declined three
WLPHVIDVWHULQWKH2(&'FRXQWULHVRYHUWKHODVW
\HDUVWKDQWKH\KDYHLQQRQ2(&'FRXQWULHV Energy
LQWHQVLW\ LQ ERWK WKH 86 DQG WKH 8. LV VRPH 
ORZHUWRGD\WKDQLWZDVLQ
Outside the most advanced nations, the pattern
has been much less clear. Even in some southern
with a continually growing economy. But they are
already of immediate concern and illustrate clearly
the scale of the problem.
How much decoupling has been achieved in these
H[DPSOHV" +RZ PXFK QHHGV WR EH DFKLHYHG"
Is it really possible for a strategy of ‘growth with
GHFRXSOLQJpWRGHOLYHUHYHULQFUHDVLQJLQFRPHVIRUD
world of nine billion people and yet remain within
HFRORJLFDOOLPLWV"7KHVHTXHVWLRQVDUHFHQWUDOWRWKLV
study.
Relative decoupling
Put very simply, relative decoupling is about doing
PRUH ZLWK OHVV PRUH HFRQRPLF DFWLYLW\ ZLWK OHVV
HQYLURQPHQWDO GDPDJH PRUH JRRGV DQG VHUYLFHV
with fewer resource inputs and fewer emissions.
'HFRXSOLQJ LV DERXW GRLQJ WKLQJV PRUH HIßFLHQWO\
$QG VLQFH HIßFLHQF\ LV RQH RI WKH WKLQJV WKDW
modern economies are good at, decoupling has a
48
(XURSHDQ FRXQWULHV *UHHFH 7XUNH\ 3RUWXJDO HJ
HQHUJ\LQWHQVLW\KDVLQFUHDVHGLQWKHODVWWZHQW\ßYH
\HDUV$QGLQHPHUJLQJHFRQRPLHVDQGGHYHORSLQJ
nations, achievements have been very mixed.
$FURVV WKH 0LGGOH (DVW HQHUJ\ LQWHQVLW\ PRUH
WKDQ GRXEOHG EHWZHHQ  DQG  LQ ,QGLD LW
LQFUHDVHGDWßUVWEXWKDVGHFOLQHGVORZO\VLQFHWKH
SHDNLQ,Q&KLQDHQHUJ\LQWHQVLW\IHOOE\RYHU
 WR WKH WXUQ RI WKH st Century but has now
begun to climb again.6
Overall, however, energy intensities declined
VLJQLßFDQWO\ GXULQJ WKH ODVW WKUHH GHFDGHV DFURVV
the OECD countries in particular. The same is true of
PDWHULDOLQWHQVLWLHVPRUHJHQHUDOO\)LJXUHVKRZV
D PHDVXUH RI PDWHULDO LQWHQVLW\ IRU ßYH DGYDQFHG
QDWLRQVLQFOXGLQJWKH8.RYHUWKHßQDOTXDUWHURI
WKHth Century. The Figure shows clear evidence of
‘relative decoupling’.
1RWVXUSULVLQJO\LPSURYHGUHVRXUFHHIßFLHQF\LVDOVR
OHDGLQJWRGHFOLQLQJHPLVVLRQLQWHQVLWLHV)LJXUH
3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
 Figure 12 Relative Decoupling in OECD countries 1975–20007

120
120
Japan
Japan

100
100

Austria
Austria
80
80
100
1975==100

60
60 Germany
1975

Germany

40 Netherlands UK
40 Netherlands UK

20
20

0
0 1975 1980 1985 1990 1995 2000
1975 1980 1985 1990 1995 2000
Figure 12: Relative Decoupling in OECD countries 1975-2000
Figure 12: Relative Decoupling in OECD countries 1975-2000
VKRZVWKHFKDQJLQJFDUERQGLR[LGHLQWHQVLW\RI*'3 $JDLQ VWHDG\ LPSURYHPHQWV DFURVV WKH 2(&'
RYHUWKHODVW\HDUV7KHJOREDOFDUERQLQWHQVLW\ countries were accompanied by a slightly more
GHFOLQHG E\ DOPRVW D TXDUWHU IURP MXVW RYHU  XQHYHQ SDWWHUQ DFURVV QRQ2(&' FRXQWULHV
kilogram of carbon dioxide per US dollar (kgCO 6LJQLßFDQW JURZWK LQ FDUERQ LQWHQVLW\ RFFXUUHG
LQWRJUDPVRIFDUERQGLR[LGHSHU86GROODU DFURVVWKH0LGGOH(DVWDQGGXULQJWKHHDUOLHUVWDJHV
(gCOLQ of development in India. China witnessed some

Figure 13 CO2 intensity of GDP across nations: 1980–20067

9.00

9.00
8.00

8.00
7.00
pricesprices

7.00 China
6.00
2000 market

China
6.00
/$ at market

5.00

5.00
4.00
at22000

US India World
4.00
3.00 UK Middle East Japan
/$ CO

World
kg CO2kg

US India
3.00
2.00 UK Middle East Japan

2.00
1.00

1.00
0.00
1980 1985 1990 1995 2000 2005
0.00
1980 1985 1990 1995 2000 2005
Figure 13: CO2 intensity of GDP across nations: 1980-2006
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 49

Figure 13: CO2 intensity of GDP across nations: 1980-2006

 striking improvements early on. But these have LQFUHDVHGE\VLQFH(PLVVLRQVWRGD\DUH
been partly offset by increasing carbon intensity in DOPRVW  KLJKHU WKDQ WKH\ ZHUH LQ  t WKH
recent years. Worryingly, the declining global trend .\RWREDVH\HDUtDQGVLQFHWKH\HDUWKH\KDYH
in carbon intensity has also faltered in recent years,
HYHQLQFUHDVLQJVOLJKWO\VLQFHLWVORZSRLQWLQ
Clearly, there is little room for complacency here.
7KH HIßFLHQF\ ZLWK ZKLFK WKH JOREDO HFRQRP\
uses fossil resources and generates carbon dioxide
emissions is improving in some places. But overall
we are making faltering progress at best.
To make matters worse, relative decoupling is
barely half the story. It measures only the resource
use (or emissions) per unit of economic output.
For decoupling to offer a way out of the dilemma
RI JURZWK UHVRXUFH HIßFLHQFLHV PXVW LQFUHDVH DW
OHDVW DV IDVW DV HFRQRPLF RXWSXW GRHV $QG WKH\
must continue to improve as the economy grows,
if overall burdens aren’t to increase. To achieve
WKLV PRUH GLIßFXOW WDVN ZH QHHG WR GHPRQVWUDWH
absolute decoupling. Evidence of this is much harder
WRßQG
Absolute decoupling
Despite declining energy and carbon intensities
carbon dioxide emissions from fossil fuels have
Figure 14 Trends in Fossil Fuel Consumption and Related CO2: 1980–20079
250
200
Natural Gas
1990 = 100
150
Coal
100
Combustion CO2
50
0
1980 1985
50 Figure 14: Trends in Fossil Fuel Consumption 3URVSHULW\ZLWKRXW*URZWK"
EHHQJURZLQJDWRYHUSHU\HDUVHH)LJXUH
)LJXUHGRHVLOOXVWUDWHVRPHUHODWLYHGHFRXSOLQJ
WKHZRUOG*'3KDVULVHQIDVWHUWKDQFDUERQGLR[LGH
emissions over the last eighteen years. But there
LV QR DEVROXWH GHFRXSOLQJ KHUH $QG D VXUJH LQ
world consumption of coal has increased the rate
of growth in carbon dioxide emissions since the
\HDU
What’s true for fossil resources and carbon emissions
is true for material throughputs more generally.
)LJXUHLOOXVWUDWHVGLUHFWPDWHULDOFRQVXPSWLRQIRU
WKH VDPH ßYH 2(&' FRXQWULHV VKRZQ LQ )LJXUH 
Despite very clear evidence of relative decoupling in
WKHHDUOLHUßJXUHWKHUHLVIDUOHVVHYLGHQFHKHUHRI
an absolute decline in material consumption.
The best that can be observed – in only a couple
of countries – is something of a stabilisation in
resource requirements, particularly since the late
V %XW HYHQ WKLV ßQGLQJ LV QRW HQWLUHO\ WR EH
WUXVWHG 7KH SUREOHP LV WKDW LWpV GLIßFXOW WR SLFN
up all the resources embedded in traded goods.
The measure shown here – direct material
consumption – does its best to identify traded
World GDP
Oil
1990 1995 2000 2005
and Related CO2: 1980-2007 Sustainable Development Commission

Figure 15 Direct Material Consumption in OECD Countries: 1975–200010
160
140
Austria
120
100
1975 = 100
80
60
40
20
0
1975 1980 1985
Figure 15: Direct Material Consumption in OECD Countries:
àRZVRIVSHFLßFUHVRXUFHV%XWLWPLVVHVRXWRQWKH
resources (and emissions) used to manufacture
ßQLVKHGDQGVHPLßQLVKHGSURGXFWVDEURDG
This question is important precisely because of the
structure of modern developed economies, which
have typically tended to move progressively away
from domestic manufacturing. Unless the demand
for consumer goods also declines, more and more
ßQLVKHG DQG VHPLßQLVKHG JRRGV QHHG WR EH
LPSRUWHGIURPDEURDG$QGVLQFHFRQFHSWVOLNHGLUHFW
material consumption omit such accounts, Figure
 XQGHUHVWLPDWHV WKH UHVRXUFH UHTXLUHPHQWV RI
developed economies.
Correcting this failing calls for more sophisticated
resource and economic models than are currently
available. In the case of carbon dioxide, however,
VHYHUDO UHFHQW VWXGLHV IRU WKH 8. KDYH FRQßUPHG
that national accounts systematically fail to account
for the ‘carbon trade balance’. In other words, there
are more (hidden) carbon emissions associated
ZLWK8.FRQVXPSWLRQSDWWHUQVWKDQDSSHDUIURPWKH
QXPEHUVZHUHSRUWWRWKH8QLWHG1DWLRQVXQGHUWKH
Climate Change Convention.
In fact, this difference is enough to undermine
WKH SURJUHVV PDGH WRZDUGV WKH 8.pV .\RWR
WDUJHWV$QDSSDUHQWUHGXFWLRQLQHPLVVLRQVRI
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK"
2
Japan Germany
UK
Netherlands
1990 1995 2000
1975-2000
EHWZHHQ  DQG  DV UHSRUWHG XQGHU 81
)&&& JXLGHOLQHV LV WXUQHG LQWR DQ  LQFUHDVH LQ
emissions, once emissions embedded in trade are
taken into account.
:LWKRXW PRUH GHWDLOHG ZRUN LWpV GLIßFXOW WR NQRZ
whether this pattern is true more generally for
material resources. But given the trend away from
PDQXIDFWXULQJ LWpV FOHDUO\ ZLVH WR YLHZ )LJXUH 
with some caution. There is an outside chance that
some stabilisation of resource consumption has
RFFXUUHG %XW )LJXUH  GRHVQpW SURYLGH D ORW RI
FRQßGHQFHLQDEVROXWHGHFRXSOLQJHYHQZLWKLQWKH
advanced economies.
Ultimately, in any case, what count most in terms
of global limits are worldwide statistics. Both
climate change and resource scarcity are essentially
JOREDOLVVXHV6RWKHßQDODUELWHURQWKHIHDVLELOLW\
of absolute decoupling – and the possibilities for
escaping the dilemma of growth – are worldwide
WUHQGV)LJXUHFRQßUPHGDULVLQJJOREDOWUHQGLQ
IRVVLOIXHOVDQGFDUERQHPLVVLRQV)LJXUHVKRZV
the global trend in the extraction of another vital set
RIßQLWHUHVRXUFHVtPHWDORUHV
:KDWpVVWULNLQJIURP)LJXUHLVQRWMXVWWKHDEVHQFH
of absolute decoupling. There is little evidence of
relative decoupling either. Some improved resource
51
Figure 16 Global Trends in Primary Metal Extraction: 1990–200712

250

200
Copper

Nickel

150 World GDP

1990 = 100

100 Zinc

Bauxite Iron Ore

50

0
1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007
Figure 16: Global Trends in Primary Metal Extraction: 1990-2007
HIßFLHQF\ LV HYLGHQW LQ WKH HDUOLHU \HDUV EXW WKLV WHFKQRORJLFDO VKLIW D VLJQLßFDQW SROLF\ HIIRUW
appears to have been eroded more recently. ZKROHVDOHFKDQJHVLQSDWWHUQVRIFRQVXPHUGHPDQG
Particularly
800 notable 768 is the increased consumption a huge international drive for technology transfer
of structural metals. Extraction of iron ore, bauxite, to bring about substantial reductions in resource
copper750
and nickel is now rising faster than world LQWHQVLW\ULJKWDFURVVWKHZRUOGWKHVHFKDQJHVDUH
*'3 the least that will be needed to have a chance of
700
remaining within environmental limits and avoiding
5HDVRQV
650IRU WKLV DUH QRW SDUWLFXODUO\ KDUG WR ßQG an inevitable collapse in the resource base at some
&KLQDpV KXQJHU IRU LURQ RUH LV ZHOOGRFXPHQWHG 
point
Scenario 1: 9 billion people: in the
trend (notgrowth
income too distant) future.
600
$V WKH HPHUJLQJ HFRQRPLHV EXLOG ScenarioXS WKHLU
2: 11 billion people: trend income growth
infrastructures, the rising demandScenariofor structural The incomes
3: 9 billion people: message here 2007
at equitable is not that decoupling is
EU level
Carbon Intensity gCO2/$

550
materials is one of the factors thatScenario
put an 4:upward unnecessary.
9 billion people: On the contrary,
incomes at equitable absolute
2007 EU level plus 2%reductions
growth
500 RQ FRPPRGLW\ SULFHV GXULQJ  DQG
SUHVVXUH in throughput are essential. The question is, how
WKHßUVWKDOIRIVHH&KDSWHU)LJXUH7KH PXFK LV DFKLHYDEOH" +RZ PXFK GHFRXSOLQJ LV
450
LPSDFW RQ FHUWDLQ QRQPHWDOOLF PLQHUDOV LV MXVW DV WHFKQRORJLFDOO\ DQG HFRQRPLFDOO\ YLDEOH" :LWK WKH
striking.
400Worldwide cement production has more right political will, could relative decoupling really
WKDQGRXEOHGVLQFHVXUSDVVLQJJURZWKLQZRUOG
347 proceed fast enough to achieve real reductions in
350
*'3E\VRPHSHUFHQWDJHSRLQWV*OREDOUHVRXUFH emissions and throughput, and allow for continued
LQWHQVLWLHV
300 WKH UDWLRV RI UHVRXUFH XVH WR *'3 IDU HFRQRPLF JURZWK" 7KHVH FULWLFDO TXHVWLRQV UHPDLQ
IURP GHFOLQLQJ KDYH LQFUHDVHG VLJQLßFDQWO\ DFURVV unanswered by those who propose decoupling as
244
D UDQJH
250RI QRQIXHO PLQHUDOV 5HVRXUFH HIßFLHQF\ WKHVROXWLRQWRWKHGLOHPPDRIJURZWK0RUHRIWHQ
is going in the wrong direction. Even relative than not, the crucial distinction between relative
200
decoupling just isn’t happening. and absolute decoupling isn’t even elucidated.
150
It’s clear from this that history provides little support It’s far too easy to get lost in general declarations
100SODXVLELOLW\ RI GHFRXSOLQJ DV D VXIßFLHQW
IRU WKH RI SULQFLSOH JURZLQJ HFRQRPLHV WHQG WR EHFRPH
solution to the dilemma of growth. But neither PRUH
36 UHVRXUFH30HIßFLHQW HIßFLHQF\ DOORZV XV WR
50
GRHV LW UXOH RXW WKH SRVVLELOLW\ HQWLUHO\ $ PDVVLYH 14
GHFRXSOH HPLVVLRQV IURP JURZWK VR WKH EHVW
6 ZD\
0
2007 World 2007 UK 2007 Japan 2050 (Scen 1) 2050 (Scen 2) 2050 (Scen 3) 2050 (Scen 4)
52 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
Now Required to meet 450 ppm target
to achieve targets is to keep growing the economy.
This argument is not at all uncommon in the tangled
debates about environmental quality and economic
growth.
It contains some partial truths – for example, that
VRPH HIßFLHQF\ LPSURYHPHQWV RFFXU LQ VRPH
advanced economies. It draws some support from
some limited evidence on air pollutants such as
sulphur dioxide and particulates. These emissions
VRPHWLPHVVKRZDQLQYHUWHG8VKDSHGUHODWLRQVKLS
ZLWKHFRQRPLFJURZWKHPLVVLRQVJURZLQWKHHDUO\
stage of growth but then peak and decline.
But this relationship only holds, according to
ecological economist Douglas Booth, for local, visible
environmental effects like smoke, river water quality
and acid pollutants. It isn’t uniformly true even for
WKHVH SROOXWDQWV $QG LW VLPSO\ GRHVQpW H[LVW DW DOO
for key indicators of environmental quality such as
carbon emissions, resource extraction, municipal
waste generation and species loss.
$V DQ HVFDSH IURP WKH GLOHPPD RI JURZWK LW LV
IXQGDPHQWDOO\ àDZHG (YHU JUHDWHU FRQVXPSWLRQ
RI UHVRXUFHV LV D GULYHU RI JURZWK $V LQGXVWULDO
HFRORJLVW5REHUW$\UHVKDVSRLQWHGRXWoFRQVXPSWLRQ
(leading to investment and technological progress)
drives growth, just as growth and technological
progress drives consumption.’ Protagonists of
growth seldom compute the consequences of this
relationship.
The Arithmetic of Growth
$ULWKPHWLFLVNH\KHUH$YHU\VLPSOHPDWKHPDWLFDO
identity governs the relationship between relative
and absolute decoupling. It was put forward almost
forty years ago by Paul Ehrlich and John Holdren.
The Ehrlich equation tells us quite simply that the
impact (I) of human activity is the product of three
SRSXODWLRQ3DQGLQFRPHSHUFDSLWD$JRXS
2YHU WKH ODVW ßYH GHFDGHV WKLV KDV EHHQ D WRXJK
DVN %RWK DIàXHQFH DQG SRSXODWLRQ KDYH JRQH XS
substantially, each being about equally responsible
IRU WKH RYHUDOO ßYHIROG JURZWK LQ WKH HFRQRP\
,Q UHFHQW \HDUV WKH DIàXHQFH IDFWRU KDV H[FHHGHG
the population factor in driving growth. But both
are clearly important, as Ehrlich himself clearly
recognised. $QG QHLWKHU KDV SURYHG SDUWLFXODUO\
WUDFWDEOH WR SROLF\ ,QFUHDVLQJ DIàXHQFH KDV EHHQ
seen as synonymous with improved wellbeing.
$GYRFDWLQJ OLPLWV WR SRSXODWLRQ JURZWK KDV EHHQ
seen as contravening basic human liberties.
Ironically, both these preconceptions are wrong.
Increasing incomes don’t always guarantee
ZHOOEHLQJ DQG VRPHWLPHV GHWUDFW IURP LW $QG
the fastest population growth has occurred in
the developing world – driven not by liberty but
by a lack of education and inadequate access to
contraception.
1RQHWKHOHVV WKH LQWUDFWDELOLW\ RI DGGUHVVLQJ ERWK
population and income has tended to reinforce the
LGHDWKDWRQO\WHFKQRORJ\FDQVDYHXV.QRZLQJWKDW
HIßFLHQF\LVNH\WRHFRQRPLFSURJUHVVLWLVWHPSWLQJ
to place our faith in the possibility that we can push
relative decoupling fast enough that it leads in the
end to absolute decoupling. But just how feasible
LVWKLV"
7KHUHLVDFRQYHQLHQWoUXOHRIWKXPEpWRßJXUHRXW
when relative decoupling will lead to absolute
decoupling. In a growing population with an
increasing average income, absolute decoupling
will occur when the rate of relative decoupling is
greater than the rates of increase in population and
income combined.
With this rule of thumb in mind, it’s instructive to
explore what’s happened historically (and why) to
global carbon dioxide emissions.
IDFWRUV WKH VL]H RI WKH SRSXODWLRQ 3 LWV OHYHO RI
DIàXHQFH$H[SUHVVHGDVLQFRPHSHUSHUVRQDQG Carbon intensities have declined on average by
a technology factor (T), which measures the impact SHU\HDUVLQFH7KDWpVJRRGEXWQRWJRRG
DVVRFLDWHGZLWKHDFKGROODUZHVSHQG%R[ HQRXJK3RSXODWLRQKDVLQFUHDVHGDWDUDWHRI
and average per capita income has increased by
For as long as the T factor is going down, then we
are safe in the knowledge that we have relative
decoupling. But for absolute decoupling we need I
WRJRGRZQDVZHOO$QGWKDWFDQRQO\KDSSHQLI7
goes down fast enough to outrun the pace at which
HDFK\HDULQUHDOWHUPVRYHUWKHVDPHSHULRG
(IßFLHQF\KDVQpWHYHQFRPSHQVDWHGIRUWKHJURZWK
in population, let alone the growth in incomes.
Instead, carbon emissions have grown on average
E\t SHU\HDUOHDGLQJRYHU\HDUV

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 53

 Box 3: 8QUDYHOOLQJWKH$ULWKPHWLFRI*URZWK

7KH(KUOLFKHTXDWLRQVWDWHVWKDWHQYLURQPHQWDO,LVDSURGXFWRISRSXODWLRQ3WLPHVDIàXHQFHRULQFRPHOHYHO

$WLPHVWKHWHFKQRORJLFDOLQWHQVLW\7RIHFRQRPLFRXWSXW

, 3[$[7

For carbon dioxide emissions from fuel combustion, for example, the total emissions are given by the product of
SRSXODWLRQ3WLPHVLQFRPHPHDVXUHGDVGROODUVRI*'3SHUVRQWLPHVWKHFDUERQLQWHQVLW\RIHFRQRPLFDFWLYLW\
(measured as gCO

& 3[SHUVRQ[J&2

8VLQJWKLVDULWKPHWLFIRUWKH\HDUZKHQWKHJOREDOSRSXODWLRQZDVDERXWELOOLRQWKHDYHUDJHLQFRPH
OHYHOLQFRQVWDQWGROODUVDWPDUNHWSULFHVZDVDQGWKHFDUERQLQWHQVLW\ZDVJ&2ZHßQG
WKDWWKHWRWDOFDUERQGLR[LGHHPLVVLRQV&ZHUH

[[ ELOOLRQWRQQHVRI&2.

,QZKHQWKHSRSXODWLRQZDVRQO\ELOOLRQDQGWKHDYHUDJHLQFRPHZDVEXWFDUERQLQWHQVLW\ZDV
J&2WRWDOFDUERQGLR[LGHHPLVVLRQV&ZHUHJLYHQE\

[[ ELOOLRQWRQQHVRI&2.

7KHVH QXPEHUV DUH FRQßUPHG DJDLQVW WKRVH UHSRUWHG LQ WKH (QHUJ\ ,QIRUPDWLRQ $GPLQLVWUDWLRQpV International
Energy Annual 7KH FXPXODWLYH JURZWK LQ HPLVVLRQV EHWZHHQ  WKH .\RWR EDVH \HDU DQG  ZDV 
 ZLWKDQDYHUDJHJURZWKUDWHLQHPLVVLRQVUiRIDOPRVWUi t 

WRDQDOPRVWLQFUHDVHLQHPLVVLRQV%R[
The same rule of thumb allows us a quick check
on the feasibility of decoupling carbon emissions
from growth in the future. The IPCC’s Fourth
$VVHVVPHQW UHSRUW VXJJHVWV WKDW DFKLHYLQJ D 
ppm stabilisation target means getting global
FDUERQ GLR[LGH HPLVVLRQV GRZQ WR EHORZ  ELOOLRQ
WRQQHVSHUDQQXPE\RUVRRQDIWHU7KLVZRXOG
be equivalent to reducing annual emissions at an
DYHUDJH UDWH RI  SHU \HDU EHWZHHQ QRZ DQG

HPLVVLRQV DUH  higher than they are today.
1RWTXLWHZKDWWKH,3&&KDGLQPLQG
7R DFKLHYH DQ DYHUDJH \HDURQ\HDU UHGXFWLRQ LQ
HPLVVLRQV RI  ZLWK  SRSXODWLRQ JURZWK
DQG  LQFRPH JURZWK 7 KDV WR LPSURYH E\
DSSUR[LPDWHO\        HDFK \HDU t
almost ten times faster than it is doing right now.
%\  WKH DYHUDJH FDUERQ FRQWHQW RI HFRQRPLF
RXWSXW ZRXOG QHHG WR EH OHVV WKDQ  J&2 D
IROGLPSURYHPHQWRQWKHFXUUHQWJOREDODYHUDJH
But income and global population are going in the
RSSRVLWHGLUHFWLRQ$FFRUGLQJWRWKH81pVPLGUDQJH
estimate, the world’s population is expected to reach
QLQHELOOLRQSHRSOHE\tDQDYHUDJHJURZWKRI
HDFK\HDU8QGHUEXVLQHVVDVXVXDOFRQGLWLRQV
the decline in carbon intensity just about balances
the growth in population and carbon emissions
will end up growing at about the same rate as the
DYHUDJH LQFRPH t  D \HDU ,W PLJKW QRW VRXQG
)LJXUH6FHQDULR
,QIDFWWKLQJVFRXOGJHWHYHQZRUVHWKDQWKLV$WWKH
KLJKHUHQGRIWKH81pVSRSXODWLRQHVWLPDWHVtLQD
ZRUOGRIDOPRVWELOOLRQSHRSOHtEXVLQHVVDVXVXDO
would more than double global carbon emissions
RYHU WRGD\pV OHYHO $FKLHYLQJ WKH  WDUJHW LQ
these circumstances would put even more pressure
on technological improvements, to drive the carbon
LQWHQVLW\ RI RXWSXW GRZQ WR OHVV WKDQ  J&2
PXFKEXWE\XQGHUWKHVHDVVXPSWLRQVFDUERQ )LJXUH6FHQDULR

54 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission

 1RWDEO\WKLVZRXOGVWLOOEHDGHHSO\XQHTXDOZRUOG
250 or so years.%\WKHDYHUDJHFDUERQLQWHQVLW\
%XVLQHVVDVXVXDOLQFRPHJURZWKLVXVXDOO\WDNHQWR ZRXOGQHHGWREHWLPHVORZHUWKDQLWLVWRGD\DW
PHDQ D VWHDG\  RU  JURZWK UDWH LQ WKH PRVW RQO\J&2)LJXUH6FHQDULR
developed
200
countries while the rest of the world
does its best to catch up – China and India leaping $QG WKLV VFHQDULR VWLOO KDVQpW IDFWRUHG LQ LQFRPH
Copper
DKHDGDWSHUDQQXPDWOHDVWIRUDZKLOHZLWK growth in the developed nations. Imagine a scenario
Nickel
$IULFD6RXWK$PHULFDDQGSDUWVRI$VLDODQJXLVKLQJ in which incomes everywhere are commensurate
in the150
doldrums for decades to come. InWorld mostGDPof ZLWK D  LQFUHDVH SHU DQQXP LQ WKH FXUUHQW (8
1990 = 100

these scenarios, both the incomes and the carbon average income. The global economy grows almost
footprints of the developed nations would be more WLPHVLQWKLVVFHQDULRDQGFDUERQLQWHQVLW\PXVW
Zinc
WKDQ100
DQ RUGHU RI PDJQLWXGH KLJKHU E\  WKDQ IDOO E\ RYHU  HYHU\ VLQJOH \HDU %\  WKH
those in the poorest nations. Bauxite carbon content of each dollar has to be no more
Iron Ore
than 6 gCO7KDWpVDOPRVWWLPHVORZHUWKDQ
If we were
50
really serious about fairness and wanted WKH DYHUDJH FDUERQ LQWHQVLW\ WRGD\ )LJXUH 
the world’s nine billion people all to enjoy an income 6FHQDULR
FRPSDUDEOH ZLWK (8 FLWL]HQV WRGD\ WKH HFRQRP\
would need to grow 6 times between now and %H\RQG  RI FRXUVH LI JURZWK LV WR FRQWLQXH
0
ZLWKLQFRPHVJURZLQJDWDQDYHUDJHUDWHRI VR PXVW HIßFLHQF\ LPSURYHPHQWV :LWK JURZWK DW
1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007
D\HDU$FKLHYLQJWKH,3&&pVHPLVVLRQWDUJHWLQ D\HDUIURPWRWKHHQGRIWKHFHQWXU\WKH
this world means pushing down the carbon intensity HFRQRP\ LQ  LV  WLPHV WKH VL]H RI WRGD\pV
RIRXWSXWE\HYHU\VLQJOH\HDUIRUWKHQH[WIRUW\ HFRQRP\$QGWRDOOLQWHQWVDQGSXUSRVHVQRWKLQJ
Figure 16: Global Trends in Primary Metal Extraction: 1990-2007

Figure 17 Carbon Intensities Now and Required to Meet 450 ppm Target25

800 768

750

700

650
Scenario 1: 9 billion people: trend income growth
600
Scenario 2: 11 billion people: trend income growth
Scenario 3: 9 billion people: incomes at equitable 2007 EU level
Carbon Intensity gCO2/$

550
Scenario 4: 9 billion people: incomes at equitable 2007 EU level plus 2% growth
500

450

400
347
350

300
244
250

200

150

100

50 36 30
14 6
0
2007 World 2007 UK 2007 Japan 2050 (Scen 1) 2050 (Scen 2) 2050 (Scen 3) 2050 (Scen 4)

Now Required to meet 450 ppm target

Sustainable Figure
Development Commission
17: Carbon 3URVSHULW\ZLWKRXW*URZWK"
Intensities Now and Required to Meet 450 ppm Target 55
less than a complete decarbonisation of every single
GROODUZLOOGRWRDFKLHYHFDUERQWDUJHWV1HHGOHVVWR
say, these numbers look even worse, if the higher
81 SRSXODWLRQ SURMHFWLRQV PDWHULDOLVH $OWKRXJK
conversely, of course, more robust population
policies would reduce the pressure on technology.
Stark choices
Playing with numbers may seem like dancing angels
on the head of a pin. But simple arithmetic hides
VWDUNFKRLFHV$UHZHUHDOO\FRPPLWWHGWRHUDGLFDWLQJ
SRYHUW\" $UH ZH VHULRXV DERXW UHGXFLQJ FDUERQ
way is an open question. The truth is, we haven’t yet
WULHGWKDWKDUGWRDFKLHYHLW$V3DXO(NLQVSRLQWHG
out in his contribution to Redefining Prosperity,
current policies barely scratch the surface of what
could be done to deliver decoupling. Substantial
early investment in low carbon technologies is
obviously essential.
The need for this kind of investment could transform
WKH HFRQRPLFV RI WKH st Century. Its impact on
global growth is far from certain. The Stern Review
famously argued that ‘the annual costs of achieving
VWDELOLVDWLRQDUH DURXQG  RI JOREDO *'3p But
the stabilisation target was a less punishing one
HPLVVLRQV" 'R ZH JHQXLQHO\ FDUH DERXW UHVRXUFH
VFDUFLW\GHIRUHVWDWLRQELRGLYHUVLW\ORVV" Or are we so
blinded by conventional wisdom that we daren’t do
WKHVXPVIRUIHDURIUHYHDOLQJWKHWUXWK"
One thing is clear. Business as usual is grossly
LQDGHTXDWHDVHYHQWKH,QWHUQDWLRQDO(QHUJ\$JHQF\
– the world’s energy watchdog – now accepts. Their
‘Reference’ scenario has the demand for primary
HQHUJ\ JURZLQJ E\  E\  RQWUDFN IRU WKH
KLNHLQFDUERQHPLVVLRQVDOOXGHGWRDERYH
7KH ,($pV o6WDELOLVDWLRQp VFHQDULR UHYHDOV WKH VFDOH
of the challenge. ‘Our analysis shows that OECD
countries alone cannot put the world onto a
SSPWUDMHFWRU\HYHQLIWKH\ZHUHWRUHGXFHWKHLU
HPLVVLRQVWR]HURpWKH:RUOG(QHUJ\2XWORRN
admits.
The report also highlights the scale of investment
that is likely to be needed over the coming decades.
Stabilising carbon emissions (and addressing
SSPWKDQLVQRZEHOLHYHGWREHQHFHVVDU\
Stern himself subsequently revised his cost estimate
WR  RI *'3 RQ WKH JURXQGV WKDW D VWDELOLVDWLRQ
WDUJHWRISSPZDVQRZQHHGHGEHFDXVHFOLPDWH
change was proceeding faster than previously
DQWLFLSDWHG 7KH 8. &OLPDWH &KDQJH &RPPLWWHHpV
ßUVW UHSRUW SXEOLVKHG LQ 'HFHPEHU  FDPH
XS ZLWK FRVWV FRQVLVWHQW ZLWK 6WHUQ $FFRXQWDQF\
ßUP 3ULFH:DWHUKRXVH&RRSHUV HVWLPDWHG WKH FRVWV
RI DFKLHYLQJ D  UHGXFWLRQ LQ JOREDO FDUERQ
HPLVVLRQVDWRIJOREDO*'3
Though clearly substantial, even these numbers may
underestimate the economic impact of addressing
climate change. ‘The easy compatibility between
economic growth and climate change, which lies at
the heart of the Stern Report, is an illusion,’ claims
energy economist Dieter Helm. Stern’s microeconomic
appraisals of cost suffer from serious ‘appraisal
optimism’, he suggests, assuming that wholesale
transformation of energy systems can be achieved
SUREOHPVRIHQHUJ\VHFXULW\UHTXLUHVDZKROHVFDOH
transition in global energy systems. Technological
change is essential, with or without growth. Even a
VPDOOHUHFRQRP\ZRXOGIDFHWKLVFKDOOHQJHGHFOLQLQJ
fossil energy requirements and substantially reduced
carbon emissions are vital.
We can never entirely discount the possibility that
some massive technological breakthrough is just
round the corner. But it’s clear that early progress
towards carbon reduction will have to rely on
RSWLRQV WKDW DUH DOUHDG\ RQ WKH WDEOH HQKDQFHG
HQHUJ\ HIßFLHQF\ UHQHZDEOH HQHUJ\ DQG SHUKDSV
carbon capture and storage.
Just how much decoupling could be achieved in this
56
by scaling up marginal cost estimates.
+HOP DOVR DWWDFNV WKH PDFURHFRQRPLFV RI FXUUHQW
VWDELOLVDWLRQ VFHQDULRV 1RW RQO\ FRXOG FDUERQ
abatement policies interfere more seriously with
SURGXFWLYLW\WKDQPDQ\PDFURHFRQRPLFDVVHVVPHQWV
suggest, but early climate change impacts could
WKHPVHOYHVUHGXFHSRWHQWLDOJURZWK$VVXPLQJWKDW
economic growth simply rolls onwards in the face of
high mitigation and adaptation costs is untenable,
claims Helm.
Besides all this, none of the existing stabilisation
scenarios (including those in the Stern review)
deliver global income parity. Income growth in the
developed nations is taken as read. Parts of the
3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
developing world are assumed to catch up a little
with the richer nations. But no attempt is made to
develop scenarios in which incomes are distributed
equally across nations. Unless growth in the richer
nations is curtailed or some kind of completely
unforeseen technological breakthrough happens,
the carbon implications of a truly shared prosperity
are even more daunting to contemplate.
7KHWUXWKLVWKDWWKHUHLVDV\HWQRFUHGLEOHVRFLDOO\
MXVW HFRORJLFDOO\VXVWDLQDEOH VFHQDULR RI FRQWLQXDOO\
growing incomes for a world of nine billion people.
In this context, simplistic assumptions that
FDSLWDOLVPpV SURSHQVLW\ IRU HIßFLHQF\ ZLOO DOORZ XV
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK"
to stabilise the climate or protect against resource
scarcity are nothing short of delusional. Those who
promote decoupling as an escape route from the
dilemma of growth need to take a closer look at
the historical evidence – and at the basic arithmetic
of growth.
5HVRXUFHHIßFLHQF\UHQHZDEOHHQHUJ\DQGUHGXFWLRQV
in material throughput all have a vital role to play in
ensuring the sustainability of economic activity. But
the analysis in this chapter suggests that it is entirely
fanciful to suppose that ‘deep’ emission and resource
cuts can be achieved without confronting the structure
of market economies.
57
58 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
 6
“As every hunted animal knows, it is not
how fast you run that counts, but whether
you are slower than everyone else.”

The Economist
1RYHPEHU

Confronting Structure
A sense of anxiety pervades modern society. At times it tips over into visceral fear.
The economic crisis of 2008 was such a time. Financial institutions became almost paralysed
by fear. Banks refused to lend even to each other; consumers stopped spending because of it.
Governments displayed signs of being totally bewildered, both by the speed of change and
by the implications of failure.

Fear may not be all bad. The threat of imminent
collapse may have been the only force strong enough
WR EULQJ VR PDQ\ FRXQWULHV WRJHWKHU LQ ODWH 
with a pledge to ‘achieve needed reforms in the
ZRUOGpVßQDQFLDOV\VWHPVp'HFLVLYHQHVVLQWKHIDFH
RIIHDUZRQ*RUGRQ%URZQKLVLQWHUQDWLRQDOSODXGLWV
GXULQJWKHHDUO\SKDVHRIßQDQFLDOUHFRYHU\
$QG\HWWKHVHQVHRIDPRUHIXQGDPHQWDODPRUH
pervasive anxiety underlying the modern economy
is an enduring one. Could it really be the case, as
The Economist suggests, that we are still behaving
OLNHKXQWHGDQLPDOVHYHQLQWKHst Century, driven
E\WKHßQHGLVWLQFWLRQEHWZHHQSUHGDWRUDQGSUH\"
,IZHDUHLWZRXOGEHJRRGWRUHFRJQLVHLW$QGWR
understand why. For without that understanding,
solutions to the dilemmas we face will inevitably
prove elusive.
$GPLWWHGO\ WKH GLOHPPD RI JURZWK LVQpW KHOSLQJ
much, looking as it does like an impossibility
theorem for lasting prosperity. Perhaps at some
instinctive level, we have always understood this.
0D\EHZHpUHKDXQWHGE\VXEFRQVFLRXVIHDUWKDWWKH
‘good life’ we aspire to is already deeply unfair and
can’t last forever. That realisation – even repressed
– might easily be enough to taint casual joy with
existential concern.
magnitude necessary to allow growth to continue
tDWOHDVWIRUDZKLOH$QG\HWWKHLGHDRIUXQQLQJ
faster and faster to escape the damage we’re
already causing is itself a strategy that smacks of
SDQLF 6R EHIRUH ZH VHWWOH IRU LW D OLWWOH UHàHFWLRQ
may be in order.
$FFRUGLQJO\ WKLV FKDSWHU FRQIURQWV WKH VWUXFWXUH
of modern economies head on. In particular, it
explores two interrelated features of economic life
that are central to the growth dynamic. On the one
KDQGWKHSURßWPRWLYHVWLPXODWHVQHZHUEHWWHURU
cheaper products and services through a continual
process of innovation and ‘creative destruction’.
$WWKHVDPHWLPHWKHPDUNHWIRUWKHVHJRRGVUHOLHV
on an expanding consumer demand, driven by a
complex social logic.
These two factors combine to drive ‘the engine of
growth’ on which modern economies depend and
lock us in to an ‘iron cage’ of consumerism. It’s
essential to get a better handle on this twin dynamic,
not least so that we can identify the potential to
escape from it. The starting point is to unravel some
of the workings of the modern economy.
Economic structure

$QG RI FRXUVH WKH DQDO\VLV LQ &KDSWHU  GRHVQpW $W LWV RXWHU IURQWLHU FRQVXPHU FDSLWDOLVP LV D
allay those fears. It more or less closes down the complex beast, generating whole new species of
most obvious escape from the dilemma of growth. ßQDQFLDOGHULYDWLYHVMXVWWRNHHSLWVHOIDàRDW$WLWV
(IßFLHQF\LVDJUDQGLGHD$QGFDSLWDOLVPVRPHWLPHV KHDUWLWLVVWULNLQJO\VLPSOH)LJXUH
delivers it. But even as the engine of growth delivers
productivity improvement, so it also drives forward ,Q EURDG WHUPV ßUPV HPSOR\ ODERXU SHRSOH DQG
WKH VFDOH RI WKURXJKSXW 1RZKHUH LV WKHUH DQ\ capital (buildings and machinery) to produce the
HYLGHQFHWKDWHIßFLHQF\FDQRXWUXQtDQGFRQWLQXH goods and services that households want and need.
to outrun – scale in the way it must do if growth is Households (people) offer up their labour and
to be compatible with sustainability.
There is still a possibility that we just haven’t tried
hard enough. With a massive policy effort and huge
technological advances, perhaps we could reduce
capitaliiiVDYLQJVWRßUPVLQH[FKDQJHIRULQFRPHV
Revenue from the sale of goods and services is what
DOORZVßUPVWRSURYLGHSHRSOHZLWKLQFRPHV3HRSOH
spend some of this income on more consumer
goods. But some of it they save. These savings
resource intensities the two or three orders of DUHLQYHVWHGGLUHFWO\RULQGLUHFWO\EDFNLQWRßUPV

60 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission

Figure 18 The ‘Engine of Growth’ in Market Economies

FIRMS

Novelty,
price reduction

Consumer spending

INCREASING PRODUCTIVITY Goods, services, incomes

Investment

DIT
CRE

HOUSEHOLDS

Figure 18: The ‘Engine of Growth’ in Market Economies

7KLV LQ D QXWVKHOO LV WKH oFLUFXODU àRZp RI WKH ,QRQHVHQVHWKHßQDQFLDOFULVLVHPHUJHGSUHFLVHO\
economy. out of the complexity generated by the evolution of
DJOREDOßQDQFLDOVHFWRU$QGDVZHVDZLQ&KDSWHU
0LVVLQJ IURP WKLV RYHUVLPSOLßHG SLFWXUH RI WKH  WKDW FRPSOH[LW\ ZDV LQ SDUW WKH UHVXOW RI WU\LQJ
HFRQRP\ DQG IURP )LJXUH  DUH ZKDWpV FDOOHG WRNHHSLQJWKHV\VWHPJRLQJ*OREDOFUHGLWPDUNHWV
the public sector (government), the foreign sector facilitate one of the most fundamental features of
RYHUVHDVßUPVKRXVHKROGVDQGJRYHUQPHQWVDQG FDSLWDOLVPWKHGXDOUROHRIVDYLQJDQGLQYHVWPHQW
WKHßQDQFLDOVHFWRUtZKLFKPHGLDWHVWKHßQDQFLDO
àRZVRIWKHFLUFXODUHFRQRP\ The basic functioning of this feature is pretty simple.
300
Households give over part of their income to
Unemployment
$OO RI WKHVH DUH FUXFLDO 3DUWO\ EHFDXVH WKH\ savings. These savings are invested – either directly
Poverty
introduce a whole
250 new set of actors and a whole or through an intermediary (a bank, building society
QHZVHWRISRVVLELOLWLHVGLIIHUHQWZD\VRIVSHQGLQJ or investment house, e.g.) in businesses to generate
and producing, saving and investing. These offer SURßWV
200
VRPH SRWHQWLDO DV ZH VKDOO VHH LQ &KDSWHU  IRU
UHFRQßJXULQJWKHHFRQRP\%XWWKH\DOVRFRPSOLFDWH 3URßWLVNH\WRWKLVV\VWHP:K\ZRXOGKRXVHKROGV
2005 = 100

WKHEDVLFVLPSOLFLW\RI)LJXUHHQRUPRXVO\ JLYH WKHLU VDYLQJV WR ßUPV UDWKHU WKDQ VLPSO\

GDP per cap
150

iii Oddly for a system which borrows its name from it, the term ‘capital’ is confusing in the sheer variety of meanings given
to it within that
100 system. Buildings and machinery are ‘capital goods’ sometimes called physical capital. Financial capital
is used to refer to reserves of money (savings for instance), which of course can be used to invest in capital goods. And
FRQIXVLQJO\WKHWHUPFDSLWDOLVDOVRXVHGWRUHIHUWRWKHDFFXPXODWLRQRIZHDOWKRUDVVHWVtZKLFKLQFOXGHERWKßQDQFLDO
and physical capital. In simple terms, capital simply means a stock of something. This broader meaning has been taken
50
(Porritt 2005, e.g.) as the basis for arguing that there are things called natural capital (stocks of resources,GHGs
say), human
capital (stocks of skills) and social capital (stocks
Debt of community).
to GDP ratio
0
2005 2010 2015 2020 2025 2030 2035
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 61
hanging on to them or spending the money on
FRQVXPHU JRRGV" 2QO\ EHFDXVH WKH\ H[SHFW WR
receive a healthy ‘return’ on their capital at some
point in the future. This return is created out of the
VWUHDPRISURßWVIURPWKHßUPVWKH\LQYHVWLQ
)LUPV WKHPVHOYHV VHHN SURßW IRU VHYHUDO UHDVRQV
,Q WKH ßUVW SODFH LW SURYLGHV WKHP ZLWK ZRUNLQJ
capital (cash) to invest in maintenance and
improvements themselves. Secondly, it’s needed to
pay off the company’s creditors – people who’ve lent
WKHßUPPRQH\LQH[SHFWDWLRQRIDUHWXUQ7KLUGO\
it’s used to pay dividends to shareholders – people
who’ve bought a share in the company.
$FRPSDQ\WKDWVKRZVJRRGUHWXUQVDWWUDFWVPRUH
investment. The value of the company will rise
because people are prepared to pay more for shares
in it. When share values are rising, more people will
be keen to buy them. Creditors know they will get
their money back with interest. Shareholders know
that the value of their shares will rise. The company
NQRZV WKDW LW KDV VXIßFLHQW UHVRXUFHV WR PDLQWDLQ
its capital stock and invest in new processes and
technologies.
7KLVDELOLW\WRUHLQYHVWLVYLWDO$WDEDVLFOHYHOLWpV
needed to maintain quality. Without it, buildings
and equipment inevitably get run down. Product
quality is lost. Sales decline. The company loses
UHGXFLQJFDSLWDOFRVWVLQGHßQLWHO\LVQpWDQRSWLRQ7
When it comes to choosing which of the other two
factors to target, a lot depends on the relative price
of labour and materials. In a growing economy,
wages rise in real terms. Until very recently at least,
material costs have been falling in real terms. So in
practice, companies have invested preferentially in
technologies that reduce labour costs even if this
LQFUHDVHVPDWHULDOFRVWVDQREYLRXVFRXQWHUWRWKH
WUHQGRIUHVRXUFHSURGXFWLYLW\GLVFXVVHGLQ&KDSWHU
For a company, then, higher labour productivity
lowers the cost of its products and services. Foregoing
WKDW SRVVLELOLW\ UXQV WKH ULVN RI WKH FRPSDQ\ ßQGLQJ
itself at a disadvantage compared with national and
international competitors. In this case, it would sell
IHZHUJRRGVUHSRUWORZHUSURßWVWRLWVVKDUHKROGHUV
DQGULVNFDSLWDOàLJKWIURPWKHFRPSDQ\$WWKHQDWLRQDO
level, this dynamic plays out as the ability to compete
in international markets.
In short, the general trend in capitalism is towards
increasing labour productivity. Since this means
producing the same quantity of goods and services
with fewer people, the cycle creates a downward
pressure on employment that’s only relieved if
RXWSXWLQFUHDVHV$WWKHQDWLRQDOOHYHOWKLVPHDQV
growing the economy. Labour productivity more
WKDQ GRXEOHG LQ WKH 8. EHWZHHQ  DQG 
its competitive position and risks going out of
business.
Investment is also needed continually to improve
HIßFLHQF\ t LQ SDUWLFXODU ODERXU SURGXFWLYLW\ 7KH
%XWWKH*'3JUHZHYHQIDVWHUE\DQGWKLV
allowed for the unemployment rate to fall by half a
percentage point over the period.
(IßFLHQF\ GULYHV JURZWK IRUZDUGV %\ UHGXFLQJ
UROH RI HIßFLHQF\ LQ FDSLWDOLVP KDV DOUHDG\ EHHQ ODERXUDQGUHVRXUFHLQSXWVHIßFLHQF\EULQJVGRZQ
QRWHG &KDSWHU  7KH GULYHU IRU HIßFLHQF\ LV
HVVHQWLDOO\ WKH SURßW PRWLYH WKH QHHG WR LQFUHDVH
the difference between revenues from sales and
WKHFRVWVDVVRFLDWHGZLWKWKHVRFDOOHGIDFWRULQSXWV
capital, labour and material resources.
&RVWPLQLPLVDWLRQEHFRPHVDFRUHWDVNIRUDQ\ßUP
%XW LW LQYROYHV VRPH LQKHUHQW WUDGHRIIV $PRQJVW
these is that capital investment is needed, in addition
to its role in maintenance, to achieve cost reduction
LQ WKH RWKHU WZR IDFWRUV ODERXU DQG PDWHULDOV6
6ZLWFKLQJ WR PRUH HQHUJ\ HIßFLHQW DSSOLDQFHV RU
the cost of goods over time. This has the effect of
stimulating demand and promoting growth. Far
from acting to reduce the throughput of goods,
technological progress serves to increase production
output by reducing factor costs.
The phenomenon of ‘rebound’ attests to this.
0RQH\ VDYHG WKURXJK HQHUJ\ HIßFLHQF\ IRU
example, gets spent on other goods and services.
These goods themselves have energy costs that
RIIVHW WKH VDYLQJV PDGH WKURXJK HIßFLHQF\ DQG
sometimes wipe them out entirely (a situation
less labour intensive processes requires capital. GHVFULEHGDVoEDFNßUHp6SHQGLQJWKHVDYLQJVIURP
This continuing capital need both motivates the HQHUJ\HIßFLHQWOLJKWLQJVD\RQDFKHDSVKRUWKDXO
VHDUFK IRU ORZFRVW FUHGLW DQG KLJKOLJKWV WKH àLJKWLVRQHVXUHßUHUHFLSHIRUDFKLHYLQJWKLV
dangers of credit drying up. It also explains why

62 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission

7KLV VRPHZKDW FRXQWHULQWXLWLYH G\QDPLF KHOSV
H[SODLQ ZK\ VLPSOLVWLF DSSHDOV WR HIßFLHQF\
ZLOO QHYHU EH VXIßFLHQW WR DFKLHYH WKH OHYHOV RI
decoupling required for sustainability. In short,
relative decoupling sometimes has the perverse
potential to decrease the chances of absolute
decoupling.
+RZHYHUHIßFLHQF\DORQHGRHVQpWJXDUDQWHHVXFFHVV
LQEXVLQHVV0DNLQJWKHVDPHWKLQJPRUHDQGPRUH
HIßFLHQWO\GRHVQpWZRUNIRUDFRXSOHRIUHDVRQV7KH
ßUVW LV WKDW WKHUH DUH SK\VLFDO OLPLWV WR HIßFLHQF\
LPSURYHPHQW LQ VSHFLßF SURFHVVHV $W WKH EDVLF
level, these constraints are laid down by the laws
needs are catered for. But what does this continual
cycle of creative destruction have to do with human
àRXULVKLQJ"'RHVWKHVHOISHUSHWXDWLQJV\VWHPUHDOO\
FRQWULEXWH WR SURVSHULW\ LQ DQ\ PHDQLQJIXO VHQVH"
Isn’t there a point at which enough is enough and
we should simply stop producing and consuming so
PXFK"
One of the things that prevents this happening,
clearly, is the structural reliance of the system itself
on continued growth. But proponents also point to
WKHKXPDQEHQHßWVWKDWWKLVNLQGRIHQWUHSUHQHXUVKLS
EULQJV DGYDQFHV LQ PHGLFDO VFLHQFH IRU H[DPSOH
which have contributed to increased longevity
of thermodynamics. The second is that failing to
diversify and innovate risks losing out to competitors
producing newer and more exciting products.
7KH HFRQRPLVW -RVHSK 6FKXPSHWHU ZDV WKH ßUVW
to suggest that it is in fact novelty, the process
of innovation, that is vital in driving economic
growth. Capitalism proceeds, he said, through a
SURFHVVRIoFUHDWLYHGHVWUXFWLRQp1HZWHFKQRORJLHV
and products continually emerge and overthrow
existing technologies and products. Ultimately,
this means that even successful companies cannot
VXUYLYHVLPSO\WKURXJKFRVWPLQLPLVDWLRQ
The ability to adapt and to innovate – to design,
produce and market not just cheaper products
but newer and more exciting ones – is vital. Firms
&KDSWHURUWKHVKHHUYDULHW\RIH[SHULHQFHZKLFK
now contributes to our modern quality of life.
,QIDFWWKHUHLVVRPHWKLQJHYHQPRUHGHHSURRWHG
DW SOD\ KHUH FRQVSLULQJ WR ORFN XV ßUPO\ LQWR WKH
cycle of growth. The continual production of novelty
ZRXOG EH RI OLWWOH YDOXH WR ßUPV LI WKHUH ZHUH QR
market for the consumption of novelty in households.
Recognising the existence, and understanding the
nature, of this demand is essential.
Social logic
It is perhaps not surprising to discover that the desire
for novelty is linked intimately to the symbolic role
that consumer goods play in our lives. It’s been
who fail in this process risk their own survival.
The economy as a whole doesn’t care if individual
companies go to the wall. It does care if the process
of creative destruction stops, because without it,
economic activity eventually stops as well.
The role of the entrepreneur – as visionary – is
critical here. But so is the role of the investor. It is
only through the continuing cycle of investment
that creative destruction is possible. When credit
GULHVXSVRGRHVLQQRYDWLRQ$QGZKHQLQQRYDWLRQ
VWDOOV DFFRUGLQJ WR 6FKXPSHWHU VR GRHV WKH ORQJ
term potential for growth itself.
$W WKLV SRLQW LWpV WHPSWLQJ WR ZRQGHU ZKDW WKH
FRQQHFWLRQ LV EHWZHHQ WKLV VHOISHUSHWXDWLQJ EXW
somewhat abstract vision of creative capitalism, and
the needs and desires of ordinary human beings.
7KH FLUFXODU àRZ RI SURGXFWLRQ DQG FRQVXPSWLRQ
may once have been a useful way of organising
QRWHG DOUHDG\ &KDSWHU  WKDW PDWHULDO DUWHIDFWV
constitute a powerful ‘language of goods’ that we
use to communicate with each other – not just about
VWDWXVEXWDOVRDERXWLGHQWLW\VRFLDODIßOLDWLRQDQG
even – through giving and receiving gifts for example
– about our feelings for each other, our hopes for our
family, and our dreams of the good life.
This is not to deny that material goods are essential
IRU RXU EDVLF QHHGV IRRG VKHOWHU SURWHFWLRQ 2Q
the contrary, this role is critical to our physiological
àRXULVKLQJKHDOWKOLIHH[SHFWDQF\YLWDOLW\
But stuff is not just stuff. Consumer artefacts play a
role in our lives that goes way beyond their material
IXQFWLRQDOLW\ 0DWHULDO SURFHVVHV DQG VRFLDO QHHGV
are intimately linked together through commodities.
0DWHULDO WKLQJV RIIHU WKH DELOLW\ WR IDFLOLWDWH RXU
SDUWLFLSDWLRQLQWKHOLIHRIVRFLHW\$QGLQVRIDUDV
they achieve this, they contribute to our prosperity
human society to ensure that people’s material &KDSWHU

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 63

One of the vital psychological processes here
is what consumer researcher Russ Belk called
cathexis D SURFHVV RI DWWDFKPHQW WKDW OHDGV XV WR
think of (and even feel) material possessions as
part of the ‘extended self’. This process is evident
everywhere. Our relationships to our homes, our
cars, our bicycles, our favourite clothes, our books,
our CD or DVD collection, our photographs all have
this character.
Our attachments to material things can sometimes be
so strong that we even feel a sense of bereavement
and loss when they are taken from us. ‘Hollow
hands clasp ludicrous possessions because they are
links in the chain of life. Without them, we are truly
lost.’ claimed the marketing guru Ernest Dichter in
The Science of Desire. seductive in its own right here. It offers variety and
6RPHRIWKHVHDWWDFKPHQWVDUHàHHWLQJ7KH\EXUQ
with novelty momentarily and are extinguished as
suddenly when something else attracts our attention.
Others last a lifetime. Possessions sometimes offer
a sanctuary for our most treasured memories and
feelings. They allow us to identify what is sacred in
our lives and distinguish it from the mundane.
7KLV NLQG RI PDWHULDOLVP àDZHG WKRXJK LW PD\ EH
even offers some kind of substitute for religious
consolation. In a secular world, having something
to hope for is particularly important when things are
going badly. Retail therapy works for a reason.
1RYHOW\SOD\VDQDEVROXWHO\FHQWUDOUROHLQDOOWKLV
,Q WKH ßUVW SODFH RI FRXUVH QRYHOW\ KDV DOZD\V
FDUULHGLQIRUPDWLRQDERXWVRFLDOVWDWXV$V7KRUVWHLQ
Veblen pointed out over a century ago, ‘conspicuous
FRQVXPSWLRQp SURFHHGV WKURXJK QRYHOW\ 0DQ\ RI
the latest consumer appliances and fashions are
DFFHVVLEOHDWßUVWRQO\WRWKHULFK1HZSURGXFWVDUH
inherently expensive, because they are produced
on a small scale. They may even be launched at
premium prices deliberately to attract those who
can afford to pay for social distinction.
$IWHUGLVWLQFWLRQFRPHVHPXODWLRQ6RFLDOFRPSDULVRQ
– keeping up with the Joneses – rapidly expands the
demand for successful products and facilitates mass
production, making once luxury goods accessible
WRWKHPDQ\$QGWKHVKHHUZHDOWKDQGHQRUPRXV
variety of material goods has a democratising
element to it. It allows more and more people to go
about inventing and reinventing their social identities
64 3URVSHULW\ZLWKRXW*URZWK"
in the search for a credible place in society.
$UJXDEO\ LW LV SUHFLVHO\ WKLV FRUQXFRSLD RI PDWHULDO
JRRGV DQG LWV UROH LQ WKH FRQWLQXDO UHLQYHQWLRQ RI
the self that distinguishes consumer society from
LWV SUHGHFHVVRUV 0DWHULDO DUWHIDFWV ZHUH DOZD\V
capable of carrying symbolic meaning. They were
often used to establish social position. Only in
modernity has this wealth of material artefacts
been so deeply implicated in so many social and
psychological processes.
$FFRUGLQJWRVRPHFRPPHQWDWRUVWKHV\PEROLFUROH
of goods is even appropriated in modern society
to explore deep existential questions about who
ZH DUH DQG ZKDW RXU OLYHV DUH DERXW 1RYHOW\ LV
H[FLWHPHQWLWDOORZVXVWRGUHDPDQGKRSH,WKHOSV
us explore our dreams and aspirations for the ideal
life and escape the sometimes harsh reality of our
lives.
$QGLWLVSUHFLVHO\EHFDXVHPDWHULDOJRRGVDUHàDZHG
but somehow plausible proxies for our dreams and
aspirations, that consumer culture seems on the
surface to work so well. Consumer goods, suggests
DQWKURSRORJLVW*UDQW0F&UDFNHQSURYLGHXVZLWKD
tangible bridge to our highest ideals. They fail, of
course, to provide a genuine access to those ideals,
but in failing they leave open the need for future
bridges, and so stimulate our appetite for more
goods. Consumer culture perpetuates itself here
SUHFLVHO\EHFDXVHLWVXFFHHGVVRZHOODWIDLOXUH
$JDLQLWLVLPSRUWDQWWRUHPHPEHUWKDWWKLVG\QDPLF
doesn’t by any means exhaust our relationship to
material goods. Consumption is also vital to us in
simple material ways. It is as much about ordinary
everyday survival as it is about the continual
processes of emulation, status competition and
oVHOIFRPSOHWLRQp%XWLWLVWKLVVRFLDOG\QDPLFUDWKHU
WKDQ SK\VLRORJLFDO àRXULVKLQJ ZKLFK VHUYHV WR
explain why our desire for material goods appears
VRLQVDWLDEOH$QGZK\QRYHOW\PDWWHUVWRXV
Novelty and anxiety
It’s tempting to dismiss such a system as pathological.
$QGLQVRPHVHQVHVLWFOHDUO\LV3V\FKRORJLVW3KLOLS
Cushman has argued that the extended self is
ultimately an ‘empty self’ which stands in continual
Sustainable Development Commission
QHHG RI oEHLQJ qßOOHG XSr ZLWK IRRG FRQVXPHU
products, and celebrities’.
But it is also vital to recognise that this pathology is
not simply the result of some terminal quality in the
human psyche. We are not by nature helpless dupes,
WRROD]\RUZHDNWRUHVLVWWKHSRZHURIPDQLSXODWLYH
advertisers. On the contrary, human creativity,
emotional intelligence and resilience in the face of
adversity are visible everywhere, even in the face of
an apparently pathological consumerism.
Rather, what emerges from this analysis is that
the empty self is itself a product of powerful social
IRUFHV DQG WKH VSHFLßF LQVWLWXWLRQV RI PRGHUQ
society. Individuals are at the mercy of social
comparison. Institutions are given over to the
pursuit of consumerism. The economy is dependent
on consumption for its very survival.
Perhaps the most telling point of all is the rather
WRRSHUIHFWßWEHWZHHQWKHFRQWLQXDOFRQVXPSWLRQ
The extended self is motivated by the angst of
the empty self. Social comparison is driven by the
anxiety to be situated favourably in society. Creative
destruction is haunted by the fear of being left
behind in the competition for consumer markets.
Thrive or die is the maxim of the jungle. It’s equally
WUXHLQWKHFRQVXPHUVRFLHW\1DWXUHDQGVWUXFWXUH
FRPELQHWRJHWKHUKHUHWRORFNXVßUPO\LQWRWKHLURQ
cage of consumerism.
It’s an anxious, and ultimately a pathological system.
But at one level it works. The relentless pursuit of
novelty may undermine wellbeing. But the system
remains economically viable as long as liquidity is
preserved and consumption rises. It collapses when
either of these stalls.
These understandings provide us with our clearest
insight yet into the enormity of the challenge implied
in delivering a truly sustainable form of prosperity.
3HUKDSVßUVWDQGIRUHPRVWWKDWFKDOOHQJHFRPSHOV
us to develop a different kind of economic structure
of novelty by households and the continuous
SURGXFWLRQ RI QRYHOW\ LQ ßUPV 7KH UHVWOHVV GHVLUH
of the ‘empty self’ is the perfect complement for
the restless innovation of the entrepreneur. The
production of novelty through creative destruction
drives (and is driven by) the appetite for novelty in
consumers.
7DNHQWRJHWKHUWKHVHWZRVHOIUHLQIRUFLQJSURFHVVHV
&KDSWHUVDQG
%XWLWpVFOHDUWKDWWKLVWDVNLVQpWVXIßFLHQW:HDOVR
KDYH WR ßQG D ZD\ WKURXJK WKH LQVWLWXWLRQDO DQG
social constraints that lock us into a failing system.
In particular, we need to identify opportunities for
change within society – changes in values, changes
in lifestyles, changes in social structure – that will free
us from the damaging social logic of consumerism
are exactly what is needed to drive growth forwards.
$VWKHHFRORJLFDOHFRQRPLVW'RXJODV%RRWKUHPDUNV
‘The novelty and status seeking consumer and the
PRQRSRO\VHHNLQJ HQWUHSUHQHXU EOHQG WRJHWKHU
WR IRUP WKH XQGHUSLQQLQJ RI ORQJUXQ HFRQRPLF
growth.’
It’s perhaps not surprising that this restlessness
doesn’t necessarily deliver genuine social progress.
&KDSWHUDQG
Only through such changes will it be possible
to get ourselves ‘unhooked’ from growth, free
RXUVHOYHV IURP WKH UHOHQWOHVV àRZ RI QRYHOW\ WKDW
GULYHV PDWHULDO WKURXJKSXW DQG ßQG LQVWHDG D
ODVWLQJSURVSHULW\tWKHSRWHQWLDOWRàRXULVKZLWKLQ
ecological and social limits.
6RPHWLPHV&KDSWHULWHYHQXQGHUPLQHVZHOOEHLQJ
DQG FRQWULEXWHV WR VRFLDO UHFHVVLRQ $QG WKHUH DUH
VRPHSUHWW\FOHDUUHDVRQVIRUWKDW$PRQJVWWKHPLV
that this is a system driven by anxiety.

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 65

66 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
 7

Keynesianism and the

‘Green New Deal’
“The new, green economy would
provide a new engine of growth,
putting the world on the road to
prosperity again. This is about
growing the world economy in a
more intelligent, sustainable way.”

Achim Steiner
October 20081
2QHRIWKHPRVWVWULNLQJIHDWXUHVRIWKHJOREDOßQDQFLDOFULVLVWKDWHPHUJHGGXULQJZDVWKH
degree of consensus that the overriding priority was to re-invigorate economic growth. From
the International Monetary Fund to the United Nations Environment Programme, from political
parties across the political spectrum, and from within both liberal and coordinated market
economies, the call was for mechanisms that would ‘kick-start’ economic growth again.

The reason for this consensus is obvious enough.
,WàRZVLPPHGLDWHO\IURPWKHVWUXFWXUDOUHOLDQFHRI
the economy on growth to maintain full employment.
When spending slows down, unemployment looms
ODUJH)LUPVßQGWKHPVHOYHVRXWRIEXVLQHVV3HRSOH
ßQGWKHPVHOYHVRXWRIDMRE$QGDJRYHUQPHQWWKDW
IDLOV WR UHVSRQG DSSURSULDWHO\ ZLOO VRRQ ßQG LWVHOI
RXWRIRIßFH,QWKHVKRUWWHUPWKHPRUDOLPSHUDWLYH
to protect jobs and prevent any further collapse is
incontrovertible.
%XW ZKDW DERXW WKH ORQJWHUP YLVLRQ" :KHQ WKH
economy falters, the clarion call from every side
is to get the economy ‘back on the growth path’.
$QG WKLV FDOO LV QRW MXVW WR LQFUHDVH WKH *'3 ,W LV
IRUWKHPRVWSDUWWRVWLPXODWHFRQVXPSWLRQJURZWK
WR UHVWRUH FRQVXPHU FRQßGHQFH DQG VWLPXODWH
high street spending. It is, in effect, a more or less
There are multiple points of intervention. But none
RIWKHPLVULVNIUHH7KHWKUHHPDLQFRQWHQGHUVDUH
to stimulate credit to businesses and consumers
(for example by cutting interest rates), to increase
people’s spending power (for example by cutting
taxes) or to increase public spending on jobs and
infrastructure.
7KHßUVWRSWLRQPRUHRUOHVVFKDUDFWHULVHVWKHZD\LQ
which the consumer boom was built and protected
IRU VR ORQJ WKURXJKRXW WKH V DQG HDUO\ V
There is a logic to it. Stimulating credit increases the
DYDLODELOLW\RILQYHVWPHQWFDSLWDOWRßUPVDQGDWWKH
same time reduces the cost of debt to consumers.
We’ve seen already how crucial both of these things
are in keeping consumption going.
But making credit easier and cheaper also played
XQLWHGFDOOWRUHLQVSLUHWKHG\QDPLFVGHVFULEHGLQ
Chapter 6. The dynamics that will continue to drive
unsustainable throughput.
Those inclined to question the consensus wisdom
are swiftly denounced as cynical revolutionaries
or modern day luddites. ‘We do not agree with
WKH DQWLFDSLWDOLVWV ZKR VHH WKH HFRQRPLF FULVLV
as a chance to impose their utopia, whether of a
VRFLDOLVW RU HFRIXQGDPHQWDOLVW NLQGp URDUHG WKH
D FULWLFDO UROH &KDSWHU  LQ FUHDWLQJ WKH JOREDO
ßQDQFLDOFULVLVRI7KHGDQJHUIRUWKH8.tDQG
for many other developed economies – is that we
are already at the limits of consumer indebtedness
and face a sharply rising public sector debt as well.
Pushing these any further stretches the boundaries
RIßQDQFLDOSUXGHQFH
Reducing the interest rate also reduces the
incentive to save, at a point when the savings rate
,QGHSHQGHQWRQ6XQGD\ODWHLQo0RVWRIXVLQ
WKLVFRXQWU\HQMR\ORQJDQGIXOßOOLQJOLYHVWKDQNVWR
OLEHUDOFDSLWDOLVPZHKDYHQRGHVLUHWROLYHLQD\XUW
under a workers’ soviet.’
:LWK WKDW FRQIXVLQJO\DWWLUHG ERJH\PDQ ORRPLQJ
RYHUXVNLFNVWDUWLQJFRQVXPHUFRQßGHQFHWRERRVW
KLJK VWUHHW VSHQGLQJ ORRNV OLNH D QREUDLQHU $QG
internecine warfare is all saved for arguing over
how this is to be achieved.
Kick-starting the economy
KDV FROODSVHG WR YLUWXDOO\ QRWKLQJ )LJXUH  7KLV
route appears to be an encouragement away from
HFRQRPLFSUXGHQFHE\ßUPVDQGKRXVHKROGV
Perversely, this may work in favour of recovery – at
least in the short term. One of the dangers of the
second option – putting more money in people’s
pockets – is that government doesn’t have control
over where it gets spent. People are more inclined
WRVDYHGXULQJDUHFHVVLRQ,I\RXUßQDQFLDOVHFXULW\
looks threatened, it’s not a bad idea to have
something put away for the future. Ironically, more
saving is the last thing that governments want in
these circumstances, in spite of widespread concern
7KHZKROHSRLQWDERXWDFLUFXODUHFRQRP\)LJXUH over levels of consumer indebtedness.
is that there’s no simple answer to this question.

68 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission

7KLVLVZKDWHFRQRPLVW-RKQ0D\QDUG.H\QHVFDOOHG %\HDUO\DVWURQJLQWHUQDWLRQDOFRQVHQVXVKDG
the ‘paradox of thrift’. The normal rules of prudence emerged in support of a very simple idea. Economic
are turned on their head. It’s entirely rational for recovery demands investment. Targeting that
HDFKLQGLYLGXDORUßUPWRVDYHDELWPRUHLQDFULVLV
But it turns out to be bad for the economy – at least
with the system designed the way it is right now.
Increased saving reduces high street spending still
further, deepening and lengthening the recession.
7KLVOHDYHVRSWLRQWKUHHDFODVVLF.H\QHVLDQSXEOLF
VSHQGLQJ SURJUDPPH 7KH PRVW ZHOONQRZQ
H[DPSOHRIWKLVZDV)UDQNOLQ'5RRVHYHOWpV1HZ'HDO
LQWKHVLPSOHPHQWHGDVWKHZRUOGVWUXJJOHGWR
HVFDSHWKHJUHDW'HSUHVVLRQ7KH1HZ'HDOHQWDLOHG
a massive investment in public sector works. It may
QRWKDYHKDGWKHVKRUWWHUPHIIHFWVRPHFODLPIRU
it. It didn’t in fact achieve a full economic recovery
ZLWKLQ5RRVHYHOWpVßUVWWZRWHUPVLQRIßFH%XWLWV
ORQJWHUPLPSDFWZDVHQRUPRXV
$V3DXO.UXJPDQZLQQHURIWKH1REHO3UL]HLQ
HFRQRPLFVKDVSRLQWHGRXWo7KH1HZ'HDOIDPRXVO\
SODFHG PLOOLRQV RI $PHULFDQV RQ WKH SXEOLF SD\UROO
YLD WKH :RUNV 3URJUHVV $GPLQLVWUDWLRQ >:3$@f 7R
WKLVGD\ZHGULYHRQ:3$EXLOWURDGVDQGVHQGRXU
FKLOGUHQ WR :3$EXLOW VFKRROVp  1RW VXUSULVLQJO\
WKHUHZDVDORWRIWDONDERXWWKH1HZ'HDOGXULQJ
WKHßQDQFLDOFULVLV.UXJPDQFDOOHGIRUD.H\QHVLDQ
W\SHVWLPXOXVHTXLYDOHQWWRRIWKH86*'36
Green New Deal
LQYHVWPHQW FDUHIXOO\ WRZDUGV HQHUJ\ VHFXULW\ ORZ
carbon infrastructures and ecological protection offers
PXOWLSOHEHQHßWV7KHVHEHQHßWVLQFOXGH
% freeing up resources for household spending
and productive investment by reducing
energy and material costs
% reducing our reliance on imports and our
exposure to the fragile geopolitics of
energy supply
% SURYLGLQJDPXFKQHHGHGERRVWWRMREVLQWKH
expanding ‘environmental industries’ sector
% making progress towards the demanding
carbon emission reduction targets needed to
stabilise the global atmosphere
% protecting valuable ecological assets
and improving the quality of our living
environment for generations to come.
Consensus had also formed around the appropriate
WDUJHWV IRU D JUHHQ VWLPXOXV SDFNDJH $V WKH 8.
3ULPH 0LQLVWHU SRLQWHG RXW LQ D VSHHFK WR WKH
:RUOG(FRQRPLF)RUXPLQ'DYRVHDUO\LQWKH
oFRQWRXUV RI D UHVLOLHQW ORZFDUERQ UHFRYHU\ DUH
becoming clear’, not just from the proposals from
a wide variety of observers but from plans being
made on the ground in numerous countries.
'XULQJWKH8.EDVHG*UHHQ1HZ'HDOJURXS
(which includes representatives from business,
WKHPHGLDDQG1*2VKDGVXJJHVWHGWKDWVWLPXOXV
The most interesting variation on this theme was spending should be focused on the twin challenges
WKHFDOOIRUDJOREDO*UHHQ1HZ'HDO,IWKHSXEOLF
VHFWRULVJRLQJWRVSHQGPRQH\WRUHLQYLJRUDWHWKH
economy, argued its advocates, wouldn’t it be as
well to spend it investing in the new technologies
that we know we are going to need to address the
HQYLURQPHQWDO DQG UHVRXUFH FKDOOHQJHV RI WKH st
&HQWXU\"
‘Investments will soon be pouring back into the
economy,’ suggested Pavan Sukdhev, the Deutsche
%DQNHFRQRPLVWOHDGLQJUHVHDUFKRQ81(3pV*UHHQ
Economy Initiative. ‘The question is whether they
JR LQWR WKH ROG H[WUDFWLYH VKRUWWHUP HFRQRP\ RI
yesterday, or a new green economy that will deal
with multiple challenges while generating multiple
HFRQRPLFRSSRUWXQLWLHVIRUWKHSRRUDQGWKHZHOO
off alike.’7
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK"
of climate change and energy security. The group put
IRUZDUGSURSRVDOVIRUDORZFDUERQHQHUJ\V\VWHP
that would make ‘every building a power station’
DQGWKHFUHDWLRQDQGWUDLQLQJRIoDqFDUERQDUP\rRI
workers to provide the human resources for a vast
environmental reconstruction programme.’
81(3pVJOREDO*UHHQ1HZ'HDOZLGHQHGWKHUHPLW
of spending to include investment in natural
LQIUDVWUXFWXUHVXVWDLQDEOHDJULFXOWXUHDQGHFRV\VWHP
protection. Ecosystems already provide tens of
trillions of dollars worth of services to the world
economy. So protecting and enhancing ecosystems
is vital to economic productivity in the future,
81(3 SRLQWHG RXW 7KH\ DOVR FDOOHG IRU VXEVWDQWLDO
investments in clean technologies, sustainable
agriculture and sustainable cities.
69
The case for a stimulus focused on energy and REYLRXV VRFLDO EHQHßW LQ SURYLGLQJ MREV SXEOLF
carbon is very strong. Re-capitalising the world’s sector employment seeks its return in several
energy systems for a low carbon world will be a ZD\V)LUVWO\WKHUHDUHWKHEHQHßWVWRWKHHFRQRP\
PDMRULQYHVWPHQWFKDOOHQJHRYHUWKHQH[WßIW\\HDUV from investment in productive infrastructure (road-
The IEA has estimated that energy investment needs
between 2010 and 2030 will be in excess of $35
trillion.11 Bringing forward some of this investment
DQG WDUJHWLQJ LW VSHFLßFDOO\ DW UHQHZDEOH HQHUJ\
ORZFDUERQ WHFKQRORJLHV DQG HQHUJ\ HIßFLHQF\
could pay massive dividends later.12
,Q D UHSRUW SXEOLVKHG WRZDUGV WKH HQG RI 
EXLOGLQJIRUH[DPSOHLQWKH1HZ'HDO,QDGGLWLRQ
public sector jobs generate a part of what has been
FDOOHG WKH oVRFLDO ZDJHp t D UHWXUQ WR KRXVHKROGV
IURP JRYHUQPHQW VSHQGLQJ LQ WKH IRUP RI ZDJHV
KHDOWKDQGHGXFDWLRQEHQHßWVDQGVRFLDOVHUYLFHV15
The stimulus packages to emerge from the 2008
crisis favoured a mixture of the other two strategies.
WKH'HXWVFKH%DQNLGHQWLßHGDoJUHHQVZHHWVSRWp
IRU VWLPXOXV VSHQGLQJ FRQVLVWLQJ RI LQYHVWPHQW
LQ HQHUJ\ HIßFLHQW EXLOGLQJV WKH HOHFWULFLW\ JULG
UHQHZDEOH HQHUJ\ DQG SXEOLF WUDQVSRUWDWLRQ o2QH
of the reasons that the “green sweet spot” is an
attractive focus for an economic stimulus is the labor-
LQWHQVLW\RIPDQ\RILWVVHFWRUVpFODLPHGWKH%DQN13
A study by the University of Massachusetts Political
Economy Research Institute supports that view.
,W LGHQWLßHG VL[ SULRULW\ DUHDV IRU LQYHVWPHQW
6SHFLßFVHFWRUVUHFHLYHGRUVRXJKWGLUHFWVXSSRUW
from government in a number of different countries.
0RVWREYLRXVO\RIFRXUVHHQRUPRXVVXPVRIPRQH\
were committed to the direct support of the
ßQDQFLDOVHFWRU%\WKHHQGRIDQHVWLPDWHG
$7 trillion had been spent globally in underwriting
WR[LF DVVHWV UHFDSLWDOLVLQJ EDQNV DQG DWWHPSWLQJ
WR UHVWRUH FRQßGHQFH LQ WKH ßQDQFLDO VHFWRU DQG
stimulate lending (Chapter 2).
Direct recovery packages were also sought (and
UHWURßWWLQJEXLOGLQJVPDVVWUDQVLWIUHLJKWUDLOVPDUW
JULGZLQGSRZHUVRODUSRZHUDQGQH[WJHQHUDWLRQ
biofuels. The authors calculated that spending $100
billion on these interventions over a two year period
ZRXOG FUHDWH  PLOOLRQ QHZ MREV %\ FRQWUDVW WKH
same money directed at household spending would
generate only 1.7 million jobs and directed at the oil
LQGXVWU\IHZHUWKDQMREV14
Strategies for job creation
,I UHSOLFDEOH HOVHZKHUH WKHVH ßQGLQJV SURYLGH
vital insights into the appropriate way to approach
economic recovery. Job creation is one of the key
aims of an economic stimulus programme. Not only
are jobs essential for economic recovery. Meaningful
employment is itself a key constituent in prosperity
(Chapter 3).
Understanding how best to protect employment is
YLWDO 6HYHUDO VWUDWHJLHV DUH SRVVLEOH LQFOXGLQJ WKH
GLUHFWFUHDWLRQRISXEOLFVHFWRUMREVßQDQFLDOVXSSRUW
WRERRVWHPSOR\PHQWLQVSHFLßFVHFWRUVRULQGLUHFW
support for jobs through measures to stimulate
demand.
VRPHWLPHVRIIHUHGLQRWKHUVHFWRUV0RVWQRWDEO\
the car industry received direct support in both
the UK and the US. The US government committed
over $23 billion to bail out the ailing giants GM and
Chrysler at the end of 2008.16(DUO\LQWKH8.
Government promised to underwrite loans to the
car industry totalling £2.3 billion.
3HUKDSV PRVW EL]DUUHO\ UHSUHVHQWDWLYHV IURP WKH
US porn industry approached US Congress for
VXSSRUW HDUO\ LQ  IROORZLQJ WKH FDU LQGXVWU\
EDLORXW o$PHULFDQV FDQ GR ZLWKRXW FDUV DQG VXFK
EXWWKH\FDQQRWGRZLWKRXWVH[pDUJXHG/DUU\)O\QW
the founder of Hustler magazine.17 Surely more
RI D SXEOLFLW\ VWXQW WKDQ D VHULRXV FODLP WKH FDOO
nonetheless highlights the profound mess created
E\WKHßQDQFLDOFULVLVZLWKWKHYXOQHUDEOHDQGQRW
so-vulnerable alike lobbying for direct support in
the matter of their livelihoods.
%H\RQG GLUHFW VXSSRUW WR VSHFLßF VHFWRUV EURDGHU
ßVFDOUHFRYHU\SDFNDJHVKDYHDOVREHHQHVWDEOLVKHG
in many countries and at EU level. The employment
aims of these packages are achieved by attempting
WRoNLFNVWDUWpJURZWKWKURXJKDPL[WXUHRIWD[FXWV
social spending and public investment.

Public sector employment was the route favoured )RU H[DPSOH WKH 8. 3UH%XGJHW 5HSRUW 3%5
in the Roosevelt’s New Deal. Apart from the  HVWDEORLVKHG D ßVFDO VWLPXOXV ZRUWK €

70 Prosperity without Growth? Sustainable Development Commission

ELOOLRQ LQFOXGLQJ DQ HVWLPDWHG € ELOOLRQ FXW LQ KRPHVDQGDIXUWKHUELOOLRQLQWKHSXEOLFHVWDWH
WKH9$7DQG€ELOOLRQRIFDSLWDOVSHQGLQJoEURXJKW  ELOOLRQ LQ HFRV\VWHP PDLQWHQDQFH DQG àRRG
forward’. SURWHFWLRQDQGELOOLRQRQSXEOLFWUDQVSRUW

In the US, the Obama administration brought in a There are good grounds to question the scope and
ßVFDOVWLPXOXVSDFNDJHHTXLYDOHQWWRRI86*'3 VFDOH HYHQ RI WKLV UHODWLYHO\ DPELWLRXV 86 SODQ $V
WKURXJKWKH$PHULFDQ5HFRYHU\DQG5HLQYHVWPHQW ZHQRWHGLQ&KDSWHUWKHOLNHO\DQQXDOLQYHVWPHQW
$FW$55$7KHELOOLRQSDFNDJHFRPSULVHG
DURXQG  ELOOLRQ LQ WD[ FXWV DQG DOPRVW 
billion in ‘thoughtful and carefully targeted priority
LQYHVWPHQWVp LWV DLP oWR FUHDWH DQG VDYH  WR 
million jobs, jumpstart our economy, and begin the
SURFHVVRIWUDQVIRUPLQJLWIRUWKHst century’.
The potential for ‘green’ recovery
In principle, each of these different approaches to
economic recovery could contain a ‘green stimulus’
component. Public sector employment could be
directed explicitly at ‘green jobs’. Direct support for
WKHßQDQFLDOVHFWRUFRXOGEHDOOLHGZLWKFRQGLWLRQV
or investment vehicles to ensure that lending is
preferentially targeted at sustainable investments.
Sectoral bailouts like those afforded to the car
industry could be made conditional on shifting
WRZDUGV JUHHQHU PDQXIDFWXULQJ DQG ORZFDUERQ
vehicles.
In practice little of this happened in the early stages
RI WKH FULVLV %XW E\ HDUO\  WKH FRQFHSW RI D
green stimulus was evident in recovery packages
across the world in countries as varied as China, South
.RUHD$XVWUDOLDDQG'HQPDUNWKH8.DQGWKH86
,QWKH8.IRULQVWDQFHDoJUHHQVWLPXOXVpHOHPHQW
ZDV LQFOXGHG LQ WKH  3UH%XGJHW 5HSRUW
,Q WRWDO WKLV RQO\ DPRXQWHG WR € PLOOLRQ OHVV
WKDQ  RI WKH ZKROH SDFNDJH ZKLFK ZDV LQ LWV
WXUQRQO\DOLWWOHRYHURIWKH*'3€PLOOLRQRI
this was for accelerated replacement of new railway
needed to achieve a low carbon society could be
DVKLJKDVRI*'3SHUDQQXP)RUWKH86WKLV
would be equivalent to a green stimulus worth
DURXQGELOOLRQRYHUWKUHHWLPHVWKHVL]HRIWKH
HQYLURQPHQWDOLQYHVWPHQWRXWOLQHGLQWKH$55$
,Q WKH FDVH RI WKH 8. WKH HTXLYDOHQW LQYHVWPHQW
ZRXOG EH LQ WKH UHJLRQ RI € ELOOLRQ D \HDU
massively higher than anything proposed so far
E\ WKH 8. JRYHUQPHQW The SDC has argued that
there is considerable scope for a much higher level
of green stimulus than is currently being considered
DQG KDV LGHQWLßHG D UDQJH RI SRVVLEOH LQYHVWPHQW
targets.7KHVHLQFOXGH
s DQDPELWLRXV\HDUSODQWRUHWURßWWKH
existing housing stock to high energy
performance standards
s substantial investment in renewable energy
WRSXWWKH8.RQWUDFNWRPHHWLQJLWVWDUJHWRI
UHQHZDEOHVE\
s the reinforcement of the electricity grid to
facilitate decentralised energy technologies,
support renewable energy companies and
improve control
s to reduce car use through a combination of
EHWWHUSXEOLFWUDQVSRUWLQYHVWPHQWLQZDON
DELOLW\F\FODELOLW\DQGWKHUROORXWRISHUVRQDO
travel planning to encourage a modal shift
s PDVVLYHLQYHVWPHQWLQWKHHQHUJ\HIßFLHQF\
of the public estate with the aim of delivering
low carbon public services across the country.
$Q\UHFRYHU\SDFNDJHUDLVHVWKHTXHVWLRQRIKRZLW
is to be paid for. One of the interesting features of
green investment packages is that they offer the
FDUULDJHV$VPDOOFRPSRQHQW€PLOOLRQZDVIRU SRWHQWLDOIRUGLUHFWßQDQFLDOUHWXUQVWRWKHHFRQRP\
àRRGGHIHQFHDQGZDWHULQIUDVWUXFWXUH2QO\DERXW 7KHVHUHWXUQVWDNHDYDULHW\RIIRUPV0RVWREYLRXVO\
€ PLOOLRQ MXVW RYHU  RI WKH WRWDO SDFNDJH
ZDVIRUHQHUJ\HIßFLHQF\PRVWO\EURXJKWIRUZDUG
investment) in people’s homes.
%\ FRPSDULVRQ WKH 86 $55$ H[SOLFLWO\ LGHQWLßHG
DERXW  ELOOLRQ RI VSHQGLQJ  RI WKH WRWDO
they arise in the form of fuel and resource savings.
For instance, some simple measures to improve the
HQHUJ\ HIßFLHQF\ RI WKH GRPHVWLF KRXVLQJ VWRFN
have payback times of less than two years.
Some are in the form of lower social costs and more
VWLPXOXVLQHQYLURQPHQWDOLQYHVWPHQW7KLVßJXUH HIßFLHQWVHUYLFHV)RULQVWDQFHWKH8.'HSDUWPHQW
LQFOXGHG  ELOOLRQ LQYHVWPHQW LQ WKH HOHFWULFLW\ IRU 7UDQVSRUW KDV HVWLPDWHG WKDW HDFK € VSHQW LQ
JULG  ELOOLRQ RQ HQHUJ\ DQG FDUERQ VDYLQJ LQ UHGXFLQJ FDU XVH VDYHV XS WR € LQ WKH HFRQRP\

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 71

through a combination of fuel savings, reduced
congestion costs, and lower pollution levels.
Beyond such easy wins, there are still challenges
in raising the funds to invest in such measures,
particularly in a harsh economic climate. The
Deutsche Bank report argues that the best way to
fund a green investment programme is through
auctioning carbon permits under a cap and trade
invest and innovate, productivity will return and the
wheels of the machine will start turning. This is the
ORJLFRI.H\QHVLDQLVP
Recovery here is taken to mean business as usual.
.LFNVWDUWWKHFLUFXODUàRZRIWKHHFRQRP\DQGZDWFK
it grow. The outcome (assuming it works) will be
thoroughly predictable. Business innovation (creative
destruction) and consumer demand (positional
scheme. In other words by raising a new form of
HQYLURQPHQWDOWD[DWLRQ$WWKHVDPHWLPHWKHUHSRUW
accepts that the more likely option in the short term
LVGHßFLWVSHQGLQJ
This was certainly the working assumption in
most of the recovery packages put forward in the
LPPHGLDWHUHVSRQVHWRWKHFULVLV7KH\ZHUH
EDVHGRQGHßFLWVSHQGLQJRYHUWKHVKRUWWHUPLQWKH
KRSHRIVWLPXODWLQJVXIßFLHQWO\UREXVWJURZWKWKDW
national debt can be reduced again in the longer
WHUP,WZDVHVWLPDWHGWKDWWKHFRVWRIWKH8.pV3%5
package could push the national debt to around
RI*'3ZLWKLQDFRXSOHRI\HDUV Paying this
RIIZRXOGLQLWVHOIEHDORQJWHUPFRPPLWPHQW
$IXUWKHURSWLRQZRXOGEHWRIXQGIXWXUHVSHQGLQJ
through ‘green bonds’. There is in any case more
likelihood that people will save during a recession.
Targetting that saving in funds which can achieve
positive returns from investment in green recovery
has a dual logic to it. On the one hand it provides a
differentiated savings product when the propensity
to save is high. On the other, it places investment
funds directly into green recovery.
Finally, the possibility of innovative service
structures which share the rewards from energy
savings between households and investors have a
clear rationale here. This ‘energy services model’
is usually assumed to proceed through private
sector energy service companies. But the case for
the public sector to reclaim some ownership in
HQHUJ\UHODWHG DVVHWV LV DOVR ZRUWK FRQVLGHULQJ
There is a legitimate public claim on the return from
public investment funds whereever those funds are
directed. The energy sector case is at least as strong
DVWKHßQDQFLDOVHFWRUFDVH
In summary however, the broad assumption behind
all these recovery packages is that they will be
successful in stimulating consumption growth again.
&UHGLWZLOOàRZFRQVXPHUVZLOOVSHQGEXVLQHVVZLOO
72 3URVSHULW\ZLWKRXW*URZWK"
VSHQGLQJZLOOGULYHFRQVXPSWLRQIRUZDUGV$QGZLWK
employment depending on it, there’s no means of
anyone getting off the treadmill. We are right back
DWWKHVWUXFWXUDOLPSDVVHLGHQWLßHGLQ&KDSWHU
Beyond recovery
&OHDUO\ WKH *UHHQ 1HZ 'HDO DGYRFDWHV DUHQpW
SURSRVLQJDUHWXUQWRWKHVWDWXVTXR7KH8.JURXS
WDONVRIoDKXJHWUDQVIRUPDWLRQDOSURJUDPPHp81(3
also calls for ‘transformational thinking’. But all
recovery initiatives proposed so far assume that the
ultimate goal of intervention is to restore economic
JURZWK ,WpV D GLIIHUHQW NLQG RI JURZWK IRU VXUH
ZKDW$FKLP6WHLQHU([HFXWLYH'LUHFWRURI81(3FDOOV
a ‘green engine of growth’. But growth nonetheless.
o$Q\ SXEOLF VSHQGLQJ VKRXOG EH WDUJHWHG VR WKDW
GRPHVWLF FRPSDQLHV EHQHßW DQG WKHQ WKH ZDJHV
generated create further spending on consumer
JRRGVDQGVHUYLFHVpDUJXHVWKH8.JURXS
Some kind of green stimulus makes perfect sense,
both in protecting people’s jobs and in making the
transition to a low carbon economy. In circumstances
where we know that public sector spending is
needed to prevent the economy from collapsing,
it is absolutely vital to target that spending
SURSHUO\0DVVLYHLQYHVWPHQWLVUHTXLUHGWRDFKLHYH
sustainability. The current crisis is exactly the right
WLPHWRFRPPLWWRWKDWLQYHVWPHQW$QGWKHHYLGHQFH
suggests that the employment and resource saving
EHQHßWVPLJKWEHFRQVLGHUDEO\EHWWHUWKDQIRURWKHU
kinds of spending.
6WLPXOXVPHDVXUHVZKLFKVXSSRUWWKHOHDVWZHOORII
are particularly to be welcomed. The poorest will
inevitably be hardest hit through the recession and
are already struggling with rising costs for food and
IXHO,QFRPHLQHTXDOLW\LVKLJKHULQWKH8.WRGD\WKDQ
LWZDVLQWKHPLGV Some modest progress has
been made in recent years, but we do not yet live
in the ‘strong, healthy and just society’ promised
Sustainable Development Commission
LQWKH8.pVPXFKODXGHG6XVWDLQDEOH'HYHORSPHQW
principles.
$QXQHTXDOVRFLHW\LVDQDQ[LRXVVRFLHW\RQHJLYHQ
too readily to ‘positional consumption’ that adds little
WRRYHUDOOKDSSLQHVVEXWFRQWULEXWHVVLJQLßFDQWO\WR
XQVXVWDLQDEOH UHVRXUFH WKURXJKSXW $ *UHHQ 1HZ
Deal worthy of the name would signal clearly to the
SRVWFULVLVZRUOGWKDWZHDUHVHULRXVDERXWßJKWLQJ
climate change, preventing resource scarcity, and
creating a fairer society.
$QG\HWLWLVGLIßFXOWWRHVFDSHWKHFRQFOXVLRQWKDW
in the longer term, we’re going to need something
more than this. Returning the economy to a
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK"
condition of continual consumption growth is the
GHIDXOW DVVXPSWLRQ RI .H\QHVLDQLVP %XW IRU DOO
the reasons highlighted in preceding chapters, this
condition remains as unsustainable as ever.
There is no consistent vision of an economy founded
on consumption growth that delivers absolute
GHFRXSOLQJ$QGWKHV\VWHPLFGULYHUVRIJURZWKSXVK
us relentlessly towards ever more unsustainable
UHVRXUFH WKURXJKSXW $ GLIIHUHQW ZD\ RI HQVXULQJ
stability and maintaining employment is essential.
$ GLIIHUHQW NLQG RI HFRQRPLF VWUXFWXUH LV QHHGHG
IRU DQ HFRORJLFDOO\FRQVWUDLQHG ZRUOG ,W LV WR WKLV
possibility that we now turn.
73
74 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
 8

Macro-economics
for Sustainability

“Under existing macro-economic

arrangements, growth is the only
real answer to unemployment –
society is hooked on growth.”

Douglas Booth

Put bluntly, the dilemma of growth has us caught between the desire to maintain economic
stability and the need to reduce resource use and emissions. This dilemma arises because
environmental impacts ‘scale with’ economic output: the more economic output there is, the
greater the environmental impact – all other things being equal.

2I FRXUVH RWKHU WKLQJV DUHQpW HTXDO $QG WKH
dominant attempt to escape the dilemma relies
precisely on this fact. Things change as economies
JURZ2QHRIWKHVHWKLQJVLVWHFKQRORJLFDOHIßFLHQF\
,WLVQRZZLGHO\DFFHSWHGWKDWWHFKQRORJLFDOHIßFLHQF\
is both an outcome from, and a fundamental driver
of, economic growth.
Proponents use this feature of capitalism to
suggest that growth is not only compatible with
HQYLURQPHQWDO OLPLWV EXW QHFHVVDU\ IRU LW *URZWK
LQGXFHVWHFKQRORJLFDOHIßFLHQF\DVZHOODVLQFUHDVHV
LQVFDOH$OOWKDWpVQHHGHGWRDFKLHYHHQYLURQPHQWDO
JRDOV LV IRU HIßFLHQF\ WR RXWUXQ DQG FRQWLQXH WR
outrun) scale.
But historical evidence for the success of this strategy
Changing the ‘Engine of Growth’
First, it’s worth exploring whether a different ‘engine
RI JURZWKp ZRXOG KHOS XV KHUH DV $FKLP 6WHLQHU
suggests. Similar proposals have been voiced for
some years by ecological economists. Pointing out
WKDW oHYHU JUHDWHU FRQVXPSWLRQ RI UHVRXUFHV LV >LQ
LWVHOI@DGULYHURIJURZWKpLQWKHFXUUHQWSDUDGLJP
$PHULFDQ DFDGHPLF 5REHUW $\UHV DUJXHV WKDW oLQ
effect, a new growth engine is needed, based
RQ QRQSROOXWLQJ HQHUJ\ VRXUFHV DQG VHOOLQJ QRQ
material services, not polluting products’.
Similar visions for business models based on
SURGXFWVHUYLFH V\VWHPV KDYH EHHQ SXW IRUZDUG
HOVHZKHUH7KH8.%XVLQHVV7DVNIRUFHRQ6XVWDLQDEOH
Consumption and Production highlighted the
LV XQFRQYLQFLQJ &KDSWHU  *OREDO HPLVVLRQV DQG
UHVRXUFH XVH DUH VWLOO ULVLQJ $SSDUHQW GHFOLQHV LQ
FDUERQ HPLVVLRQV LQ FRXQWULHV OLNH WKH 8. WXUQ RXW
on closer inspection to be due to accounting errors
DQGFURVVERXQGDU\WUDGHV0XFKRIWKHJURZWKWKDW
is desperately needed in developing countries is
LQKHUHQWO\PDWHULDOLQQDWXUH$QGUHERXQGHIIHFWV
from technological change push consumption even
KLJKHU,QVKRUWHIßFLHQF\KDVQpWRXWUXQVFDOHDQG
shows no signs of doing so.
That doesn’t mean such a transition is impossible.
On the contrary, we’ve already seen how little effort
KDVWUXO\EHHQGHGLFDWHGWRZDUGVDFKLHYLQJLW$QG
how the current economic crisis presents a unique
ZLQGRZRIRSSRUWXQLW\WRUHFRQßJXUHRXUHFRQRPLHV
and invest in a sustainable future.
But it’s abundantly clear that a different kind of
potential for such models to reduce the requirement
for personal ownership, improve the utilisation of
capital resources and lower the material intensity of
the economy.
This is still essentially an appeal to decoupling.
*URZWK FRQWLQXHV ZKLOH UHVRXUFH WKURXJKSXW
declines. But here at least is something in the way
of a blueprint for what such an economy might
look like. It gives us more idea what people are
buying and what businesses are selling in this new
economy. Its founding concept is the production
DQG VDOH RI GHPDWHULDOLVHG oVHUYLFHVp UDWKHU WKDQ
material products.
It’s vital to note that this cannot simply be the
oVHUYLFHEDVHG HFRQRPLHVp WKDW KDYH FKDUDFWHULVHG
development in advanced economies. For the most
part, that has been achieved (as we saw in Chapter
macroeconomics is going to be needed. One in
ZKLFK VWDELOLW\ QR ORQJHU UHOLHV RQ HYHULQFUHDVLQJ
consumption growth. One in which economic
activity remains within ecological scale. Though
WKHVH DUH XQIDPLOLDU JRDOV IRU PDFURHFRQRPLVWV
the aim of this chapter is to show that they are not
only meaningful, but achievable.
E\UHGXFLQJPDQXIDFWXULQJFRQWLQXLQJWRLPSRUW
consumption goods from abroad and expanding the
ßQDQFLDOVHFWRUWRSD\IRULW
1RUFDQLWORRNPXFKOLNHDQ\WKLQJWKDWSDVVHVIRU
service sector activity in modern economies at the
present. When the impacts attributable to these
are computed properly, most of them turn out to

76 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission

be at least as resource hungry as the manufacturing
sectors. The recreation and leisure sector ought
WR EH D SULPH FDQGLGDWH IRU GHPDWHULDOLVDWLRQ LQ
principle. In practice, it’s responsible for around
RIDOOHQHUJ\DQGFDUERQHPLVVLRQVDWWULEXWDEOH
WR8.FRQVXPHUV
So what exactly constitutes productive economic
DFWLYLW\LQWKLVHFRQRP\",WLVQpWLPPHGLDWHO\FOHDU
Selling ‘energy services’, certainly, rather than
energy supplies. Selling mobility rather than cars.
5HF\FOLQJ UHXVLQJ OHDVLQJ PD\EH <RJD OHVVRQV
SHUKDSVKDLUGUHVVLQJJDUGHQLQJVRORQJDVWKHVH
aren’t carried out using buildings, don’t involve the
latest fashion and you don’t need a car to get to
them. The humble broom would need to be preferred
WRWKHGLDEROLFDOoOHDIEORZHUpIRULQVWDQFH
7KH IXQGDPHQWDO TXHVWLRQ LV WKLV FDQ \RX UHDOO\
make enough money from these activities to keep
DQ HFRQRP\ JURZLQJ"6 $QG WKH WUXWK LV ZH MXVW
don’t know. We have never at any point in history
lived in such an economy. That doesn’t mean we
couldn’t. But it sounds at the moment suspiciously
like something the Independent on Sunday would
LQVWDQWO\ GLVPLVV DV D \XUWEDVHG HFRQRP\ t ZLWK
increasingly expensive yurts.
The dynamics described in Chapter 6 just don’t seem
amenable to moderation of the kind envisaged.
Social logic, questions of scale, and the laws of
WKHUPRG\QDPLFV DUH VWLOO VLJQLßFDQW VWXPEOLQJ
blocks to the changes hoped for by those with
ZHOOPHDQLQJLQWHQWLRQVIRUFRQWLQXHGJURZWKZLWK
drastic reductions in material intensity.
‘The idea of economic growth overcoming physical
OLPLWVE\DQJHOL]LQJ*'3LVHTXLYDOHQWWRRYHUFRPLQJ
physical limits to population growth by reducing the
throughput intensity or metabolism of human beings,’
wrote ecological economist, Herman Daly, over thirty
years ago. ‘First pygmies, then Tom Thumbs, then
big molecules, then pure spirits. Indeed, it would be
necessary for us to become angels in order to subsist
RQDQJHOL]HG*'3p7
On the other hand, doing without growth doesn’t
ORRN DWWUDFWLYH HLWKHU 0RGHUQ HFRQRPLHV DUH EXLOW
explicitly around consumption growth. Politicians
and economists may differ in their prescriptions for
NLFNVWDUWLQJJURZWKLQWKHHYHQWRIDUHFHVVLRQ%XW
all of them assume a return to high street spending
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK"
LVZKDWZHpUHDIWHU$SDUWIURPDQ\WKLQJHOVHLQWKH
conventional view, structural stability relies on it.
$QG \HW WKHUHpV VWLOO VRPHWKLQJ RGG DERXW RXU
persistent refusal to countenance anything but
JURZWK DW DOO FRVWV $IWHU DOO -RKQ 6WXDUW 0LOO RQH
of the founding fathers of economics, recognised
both the necessity and the desirability of moving
eventually towards a ‘stationary state of capital and
wealth’, suggesting that it ‘implies no stationary
VWDWHRIKXPDQLPSURYHPHQWp$QGWKRXJK.H\QHVp
PDFURHFRQRPLFV ZDV ODUJHO\ FRQFHUQHG ZLWK WKH
conditions of prudent growth, he also foresaw a
time when the ‘economic problem’ would be solved
and ‘we prefer to devote our further energies to
QRQHFRQRPLFSXUSRVHVp
$OOWKHPRUHVWUDQJHWKHQWKDWYLUWXDOO\QRDWWHPSW
has been made to develop an economic model that
GRHVQpW UHO\ RQ ORQJWHUP JURZWK +HUPDQ 'DO\pV
SLRQHHULQJ ZRUN DW OHDVW GHßQHG WKH HFRORJLFDO
conditions of a steady state economy. For Daly,
these can be expressed in terms of a constant stock
of physical capital, capable of being maintained by
a low rate of material throughput that lies within
the regenerative and assimilative capacities of the
ecosystem.
What we still miss from this is the ability to establish
economic stability under these conditions. We
KDYH QR PRGHO IRU KRZ FRPPRQ PDFURHFRQRPLF
‘aggregates’ (production, consumption, investment,
trade, capital stock, public spending, labour, money
supply and so on) behave when capital doesn’t
DFFXPXODWH1RUGRRXUPRGHOVSURSHUO\DFFRXQWIRU
WKHGHSHQGHQF\RIPDFURHFRQRPLFDJJUHJDWHVRQ
ecological variables such as resource use, reserves,
emissions and ecological integrity.
,Q VKRUW WKHUH LV QR PDFURHFRQRPLFV IRU
sustainability and there is an urgent need for one.
,Q IDFW WKLV FDOO t IRU D UREXVW PDFURHFRQRPLFV
of sustainability – is one of the most important
messages from the analysis in this study. The
following paragraphs explore the dimensions of this
call in more detail.
Macro-economic basics
The main parameters can be set out easily enough.
7KHSULQFLSDOPDFURHFRQRPLFDJJUHJDWHtWKHRQH
77
DOOWKHIXVVLVDERXWVRWRVSHDNtLVWKH*'3:KHWKHU
it deserves pride of place in a new macroeconomics
for sustainability is an open question to which we
return below. In the meantime, it’s useful to set out
EULHà\VRPHRILWVHFRQRPLFFKDUDFWHULVWLFV
There are three distinct ways of thinking about (and
material resources. So to some extent this is inherent
in both the demand side and the supply side (in
the production function). But these are measured
only in monetary terms and don’t usually carry any
H[SOLFLW UHIHUHQFH WR WKH PDWHULDO àRZV QHHGHG WR
create them.
FDOFXODWLQJ WKH *'3 ,Q RQH YLHZ LW LV WKH VXP RI
DOOßQDOH[SHQGLWXUHVRQJRRGVDQGVHUYLFHVLQWKH
economy. In another it measures the total output
(or value added) of goods and services from all the
productive enterprises within the nation. In a third
view, it is the sum of all the incomes earned by
people living in the country.
The different calculations all come up with more
or less the same total. In fact, they can be thought
of, broadly speaking, as measuring the volume of
$PRUHJHQHUDOFULWLFLVPRIWKH*'3LVLWVIDLOXUHWR
account properly for changes in the asset base, even
ZKHQLWFRPHVWRßQDQFLDODVVHWV*URVVß[HGFDSLWDO
investment is measured. But depreciation of capital
VWRFNVJRHVXQDFFRXQWHGIRUDQGWKH*'3LVDOPRVW
completely blind to the levels of indebtedness
LGHQWLßHGLQ&KDSWHU
1R DWWHQWLRQ LV SDLG LQ WKH *'3 WR WKH FRVWV
associated with the degradation of natural capital
from economic activity, either through the impacts
WKHHFRQRPLFàRZDWGLIIHUHQWSRLQWVDURXQGWKH
circular economy.
7KHH[SHQGLWXUHEDVHG*'3DOVRFDOOHGoDJJUHJDWH
demand’ is made up from private consumer
expenditure, public (government) expenditure,
JURVVLQYHVWPHQWLQß[HGFDSLWDODQGQHWH[SRUWV
The economy is said to be in equilibrium when the
aggregate demand matches the aggregate supply
(sometimes called the national income).
,Q FRQYHQWLRQDO PDFURHFRQRPLFV WKH QDWLRQDO
income is estimated through a ‘production function’,
which tells us how much (in monetary terms) an
economy is capable of producing with any given
LQSXW RI WKH IDFWRUV RI SURGXFWLRQ 0RVW RIWHQ DV
we saw in Chapter 6) the factors considered to
drive the national income are capital, labour and
WHFKQRORJLFDOHIßFLHQF\
Ecological economists argue that this form of
production function is unsatisfactory because it
takes no explicit account of material resources and
carries an implicit assumption that it’s possible to
VXEVWLWXWHGLIIHUHQWIDFWRUVRISURGXFWLRQLQGHßQLWHO\
One way of rectifying this would be to include
of environmental emissions or through the depletion
RIQDWXUDOUHVRXUFHV$QGE\FRQWUDVWWKHUHDUHDOO
NLQGVRIWKLQJVZKLFKDUHLQFOXGHGLQWKH*'3tWKH
costs of congestion, oil spills, and clearing up after
car accidents, for example – that should not really
be counted as additional to human wellbeing.
These kinds of perversities have been the focus
IRU ORQJVWDQGLQJ FULWLTXHV RI FRQYHQWLRQDO PDFUR
economics by ecological economists and others.
1XPHURXV VXJJHVWLRQV KDYH EHHQ PDGH IRU
supplementing or adjusting the natural accounts
to rectify the situation. For instance, there is a
strong argument in favour of including some
DFFRXQW RI WKH àRZ RI VHUYLFHV SURYLGHG E\ WKH
QDWXUDO HQYLURQPHQW DQG IRU VXEWUDFWLQJ VRFDOOHG
‘defensive’ expenditures.
We return to these policy suggestions in Chapter
 7KH PDLQ DLP KHUH LV WR H[SORUH WKH SULQFLSDO
macroeconomic variables and understand their
UHODWLRQVKLSVWRHDFKRWKHU$NH\HOHPHQWLQWKRVH
relationships is the balance between supply and
demand, and the importance of this balance for
labour employment.
energy (or other material resources) explicitly
within the production function and also to constrain
substitution possibilities.
%XW WKH FRQYHQWLRQDO PDFURHFRQRPLF IRUPXODWLRQ
contains no explicit reference to the material or
ecological basis for the economy at all. Clearly both
consumer goods and capital goods do embody
78
$VZHpYHDOUHDG\VHHQ&KDSWHUZKHQGHPDQG
IDOOVUHYHQXHVWRßUPVDUHUHGXFHGDQGWKLVOHDGV
to job losses and reduced investment. Reduced
investment leads to a lower capital stock which,
together with a lower labour input, in turn reduces
the productive capability of the economy. Output
falls and with less money in the economy, public
UHYHQXHVDOVRIDOOGHEWLVPRUHGLIßFXOWWRVHUYLFHDQG
3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
 the system has a tendency to become unstable. model estimates the national income, computes
FIRMS
WKHßVFDOEDODQFHDQGWUDFNVWKHQDWLRQDOGHEWRYHU
%XW GRHV LW KDYH WR ZRUN OLNH WKLV" ,V LW SRVVLEOH D  \HDU SHULRG WR  7KH PRGHO DOVR NHHSV
WR FRQßJXUH WKH FRQYHQWLRQDO PDFURHFRQRPLF an account of unemployment, greenhouse gas
variables in such a way as to reduce the imperative Novelty, and poverty levels.
emissions,
price reduction
IRU JURZWK DQG \HW PDLQWDLQ HFRQRPLF VWDELOLW\"
One potential avenue of exploration is to attempt By changing key input variables – particularly those
a stabilisation of economic output by altering the
Consumer spending which are known to be drivers of growth, such as
role or relative importance of key variables (such as labour participation and investment rates – the model
consumption, investment, public spending INCREASINGand PRODUCTIVITY
so can be used to developGoods,different scenarios for the
services, incomes
RQZLWKLQWKHEDVLFPDFURHFRQRPLFPRGHO
In search of the low-growth economy
Investment
T
EDI
CR$VWRQLVKLQJO\WKHUHLVDOPRVWQRDWWHPSWDWWKLVWDVN
in the literature at all. The most notable exception
is a study carried out by Canadian economist, Peter
HOUSEHOLDS
Victor, which was presented and discussed in detail
at two workshops held by the SDC during the course
of the Redefining Prosperity project.
The study used an interactive systems model to
explore the potential for achieving a stable, but
Figure 18: The ‘Engine of Growth’ in Market Economies
QRQJURZLQJ HFRQRP\ 7KH PRGHO LV FDOLEUDWHG
DJDLQVW VWDWLVWLFDO GDWD UHODWLQJ WR WKH NH\ PDFUR
HFRQRPLF YDULDEOHV LQ WKH &DQDGLDQ HFRQRP\
output, consumption, public spending, investment,
employment, trade and so on. On the basis of these,
DQGVSHFLßFDVVXPSWLRQVDERXWWKHIXWXUH9LFWRUpV
future of the Canadian economy. It can also illustrate
the environmental and social implications of those
VFHQDULRV)LJXUHVKRZVRQHVXFKDWWHPSW
This scenario certainly achieves a stabilisation in the
*'38QGHUEXVLQHVVDVXVXDOLQFRPHOHYHOVPLJKW
EHH[SHFWHGWRJURZE\XSWRRYHU\HDUV
,Q )LJXUH  LQFRPH SHU SHUVRQ LV EDUHO\ 
KLJKHU LQ  WKDQ LW ZDV LQ  *UHHQKRXVH
gas emissions come down slightly, mainly because
output falls. But this reduction falls considerably
VKRUW RI ZKDW PLJKW EH QHHGHG IRU D  SSP
stabilisation scenario.
What’s more worrying is that income stabilisation
has only been achieved at the cost of spiralling
unemployment, rising poverty and escalating public
sector debt. In short, this scenario represents the
unpalatable form of social (and economic) collapse
that politicians fear the most.

Figure 19 A Low-Growth Scenario for Canada: Collapse

300
Unemployment
Poverty
250

200
2005 = 100

150 GDP per cap

100

50 GHGs
Debt to GDP ratio
0
2005 2010 2015 2020 2025 2030 2035

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 79

Figure 19: A Low-Growth Scenario for Canada: Collapse

 )LJXUH  LOOXVWUDWHV D PRUH VXFFHVVIXO DWWHPSW WR
stabilise the economy. This time income is stabilised
DW D KLJKHU OHYHO *'3 SHU FDSLWD LV DURXQG 
KLJKHULQWKDQLWZDVLQ%XWPRVWRIWKH
JURZWK RFFXUV LQ WKH ßUVW  \HDUV RI WKH VFHQDULR
$VHFRQRPLFVWDELOLVDWLRQFRPHVLQWRHIIHFWLQFRPH
JURZWKLVJUDGXDOO\UHGXFHGIURPD\HDUWROHVV
WKDQD\HDU'XULQJWKHßQDO\HDUVWKHQDWLRQDO
income is effectively stabilised.
1RWDEO\ WKRXJK WKLV KDV EHHQ DFKLHYHG ZLWKRXW
compromising wider economic and social resilience.
Unemployment and poverty have both been halved.
7KH GHEW WR *'3 UDWLR KDV EHHQ VODVKHG E\ 
7KRXJKLWIDOOVVRPHZD\VKRUWRIDFKLHYLQJD
SSP VWDELOLVDWLRQ WDUJHW &DQDGD KDV DFKLHYHG 
to public goods, implemented through changes in
taxation and public spending. The labour force has
been stabilised, partly through demographic change
and partly through policies aimed at stabilising the
overall population.
Perhaps most importantly, unemployment is
avoided in the Resilience scenario by reducing both
the total and the average number of working hours.
/DERXUSURGXFWLYLW\LVDVVXPHGWRLQFUHDVH$QGWKLV
normally leads, through the logic discussed already
(Chapter 6), to a reduction in the available work.
But here unemployment is averted by sharing the
work more equally across the available workforce.
This is an important outcome. It is possible to avoid
\HDUVWRRODWHLWVo7RURQWRWDUJHWpRIDFXWLQ
greenhouse gas emissions.
The difference in outcome in the two scenarios is
striking. But what kinds of assumptions and policy
interventions distinguish the ‘Collapse’ scenario in
)LJXUH  IURP WKH o5HVLOLHQFHp VFHQDULR LQ )LJXUH
"+RZLVWKHFROODSVHVKRZQLQ)LJXUHDYHUWHG
LQ)LJXUH"
7KHPRVWLQàXHQWLDOIDFWRUVDUHFKDQJHVWRLQYHVWPHQW
DQGWKHVWUXFWXUHRIWKHODERXUPDUNHW1HWEXVLQHVV
investment is reduced in the Resilience scenario, and
the damaging unemployment that follows from
recession by sharing work more equally amongst
the population.
Reducing the working week is the simplest and
most often cited structural solution to the challenge
RIPDLQWDLQLQJIXOOHPSOR\PHQWZLWKQRQLQFUHDVLQJ
RXWSXW $QG WKHUH LV VRPH SUHFHGHQW IRU LW IRU
example, from labour policies in certain European
nations. But it’s worth noting that there are some
other more radical suggestions for reorganising
work to ensure equity and to encourage creative
participation in society. These include the introduction
there has been a shift in investment from private RIDEDVLFRUFLWL]HQpVLQFRPH

Figure 20 A Low Growth Scenario for Canada: Resilience

300

250

200 GDP per cap

2005 = 100

150
Poverty

GHGs
100 Unemployment

50

Debt to GDP ratio

0
2005 2010 2015 2020 2025 2030 2035

Figure 20: A Low Growth Scenario for Canada: Resilience

80 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
One of the strengths of Peter Victor’s model is that
it looks and behaves remarkably like a conventional
PDFURHFRQRP\ ,Q IDFW DJJUHJDWH GHPDQG LV VWLOO
dominated by consumption (although not driven
by consumption growth). Consumer expenditure is
VXFFHVVIXOO\ WR PDNH WKH WUDQVLWLRQ WR D QRQIRVVLO
world.
Crucially though, this ‘sustainability window’ is
widened if the balance between consumption and
FORVHWRRI*'3LQERWKWKHEDVH\HDU LQYHVWPHQWLQWKHHFRQRP\LVFKDQJHG6SHFLßFDOO\
DQG WKH ßQDO \HDU  +RZHYHU WKH EDODQFH
between other demand side variables is changed.
6SHFLßFDOO\ EXVLQHVV LQYHVWPHQW IDOOV IURP MXVW
XQGHU  RI *'3 LQ  WR RQO\  LQ 
Public spending and net exports both rise.
In other words, what Victor demonstrates is that
there may be more room than commonly supposed,
even within the conventional framework, to
stabilise economic output. This is not to suggest that
such changes are easy to implement. $FKLHYLQJ
reduced working hours, for example, requires careful
policy and only tends to succeed under certain
conditions. ‘One of the fundamental preconditions
IRUWKHZRUNLQJWLPHSROLF\SXUVXHGLQ*HUPDQ\DQG
'HQPDUNpZULWHVVRFLRORJLVW*HUKDUG%RVFKoZDVD
stable and relatively equal earning distribution.’
The same may be said for policies which restructure
investment or shift taxation.
But the point here is that – even within a relatively
FRQYHQWLRQDOPDFURHFRQRPLFIUDPHZRUNtGLIIHUHQW
FRQßJXUDWLRQV RI WKH NH\ YDULDEOHV DUH SRVVLEOH
if the savings ratio is increased and more of the
national income is allocated to investment, the
àH[LELOLW\ WR DFKLHYH WKH WUDQVLWLRQ LV KLJKHU
according to this analysis.
Beyond the consumption-driven economy
$JDLQWKLVLVDUHDOO\LPSRUWDQWLQVLJKW7KHGHIDXOW
assumption is that consumption is not just the
primary purpose but the principal driver of growth.
Investment is crucial too. But its role is largely seen
as being to stimulate the innovation necessary to
LQFUHDVH FRQVXPSWLRQ àRZV LQ WKH IXWXUH 3XEOLF
sector spending is often regarded as a ‘necessary
evil’ – there to correct for failures in the market and
SURYLGHDEDVLFVDIHW\QHWIRUWKHOHDVWZHOORII
It’s easy to see how we’ve ended up with this
YHU\ VSHFLßF DQG UDWKHU QDUURZ YLVLRQ RI WKH
PDFURHFRQRP\ DW ßUVW EHFDXVH RI WKH FORVH
correspondence between consumption growth
DQGWKHOLYLQJVWDQGDUGDQGWKHQODWHUEHFDXVHRI
$QGWKHVHFRQßJXUDWLRQVGHOLYHUGLIIHUHQWRXWFRPHV
When our goal is both to achieve economic stability
and remain within ecological and resource limits, this
LVDQDEVROXWHO\FULWLFDOßQGLQJ
$QRWKHURIWKHFRQWULEXWLRQVWRRedefining Prosperity
illustrates the same point. Using a hypothetical
simulation model, Italian economists Simone
Gp$OHVVDQGUR DQG 7RPPDVR /X]]DWL H[SORUHG WKH
challenge associated with the transition from fossil
fuels to renewable energy.
VWUXFWXUDODQGVRFLDOORFNLQ&KDSWHU
But the vision has failed. Consumption growth
is damaging the basis for future wellbeing and
LVQpW HYHQ ZHOODOLJQHG ZLWK FXUUHQW ZHOOEHLQJ
,QYHVWPHQWLVQHHGHGQRZPRUHWKDQHYHU1RWWR
stimulate ever higher levels of consumption in the
future, but to build new infrastructures, to effect
the transition to renewable energy and to deliver
NH\HQYLURQPHQWDODQGVRFLDOJRDOV$QGWKHSXEOLF
sector, far from being a ‘distortion’ of the free
market, has an absolutely crucial role to play in the
$V DOUHDG\ QRWHG &KDSWHU  WKLV WUDQVLWLRQ ZLOO
require substantial new investment. But there’s
a balance to be struck. If we invest too slowly,
we run out of resources before alternatives are in
place. Fuel prices soar and economies crash. If we
invest too fast, there’s a risk of slowing down the
economy to the extent that the resources required
for further investment aren’t available. The upshot,
DFFRUGLQJ WR Gp$OHVVDQGUR DQG KLV FROOHDJXHV LV
transition.
7KHVWDWHKDVFOHDUO\HPHUJHGDVDYLWDOoßUVWUHVRUWp
when markets fail, as they did spectacularly during
 %XW DV WKH DQDO\VLV LQ WKLV FKDSWHU VKRZV
the public sector also has an active role to play
LQ SURWHFWLQJ PDFURHFRQRPLF VWDELOLW\ GHOLYHULQJ
SXEOLFJRRGVLQYHVWLQJLQDQGPDQDJLQJORQJWHUP
LQIUDVWUXFWXUHDVVHWVDQGFRFUHDWLQJWKHFOLPDWHIRU
that there is a narrow ‘sustainability window’ VXVWDLQDEOHFRQVXPSWLRQ&KDSWHU
through which the economy must pass if it is

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 81

In short, the assumptions embedded in the
FRQYHQWLRQDO PDFURHFRQRPLFV VWDQG LQ XUJHQW
QHHGRIUHYLVLRQ$QGWKHSRWHQWLDOWRH[SORUHWKLV
possibility clearly exists. Promisingly, we can already
make a decent guess at some of the characteristics
RIDQHZPDFURHFRQRPLFVIRUVXVWDLQDELOLW\
7KH IXQGDPHQWDO PDFURHFRQRPLF YDULDEOHV ZLOO
still pertain. People will still spend and they will
still save. Enterprise will still produce goods and
VHUYLFHV *RYHUQPHQW ZLOO VWLOO UDLVH UHYHQXHV DQG
spend them in the public interest. Both private
and public sector will both still invest in stocks of
physical, human and social capital.
%XW QHZ PDFURHFRQRPLF YDULDEOHV ZLOO QHHG WR
be brought explicitly into play. These will almost
FHUWDLQO\LQFOXGHYDULDEOHVWRUHàHFWWKHHQHUJ\DQG
resource dependency of the economy. They may also
LQFOXGHYDULDEOHVWRUHàHFWWKHYDOXHRIHQYLURQPHQWDO
services or stocks of natural capital.
$QG WKHUH DUH OLNHO\ WR EH NH\ GLIIHUHQFHV HYHQ LQ
the way that conventional variables play out. The
balance between consumption and investment,
the balance between public and private sector, the
role of different sectors, the nature of productivity
LPSURYHPHQW WKH FRQGLWLRQV RI SURßWDELOLW\ $OO RI
these are likely to be up for renegotiation.
Investment is certainly going to play an absolutely
vital role. If debt is to be kept under control this
suggests that a different savings ratio will be
QHHGHG $QG WKDW D GLIIHUHQW EDODQFH EHWZHHQ
consumption and investment in the aggregate
demand function is likely. In addition, the level and
nature of this investment almost certainly calls for a
different balance between public and private sector
investment.
It’s worth exploring this last point further. The
traditional function of investment (Chapter 6) is
framed around labour productivity. This role is
likely to diminish in importance. Innovation will
still be vital, but it will need to be targeted more
FDUHIXOO\ WRZDUGV VXVWDLQDELOLW\ JRDOV 6SHFLßFDOO\
investments will need to focus on resource
productivity, renewable energy, clean technology,
green business, climate adaptation and ecosystem
maintenance and protection. These are some of
the things to emerge from the consensus around a
What we don’t yet know is how to make the nature
DQG VFDOH RI WKLV LQYHVWPHQW ZRUN .H\QHVLDQLVP
assumes that investment has a ‘multiplier’ effect
because it stimulates further consumption. This is
WUXHRIFRQYHQWLRQDOO\IRFXVHGEXVLQHVVLQYHVWPHQW
But the nature and scale of investment for
sustainability is very different.
Investment in resource productivity won’t always
bring preferential returns unless the relative price
of labour and materials changes substantially.
Some investments in renewable energy will only
bring returns over much longer time frames than
WUDGLWLRQDOßQDQFLDOPDUNHWVH[SHFW$QGLQYHVWPHQWV
in ecosystem protection and maintenance might
QRWEULQJFRQYHQWLRQDOßQDQFLDOUHWXUQVDWDOOHYHQ
though they are protecting vital ecosystem services
for the future and may also be contributing to
employment.
Simplistic prescriptions in which investment
contributes to future productivity won’t work
here. The nature and conditions of investment will
WKHPVHOYHV KDYH WR FKDQJH ,QYHVWPHQW LQ ORQJ
term infrastructures and public goods will have
WR EH MXGJHG DJDLQVW GLIIHUHQW FULWHULD $SSHQGL[
 VNHWFKHV WKH RXWOLQH IRU D QHZ PDFURHFRQRPLF
investment framework that builds on these points.
3DUWLFXODU DWWHQWLRQ LV GUDZQ LQ $SSHQGL[  WR WKH
challenge of matching supply with demand under
these new conditions. Investments in ecosystem
maintenance (for example) contribute to aggregate
demand, but make no direct contribution to
aggregate supply – at least under the assumptions
of a conventional production function. They may be
YLWDOLQSURWHFWLQJHQYLURQPHQWDOLQWHJULW\$QGWKLV
is in its turn vital for sustaining production at all over
WKH ORQJWHUP %XW LQ WKH VKRUWWHUP WKH\ DSSHDU
to ‘soak up’ income without increasing economic
output.
,Q D FRQYHQWLRQDO JURZWKEDVHG HFRQRP\ WKLV LV
problematic. In a sustainable economy this kind
of investment needs to be seen as an essential
FRPSRQHQW RI PDFURHFRQRPLF VWUXFWXUH $QG \HW
at the moment, the tools to analyse this dynamic
properly don’t exist, even if the political will to
implement such a strategy were in place. We return
WRWKHSROLF\LPSOLFDWLRQVRIWKLVLQ&KDSWHU
JOREDO*UHHQ1HZ'HDO&KDSWHU

82 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission

In the meantime, the aim of this chapter has been to
VKRZWKDWDQHZPDFURHFRQRPLFVIRUVXVWDLQDELOLW\
is not only essential, but possible. The starting point
must be to relax our presumption of perpetual
consumption growth as the only possible basis for
stability and to identify clearly the conditions that
GHßQHDVXVWDLQDEOHHFRQRP\
These conditions will still include a strong
requirement for economic stability. Or perhaps
‘resilience’ would be a better word for what is
UHTXLUHG KHUH $ VXVWDLQDEOH HFRQRP\ PXVW EH
capable of resisting the exogenous shocks and avoid
the internal contradictions which have caused chaos
in the last year.
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK"
But the requirement for resilience will need to be
augmented by conditions that address distributional
equity, impose sustainable levels of resource
throughput, and provide for the protection of critical
natural capital.
,QRSHUDWLRQDOWHUPVWKLVQHZPDFURHFRQRP\ZLOO
require enhanced investment in public infrastructures,
in sustainable technologies and in ecosystem
maintenance. It is likely to demand a different
balance between public and private goods. It will
require us to reframe our concepts of productivity
DQGSURßWDELOLW\$ERYHDOODQHZPDFURHFRQRPLFV
for sustainability will be ecologically and socially
literate, ending the folly of separating economy
from society and environment.
83
84 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
 9
Flourishing –
within limits

“We must bring back into society a deeper sense of

the purpose of living. The unhappiness in so many
lives ought to tell us that success alone is not
enough. Material success has brought us to
a strange spiritual and moral bankruptcy.”
Ben Okri
October 20081
Fixing the economy is only part of the problem. Addressing the social logic of consumerism
is also vital. This task is far from simple – mainly because of the way in which material goods
are so deeply implicated in the fabric of our lives.

Prosperity is not synonymous with material wealth.
$QG WKH UHTXLUHPHQWV RI SURVSHULW\ JR EH\RQG
material sustenance. Rather, prosperity has to do
ZLWKRXUDELOLW\WRàRXULVKSK\VLFDOO\SV\FKRORJLFDOO\
and socially. Beyond sheer subsistence or survival,
prosperity hangs on our ability to participate
meaningfully in the life of society.
This task is as much social and psychological as it
is material. But the appealing idea that (once our
lives. Their prescriptions for solving the problem
differ accordingly. But on the existence of a social
recession there is much less disagreement.
The extent of this phenomenon clearly differs across
different nations. Data from a recent module in the
European Social Survey designed to measure social
ZHOOEHLQJLOOXVWUDWHWKLVSRLQW)LJXUHVKRZVWKH
different levels of trust and belonging experienced
E\ UHVSRQGHQWV DFURVV  (XURSHDQ QDWLRQV 7KRVH
PDWHULDOQHHGVDUHVDWLVßHGZHFRXOGGRDZD\ZLWK ZLWK WKH KLJKHVW VFRUHV HJ 1RUZD\ H[SHULHQFH
PDWHULDOWKLQJVàRXQGHUVRQDVLPSOHEXWSRZHUIXO far greater levels of trust and belonging than those
IDFWPDWHULDOJRRGVSURYLGHDYLWDOODQJXDJHWKURXJK
which we communicate with each other about the
WKLQJVWKDWUHDOO\PDWWHUIDPLO\LGHQWLW\IULHQGVKLS
community, purpose in life.
7KHUHLVFOHDUO\DSX]]OHKHUH,ISDUWLFLSDWLRQLVUHDOO\
what matters, and material goods provide a language
to facilitate that, then richer societies ought to show
more evidence of it. In fact, the opposite appears to
be the case. Robert Putnam’s groundbreaking book
Bowling Alone provided extensive evidence of the
FROODSVHRIFRPPXQLW\DFURVVWKH86$
Social Recession
0RGHUQZHVWHUQVRFLHW\DSSHDUVWREHLQWKHJULSRI
a ‘social recession’. There is a surprising agreement
on this from across the political spectrum. Jonathan
ZLWKORZHUVFRUHVHJWKH8.
It’s commonly agreed that some at least of the
reasons for the breakdown in trust lie in the erosion
RI JHRJUDSKLFDO FRPPXQLW\ $ VWXG\ E\ 6KHIßHOG
8QLYHUVLW\IRUWKH%%&FRQßUPVWKLVWUHQGLQWKH8.
Using an index to measure geographical community
in different BBC regions, the study revealed a
remarkable change in British society since the early
V ,QFRPHV GRXEOHG RQ DYHUDJH RYHU WKH 
\HDU SHULRG %XW WKH 6KHIßHOG oORQHOLQHVV LQGH[p
increased in every single region measured. In fact,
according to one of the report’s authors ‘even the
ZHDNHVW FRPPXQLWLHV LQ  ZHUH VWURQJHU WKDQ
any community now’.
The increasing number of people living on their
own has a number of different causes, including a
VXEVWDQWLDO KLNH LQ WKH GLYRUFH UDWH EHWZHHQ 
5XWKHUIRUGIURPWKHSROLWLFDOOHIWDQG-HVVH1RUPDQ
(from the political right) both presented evidence
on it to Redefining Prosperity. Rutherford pointed
to rising rates of anxiety and clinical depression,
increased alcoholism and binge drinking, and a
GHFOLQH LQ PRUDOH DW ZRUN 1RUPDQ KLJKOLJKWHG
the breakdown of community, a loss of trust across
society and rising political apathy.
The two authors disagree on the causes of social
recession. For Rutherford, the main culprit is the
increasing commoditisation of public goods and
the rising social inequalities that are engendered
E\ FDSLWDOLVP LWVHOI )RU 1RUPDQ LW LV WKH RYHU
EHDULQJ LQàXHQFH RI oELJp JRYHUQPHQW LQ SHRSOHpV
86 3URVSHULW\ZLWKRXW*URZWK"
DQG 6 The study’s authors link the changes
over time largely to mobility. ‘Increased wealth and
improved access to transport has made it easier
for people to move for work, for retirement, for
schools, for a new life’, reports the BBC. They might
also have mentioned that the mobility of labour is
one of the requirements for higher productivity in
the growth economy.7
In other words, some degree of responsibility for the
change appears to be attributable to growth itself.
$V HYLGHQFH IRU àRXULVKLQJ LW GRHVQpW ORRN JRRG
$QG LW EHFRPHV HYHQ PRUH SX]]OLQJ ZK\ ULFK
societies continue to pursue material growth.
Sustainable Development Commission
 0
2005 2010 2015 2020 2025 2030 2035

Figure 20: A Low Growth Scenario for Canada: Resilience

Figure 21 Trust and Belonging in 22 European Nations8

Key

0.0 4.0 7.0 10.0

A Life without Shame degree of poverty which, it is presumed, no body

Figure 21: Trust and Belonging in 22 European Nations
Interestingly, Sen came close to addressing this
SX]]OH LQ KLV HDUO\ ZRUN RQ WKH oOLYLQJ VWDQGDUGp
There he argued that the material requirements for
SK\VLRORJLFDOàRXULVKLQJWHQGWREHIDLUO\VLPLODULQ
DOOVRFLHWLHV$IWHUDOOWKHEDVLFKXPDQPHWDEROLVP
doesn’t change so much across the species. Crucially,
however, Sen claimed that the material requirements
associated with social and psychological capabilities
can vary widely between different societies.
+LVDUJXPHQWKDUNVEDFNWR$GDP6PLWKpVLQVLJKWRQ
WKHLPSRUWDQFHRIVKDPHLQVRFLDOOLIHo$OLQHQVKLUW
for example, is, strictly speaking, not a necessary
of life,’ wrote Smith in The Wealth of Nations. ‘But
in the present times, through the greater part of
Europe, a creditable day labourer would be ashamed
to appear in public without a linen shirt, the want of
which would be supposed to denote that disgraceful
can well fall into without extreme bad conduct.’
Sen broadens this argument to a wider range of
JRRGV DQG D GHHSHU VHQVH RI àRXULVKLQJ 7R OHDG
a ‘life without shame,’ he claimed in The Living
Standard, ‘to be able to visit and entertain one’s
friends, to keep track of what is going on and what
others are talking about, and so on, requires a more
expensive bundle of goods and services in a society
that is generally richer and in which most people
DOUHDG\ KDYH VD\ PHDQV RI WUDQVSRUW DIàXHQW
clothing, radios or television sets, and so on.’ In
short, he suggested, ‘the same absolute level of
capabilities may thus have a greater relative need
for incomes (and commodities)’.
Putting aside for a moment the fact that higher
incomes have – in the same token – been partly
UHVSRQVLEOH IRU GLPLQLVKHG àRXULVKLQJ WKHUH LV DQ

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 87

even more striking point to be noted here. If we take
for granted the importance of material commodities
for social functioning, there is never any point at
which we will be able to claim that enough is
enough. This is the logic of Sen’s argument. The
baseline for social functioning is always the current
OHYHORIFRPPRGLWLHV$QGWKHDYRLGDQFHRIVKDPH
t D NH\ IHDWXUH RI VRFLDO àRXULVKLQJ t ZLOO GULYH
material demand forward relentlessly.
This is in effect a different framing of the social
logic explored in Chapter 6. But the social trap is
QRZ HYHQ FOHDUHU $W WKH LQGLYLGXDO OHYHO LW PDNHV
perfect sense to avoid shame. It is essential to
she describes a widespread disenchantment with
modern life – what she refers to as a ‘structure of
feeling’ – that consumer society has passed some
kind of critical point, where materialism is now
actively detracting from human wellbeing.
$Q[LRXV WR HVFDSH WKH ZRUN DQG VSHQG F\FOH ZH
are suffering from a ‘fatigue with the clutter and
waste of modern life’ and yearn for certain forms
of human interaction that have been eroded. We
would welcome interventions to correct the balance,
DFFRUGLQJ WR 6RSHU $ VKLIW WRZDUGV DOWHUQDWLYH
hedonism would lead to a more ecologically
sustainable life that is also more satisfying and
VRFLDO DQG SV\FKRORJLFDO àRXULVKLQJ %XW WKH
mechanism for doing so in the consumer society is
LQKHUHQWO\àDZHG$WWKHVRFLHWDOOHYHOLWFDQRQO\
OHDGWRIUDJPHQWDWLRQDQGDQRPLH$QGLQGRLQJVR
it undermines the best intentions of the individual
as well. It looks suspiciously like the language of
JRRGVMXVWLVQpWGRLQJLWVMRESURSHUO\$OOWKDWpVOHIW
LVDQXQGLJQLßHGVFUDSWRWU\DQGHQVXUHWKDWZHpUH
somewhere near the top of the pile.
0RVWZRUU\LQJRIDOOLVWKDWWKHUHLVQRHVFDSHIURP
this social trap within the existing paradigm. While
VRFLDOSURJUHVVGHSHQGVRQWKHVHOIUHLQIRUFLQJF\FOH
of novelty and anxiety, the problem can only get
ZRUVH0DWHULDOWKURXJKSXWZLOOLQHYLWDEO\JURZ$QG
WKHSURVSHFWVIRUàRXULVKLQJZLWKLQHFRORJLFDOOLPLWV
evaporate. Prosperity itself – in any meaningful
VHQVH RI WKH ZRUG t LV XQGHU WKUHDW 1RW IURP WKH
current economic recession, but from the continuing
surge of materialism, and from the economic model
that perpetuates it.
Alternative hedonism
&KDQJH LV HVVHQWLDO $QG VRPH PDQGDWH IRU WKLV
FKDQJHDOUHDG\H[LVWV7KHUHLVFURVVSDUW\FRQFHUQ
RYHUWKHVRFLDOUHFHVVLRQ$QGDODUPDWHYLGHQFHOLNH
WKH6KHIßHOGVWXG\3ROLWLFLDQVVWUXJJOHIRUVROXWLRQV
Small scale initiatives aimed at addressing the
pernicious impacts of social recession are springing
up across the country, led by local authorities or
community groups.
7KH SKLORVRSKHU .DWH 6RSHU SRLQWV WR D JURZLQJ
appetite for ‘alternative hedonism’ – sources
of satisfaction that lie outside the conventional
market. In her contribution to Redefining Prosperity
88 3URVSHULW\ZLWKRXW*URZWK"
would leave us happier.
Some statistical evidence supports this view.
3V\FKRORJLVW7LP.DVVHUKDVKLJKOLJKWHGZKDWKHFDOOV
the high price of materialism. In his contribution to
Redefining Prosperity, he shows how materialistic
YDOXHV VXFK DV SRSXODULW\ LPDJH DQG ßQDQFLDO
success are psychologically opposed to ‘intrinsic’
YDOXHV OLNH VHOIDFFHSWDQFH DIßOLDWLRQ D VHQVH RI
belonging in the community.
(YHQPRUHVWULNLQJLV.DVVHUpVHYLGHQFHWKDWSHRSOH
with higher intrinsic values are both happier and
have higher levels of environmental responsibility
WKDQWKRVHZLWKPDWHULDOLVWLFYDOXHV7KLVßQGLQJLV
extraordinary because it suggests there really is a kind
RIGRXEOHRUWULSOHGLYLGHQGLQDOHVVPDWHULDOLVWLFOLIH
people are both happier and live more sustainably
when they favour intrinsic goals that embed them
in family and community. Flourishing within limits is
a real possibility, according to this evidence.
It’s a possibility that has already been explored to
VRPHH[WHQWIURPZLWKLQPRGHUQVRFLHW\$JDLQVWWKH
surge of consumerism, there are already those who
have resisted the exhortation to ‘go out shopping’,
preferring instead to devote time to less materialistic
pursuits (gardening, walking, enjoying music or
reading, for example) or to the care of others. Some
people (up to a quarter of the sample in a recent
study) have even accepted a lower income so that
they could achieve these goals.
Beyond this ‘quiet revolution’, there have also been
a series of more radical initiatives aimed at living
a simpler and more sustainable life. ‘Voluntary
simplicity’ is at one level an entire philosophy
for life. It draws extensively on the teachings of
Sustainable Development Commission
WKH ,QGLDQ FXOWXUDO OHDGHU 0DKDWPD *DQGKL ZKR
encouraged people to ‘live simply, that others might
VLPSO\OLYHp,QDVWXGHQWRI*DQGKLpVGHVFULEHG
voluntary simplicity in terms of an ‘avoidance of
exterior clutter’ and the ‘deliberate organisation of
life for a purpose’.
Former Stanford scientist Duane Elgin picked up this
theme of a way of life that is ‘outwardly simple,
yet inwardly rich’ as the basis for revisioning human
progress. 0RUH UHFHQWO\ SV\FKRORJLVW 0LKDO\L
&VLNV]HQWPLKDO\L KDV RIIHUHG D VFLHQWLßF EDVLV IRU
the hypothesis that our lives can be more satisfying
when engaged in activities which are both purposive
and materially light. wellbeing – completely contrary to the conventional
6RPH RI WKHVH VRFDOOHG oLQWHQWLRQDOp LQLWLDWLYHV
such as the Findhorn community in northern
Scotland, emerged initially as spiritual communities,
attempting to create space in which it was possible
to reclaim the contemplative dimension of our lives
that used to be captured by religious institutions.
)LQGKRUQpV FKDUDFWHU DV DQ HFRYLOODJH GHYHORSHG
more recently, building on principles of justice and
respect for nature.
$QRWKHU PRGHUQ H[DPSOH LV 3OXP 9LOODJH WKH
‘mindfulness’ community established by the exiled
9LHWQDPHVHPRQN7KLFK1KDW+DKQLQWKH'RUGRJQH
area of France, which now provides a retreat for
RYHU  SHRSOH 7KHVH LQLWLDWLYHV DUH PRGHUQ
equivalents of more traditional religious communities
OLNH WKRVH RI WKH $PLVK LQ 1RUWK $PHULFD RU WKH
network of Buddhist monasteries in Thailand – in
which every young male is expected to spend some
time before going out into professional life.
1RWDOOQHWZRUNVKDYHWKLVH[SOLFLWVSLULWXDOFKDUDFWHU
The Simplicity Forum, for example, launched in
1RUWK$PHULFDLQLVDORRVHVHFXODUQHWZRUN
of ‘simplicity leaders’ who are committed to
‘achieving and honoring simple, just and sustainable
ways of life.’ Downshifting Downunder is an even
more recent initiative, launched off the back of an
international conference on downshifting held in
6\GQH\GXULQJLWVDLPLVWRoFDWDO\]HDQGFR
RUGLQDWHDGRZQVKLIWLQJPRYHPHQWLQ$XVWUDOLDWKDW
ZLOO VLJQLßFDQWO\ LPSDFW VXVWDLQDELOLW\ DQG VRFLDO
capital’.
The downshifting movement now has a surprising
degree of allegiance across a number of developed
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK"
HFRQRPLHV $ UHFHQW VXUYH\ RQ GRZQVKLIWLQJ LQ
$XVWUDOLD IRXQG WKDW  RI UHVSRQGHQWV KDG
HQJDJHGLQVRPHIRUPRIGRZQVKLIWLQJLQWKHßYH
\HDUVSULRUWRWKHVWXG\$VWDJJHULQJIHOWWKDW
$XVWUDOLDQVDUHWRRPDWHULDOLVWLF$QHDUOLHUVWXG\LQ
WKH 86 IRXQG WKDW  KDG WDNHQ VRPH VWHSV WR
VLPSOLI\DQGH[SUHVVHGDZLOOLQJQHVVWRGRVR
Very similar results have been found in Europe.
Research on the success of these initiatives is quite
OLPLWHG%XWWKHßQGLQJVIURPVWXGLHVWKDWGRH[LVW
DUH LQWHUHVWLQJ ,Q WKH ßUVW SODFH WKH HYLGHQFH
FRQßUPV WKDW oVLPSOLßHUVp DSSHDU WR EH KDSSLHU
Consuming less, voluntarily, can improve subjective
model.
$WWKHVDPHWLPHLQWHQWLRQDOFRPPXQLWLHVUHPDLQ
marginal. The spiritual basis for them doesn’t appeal
to everyone, and the secular versions seem less
resistant to the incursions of consumerism. Some of
WKHVHLQLWLDWLYHVGHSHQGKHDYLO\RQKDYLQJVXIßFLHQW
personal assets to provide the economic security
needed to pursue a simpler lifestyle.
0RUH LPSRUWDQWO\ HYHQ WKRVH LQ WKH YDQJXDUG RI
VRFLDO FKDQJH WXUQ RXW WR EH KDXQWHG E\ FRQàLFW
– internal and external. ([WHUQDO FRQàLFWV DULVH
because people are trying to live quite literally
in opposition to the structures and values that
dominate society. In the normal course of events,
these structures and values shape and constrain how
SHRSOHEHKDYH7KH\KDYHDSURIRXQGLQàXHQFHRQ
how easy or hard it is to behave sustainably.
The role of structural change
Examples of the perverse effect of dominant
VWUXFWXUHVDUHOHJLRQSULYDWHWUDQVSRUWLVLQFHQWLYLVHG
RYHU SXEOLF WUDQVSRUW PRWRULVWV DUH SULRULWLVHG
RYHU SHGHVWULDQV HQHUJ\ VXSSO\ LV VXEVLGLVHG DQG
protected, while demand management is often
FKDRWLF DQG H[SHQVLYH ZDVWH GLVSRVDO LV FKHDS
HFRQRPLFDOO\DQGEHKDYLRXUDOO\UHF\FOLQJGHPDQGV
WLPH DQG HIIRUW oEULQJ FHQWUHVp DUH IHZ DQG IDU
EHWZHHQDQGRIWHQRYHUàRZLQJZLWKZDVWH
Equally important are the subtle but damaging
signals sent by government, regulatory frameworks,
ßQDQFLDOLQVWLWXWLRQVWKHPHGLDDQGRXUHGXFDWLRQ
V\VWHPV EXVLQHVV VDODULHV DUH KLJKHU WKDQ WKRVH
89
LQ WKH SXEOLF VHFWRU SDUWLFXODUO\ DW WKH WRS QXUVHV
and those in the caring professions are consistently
ORZHU SDLG SULYDWH LQYHVWPHQW LV ZULWWHQ GRZQ
DW KLJK GLVFRXQW UDWHV PDNLQJ ORQJWHUP FRVWV
LQYLVLEOH VXFFHVV LV FRXQWHG LQ WHUPV RI PDWHULDO
as all the messages about high street consumption
point in the opposite direction.
Equally, it’s clear that changing the social logic of
consumption cannot simply be relegated to the
VWDWXVVDODU\KRXVHVL]HHWFFKLOGUHQDUHEURXJKW
up as a ‘shopping generation’ – hooked on brand,
celebrity and status.
Policy and media messages about the recession
XQGHUOLQHWKLVSRLQW2SHQLQJWKHKXJHQHZ:HVWßHOG
6KRSSLQJ &HQWUH LQ :KLWH &LW\ LQ 2FWREHU 
/RQGRQ 0D\RU %RULV -RKQVRQ VSRNH RI SHUVXDGLQJ
people to come out and spend their money, despite
the credit crunch. Londoners had made a ‘prudent
decision to give Thursday morning a miss and come
shopping’, he said of the huge crowds who attended
the opening.
Little wonder that people trying to live more
VXVWDLQDEO\ßQGWKHPVHOYHVLQFRQàLFW7KHVHNLQGV
of asymmetry represent a culture of consumption
WKDW VHQGV DOO WKH ZURQJ VLJQDOV SHQDOLVLQJ SUR
environmental behaviour, and making it all but
LPSRVVLEOHHYHQIRUKLJKO\PRWLYDWHGSHRSOHWRDFW
VXVWDLQDEO\ZLWKRXWSHUVRQDOVDFULßFH
It’s really important to take this evidence seriously.
$V ODERUDWRULHV IRU VRFLDO FKDQJH LQWHQWLRQDO
households and communities are vital in pointing
WRWKHSRVVLELOLWLHVIRUàRXULVKLQJZLWKLQHFRORJLFDO
limits. But they are also critical in highlighting the
limits of voluntarism.
Simplistic exhortations for people to resist
consumerism are destined to failure. Particularly
ZKHQWKHPHVVDJHVàRZLQJIURPJRYHUQPHQWDUH
so painfully inconsistent. People readily identify
realm of individual choice. In spite of a growing
desire for change, it’s almost impossible for people
to simply choose sustainable lifestyles, however
PXFK WKH\pG OLNH WR (YHQ KLJKO\PRWLYDWHG
LQGLYLGXDOV H[SHULHQFH FRQàLFW DV WKH\ DWWHPSW WR
HVFDSHFRQVXPHULVP$QGWKHFKDQFHVRIH[WHQGLQJ
this behaviour across society are negligible without
changes in the social structure.
Conversely, of course, social structures can and do
shift people’s values and behaviours. Structural
changes of two kinds must lie at the heart of any
strategy to address the social logic of consumerism.
7KHßUVWZLOOEHWRGLVPDQWOHRUFRUUHFWWKHSHUYHUVH
incentives for unsustainable (and unproductive)
status competition. The second must be to establish
new structures that provide capabilities for people
WRàRXULVKDQGSDUWLFXODUO\WRSDUWLFLSDWHIXOO\LQWKH
life of society, in less materialistic ways.
What this second avenue means in practice is
something that requires a more detailed exploration
than is possible here. It will certainly require
D NHHQHU SROLF\ DWWHQWLRQ WR ZKDW àRXULVKLQJ
means, particularly when it comes to questions of
community, social participation and psychological
àRXULVKLQJ%XWWKHVHRXWFRPHVFDQQRWEHGHOLYHUHG
in instrumental, ad hoc ways. Policy must pay closer
attention to the structural causes of social alienation
and anomie. It must have the goal of providing
FDSDELOLWLHVIRUàRXULVKLQJDWLWVKHDUW
This idea has some resonances with the concept of
this inconsistency and perceive it as hypocrisy.
Or something worse. Under current conditions,
it’s tantamount to asking people to give up key
capabilities and freedoms as social beings. Far from
being irrational to resist these demands, it would be
irrational not to, in our society.
6HYHUDOOHVVRQVàRZIURPWKLV7KHßUVWLVWKHREYLRXV
need for government to get its message straight.
Urging people to Act on CO2, to insulate their homes,
turn down their thermostat, put on a jumper, drive
a little less, walk a little more, holiday at home, buy
locally produced goods (and so on) will either go
unheard or be rejected as manipulation for as long
90
D VHUYLFHEDVHG HFRQRP\ &KDSWHU  6SHFLßFDOO\
the strategy suggested here replaces the centrality
RIPDWHULDOFRPPRGLWLHVDVWKHEDVLVIRUSURßWDELOLW\
with the idea of an economy designed explicitly
around delivering the capabilities for human
àRXULVKLQJ
0RUH WKDQ WKLV RI FRXUVH WKHVH FDSDELOLWLHV ZLOO
have to be delivered with considerably less material
input. We will need to call on the creativity of the
entrepreneur in a different way than in the past.
Social innovation is going to be vital in achieving
change. But so too is a closer attention to the
question of limits. Creating continuity and cohesion
3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
must be balanced against stimulating change.
$FRUHHOHPHQWLQWKLVVWUDWHJ\PXVWEHWKHUHGXFWLRQ
of social inequality. Unproductive status competition
increases material throughput and creates distress.
In his book Affluenza, clinical psychologist Oliver
James presents evidence that more unequal societies
systematically report higher levels of distress than
more equal societies.
$NH\SRLQWRILQàXHQFHKHUHZLOOOLHLQWKHVWUXFWXUH
of wages. This balance has consistently rewarded
competitive and materialistic outcomes even when
these are socially detrimental – as the lessons from
WKH ßQDQFLDO FULVLV PDGH FOHDU 5HGXFLQJ WKH KXJH
income disparities that result from this would send
a powerful signal about what is valued in society.
%HWWHUUHFRJQLWLRQIRUWKRVHHQJDJHGLQFKLOGFDUH
care for the elderly or disabled and volunteer work
would shift the balance of incentives away from
status competition and towards a more cooperative,
and potentially more altruistic society.
Increased investment in public goods and social
LQIUDVWUXFWXUH LV DQRWKHU YLWDO SRLQW RI LQàXHQFH
7KLV KDV DOUHDG\ EHHQ LGHQWLßHG DV DQ HVVHQWLDO
FRPSRQHQWLQWKHPDFURHFRQRPLFVRIVXVWDLQDELOLW\
economic resilience, it sends a powerful signal
about the balance between private interests and
the public good.
In summary, we are faced with an unavoidable
FKDOOHQJH $ OLPLWHG IRUP RI àRXULVKLQJ WKURXJK
material success has kept our economies going
for half a century or more. But it is completely
unsustainable and is now undermining the
conditions for a shared prosperity. This materialistic
vision of prosperity has to be dismantled.
The idea of an economy whose task is to provide
FDSDELOLWLHV IRU àRXULVKLQJ ZLWKLQ HFRORJLFDO OLPLWV
offers the most credible vision to put in its place.
But this can only happen through changes that
support social behaviours and reduce the structural
incentives to unproductive status competition.
The rewards from these changes are likely to be
VLJQLßFDQW $ OHVV PDWHULDOLVWLF VRFLHW\ ZLOO EH D
KDSSLHU RQH $ PRUH HTXDO VRFLHW\ ZLOO EH D OHVV
DQ[LRXV RQH *UHDWHU DWWHQWLRQ WR FRPPXQLW\ DQG
to participation in the life of society will reduce
the loneliness and anomie that has undermined
wellbeing in the modern economy. Enhanced
investment in public goods will provide lasting
&KDSWHU  ,Q DGGLWLRQ WR LWV UROH LQ HQVXULQJ returns to the nation’s prosperity.

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 91

92 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
 10
3HWHU+DOO
2FWREHU

q7KHFXUUHQWßQDQFLDOFULVLVKDVDOVREHFRPHDSROLWLFDOFULVLV
WKDWLVUHFRQßJXULQJWKHUROHRIJRYHUQPHQWLQWKHHFRQRP\
DQGFRQYHQWLRQDOZLVGRPDERXWWKHDSSURSULDWHUHODWLRQVKLS
EHWZHHQWKHSXEOLFDQGWKHSULYDWHVHFWRUr

Governance
for Prosperity
$FKLHYLQJDODVWLQJSURVSHULW\UHOLHVRQSURYLGLQJFDSDELOLWLHVIRUSHRSOHWRàRXULVKZLWKLQ
certain limits. Those limits are established not by us, but by the ecology and resources of a
ßQLWH SODQHW 8QERXQGHG IUHHGRP WR H[SDQG RXU PDWHULDO DSSHWLWHV MXVW LVQpW VXVWDLQDEOH
Change is essential.

7ZR VSHFLßF FRPSRQHQWV RI FKDQJH KDYH EHHQ in this debate occurred as a result of the economic
LGHQWLßHG 7KH ßUVW &KDSWHU  LV WKH QHHG WR
GHYHORSDQHZPDFURHFRQRPLFVIRUVXVWDLQDELOLW\
7KLV QHZ PDFURHFRQRPLFV ZLOO KDYH WR EHFRPH
more ecologically literate. It will also need to reduce
the structural reliance on consumption growth and
ßQG D GLIIHUHQW PHFKDQLVP WR DFKLHYH XQGHUO\LQJ
stability.
The existing mechanism, in any case, has failed us.
$UHVLOLHQWHFRQRP\tFDSDEOHRIUHVLVWLQJH[WHUQDO
shocks, maintaining people’s livelihoods, and living
within our ecological means – is the goal we should
be aiming for here.
The second component of change lies in shifting the
UHFHVVLRQ 7KH ßQDQFLDO FULVLV RI  UHZURWH WKH
boundary between the public and the private sector
DQG FKDQJHG SURIRXQGO\ WKH ODQGVFDSH RI st
Century politics.
3DUWQDWLRQDOLVDWLRQRIßQDQFLDOVHFWRULQVWLWXWLRQVZDV
an almost shocking turn of events, particularly from
a free market perspective in which government is
EURDGO\ VHHQ DV D GLVWRUWLRQ RI WKH PDUNHW $QG \HW
there was little disagreement anywhere about the role
of the state in times of crisis. On the contrary, the only
possible response when the economy failed was for
JRYHUQPHQWVWRLQWHUYHQH(YHQWKHGLHKDUGVDJUHHG
on this. ‘Finance is inherently unstable,’ acknowledged
The Economist in the early days of the crisis. ‘So the
VRFLDOORJLFRIFRQVXPHULVP&KDSWHU7KLVFKDQJH
has to proceed through the provision of real, credible
DOWHUQDWLYHV WKURXJK ZKLFK SHRSOH FDQ àRXULVK
$QGWKHVHDOWHUQDWLYHVPXVWJREH\RQGPDNLQJEDVLF
systems of provision (in food, housing and transport,
for example) more sustainable. They must also
provide capabilities for people to participate fully in
the life of society, without recourse to unsustainable
material accumulation and unproductive status
competition.
0DNLQJ WKHVH FKDQJHV PD\ ZHOO EH WKH ELJJHVW
challenge ever faced by human society. Inevitably it
raises the question of governance – in the broadest
sense of the word. How is a shared prosperity to be
DFKLHYHGLQDSOXUDOLVWLFVRFLHW\"+RZLVWKHLQWHUHVW
of the individual to be balanced against the common
JRRG":KDWDUHWKHPHFKDQLVPVIRUDFKLHYLQJWKLV
EDODQFH" 7KHVH DUH VRPH RI WKH TXHVWLRQV UDLVHG
E\ WKLV FKDOOHQJH 6SHFLßFDOO\ RI FRXUVH VXFK
changes raise questions about the nature and role
of government itself.
The role of government
Debates over whether we need more state or less
VWDWHKDYHEHHQßHUFHO\IRXJKWDWWLPHVDQGKDYH
complex roots in history. But some striking shifts
94 3URVSHULW\ZLWKRXW*URZWK"
state has to play a big role in making it safer by lending
in a crisis in return for regulation and oversight.’
Extending this responsibility to the task of
building a credible and robust macroeconomics
for sustainability seems entirely reasonable. It is
admittedly a more complex task than anything
IDFHG LQ FRQYHQWLRQDO PDFURHFRQRPLFV LQ SDUW
EHFDXVHLWKDVWRGHSDUWIURPWKHZHOOZRUQIRUPXOD
RIODLVVH]IDLUHFRQVXPSWLRQJURZWKDVWKHEDVLVIRU
VWDELOLW\ DQG LQ SDUW EHFDXVH LW UHTXLUHV D FORVHU
attention to key ecological variables. For these
reasons, progress will depend on engaging a wider
community of advice than conventional approaches
do. But the responsibility for taking it forwards lies
unequivocally with government.
%H\RQG WKLV TXLWH VSHFLßF UHVSRQVLELOLW\ WKHUH DUH
vital questions about the role of government – and
the mechanisms for governance – in a much broader
sense. Where, for example, does responsibility lie
IRU WKH RWKHU NH\ WDVN LGHQWLßHG KHUH UHGUHVVLQJ
WKH VRFLDO ORJLF RI FRQVXPHULVP" 3ROLF\PDNHUV
are (perhaps rightly) uncomfortable with the idea
WKDWWKH\KDYHDUROHLQLQàXHQFLQJSHRSOHpVYDOXHV
and aspirations. But the truth is that governments
intervene constantly in the social context, whether
they like it or not.
Sustainable Development Commission
$P\ULDGGLIIHUHQWVLJQDOVDUHVHQWRXWIRUH[DPSOH
by the way in which education is structured, by the
importance accorded to economic indicators, by
public sector performance indicators, by procurement
policies, by the impact of planning guidelines on
SXEOLFDQGVRFLDOVSDFHVE\WKHLQàXHQFHRIZDJH
SROLF\ RQ WKH ZRUNOLIH EDODQFH E\ WKH LPSDFW RI
employment policy on economic mobility (and
hence on family structure and stability), by the
effect of trading standards on consumer behaviour,
by the degree of regulation of advertising and the
media, and by the support offered to community
Savings accounts, marriage, norms for social
EHKDYLRXU JRYHUQPHQW LWVHOI LQ VRPH VHQVH DOO
these can be regarded as commitment devices.
0HFKDQLVPVZKLFKPDNHLWDOLWWOHHDVLHUIRUXVWR
curtail our appetite for immediate arousal and protect
RXURZQIXWXUHLQWHUHVWV$QGLQGHHGtDOWKRXJKWKLV
is less obvious in Offer’s exposition – the interests of
affected others, including future generations.
7KHWURXEOHLVDV2IIHUGHPRQVWUDWHVDIàXHQFHLWVHOI
is eroding and undermining these commitment
devices. The increase in family breakdown and the
initiatives and faith groups.
,QDOOWKHVHDUHQDVSROLF\VKDSHVDQGFRFUHDWHVWKH
social world. So the idea that it is not only legitimate
but possible for the state to intervene in changing
the social logic of consumerism is far less problematic
WKDQLVRIWHQSRUWUD\HG$FULWLFDOWDVNLVWRLGHQWLI\
(and correct) those aspects of this complex social
structure which provide perverse incentives in favour
of a materialistic individualism and undermine the
GHFOLQHLQWUXVWKDYHDOUHDG\EHHQQRWHG&KDSWHU
Parenthood has come under attack in developed
FRXQWULHV 7KH ßQDQFLDO FULVLV LV LQ SDUW D SURGXFW
RI WKH HURVLRQ RI HFRQRPLF FRPPLWPHQW $QG WKH
KROORZLQJRXWRIJRYHUQPHQWKDVOHIWXVLOOSUHSDUHG
to deal with the ‘crisis of commitment’.
Strikingly, Offer places a key responsibility for this
erosion on the relentless pursuit of novelty in
modern society. This dynamic has been addressed
potential for a shared prosperity.
$W RQH OHYHO WKLV WDVN LV DV ROG DV WKH KLOOV ,W LV
in part at least, the task of balancing individual
freedoms against the social good. It relies crucially
on being able to make prudent choices – both at
the individual and at the social level – between the
present and the future. In fact, rampant individualism
ZKLFK VHHNV VKRUWWHUP PDWHULDO JUDWLßFDWLRQ HQGV
up undermining prosperity – not just for society as a
whole, but at the individual level as well.
2[IRUG HFRQRPLF KLVWRULDQ $YQHU 2IIHU DGGUHVVHV
exactly this problem in The Challenge of Affluence.
Left to our own devices, argues Offer, individual
choices tend to be irredeemably myopic. We favour
today too much over tomorrow, in ways which, to an
economist, appear entirely inexplicable under any
rational rate of discounting of the future. Economists
call this the problem of ‘hyperbolic’ discounting. It’s
not unfamiliar in itself. Offer’s unique contribution is
to suggest that this fallibility has (or has in the past
had) a social solution.
7R SUHYHQW RXUVHOYHV IURP WUDGLQJ DZD\ RXU ORQJ
WHUPZHOOEHLQJIRUWKHVDNHRIVKRUWWHUPSOHDVXUHV
society has evolved a whole set of ‘commitment
GHYLFHVpVRFLDODQGLQVWLWXWLRQDOPHFKDQLVPVZKLFK
moderate the balance of choice away from the
present and in favour of the future.
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK"
DOUHDG\ LQ VWUXFWXUDO WHUPV &KDSWHU  1RYHOW\
keeps us buying more stuff. Buying more stuff
keeps the economy going. The end result is a society
‘locked in’ to consumption growth by forces outside
the control of individuals.
Physical infrastructure and social architecture
conspire against us. Lured by our evolutionary
roots, bombarded with persuasion, and seduced
E\QRYHOW\ZHDUHOLNHFKLOGUHQLQWKHVZHHWVKRS
NQRZLQJ WKDW VXJDU LV EDG IRU XV XQDEOH WR UHVLVW
the temptation.
These insights are damning for the prospects
RI ODLVVH]IDLUH LQGLYLGXDOLVP EHLQJ D VXIßFLHQW
governance mechanism for a lasting prosperity.
Left to our own individual devices, it seems, there
is not much hope that people will spontaneously
EHKDYHVXVWDLQDEO\$VHYROXWLRQDU\ELRORJLVW5LFKDUG
Dawkins has concluded, sustainability just ‘doesn’t
come naturally’ to us.
6HOßVKQHVVDQGDOWUXLVP
$W WKH VDPH WLPH LW LV PLVWDNHQ WR DVVXPH WKDW
KXPDQPRWLYDWLRQVDUHDOOVHOßVK(YROXWLRQGRHVQpW
preclude moral, social and altruistic behaviours.
On the contrary, social behaviours evolved in humans
precisely because they offer selective advantages
95
WR WKH VSHFLHV $OO RI XV DUH WRUQ WR VRPH H[WHQW
EHWZHHQVHOßVKQHVVDQGDOWUXLVP
7KH SV\FKRORJLVW 6KDORP 6FKZDUW] DQG KLV
colleagues have formalised this insight in terms of
underlying human values. Using a scale that has
QRZ EHHQ WHVWHG LQ RYHU  FRXQWULHV 6FKZDUW]
suggests that our values are structured around two
GLVWLQFW WHQVLRQV ZLWKLQ WKH SV\FKRORJLFDO PDNH
up of human beings. One is the tension between
VHOßVKQHVV VHOIHQKDQFHPHQW LQ 6FKZDUW]pV
society are designed to favour a particularly
materialistic individualism and to encourage the
relentless pursuit of consumer novelty.
*RYHUQPHQW SOD\V D FUXFLDO UROH LQ WKLV SDUWO\
because it bears a responsibility for the stability of
WKH PDFURHFRQRP\ 7KH LQGLYLGXDOLVWLF SXUVXLW RI
novelty is a key requirement in consumption growth
and economic stability depends on consumption
growth. Little surprise then that the drift of policy is
in these directions. The erosion of commitment, in
VFKHPH DQG DOWUXLVP VHOIWUDQVFHQGHQFH QRWHG
above. The other is between openness to change
and conservation – or in other words between
novelty and the maintenance of tradition.6
6FKZDUW] SURYLGHG DQ HYROXWLRQDU\ H[SODQDWLRQ IRU
WKHVHWHQVLRQV$VVRFLHW\HYROYHGLQJURXSVSHRSOH
were caught between the needs of the individual
DQGWKHQHHGVRIWKHJURXS$QGDVWKH\VWUXJJOHG
for survival in sometimes hostile environments,
people were caught between the need to adapt and
to innovate and the need for stability. In other words,
Offer’s terms, is a structural requirement for growth
DVZHOODVDVWUXFWXUDOFRQVHTXHQFHRIDIàXHQFH
Varieties of capitalism
This drift has not been uniform across all nations.
Harvard historian Peter Hall and Oxford economist
David Soskice have made an extensive study of the
different ‘varieties of capitalism’. They distinguish
two main types of capitalism across the advanced
QDWLRQV/LEHUDOPDUNHWHFRQRPLHVVSHFLßFDOO\WKH
both individualism and the pursuit of novelty have
played an adaptive role in our common survival. But
so have altruism and conservation or tradition.
The important point here is that each society strikes
WKHEDODQFHEHWZHHQDOWUXLVPDQGVHOßVKQHVVDQG
also between novelty and tradition) in different
places.7 $QG ZKHUH WKLV EDODQFH LV VWUXFN GHSHQGV
crucially on social structure. When technologies,
LQIUDVWUXFWXUHVLQVWLWXWLRQVVRFLDOQRUPVUHZDUGVHOI
HQKDQFHPHQW DQG QRYHOW\ WKHQ VHOßVK VHQVDWLRQ
seeking behaviours prevail over more considered,
altruistic ones. Where social structures favour
DOWUXLVPDQGWUDGLWLRQVHOIWUDQVFHQGLQJEHKDYLRXUV
DUH UHZDUGHG DQG VHOßVK EHKDYLRXU PD\ HYHQ EH
penalised.
7KLV ßQGLQJ VXJJHVWV WKDW ZH PXVW DVN VHDUFKLQJ
questions about the balance of the institutions
that characterise modern society. Do they promote
FRPSHWLWLRQ RU FRRSHUDWLRQ" 'R WKH\ UHZDUG VHOI
VHUYLQJEHKDYLRXURUSHRSOHZKRVDFULßFHWKHLURZQ
8.WKH86$&DQDGDDQG$XVWUDOLDOHGWKHPDUFK
towards competition and deregulation, particularly
GXULQJ WKH V DQG V &RRUGLQDWHG PDUNHW
HFRQRPLHV VXFK DV -DSDQ *HUPDQ\ $XVWULD DQG
the Scandinavian countries) depend more heavily
RQVWUDWHJLFLQWHUDFWLRQVEHWZHHQßUPVtUDWKHUWKDQ
competition – to coordinate economic behaviour.
There are some clear differences between the
different kinds of economy. For example, inequality
tends to be higher in liberalised market economies
WKDQ LQ FRRUGLQDWHG PDUNHW HFRQRPLHV $QG LW LV
mainly in the liberalised market economies that
savings rates have fallen so dramatically in recent
\HDUVDQGFRQVXPHUGHEWKDVVRDUHG,Q*HUPDQ\
the government has had the opposite problem
RYHUWKHODVWGHFDGHßQGLQJLWKDUGWRSHUVXDGHLWV
FLWL]HQVWRVDYHOHVVDQGFRQVXPHPRUH
Some other interesting differences emerge. Figure
VKRZVWKHLQGH[HGXQHPSOR\PHQWUDWHVGXULQJ
WKHUXQXSWRWKHHFRQRPLFFULVLVLQWZROLEHUDOLVHG
JDLQWRVHUYHRWKHUV":KDWVLJQDOVGRJRYHUQPHQW
schools, the media, religious and community
LQVWLWXWLRQVVHQGRXWWRSHRSOH":KLFKEHKDYLRXUVDUH
supported by public investments and infrastructures
DQGZKLFKDUHGLVFRXUDJHG"
PDUNHW HFRQRPLHV WKH 8. DQG WKH 86 DQG WZR
FRRUGLQDWHG PDUNHW HFRQRPLHV *HUPDQ\ DQG
Denmark). Though starting from a much higher
EDVH XQHPSOR\PHQW LQ *HUPDQ\ IHOO E\ DOPRVW
RYHUWKHSHULRGIURPPLGWRWKHHQGRI
 In Denmark, where unemployment was
Increasingly, it seems, the institutions of consumer DOUHDG\ORZWKHIDOOZDVHYHQJUHDWHURYHU

96 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission

 Figure 22 Unemployment Rates in Four OECD Countries 2007–811
14
12
Germany
10
Unemployment rate %
8
UK
4
Jan 07 Mar 07 May 07 Jul 07 Sept 07 Nov 07 Jan 08 Mar 08 May 08
Figure 22: Unemployment Rates in Four OECD Countries 2007-8
WKH SHULRG ,Q WKH 8. E\ FRQWUDVW XQHPSOR\PHQW
URVHE\LQWKHODVWKDOIRIZKLOHWKH86
saw unemployment increase by over a third since
-XO\
Recent work suggests that the different varieties
of capitalism also perform differently in relation to
ecological impacts, opportunities for skills training
and various aspects of social capital. 7LP .DVVHU
and his colleagues show that people in liberalised
market economies tend to have higher per capita
carbon emissions, higher infant mortality, higher
teenage pregnancies and a greater percentage of
people reporting that they ‘feel like an outsider’.
1RWDOOWKHVHßQGLQJVDUHUHSOLFDWHGFRQVLVWHQWO\DFURVV
all liberalised market economies and all coordinated
market economies. Indeed there is some suggestion
that the distinctions between liberalised and coordinated
market economies are not as profound as they were
WKURXJKWKHVDQGVZKHQ+DOODQG6RVNLFH
carried out their analysis.
,URQLFDOO\DVZHVDZLQ&KDSWHU*HUPDQ\VXIIHUHG
PRUHGXULQJWKHHDUO\PRQWKVRIWKHßQDQFLDOFULVLV
from building its economy on exports, than the
8. GLG IURP EXLOGLQJ LWV HFRQRP\ RQ GRPHVWLF
consumption. Both economies, ultimately, were
predicated on a materialistic consumerism fuelled
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK"
USA
Denmark
Jul 08 Sep 08 Nov 08
E\ GHEW $QG LWpV WRR HDUO\ WR WHOO ZKLFK RQH ZLOO
emerge stronger in the end. In a recent article for the
Huffington Post 3HWHU +DOO DUJXHV WKDW *HUPDQ\pV
domestic prudence and strong manufacturing base
will make it more resilient in long run.
But the truth is that none of the varieties of capitalism
is immune from the increasingly global recession.
$OORIWKHPDUHWRDJUHDWHURUOHVVHUH[WHQWERXQG
up in the pursuit of economic growth. Differences
in social and economic organisation are differences
in degree rather than fundamental differences in
NLQG $QG D NH\ HOHPHQW LQ WKH SROLWLFDO HFRQRP\
of all capitalist nations appears to be the role of
government in protecting and stimulating economic
growth.
7KHFRQàLFWHGVWDWH
*RYHUQDQFHPHFKDQLVPVHPHUJHGLQKXPDQVRFLHW\
to protect social behaviours. The principal role of
JRYHUQPHQWLVWRHQVXUHWKDWORQJWHUPSXEOLFJRRGV
DUHQRWXQGHUPLQHGE\VKRUWWHUPSULYDWHLQWHUHVWV
It seems ironic then, that governments across
the world – and in particular in the liberal market
economies – have been so active in championing
the pursuit of individual freedoms, often elevating
consumer sovereignty above social goals and
97
actively encouraging the expansion of the market
into different areas of people’s lives.
It is particularly odd to see this tendency going hand
in hand with the desire to protect social and ecological
JRDOV,WpVQRWDEOHIRUH[DPSOHWKDWWKH8.RQHRI
WKHPRVWßHUFHO\OLEHUDOPDUNHWHFRQRPLHVKDVDOVR
been a vociferous champion of sustainability, social
MXVWLFH DQG FOLPDWH FKDQJH SROLF\ 7KH 8.pV 
Sustainable Development Strategy received wide
VSUHDGLQWHUQDWLRQDOSUDLVH,WV&OLPDWH&KDQJH
$FWLVDZRUOGOHDGLQJSLHFHRIOHJLVODWLRQ
7KHUHLVDUHDOVHQVHKHUHRISROLF\PDNHUVVWUXJJOLQJ
with competing goals. On the one hand government
is bound to the pursuit of economic growth. On the
RWKHULWßQGVLWVHOIKDYLQJWRLQWHUYHQHWRSURWHFWWKH
common good from the incursions of the market.
7KH VWDWH LWVHOI DSSHDUV GHHSO\ FRQàLFWHG VWULYLQJ
on the one hand to encourage consumer freedoms
that lead to growth and on the other to protect
social goods and defend ecological limits.
7KHUHDVRQIRUWKLVFRQàLFWLVFOHDURQFHZHUHFRJQLVH
WKHFULWLFDOUROHWKDWJURZWKSOD\VLQPDFURHFRQRPLF
stability. With a vital responsibility to protect jobs
and to ensure stability, the state is bound (under
current conditions) to prioritise economic growth.
$QG LW LV ORFNHG LQWR WKLV WDVN HYHQ DV LW VHHNV WR
promote sustainability and the common good.
*RYHUQPHQWLWVHOILQRWKHUZRUGVLVFDXJKWLQWKH
dilemma of growth.
Overcoming this dilemma is absolutely vital. The
lessons from this study make it clear that without
strong leadership, change will be impossible.
Individuals are too exposed to social signals and
status competition. Businesses operate under market
FRQGLWLRQV $ WUDQVLWLRQ IURP QDUURZ VHOILQWHUHVW
to social behaviours, or from relentless novelty to
a considered conservation of things that matter,
can only proceed through changes in underlying
structure. Changes that strengthen commitment
DQGHQFRXUDJHVRFLDOEHKDYLRXU$QGWKHVHFKDQJHV
require governments to act.
The trouble is that the thrust of policy over the
last half century – particularly in the liberalised
market economies – has been going in almost
H[DFWO\ WKH RSSRVLWH GLUHFWLRQ *RYHUQPHQWV KDYH
systematically promoted materialistic individualism
and encouraged the pursuit of consumer novelty.
98
This trend has been perpetrated, mostly deliberately,
under the assumption that this form of consumerism
serves economic growth, protects jobs and maintains
VWDELOLW\ $QG DV D UHVXOW WKH VWDWH KDV EHFRPH
caught up in a belief that growth should trump all
other policy goals.
But this narrow pursuit of growth represents a
horrible distortion of the common good and of our
underlying human values. It also undermines the
OHJLWLPDWHUROHRIJRYHUQPHQWLWVHOI$WWKHHQGRI
the day, the state is society’s commitment device,
par excellence, and the principal agent in protecting
RXUVKDUHGSURVSHULW\$QHZYLVLRQRIJRYHUQDQFH
that embraces this role is critical.
Of course, such a vision requires a democratic
mandate. ‘Political change comes from leadership
DQG SRSXODU PRELOLVDWLRQ $QG \RX QHHG ERWK RI
WKHPp DUJXHG 8. &OLPDWH &KDQJH 6HFUHWDU\ (G
0LOLEDQG LQ 'HFHPEHU  $XWKRULWDULDQLVP LV
damaging to human wellbeing in its own right.
$QGLQDQ\FDVHLWLVXQOLNHO\WRVXFFHHGLQPRGHUQ
SOXUDOLVWLFVRFLHWLHV*RYHUQDQFHIRUSURVSHULW\PXVW
HQJDJH DFWLYHO\ ZLWK FLWL]HQV ERWK LQ HVWDEOLVKLQJ
the mandate and delivering the change.
But this doesn’t absolve government from its own
vital responsibility in ensuring a lasting prosperity.
The role of government is to provide the capabilities
IRULWVFLWL]HQVWRàRXULVKtZLWKLQHFRORJLFDOOLPLWV
The analysis here suggests that, at this point in
time, that responsibility entails shifting the balance
of existing institutions and structures away from
materialistic individualism and providing instead
real opportunities for people to pursue intrinsic
goals of family, friendship and community.
8QIRUWXQDWHO\ IRU DV ORQJ DV PDFURHFRQRPLF
stability depends on economic growth, there will
be a tendency for governments to support social
VWUXFWXUHV WKDW UHLQIRUFH PDWHULDOLVWLF QRYHOW\
seeking individualism.
But it doesn’t have to be like this. Freeing the
PDFURHFRQRP\ IURP WKH VWUXFWXUDO UHTXLUHPHQW
for consumption growth will simultaneously free
government to play its proper role in delivering
social and environmental goods and protecting
ORQJWHUP LQWHUHVWV 7KH VDPH JRDO WKDW ZDV
LGHQWLßHG DV HVVHQWLDO IRU D PDFURHFRQRPLFV
of sustainability is essential to a governance for
3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
SURVSHULW\7KHFRQàLFWHGVWDWHLVLWVHOIDFDVXDOW\RI
DQXQVXVWDLQDEOHPDFURHFRQRPLFV$QGLQUHVFXLQJ
WKH PDFURHFRQRP\ LW KDV D FKDQFH RI UHVFXLQJ
itself.
In summary, it emerges that governments must
QRZHQJDJHXUJHQWO\LQVHYHUDOLQWHUUHODWHGWDVNV
The precise policy directions implied by these goals
must ultimately be a matter for public discourse and
it lies beyond the scope of this study to address them
LQ GHWDLO %XW LQ WKH ßQDO FKDSWHU VRPH SRWHQWLDO
policy directions are suggested under each of these
themes.
1 GHYHORSDQGDSSO\DUREXVWPDFURHFRQRPLFV
for sustainability
2) redress the damaging and unsustainable
social logic of consumerism
3) establish and impose meaningful resource
and environmental limits on economic
activity.

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 99

100 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
 11

Steps towards a
Sustainable Economy
“In the end, this economic agenda won’t just require new money.
It will require a new spirit of cooperation… We will be called
XSRQWRWDNHSDUWLQDVKDUHGVDFULßFHDQGVKDUHGSURVSHULW\r
Barack Obama
February 20081
)RUWKHODVWßYHGHFDGHVWKHSXUVXLWRIJURZWKKDVEHHQWKHVLQJOHPRVWLPSRUWDQWSROLF\
JRDODFURVVWKHZRUOG7KHJOREDOHFRQRP\LVDOPRVWßYHWLPHVWKHVL]HLWZDVKDOIDFHQWXU\
DJR,ILWFRQWLQXHVWRJURZDWWKHVDPHUDWHWKHHFRQRP\ZLOOEHWLPHVWKDWVL]HE\WKH
year 2100.
This extraordinary ramping up of global economic
activity is without historical precedent. It appears
WREHWRWDOO\DWRGGVZLWKRXUVFLHQWLßFNQRZOHGJH
RIWKHßQLWHUHVRXUFHEDVHDQGWKHIUDJLOHHFRORJ\
RQ ZKLFK ZH GHSHQG IRU VXUYLYDO $QG LW KDV
already been accompanied by the degradation of
DQHVWLPDWHGRIWKHZRUOGpVHFRV\VWHPV
For the most part, we tend to avoid the stark
reality of these numbers. The default assumption is
WKDW t ßQDQFLDO FULVHV DVLGH t JURZWK ZLOO FRQWLQXH
LQGHßQLWHO\ 1RW MXVW IRU WKH SRRUHVW FRXQWULHV
where a better quality of life is essential, but even
for the richest nations where material wealth adds
little further to people’s quality of life and may even
threaten the foundations of our wellbeing.
The reasons for this collective blindness are easy
HQRXJKWRßQG7KHPRGHUQHFRQRP\LVVWUXFWXUDOO\
reliant on economic growth for its stability.
When growth falters, as it has done recently,
politicians panic. Businesses struggle to survive.
People lose their jobs and sometimes their homes.
$ VSLUDO RI UHFHVVLRQ ORRPV 4XHVWLRQLQJ JURZWK
is deemed to be the act of lunatics, idealists and
revolutionaries.
In short, society is faced with a profound dilemma.
To resist growth is to risk economic and social collapse.
To pursue it is to endanger the ecosystems on which
ZHGHSHQGIRUORQJWHUPVXUYLYDO
For the most part, this dilemma goes unrecognised in
mainstream policy or in public debate. When reality
begins to impinge on the collective consciousness,
the best suggestion to hand is that we can somehow
‘decouple’ growth from its material impacts.
1HYHUPLQGWKDWGHFRXSOLQJLVQpWKDSSHQLQJ1HYHU
mind that no such economy has ever existed.
1HYHU PLQG WKDW DOO RXU LQVWLWXWLRQV DQG LQFHQWLYH
structures continually point in the opposite
direction. The dilemma, once recognised, looms so
dangerously over our future that we are desperate
to believe in miracles. Technology will save us.
102 3URVSHULW\ZLWKRXW*URZWK"
Capitalism is good at technology. So let’s just keep
the show on the road and hope for the best.
We can’t entirely dismiss the potential for
technological breakthroughs. In fact we already
have at our disposal a range of technologies that
could begin to deliver effective change. But the idea
that these will emerge spontaneously by giving free
reign to the competitive market is patently false.
This delusional strategy has reached its limits. We
stand in urgent need of a clearer vision, more honest
SROLF\PDNLQJ VRPHWKLQJ PRUH UREXVW LQ WKH ZD\
of a strategy with which to confront the dilemma
of growth.
The starting place must be to confront the structures
that keep us in damaging denial. The analysis in this
study suggests that nature and structure conspire
together here. The endless creativity of capitalism
and our own relentless striving for social status have
ORFNHGXVLQWRDQLURQFDJHRIFRQVXPHULVP$IàXHQFH
itself has betrayed us.
$IàXHQFH EUHHGV t DQG LQGHHG UHOLHV RQ t WKH
continual production and consumption of consumer
novelty. But relentless novelty seeds social anxiety
DQGZHDNHQVRXUDELOLW\WRSURWHFWORQJWHUPVRFLDO
goals. In doing so it ends up undermining our own
ZHOOEHLQJDQGWKDWRIRWKHUV$QGVRPHZKHUHDORQJ
the way, we lose the sense of shared prosperity that
ZHVRXJKWLQWKHßUVWSODFH
For at the end of the day, prosperity goes beyond
àHHWLQJ PDWHULDO SOHDVXUHV ,W WUDQVFHQGV PDWHULDO
concerns. It resides in the quality of our lives and in
the health and happiness of our families. It is present
in the strength of our relationships and our trust in
the community. It is evidenced by our satisfaction at
work and our sense of shared meaning and purpose.
It hangs on our potential to participate fully in the
life of society. Prosperity consists in our ability to
àRXULVK DV KXPDQ EHLQJV t ZLWKLQ WKH HFRORJLFDO
OLPLWVRIDßQLWHSODQHW
Sustainable Development Commission
Delivering these goals is not an entirely unfamiliar
WDVN WR SROLF\PDNHUV *RYHUQPHQWV FDUH DERXW
KHDOWKSURYLVLRQ$QGWKHUHFHQWIRFXVRQZHOOEHLQJ
has extended that concern to psychological health.
$WWKHVDPHWLPHWKHVHJRDOVWRRRIWHQWDNHVHFRQG
place to economic growth. The role of the state
is too narrowly framed by a misguided vision of
XQERXQGHG FRQVXPHU IUHHGRPV *RYHUQDQFH LWVHOI
stands in urgent need of renewal.
But the current economic crisis presents a unique
opportunity to invest in change. To sweep away
WKHVKRUWWHUPWKLQNLQJWKDWKDVSODJXHGVRFLHW\IRU
GHFDGHV7RUHSODFHLWZLWKFRQVLGHUHGSROLF\PDNLQJ
capable of addressing the enormous challenge of
delivering a lasting prosperity.
The policy demands of this task are considerable.
Specifying them with any degree of precision
is beyond the scope of this or any other single
document. First and foremost, they call for a
concerted and committed effort on the part of
government to establish a detailed set of viable and
12 STEPS TO A SUSTAINABLE ECONOMY
A
Building a Sustainable Macro-Economy
$ PDFURHFRQRP\ SUHGLFDWHG RQ FRQWLQXDO H[SDQVLRQ RI GHEWGULYHQ PDWHULDOLVWLF FRQVXPSWLRQ
effective policies for a sustainable economy. This is
a challenge that governments can no longer afford
to ignore. Beyond that need, it is possible to identify
a range of broad policy recommendations on which
the transition to a sustainable economy could be
built.
In the following paragraphs, these recommendations
DUH JURXSHG LQWR WKUHH PDLQ WKHPHV WKDW àRZ
GLUHFWO\IURPWKHDQDO\VLVLQWKLVUHSRUW6SHFLßFDOO\
WKHVHWKHPHVDUH
% %XLOGLQJDPDFURHFRQRPLFVIRUVXVWDLQDELOLW\
% 3URWHFWLQJFDSDELOLWLHVIRUVRFLDOàRXULVKLQJ
and
% Respecting ecological limits
Inevitably, there is some overlap between these
groupings. Undoubtedly there are things missing
IURPWKHUDQJHRISROLFLHVVXJJHVWHGKHUH1RWDOORI
WKHPFDQEHDFKLHYHGLPPHGLDWHO\1RWDOORIWKHP
can be achieved unilaterally. But taken together they
offer the foundation from which to build meaningful
and lasting change.
LV XQVXVWDLQDEOH HFRORJLFDOO\ SUREOHPDWLF VRFLDOO\ DQG XQVWDEOH HFRQRPLFDOO\ &KDSWHUV   
7KHWLPHLVQRZULSHWRGHYHORSDQHZPDFURHFRQRPLFVIRUVXVWDLQDELOLW\&KDSWHUV WKDW
does not rely for its stability on relentless growth and expanding material throughput. This theme
LQFOXGHVIRXUVSHFLßFSROLF\DUHDVWRKHOSDFKLHYHWKLVJRDO

1
Developing macro-economic capability
There is an urgent need to develop the capabilities
UHTXLUHG WR EXLOG D QHZ PDFURHFRQRPLFV IRU
sustainability. This will include developing tools to
H[SORUH GLIIHUHQW FRQßJXUDWLRQV RI WKH NH\ PDFUR
economic variables and to map the interactions
UHVRXUFH RU HPLVVLRQ FDSV DQG  HYDOXDWLQJ WKH
impact of changes in natural assets and ecosystem
functioning on economic stability.
Examples/precedents: &DQDGLDQ /RZ*URZ PRGHO
between these and ecological variables. Particular FOLPDWHHFRQRP\ PRGHOV FI ,3&& 6WHUQ 5HYLHZ
FKDOOHQJHV LQFOXGH  H[SORULQJ WKH LQYHVWPHQW &DPEULGJH (FRQRPHWULFVp 0'0( PRGHO WKH (8pV
GHPDQGV DVVRFLDWHG ZLWK D VXVWDLQDEOH HFRQRP\ 7((%VWXG\WKH0LOOHQQLXP(FRV\VWHP$VVHVVPHQW
LQYHVWLJDWLQJWKHHFRQRPLFLPSOLFDWLRQVRIVWULFW

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 103

 2 RU FRPPXQLW\EDVHG ERQGV RXWODZ XQVFUXSXORXV
DQG GHVWDELOLVLQJ PDUNHW SUDFWLFHV VXFK DV VKRUW
,QYHVWLQJLQMREVDVVHWVDQGLQIUDVWUXFWXUHV VHOOLQJ DQG SURYLGH JUHDWHU SURWHFWLRQ DJDLQVW
Investment in jobs, assets and infrastructures consumer debt.
emerges as a key component – not just of economic
recovery – but of a new macroeconomics for Examples/precedents: *VWDWHPHQWRQUHJXODWLRQ
VXVWDLQDELOLW\7DUJHWVIRUWKLVLQFOXGHSXEOLFVHFWRU
MREV LQ EXLOGLQJ DQG PDLQWDLQLQJ SXEOLF DVVHWV
investments in renewable energy, public transport
LQIUDVWUXFWXUH DQG SXEOLF VSDFHV UHWURßWWLQJ
WKH H[LVWLQJ EXLOGLQJ VWRFN ZLWK HQHUJ\ DQG
FDUERQVDYLQJ PHDVXUHV LQYHVWLQJ LQ HFRV\VWHP
PDLQWHQDQFH DQG SURWHFWLRQ DQG SURYLGLQJ ßVFDO
support and training for green businesses, clean
WHFKQRORJLHVDQGUHVRXUFHHIßFLHQF\
Examples/precedents:WKH$PHULFDQ5HFRYHU\DQG
RI ßQDQFH DQG FXUUHQF\ PDUNHWV 1RY 
7RELQ WD[ 2EDPD $GPLQLVWUDWLRQ SODQ WR SURWHFW
borrowers.
4
Improving macro-economic accounting
The shortfalls of conventional output or
FRQVXPSWLRQEDVHG PHDVXUHV RI WKH *'3 DUH QRZ
ZHOOHVWDEOLVKHG7KHUHLVDQXUJHQWQHHGWRGHYHORS
5HLQYHVWPHQW $FW $55$ 8. 3UH%XGJHW 5HSRUW
oJUHHQ VWLPXOXVp 81(3pV JOREDO *UHHQ 1HZ 'HDO
'HXWVFKH%DQNo*UHHQ,QYHVWPHQWp6'&6XVWDLQDEOH
1HZ'HDO
3
,QFUHDVLQJßQDQFLDODQGßVFDOSUXGHQFH
'HEWGULYHQPDWHULDOLVWLFFRQVXPSWLRQKDVSURSSHG
up economic growth for over a decade. But
PDLQWDLQLQJLWKDVGHVWDELOLVHGWKHPDFURHFRQRP\
and contributed to the global economic crisis.
$QHZHUDRIßQDQFLDODQGßVFDOSUXGHQFHQHHGVWR
EHXVKHUHGLQWRUHIRUPWKHUHJXODWLRQRIQDWLRQDO
DQGLQWHUQDWLRQDOßQDQFLDOPDUNHWVLQFUHDVHSXEOLF
FRQWURO RI WKH PRQH\ VXSSO\ LQFHQWLYLVH GRPHVWLF
savings, for example through secure (green) national
Protecting Capabilities for Flourishing
The social logic that locks people into materialistic consumerism as the basis for participating in
the life of society is extremely powerful, but detrimental ecologically and psychologically (Chapters
more robust measures of economic wellbeing that
correct for the most obvious drawbacks in using
WKH*'37KHVHQHZPHDVXUHVZLOOQHHGWRDFFRXQW
PRUHV\VWHPDWLFDOO\IRUFKDQJHVLQWKHDVVHWEDVH
to incorporate welfare losses from inequality in the
GLVWULEXWLRQRILQFRPHVWRDGMXVWIRUWKHGHSOHWLRQ
of material resources and other forms of natural
capital, to account for the social costs of carbon
emissions and other external environmental and
VRFLDOFRVWVDQGWRFRUUHFWIRUSRVLWLRQDOFRQVXPSWLRQ
and defensive expenditures.
Examples/precedents: longstanding critiques in the
HFRQRPLFOLWHUDWXUHWKH:RUOG%DQNpV$GMXVWHG1HW
6DYLQJV PHDVXUH 5'$ SROLFLHV RQ 5HJLRQDO,6(:
6HQ6WLJOLW] UHFRPPHQGDWLRQV IURP WKH )UHQFK
&RPPLVVLRQ RQ WKH 0HDVXUHPHQW RI (FRQRPLF
Performance and Social Progress.
$QHVVHQWLDOSUHUHTXLVLWHIRUDODVWLQJSURVSHULW\LVWRIUHHSHRSOHIURPWKLVGDPDJLQJG\QDPLF
DQGSURYLGHRSSRUWXQLWLHVIRUVXVWDLQDEOHDQGIXOßOOLQJOLYHV&KDSWHU:HRIIHUßYHSROLF\DUHDV
to help achieve this task.

104 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission

 5 7
Sharing the work and improving the Measuring prosperity
work-life balance The suggestion that prosperity is not adequately
,QDGHFOLQLQJRUQRQLQFUHDVLQJHFRQRP\ZRUNLQJ captured by conventional measures of economic
WLPHSROLFLHVDUHHVVHQWLDOIRUWZRPDLQUHDVRQV output or consumption leaves open the need to
WR DFKLHYH PDFURHFRQRPLF VWDELOLW\  WR SURWHFW
people’s jobs and livelihoods. But in addition,
UHGXFHG ZRUNLQJ KRXUV FDQ LQFUHDVH àRXULVKLQJ E\
LPSURYLQJ WKH ZRUNOLIH EDODQFH 6SHFLßF SROLFLHV
QHHG WR LQFOXGH UHGXFWLRQV LQ ZRUNLQJ KRXUV
GHßQHDQDSSURSULDWHPHDVXUHPHQWIUDPHZRUNIRU
DODVWLQJSURVSHULW\6SHFLßFDOO\WKLVZRXOGHQWDLOWKH
DVVHVVPHQWRISHRSOHpVFDSDELOLWLHVIRUàRXULVKLQJLQ
different sections of the population and across the
nation as a whole. Developing national accounts of
JUHDWHU FKRLFH IRU HPSOR\HHV RQ ZRUNLQJ WLPH
PHDVXUHV WR FRPEDW GLVFULPLQDWLRQ DJDLQVW SDUW
time work as regards grading, promotion, training,
VHFXULW\ RI HPSOR\PHQW UDWH RI SD\ DQG VR RQ
EHWWHU LQFHQWLYHV WR HPSOR\HHV DQG àH[LELOLW\ IRU
employers) for family time, parental leave, and
sabbatical breaks.
Examples/precedents:)UHQFK*HUPDQDQG'DQLVK
ZRUNWLPH SROLFLHV 78& *UHHQ DQG 'HFHQW :RUN
seminar.
6
Tackling systemic inequality
Systemic income inequalities drive positional
consumption, increase anxiety, undermine social
capital and expose lower income households to
higher morbidity and lower life satisfaction. Too
OLWWOH KDV EHHQ GRQH WR UHYHUVH WKH ORQJWHUP
trend towards income inequality. But redistributive
PHFKDQLVPV DQG SROLFLHV DUH ZHOOHVWDEOLVKHG
DQG FRXOG LQFOXGH UHYLVHG LQFRPH WD[ VWUXFWXUHV
PLQLPXP DQG PD[LPXP LQFRPH OHYHOV LPSURYHG
DFFHVVWRJRRGTXDOLW\HGXFDWLRQDQWLGLVFULPLQDWLRQ
OHJLVODWLRQLPSOHPHQWLQJDQWLFULPHPHDVXUHVDQG
LPSURYLQJWKHORFDOHQYLURQPHQWLQGHSULYHGDUHDV
addressing the impact of immigration on urban and
rural poverty.
Examples/precedents: proposals for higher income
WD[ RQ KLJKHU UDWH HDUQHUV LQ 3%5  UHVWULFWLRQV
RQ ERQXVHV LQ WKH ßQDQFLDO VHFWRU 2EDPD oVKDUHG
SURVSHULW\pSODQKLVWRU\RIUHGLVWULEXWLYHWD[DWLRQLQ
many countries.
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK"
ZHOOEHLQJRURIàRXULVKLQJFRXOGSURFHHGWKURXJK
the measurement of outcome variables such as
healthy life expectancy, educational participation,
social wellbeing, trust in the community, social
FDSLWDODQGVRRQ$IXUWKHUUHTXLUHPHQWKHUHLVWR
adjust existing economic measurement frameworks
to account systematically for ecological and social
factors.
Examples/precedents: 'HIUD 6' LQGLFDWRU 1R 
'XWFK FDSDELOLWLHV LQGH[ QHIpV QDWLRQDO ZHOOEHLQJ
DFFRXQWVWKH*RYHUQPHQW(FRQRPLF6HUYLFHSURMHFW
RQVXVWDLQDELOLW\DQG*UHHQ%RRN
8
Strengthening human and social capital
Understanding that prosperity consists in part in
our capabilities to participate in the life of society
demands that attention is paid to the underlying
human and social resources required for this task.
Creating resilient social communities is particularly
LPSRUWDQW LQ WKH IDFH RI HFRQRPLF VKRFNV 6SHFLßF
SROLFLHV DUH QHHGHG WR FUHDWH DQG SURWHFW VKDUHG
SXEOLF VSDFHV VWUHQJWKHQ FRPPXQLW\EDVHG
VXVWDLQDELOLW\ LQLWLDWLYHV UHGXFH JHRJUDSKLFDO
ODERXU PRELOLW\ SURYLGH WUDLQLQJ IRU JUHHQ MREV
RIIHU EHWWHU DFFHVV WR OLIHORQJ OHDUQLQJ DQG VNLOOV
place more responsibility for planning in the hands
RI ORFDO FRPPXQLWLHV DQG SURWHFW SXEOLF VHUYLFH
broadcasting, museum funding, public libraries,
parks and green spaces.
Examples/precedents:&DELQHW2IßFHVWXG\RQVRFLDO
FDSLWDO)RUHVLJKWVWXG\RQZHOOEHLQJDQGLQWHOOHFWXDO
FDSLWDO 7UDQVLWLRQ 7RZQ PRYHPHQW (QYLURQPHQWDO
$FWLRQ )XQG <RXQJ )RXQGDWLRQpV /RFDO :HOOEHLQJ
3URMHFWWKHo&DSLWDO*URZWKpSURMHFW
105
 9
Reversing the culture of consumerism
The culture of consumerism has developed in part
DW OHDVW DV D PHDQV RI SURWHFWLQJ FRQVXPSWLRQ
driven economic growth. But it has had damaging
psychological and social impacts on people’s
wellbeing. There is a need systematically to
dismantle incentives towards materialistic
consumption and unproductive status competition.
7KLV UHFRPPHQGDWLRQ ZLOO UHTXLUH VWURQJHU
UHJXODWLRQ LQ UHODWLRQ WR WKH FRPPHUFLDO PHGLD
HQKDQFHG VXSSRUW IRU SXEOLF VHFWRU EURDGFDVWLQJ
Respecting Ecological Limits
7KH PDWHULDO SURàLJDF\ RI FRQVXPHU VRFLHW\ LV GHSOHWLQJ NH\ QDWXUDO UHVRXUFHV DQG SODFLQJ
more effective trading standards and stronger
consumer protection – particularly on questions
of product durability, sustainability and fair trade.
2WKHUPHDVXUHVPLJKWLQFOXGHEDQQLQJDGYHUWLVLQJ
WR FKLOGUHQ WKH HVWDEOLVKPHQW RI FRPPHUFLDOIUHH
]RQHV DQG WLPHV DQG D IXQGHG ULJKW RI UHSO\ WR
advertisers’ claims.
Examples/precedents: Scandinavian advertising
SROLFLHV SXEOLF WUDQVSRUW oTXLHW ]RQHVp %UD]LOpV Lei
Cuidade Limpa.
XQVXVWDLQDEOH EXUGHQV RQ WKH SODQHWpV HFRV\VWHPV &KDSWHU  (VWDEOLVKLQJ FOHDU UHVRXUFH DQG
HQYLURQPHQWDOOLPLWVDQGLQWHJUDWLQJWKHVHOLPLWVLQWRERWKHFRQRPLFIXQFWLRQLQJ&KDSWHUDQG
$SSHQGL[DQGVRFLDOIXQFWLRQLQJ&KDSWHULVHVVHQWLDO7KHIROORZLQJWKUHHSROLF\VXJJHVWLRQV
contribute to that task.
10
,PSRVLQJFOHDUO\GHßQHGUHVRXUFHHPLVVLRQVFDSV
$ODVWLQJSURVSHULW\UHTXLUHVDPXFKFORVHUDWWHQWLRQWR
the ecological limits of economic activity. Identifying
and imposing strict resource and emission caps is
vital for a sustainable economy. The contraction
DQG FRQYHUJHQFH PRGHO GHYHORSHG IRU FOLPDWH
related emissions should be applied more generally.
Declining caps on throughput should be established
IRU DOO QRQUHQHZDEOH UHVRXUFHV 6XVWDLQDEOH \LHOGV
VKRXOGEHLGHQWLßHGIRUUHQHZDEOHUHVRXUFHV/LPLWV
should be established for per capita emissions and
wastes. Effective mechanisms for imposing caps on
WKHVH PDWHULDO àRZV VKRXOG EH VHW LQ SODFH 2QFH
established, these limits need to be built into the
PDFURHFRQRPLFIUDPHZRUNVGHYHORSHGLQDERYH
Example/precedent:8.FOLPDWHFKDQJHEXGJHWVWKH
6XSSOLHU 2EOLJDWLRQ UDWLRQLQJ t SRVWZDU DQG &XED
FRQWUDFWLRQ FRQYHUJHQFHSURSRVDOV.\RWRDQGSRVW
11
Fiscal Reform for Sustainability
The argument for an ecological tax reform – a shift
in the burden of taxation from economic goods (e.g.
incomes) to ecological bads (e.g. pollution) – has
been broadly accepted for at least a decade and
has been implemented in varying degrees across
Europe. But progress towards this goal has been
SDLQIXOO\VORZ,QWKH8.WKHSURSRUWLRQRIWD[DWLRQ
IURPJUHHQWD[HVLVQRZORZHUWKDQLWZDVLQ
There’s an urgent need to achieve an order of
PDJQLWXGHVWHSFKDQJHLQWKHVWUXFWXUHRIWD[DWLRQ
$ VXVWDLQHG HIIRUW E\ JRYHUQPHQW LV QRZ UHTXLUHG
to design appropriate mechanisms for shifting the
burden of taxation from incomes onto resources and
emissions.
Example/precedent: 8.*RYHUQPHQW6WDWHPHQW
RI,QWHQWRQ(QYLURQPHQWDO7D[DWLRQ'DQLVK*HUPDQ
H[SHULHQFHLQ(FRORJLFDO7D[5HIRUPVWKH8.*UHHQ
.\RWRQHJRWLDWLRQVFRQFHSWRIHFRORJLFDOVSDFH )LVFDO&RPPLVVLRQUHSRUWLQJ

106 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission

 12
Promoting Technology Transfer and Ecosystem
Protection
$ NH\ PRWLYDWLRQ IRU UHGHßQLQJ WKH EDVLV RI
prosperity in advanced economies is to make room
IRUPXFKQHHGHGJURZWKLQSRRUHUQDWLRQV%XWDV
these economies expand there will also be an urgent
need to ensure that development is sustainable and
remains within ecological limits. International policy
will be required to establish a global technology fund
WR LQYHVW LQ UHQHZDEOH HQHUJ\ HQHUJ\ HIßFLHQF\
,Q VXPPDU\ WKHVH  VWHSV RIIHU WKH IRXQGDWLRQV
for a comprehensive policy programme to make the
transition to a sustainable economy. There is a unique
opportunity here for government to demonstrate
economic leadership and champion international
action on sustainability. But it’s also essential to
GHYHORSßQDQFLDODQGHFRORJLFDOSUXGHQFHDWKRPH
$QG ZH PXVW DOVR EHJLQ WR UHGUHVV WKH SHUYHUVH
incentives and damaging social logic that lock us into
unproductive status competition and materialistic
consumerism.
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK"
carbon reduction, and the protection of ‘carbon
sinks’ (e.g. forests) and biodiversity in developing
FRXQWULHV7KLVFRXOGEHIXQGHGWKURXJKDFDUERQ
resource levy (payable by importers) on imports
from developing countries, or through a Tobin tax
on international currency transfers.
Example/precedent:*OREDO(QYLURQPHQWDO)DFLOLW\
&OHDQ 'HYHORSPHQW 0HFKDQLVP 'HYHORSPHQW $LG
WDUJHWV IXQGLQJ SURYLVLRQV RI WKH 81 %LRGLYHUVLW\
Convention.
$ERYH DOO WKHUH LV DQ XUJHQW QHHG WR GHYHORS D
QHZHFRORJLFDOO\OLWHUDWHPDFURHFRQRPLFVFDSDEOH
of offering meaningful guidance for a lasting
SURVSHULW\ D SURVSHULW\ WKDW IRU QRZ DW OHDVW ZLOO
KDYHWRGRZLWKRXWJURZWKDQGPD\HYHQWXDOO\EH
able to replace it altogether.
107
Appendix 1
The SDC Redefining Prosperity Project
Prosperity without Growth? represents the $ NH\ ßQGLQJ IURP WKH FRQVXOWDWLRQ ZDV WKDW WKH
FXOPLQDWLRQ RI DQ H[WHQVLYH LQTXLU\ E\ WKH 8. conventional measure of economic output – the
Sustainable Development Commission into the
relationship between sustainability and economic
JURZWK 7KDW LQTXLU\ ZDV ODXQFKHG LQ 
when the Commission published its landmark
report – Redefining Prosperity – which challenged
*RYHUQPHQW oIXQGDPHQWDOO\ WR UHWKLQN WKH
dominance of economic growth as the driving force
in the modern political economy, and to be far
more rigorous in distinguishing between the kind
of economic growth that is compatible with the
transition to a genuinely sustainable society and the
kind that absolutely isn’t’.
That earlier report summarised evidence of a
oPLVPDWFKp EHWZHHQ HFRQRPLF JURZWK HQYLURQ
mental sustainability and human wellbeing, and
called on politicians, policy experts, commentators,
EXVLQHVVSHRSOHUHOLJLRXVOHDGHUVDQG1*2VWRoSXW
WKHVHLVVXHVRQWKHLUPXVWJHWWRJULSVZLWKDJHQGD
rather than defer them endlessly as tomorrow’s
LVVXHVp 7KH &RPPLVVLRQ LWVHOI NLFNVWDUWHG WKDW
process with a series of stakeholder workshops
*URVV'RPHVWLF3URGXFW*'3tLVZLGHO\UHJDUGHG
as an inadequate measure of sustainable wellbeing,
and that there is a need to ‘open out political
space’ within which to address the shortcomings of
conventional approaches to prosperity.
In the spirit of ‘opening out space’, SDC launched a
QHZSURJUDPPHRIZRUNRQSURVSHULW\GXULQJ
The programme involved a series of workshops –
KHOGEHWZHHQ1RYHPEHUDQG$SULO7KH
workshops entailed intensive discussions based
DURXQG LQYLWHG oWKLQNSLHFHVp RQ GLIIHUHQW DVSHFWV
RISURVSHULW\IURPVHQLRUDFDGHPLFVSROLF\PDNHUV
EXVLQHVVDQG1*2V7KHHVVD\VDQGWKHZRUNVKRSV
were organised around four related themes.
% Visions of ProsperityLGHQWLßHGDYDULHW\RI
different perspectives (historical, economic,
psychological, religious) on the meaning and
interpretation of prosperity
% Economy ‘Lite’H[DPLQHGLQWHUQDWLRQDO
KHOGGXULQJWKHODWWHUSDUWRIWRGLVFXVVWKH
UHSRUWpVßQGLQJV
'XULQJ  DQG HDUO\  6'& ZRUNHG FORVHO\
ZLWK JRYHUQPHQW WR UHQHZ WKH 8. 6XVWDLQDEOH
Development Strategy. In particular, the Commission
itself led the engagement process that resulted in
WKHßYH6XVWDLQDEOH'HYHORSPHQWoSULQFLSOHVp$NH\
element in these principles is the recognition that
– rather than being an end in itself – a ‘sustainable
economy’ should be regarded as the means to
reaching the more fundamental goal of a ‘strong,
healthy and just society’ that is ‘living within
environmental limits’.
Following the launch of the new Strategy,
WKH &RPPLVVLRQ KHOSHG *RYHUQPHQW PHHW LWV
commitment in Securing the Future to explore the
concept of wellbeing and develop new wellbeing
LQGLFDWRUVIRUWKH8.,QSDUWLFXODU6'&FRQYHQHGD
ZHEEDVHG FRQVXOWDWLRQ LQYROYLQJ VHYHUDO KXQGUHG
respondents to explore people’s perceptions of
the relationship between wellbeing and economic
progress.
108 3URVSHULW\ZLWKRXW*URZWK"
evidence concerning the feasibility of
‘decoupling’ economic progress from material
throughput and environmental impact
% Confronting Structure addressed the
structural drivers associated with continued
economic growth and explored the
impediments to a ‘stationary state economy’
% Living WellH[SORUHGWKHOLQNVEHWZHHQ
prosperity, economic progress and the
recent surge of policy and media interest in
happiness and wellbeing.
It is intended to publish the seminar contributions as
an edited collection. In the meantime, draft versions
of these papers can be found on the SDC website
DW ZZZVGFRPPLVVLRQRUJXNSDJHVUHGHßQLQJ
prosperity.html. Together with ‘background’ reports
prepared by SDC staff (and interns) and the extensive
literature on growth and sustainability, these essays
provide a part of the ‘evidence base’ from which
this study has drawn.
Sustainable Development Commission
However, this report is not intended to be a
commentary on the Redefining Prosperity workshops.
1RUFDQLWUHDOO\GRMXVWLFHWRWKHZHDOWKRILQSXWDQG
advice that we received from those who attended
the workshops and contributed thinkpieces to them.
Rather, Prosperity without Growth? aims to convey
a coherent position on questions of sustainability
DQG HFRQRPLF JURZWK DQG WR RIIHU VRPH FOHDU
UHFRPPHQGDWLRQVWRSROLF\PDNHUVVWUXJJOLQJWRWDNH
concrete steps towards a sustainable economy.

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 109

Appendix 2
Towards a Sustainable Macro-Economy
This annex addresses the broad goal of developing Y Ł Y (K,L) = a.KĮ .LĮ
D PDFURHFRQRPLFV IRU VXVWDLQDELOLW\ &KDSWHU
 ([SOLFLWO\ LW VHWV RXW VRPH RI WKH IHDWXUHV RI D
SRWHQWLDOPDFURHFRQRPLFVLPXODWLRQPRGHOIRUWKH
8.WKDWZRXOGEHFDSDEOHRIWHVWLQJWKHUHODWLRQVKLS
between the economy and the demands of
VXVWDLQDELOLW\6SHFLßFDLPVRIVXFKDPRGHOZRXOG
where K is capital, LLVODERXUDLVDQHIßFLHQF\IDFWRU
DQGĮ7KHIXQGDPHQWDOPDFURHFRQRPLF
LGHQWLW\LVWKHQJLYHQE\WKHHTXDWLRQ
EH
% WRWHVWWKHVWDELOLW\RIGLIIHUHQWPDFUR
HFRQRPLHVXQGHUH[RJHQRXVO\GHßQHGFDUERQ
emission and energy resource constraints
% WRH[SORUHWKHSRWHQWLDOIRUPDFURHFRQRPLHV
with high investment to consumption ratios
% WRH[SORUHWKHSRWHQWLDOIRUPDFURHFRQRPLHV
Y (K,L) = C + G + I + X̄
This form of production function has been subject to
WZR PDLQ FULWLFLVPV E\ HFRORJLFDO HFRQRPLVWV ßUVW
that it includes no explicit reference to material
UHVRXUFHV DQG VHFRQG WKDW LW DVVXPHV SHUIHFW
substitutability between factors. For these reasons,
we may want to adopt a production function that has
with high public sector expenditure and explicit reference to (say) energy resources (E
investment
% WRH[SORUHWKHVWDELOLW\RIPDFURHFRQRPLHV
with low or no consumption growth
% WRH[SORUHWKHVWDELOLW\RIPDFURHFRQRPLHV
with low or no aggregate demand growth.
7KHUDWLRQDOHIRUH[SORULQJGLIIHUHQWLQYHVWPHQWWR
FRQVXPSWLRQ UDWLRV DQG GLIIHUHQW SXEOLFWRSULYDWH
UDWLRVIROORZVIURPWKHGLVFXVVLRQLQ&KDSWHU,QWKH
Y Ł Y (K,E,L)
where the energy variable E Ł E (F,R) accounts
separately for fossil resources F and renewable
resources R, and the level of renewable resources
R in any given year is a function of investment I R in
renewables capacity.
ßUVWFDVHLWLVDVVXPHGWKDWFKDQJHVLQLQYHVWPHQW Rt Ł Rt (Rt–1 ,IRt–1 )
structure are a prerequisite for sustainability. In
particular, there will be a need to shift investment We may also want to use a production function
substantially towards resource productivity, energy where the elasticity of substitution is constant
HIßFLHQF\ DQG ORZ FDUERQ HJ UHQHZDEOH
technologies. Secondly, some of this investment
may need to be led by the public sector – because of
the nature of the required projects. This requirement
is discussed in more detail below.
Model Development
$VLPSOHDSSURDFKWRGHYHORSLQJDPDFURHFRQRPLF
VLPXODWLRQ IRU WKH 8. HFRQRP\ ZRXOG EH WR WDNH
DEURDGO\.H\QHVLDQPRGHOLQZKLFKDQDJJUHJDWH
EXW OHVV WKDQ  7KH JHQHUDO IRUP RI WKUHH IDFWRU
constant elasticity of substitution (CES) production
IXQFWLRQLVJLYHQE\
6) Y Ł a.(ĮKP + ȕL ȡ+ ȖE ȡ)ȡ
ZKHUH D LV DQ HIßFLHQF\ IDFWRU Į + ȕ + Ȗ = 1
and ȡ = (s – 1)/s where s is the elasticity
of substitution.
demand (ADIXQFWLRQRIWKHIRUP Finally, we might want the production function
to be able to ‘pick out’ improvements in resource
AD Ł C + G + I + X̄ productivity, separately from total factor productivity.
Our initial requirements for a suitable production
(where C  SULYDWH FRQVXPSWLRQ G  JRYHUQPHQW IXQFWLRQDUHWKHUHIRUHDVIROORZV
expenditure, I LQYHVWPHQWDQGX̄ QHWH[SRUWVLV
coupled with some form of production function. The % includes explicit account of energy resources
simplest (and commonest) such production function % allows for incomplete substitutability
LVDWZRIDFWRU&REE'RXJODVIXQFWLRQRIWKHIRUP between factors

110 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission

 % accounts for resource productivity a part of the hypothetical exercise set out here
improvements. would be to explore the potential for different kinds
of investment conditions, which might be more
$GGLWLRQDOO\ ZH DUH OLNHO\ WR ZDQW RXU PRGHO WR VXLWHG WR WKH ORQJWHUP SXEOLF VHFWRU LQYHVWPHQWV
UHàHFW WKH PRUH GHWDLOHG DFFRXQW RI LQYHVWPHQW needed to mitigate or adapt to climate change or to
structure that lies at the heart of our exploration restore ecosystem integrity. Taken together, these
of alternative macroeconomic structures. In fact, two dimensions suggest a ‘matrix’ of investment
this feature of our model could be regarded as the W\SHVVRPHWKLQJOLNHWKHIROORZLQJ
single most important innovation over conventional
PDFURHFRQRPLFPRGHOVDQGLVZRUWKVHWWLQJRXWLQ Business 3XEOLF 3XEOLF
more detail here. sector – sector sector –
commercial – quasi social rate
rate of commercial of return
6SHFLßFDOO\ZHZDQWWRGLVWLQJXLVKEHWZHHQGLIIHUHQW return
IRUPVRILQYHVWPHQWLQWZRGLVWLQFWoGLPHQVLRQVp
Energy E E E
the targetIRULQYHVWPHQWDQGWKHconditions of HIßFLHQF\
I B
I P
I S
investment.
Renewable R R R
supply
I B
I P
I S
Firstly, we are likely to want to identify different
technological targets for investment. For instance, Other
I
O
I
O
I
O

we might want to separate investment dedicated capacity B P S

to reducing the demand for resources from Climate A A A

conventional business investments aimed at the adaptation
I B
I P
I S

recapitalisation of productive capacity. Energy

Ecosystem M M M
GHPDQGUHGXFLQJLQYHVWPHQWVWKHPVHOYHVFRXOGEH maintenance
I B
I P
I S
of two main types, some devoted to improvements
LQHQHUJ\HIßFLHQF\VRPHGHYRWHGWRVXEVWLWXWLRQRI 7DEOH 3RWHQWLDO,QYHVWPHQW'LPHQVLRQVLQWKH0RGHO
UHQHZDEOHVVD\IRUIRVVLOIXHOOHGWHFKQRORJLHV:H
may also want to consider investments dedicated
WRLPSURYLQJHFRV\VWHPIXQFWLRQLQJRULQYHVWPHQWV
targeted at climate adaptation.
Our second ‘dimension’ of investment structure
follows on from this consideration of investment
GHPDQGV LQ GLIIHUHQW FDWHJRULHV 6SHFLßFDOO\ ZH
need to identify different conditions of investment.
For example, investment focused on technological
HIßFLHQF\ PLJKW ZHOO EH YLHZHG VWUDLJKWIRUZDUGO\
as a conventional business sector investment.
However, investment in ecosystem function or
adaptation might more realistically be envisaged as
UHTXLULQJVLJQLßFDQWSXEOLFLQYHVWPHQW6RPHZKHUH
between these extremes we might want to consider
categories of infrastructure investment which
typically require some public sector involvement.
The Severn Tidal Barrage may be one potential
investment in this category.
3HUKDSV WKH PRVW VLJQLßFDQW GLIIHUHQFH EHWZHHQ
different investment conditions is the required rate
The next consideration in developing a model
along the lines outlined here would be to connect
these different investment types to the production
function. In principle, investments should add to
capital stocks, and the augmented capital stocks
will then lead – via the production function – to
increased output. In practice, however, connections
between our different types of investment and the
production function might be of different kinds. For
H[DPSOHHQHUJ\HIßFLHQF\LQYHVWPHQWVPLJKWOHDG
VSHFLßFDOO\WRFKDQJHVLQWKHHIßFLHQF\IDFWRULQWKH
production function.
Investments in ecosystem maintenance may have
no direct impact on the production function at all.
7KH\DUHoQRQSURGXFWLYHpLQFRQYHQWLRQDOHFRQRPLF
terms – whatever their importance for sustainability.
On the other hand, they ‘soak up’ income and have
to be included in the model.
Investments in renewable energy (as indicated
above) might contribute directly to the E factor
DQG SHULRG RI ßQDQFLDO UHWXUQ :KHUHDV W\SLFDOO\ in the production function. Some may be less
models of this kind would assume a single rate of productive (in conventional terms) than others. The
return consistent with current commercial conditions, Tidal Barrage is an example of such an investment

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 111

tLWVYDOXHLVGLIßFXOWWRFDSWXUHDWFRPPHUFLDOUDWHV
of return, in part because of the longevity of the
investment.
This is not to denigrate these relatively ‘unproductive’
investments. They may be essential to reduce carbon
emissions, to protect ecosystems or to guarantee
ORQJWHUP HQHUJ\ VHFXULW\ 7KH SRLQW LV WKDW ZH
need to be able to distinguish different categories
RI LQYHVWPHQW LQ WHUPV RI WKUHH NH\ SDUDPHWHUV
enough econometric data, for example, to estimate
productivities separately for each of the capital
VWRFNVLPSOLHGE\7DEOH7KLVPD\QRWQHFHVVDULO\
matter for a simulation model, but at some level we
will want to ensure that business as usual can be
calibrated consistently with current trends.
$IXUWKHUDVSHFWWKDWZRXOGQHHGWREHGHYHORSHG
in the model is the ability to map the carbon
HPLVVLRQ DQGRU UHVRXUFH LPSOLFDWLRQV RI GLIIHUHQW
WKHLUFRQWULEXWLRQWRHPLVVLRQOLPLWVRUUHVRXUFH levels and compositions of aggregate demand. The
FDSV  WKHLU FRQWULEXWLRQ WR DJJUHJDWH GHPDQG most immediate way to take this forward would
DQG  WKHLU LPSDFW RQ WKH SURGXFWLYH FDSDFLW\ be to expand or disaggregate the subcategories
RI WKH HFRQRP\ :KLOH  DQG  DUH UHODWLYHO\ RI WKH DJJUHJDWH GHPDQG IXQFWLRQ & * , ;
VWUDLJKWIRUZDUGWRKDQGOHH[RJHQRXVO\UHTXLUHV
us to establish (within the model) a relationship
between the schedule of investments determined
E\7DEOHDQGWKHSURGXFWLRQIXQFWLRQ
$WWKHPRPHQWLWLVQpWHQWLUHO\FOHDUKRZWKLVLVWREH
achieved. Several possibilities exist. One would be to
assume that different forms of investment augment
different categories of capital, each of which has
D GLIIHUHQW SURGXFWLYLW\ IDFWRU $QRWKHU ZRXOG EH
DQG WR XVH DQ (QYLURQPHQWDO ,QSXW2XWSXW (,2
model WR DWWULEXWH WKH FDUERQ HPLVVLRQV DQGRU
energy resource requirements associated with the
different demand categories using known carbon
intensities. In principle, this attribution exercise
could also be used to develop different scenarios
ZLWKGLIIHUHQWFDUERQUHVRXUFHLPSOLFDWLRQVVXEMHFW
to some obvious caveats about the limitations of
the underlying EIO data.
WR VHSDUDWH RXW HQHUJ\ UHVRXUFHV VSHFLßFDOO\ LQ
the production function and relate investment
to changes in the availability of those resources.
$IXUWKHUDYHQXHZRXOGEHWRDJJUHJDWHFDSLWDOLQWR
(say) two categories in the production function,
with different productivity assumptions associated
with each.
Broadly speaking, the development of an
appropriate production function emerges as one of
the key tasks inherent in taking this work forward.
2QH RI WKH GLIßFXOWLHV LQ DFKLHYLQJ WKLV OLHV LQ WKH
calibration of the model. It isn’t clear that we have
112
In summary, this brief overview serves to establish
WKHRXWOLQHVIRUDPDFURHFRQRPLFPRGHOWKDWFRXOG
be used to explore further some of the arguments
made in this study. In particular, the enhanced
capability to explore different targets of, and
conditions for, investment is key. It will be essential
in understanding how to build a different kind of
PDFURHFRQRPLFVRQHLQZKLFKVWDELOLW\LVQRORQJHU
predicated on increasing consumption growth, but
emerges through strategic investment in jobs, social
infrastructures, sustainable technologies and the
maintenance and protection of ecosystems.
3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
References

$EGDOODK 6DDPDK 6DP 7KRPSVRQ DQG 1LF 0DUNV %DXPDQ=\JPXQWConsuming Life.&DPEULGJH

 Estimating worldwide life satisfaction. Polity Press.
(FRORJLFDO(FRQRPLFVt
$KLDNSRU -DPHV  On the Mythology of the
Keynesian Multiplier.$PHULFDQ-RXUQDORI(FRQRPLFV
and Sociology t
$QGHUVRQ 9LFWRU  Alternative Economic
Indicators./RQGRQ5RXWOHGJH
$QGHUWRQ $ODLQ  Economics rd Edition),
2UPVNLUN8.&DXVHZD\3UHVV
$33*Return of the Population Growth Factor –
Baumol, William, Robert Litan and Carl Schramm
 Good Capitalism, Bad Capitalism, and the
economics of growth and prosperity 1HZKDYHQ
DQG/RQGRQ<DOH8QLYHUVLW\3UHVV
%HGIRUG7UDFH\. Ethical consumerism: everyday
negotiations in the construction of an ethical self.
Seminar Presentation, RESOLVE, University of Surrey
th )HEUXDU\  2QOLQH DW ZZZVXUUH\DFXN
UHVROYHVHPLQDUV7UDFH\%HGIRUG6OLGHVSGI
Begg, David, Stanley Fischer and Rudiger Dornbusch
its impact on millennium development goals. Report
RI+HDULQJVE\WKH$OO3DUW\3DUOLDPHQWDU\*URXSRQ
Population, Development and Reproductive Health,
/RQGRQ3RSXODWLRQ6XVWDLQDELOLW\1HWZRUN
$UPVWURQJ $OLVRQ DQG 7LP -DFNVRQ  Tied
up in ‘nots’: an exploration of the link between
consumption and spirituality. Paper presented to
WKH(XURSHDQ6RFLRORJLFDO$VVRFLDWLRQFRQIHUHQFHLQ
+HOVLQNL$XJXVW
$UQGW -DPLH 6KHOGRQ 6RORPRQ 7LP .DVVHU DQG
.D\ 6KHOGRQ . The Urge to Splurge: a terror
management account of materialism and consumer
Economics (7th(GLWLRQ0DLGHQKHDG0F*UDZ
Hill.
%HLQKRFNHU (ULF  The Origin of Wealth:
Evolution, Complexity, and the Radical Remaking of
Economics./RQGRQ5DQGRP+RXVH
%HON5XVV*XOL]*HUDQG6ÔUHQ$VNHJDDUGThe
fire of desire – a multi-sited inquiry into consumer
passion. -RXUQDO RI &RQVXPHU 5HVHDUFK  

%HON5XVVHOO0HODQLH:DOOHQGRUIDQG-RKQ)6KHUU\
 The Sacred and the Profane in Consumer
behaviour. -RXUQDO RI &RQVXPHU 3V\FKRORJ\ 

$[HOURG5REHUWThe Evolution of Cooperation.
5HSULQWHG/RQGRQ%DVLF%RRNV
$\UHV5REHUWSustainability Economics: where
do we stand?(FRORJLFDO(FRQRPLFV
$\UHV 5REHUW DQG -HURHQ YDQ GHQ %HUJK  A
theory of economic growth with material/energy
resources and dematerialisation: interaction of
three growth mechanisms.(FRORJLFDO(FRQRPLFV

%DXGULOODUG -HDQ  The Consumer Society –
myths and structures. 5HSULQWHG  /RQGRQ
Sage Publications.
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK"
Behavior: Theodicy on the Odyssey, Journal of
&RQVXPHU5HVHDUFK
%HON 5XVVHOO  Possessions and the Extended
Self.-RXUQDORI&RQVXPHU5HVHDUFK
%HUJHU3HWHUThe Sacred Canopy – Elements
of a Sociological Theory of Religion 1HZ <RUN
$QFKRU%RRNV
%(55Smart Business – sustainable solutions
for changing times.5HSRUWRIWKH8.*RYHUQPHQWpV
Business Taskforce on Sustainable Consumption and
3URGXFWLRQ /RQGRQ 'HSW IRU %XVLQHVV (QWHUSULVH
and Regulatory Reform.
%RRWK'RXJODVHooked on Growth – economic
addictions and the environment1HZ<RUN5RZPDQ
DQG/LWWOHßHOG
113
%RVFK *HUKDUG  :RUNLQJ Time Reductions, &RPPRQ0LFKDHODQG6LJULG6WDJOEcological
Employment Consequences and Lessons from Economics – an introduction&DPEULGJH&DPEULGJH
Europe.,Q*ROGHQ/DQG')LJDUWHGV University Press.

%RXGHU )UHGHULF  Can Decoupling Work? &RVWDQ]D5REHUWHWDOThe Value of the World’s
Thinkpiece contributed to the SDC Workshop ‘Economy Ecosystem Services and Natural Capital,1DWXUH
/LWHtFDQGHFRXSOLQJZRUN"p)HEUXDU\/RQGRQ 7DEOH
6XVWDLQDEOH 'HYHORSPHQW &RPPLVVLRQ 2QOLQH DW
ZZZVGFRPPLVVLRQRUJXNSDJHVUHGHILQLQJ
prosperity.html
%RXUGLHX3LHUUHDistinction—A social critique
of the judgement of taste/RQGRQ5RXWOHGJHDQG
&URFNHU 'DYLG DQG 7RE\ /LQGHQ HGV  The
Ethics of Consumption 1HZ <RUN 5RZPDQ DQG
/LWWOHßHOG
&VLNV]HQWPLKDO\L0LKDO\7KH&RVWVDQG%HQHßWV
.HJDQ3DXO
%UDGOH\6In Greed We Trust: Capitalism gone
wrong9LFWRULD%&7UDIIRUG
of Consuming. Journal of Consumer Research
5HSULQWHGDV&KDSWHULQ-DFNVRQ
&VLNV]HQWPLKDO\L 0LKDO\L  Materialism and
the evolution of consciousness.&KDSWHULQ.DVVHU
%URZQ/HVWHUPlan B 3.0 – mobilizing to save
civilization1HZ<RUN::1RUWRQ &R
%URZQ 3HWHU DQG *HRIIUH\ *DUYHU  Right
Relationship – building a whole earth economy. San
)UDQFLVFR%HUUHWW.RHKOHU3XEOLVKHUV,QF
%URZQ.LUNDQG7LP.DVVHUAre Psychological
and Ecological Well-being Compatible? The Role of
Values, Mindfulness, and Lifestyle. Social Indicators
7 DQG .DQQHU $ HGV o3V\FKRORJ\ DQG &RQVXPHU
Culture’ – the struggle for a good life in a material
ZRUOG :DVKLQJWRQ '& $PHULFDQ 3V\FKRORJLFDO
$VVRFLDWLRQ
&VLNV]HQWPLKDO\L 0LKDO\ DQG (XJHQH 5RFKEHUJ
+DOWRQ  The Meaning of Things – domestic
symbols and the self &DPEULGJH DQG 1HZ <RUN
Cambridge University Press.
5HVHDUFK &XOSHSSHU 3HSSHU  Employers, Public Policy
and the Politics of Decentralised Cooperation in
%XQWLQJ 0DGHOHLQH  Willing Slaves: how France and Germany&KDSWHULQ+DOODQG6RVNLFH
the overwork culture is ruining our lives /RQGRQ
Harper.
&DPSEHOO&ROLQI shop therefore (I know that)
I am. The Metaphysical Foundations of Modern
Consumerism.,Q.DULQ(NVWURPDQG+HOHQ%UHPEHFN
(eds.), Elusive Consumption.2[IRUG%HUJ
&DPSEHOO &ROLQ  The Romantic Ethic and
the Spirit of Modern Consumerism 2[IRUG %DVLO
Blackwell.
&DUERQ7UXVW. The carbon emissions in all that
we consume/RQGRQ&DUERQ7UXVW
&&&Building a Low-Carbon Economy – the UK’s
contribution to tackling climate change.st Report
RIWKH&OLPDWH&KDQJH&RPPLWWHH/RQGRQ762
114 3URVSHULW\ZLWKRXW*URZWK"
HGV
&XVKPDQ 3KLOLS  Why the Self is Empty:
toward a historically situated psychology$PHULFDQ
3V\FKRORJLVW
'p$OHVVDQGUR6LPRQH7RPPDVR/X]]DWLDQG0DULR
0RUURQL  Feasible Transition Paths towards
a Renewable Energy Economy: Investment
Composition, Consumption and Growth. Thinkpiece
SUHVHQWHGWRWKH6'&6HPLQDUo&RQIURQWLQJ6WUXFWXUHp
$SULO  /RQGRQ 6XVWDLQDEOH 'HYHORSPHQW
&RPPLVVLRQ 2QOLQH DW ZZZVGFRPPLVVLRQRUJ
XNSDJHVUHGHßQLQJSURVSHULW\KWPO
'DO\ +HUPDQ  Beyond Growth. Washington,
'&%HDFRQ3UHVV
'DO\ +HUPDQ  The Steady State Economy.
/RQGRQ:+)UHHPDQDQG&R/WG
Sustainable Development Commission
'%  Economic Stimulus: The Case for ‘Green’
Infrastructure, Energy Security and ‘Green’ Jobs.
'HXWVFKH%DQN$GYLVRUV1HZ<RUN'HXWVFKH%DQN
'H %RWWRQ $ODLQ  Status Anxiety 2[IRUG
Oxford University Press.
'HIUD  Development of an Embedded
Emissions Indicator. Report to the Department for the
(QYLURQPHQW)RRGDQG5XUDO$IIDLUVE\WKH6WRFNKROP
Environment Institute and University of Syney.
/RQGRQ 'HIUD 2QOLQH DW KWWSUDQGGGHIUDJRY
XN'RFXPHQWDVS["'RFXPHQW (9BB)53
pdf
'HIUDSustainable Development Indicators in
Your Pocket/RQGRQ762
'R\DO/HQDQG,DQ*RXJKA Theory of Human
Needs%DVLQJVWRNH3DOJUDYH0DFPLOODQ
'UXFNPDQ$QJHODDQG7LP-DFNVRQThe carbon
footprint of UK households 1990-2004: a socio-
economically disaggregated, quasi-multi-regional
input-output model. Ecological Economics. In press.
'UXFNPDQ $QJHOD DQG 7LP -DFNVRQ  The
Surrey Environmental Lifestyle Mapping (SELMA)
Framework – development and key results to date.
5(62/9(:RUNLQJ3DSHU*XLOGIRUG8QLYHUVLW\
RI 6XUUH\ 2QOLQH DW ZZZVXUUH\DFXNUHVROYH
'RFV:RUNLQJ3DSHUV5(62/9(B:3BSGI
'UXFNPDQ $QJHOD 3HWH %UDGOH\ (OHQL
3DSDWKDQDVRSRXORX DQG 7LP -DFNVRQ 
Measuring progress towards carbon reduction in
'HIUD  Securing the Future. UK Sustainable the UK(FRORJLFDO(FRQRPLFV
Development Strategy /RQGRQ 'HSDUWPHQW IRU
(QYLURQPHQW)RRGDQG5XUDO$IIDLUV
'LWWPDU +HOJD  The Social Psychology of
Material Possessions – to have is to be1HZ<RUN
6W0DUWLQpV3UHVV
'RODQ 3DXO 7HVVD 3HDVJRRG DQG 0DWWKHZ :KLWH
 Do we really know what makes us happy?
$UHYLHZRIWKHHFRQRPLFOLWHUDWXUHRQWKHIDFWRUV
DVVRFLDWHG ZLWK VXEMHFWLYH ZHOOEHLQJ -RXUQDO RI
Economic Psychology, 29, 94-122.
'RODQ 3DXO 7HVVD 3HDVJRRG DQG 0DWWKHZ :KLWH
 Review of research on the influences on
'XUNKHLP(PLOHSuicide.5HSULQWHGLQ
5RXWOHGJH&ODVVLFV/RQGRQ5RXWOHGJH
(DVWHUOLQ5LFKDUG:LOOUDLVLQJWKHLQFRPHVRI
DOOLQFUHDVHWKHKDSSLQHVVRIDOO"Journal of Economic
Behaviour and Organizationt
(DVWHUOLQ 5LFKDUG  Does economic growth
improve the human lot? Some empirical evidence.
,Q ' 'DYLG DQG 0 5HGHU HGV 1DWLRQV DQG
KRXVHKROGVLQHFRQRPLFJURZWK6WDQIRUG6WDQIRUG
University Press.
(KUOLFK3DXOThe Population Bomb. Reprinted
personal well-being and application to policy 1HZ<RUN%XFFDQHHU%RRNV
making5HSRUWWR'HIUD/RQGRQ'HIUD
(,$  International Energy Annual 2006.
'RXJODV 0DU\   Relative Poverty, :DVKLQJWRQ'&(QHUJ\,QIRUPDWLRQ$GPLQLVWUDWLRQ
Relative Communication LQ +DOVH\ $ HG
7UDGLWLRQV RI 6RFLDO 3ROLF\ 2[IRUG %DVLO %ODFNZHOO
UHSULQWHGDV&KDSWHULQ-DFNVRQD
'RXJODV 0DU\ DQG %DURQ ,VKHUZRRG  The
World of Goodsnd(GLWLRQ/RQGRQ5RXWOHGJH
'RXWKZDLWH 5LFKDUG  The Growth Illusion
– how economic growth has enriched the few,
impoverished the many and endangered the
planet. 7RWQHV'HYRQ*UHHQ%RRNV
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK"
2QOLQHDWZZZHLDGRHJRYHPHXLHD
(NLQV3DXOPolicies for Decoupling. Thinkpiece
contributed to the SDC workshop ‘Decoupling Lite
t FDQ GHFRXSOLQJ ZRUN"p )HEUXDU\  /RQGRQ
6XVWDLQDEOH 'HYHORSPHQW &RPPLVVLRQ 2QOLQH DW
ZZZVGFRPPLVVLRQRUJXNSDJHVUHGHILQLQJ
prosperity.html
(NLQV 3DXO  Economic Growth and
Environmental Sustainability/RQGRQ5RXWOHGJH
115
(NLQV3DXODQG0DQIUHG0D[1HHI(GVReal-
life economics: Understanding wealth creation.
/RQGRQ5RXWOHGJH
(OJLQ'XDQHVoluntary Simplicity – towards a
way of life that is outwardly simple, inwardly rich.
5HSULQWHG1HZ<RUN:LOOLDP0RUURZ
(VWHYH]$EH 0DUJDULWD 7RUEHQ ,YHVHQ DQG 'DYLG
6RVNLFHSocial Protection and the Formation
*1'A Green New Deal: joined up policies to
solve the triple crunch of the credit crisis, climate
change and high oil prices. 7KH ßUVW UHSRUW RI WKH
*UHHQ1HZ'HDO*URXS/RQGRQQHI
*ROGHQ / DQG ' )LJDUW  Working Time:
international trends, theory and policy perspectives.
/RQGRQDQG1HZ<RUN5RXWOHGJH
*RU] $QGUÅ  Reclaiming Work – beyond the
of Skills&KDSWHULQ+DOODQG6RVNLFHHGV wage-based society./RQGRQ3ROLW\3UHVV

(W]LRQL $PLWDL  >@ Voluntary Simplicity: *UHHQVSDQ $ODQ  The Age of Turbulence:
Characterisation, Select Psychological Implications adventures in a new world/RQGRQ3HQJXLQ
and Societal Consequences. Journal of Economic
3V\FKRORJ\t5HSULQWHGDV&KDSWHU
LQ-DFNVRQ
(YDQV'DYLGDQG:RNMH$EUDKDPVH Beyond
Rhetoric: the Possibilities of and for ‘Sustainable
Lifestyles’ 5(62/9( :RUNLQJ 3DSHU 6HULHV 
*XLOGIRUG8QLYHUVLW\RI6XUUH\
)UDQFR0DQXHO3HGUR2UGXÍH]%HQMDPÉQ&DEDOOHUR
-RVÅ $ 7DSLD *UDQDGRV 0DULDQD /D]R -RVÅ /XÉV
%HUQDO (OLVHR *XDOODU DQG 5LFKDUG 6 &RRSHU 
Impact of Energy Intake, Physical Activity, and
Population-wide Weight Loss on Cardiovascular
Disease and Diabetes Mortality in Cubat
-RXUQDORI(SLGHPLRORJ\
)UHHPDQ 5LFKDUG DQG .DWKU\Q 6KDZ 
International Differences in the Business Practices
and Productivity of Firms. Proceedings of a
*URVVPDQ*HQHDQG$ODQ.UXHJHUEconomic
Growth and the Environment. Quarterly Journal of
(FRQRPLFV
+DLGW -RQDWKDQ  The Happiness Hypothesis –
finding modern truth in ancient wisdom.1HZ<RUN
Basic Books.
+DOO 3HWHU DQG 'DYLG 6RVNLFH  Varieties
of Capitalism: the institutional foundations of
competitive advantage 2[IRUG 2[IRUG 8QLYHUVLW\
Press.
+DOO5REHUWDQG'DYLG3DSHOOMacroeconomics:
economic growth, fluctuations and policy 1HZ
<RUN::1RUWRQ
+HOOLZHOO -RKQ  How’s life? Combining
individual and national variables to explain
&RQIHUHQFHKHOGDWWKH1DWLRQDO%XUHDXRI(FRQRPLF subjective wellbeing. (FRQRPLF 0RGHOOLQJ  
5HVHDUFK&KLFDJR8QLYHUVLW\RI&KLFDJR3UHVV t
IRUWKFRPLQJ 2QOLQH DW KWWSZZZQEHURUJ
ERRNVIUHH
*DGMLO 0DGKDY DQG 5DPDFKDQGUD *XKD 
Ecology and Equity— The Use and Abuse of Nature
in Contemporary India.1HZ<RUN5RXWOHGJHS
*DWHUVOHEHQ %LUJLWWD -HVVH 0HDGRZV :RNMH
$EUDKDPVHDQG7LP-DFNVRQMaterialistic and
environmental values of young volunteers in nature
conservation projects. 5(62/9( :RUNLQJ 3DSHU 
*XLOGIRUG8QLYHUVLW\RI6XUUH\
*HRUJHVFX5RHJHQ 1LFKRODV  The Entropy
Law and the Economic Process &DPEULGJH 0DVV
Harvard University Press.
116
+DPLOWRQ &OLYH  Downshifting in Britain. A
sea-change in the pursuit of happiness. Discussion
3DSHU1R&DQEHUUD7KH$XVWUDOLD,QVWLWXWH
+DPLOWRQ &OLYH DQG / 0DLO  Downshifting in
Australia: A sea-change in the pursuit of happiness,
'LVFXVVLRQ 3DSHU 1R  &DQEHUUD 7KH $XVWUDOLD
Institute.
+D\GHQ $QGHUV  Sharing the Work, Sparing
the Planet – work time, consumption and ecology.
/RQGRQ=HG%RRNV
+HOP'LHWHUDToo Good to be True. Online at
www.dieterhelm.co.uk
3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
+HOP'LHWHUEClimate-change policy: why has -DFNVRQ 7LP HG D Earthscan Reader in
so little been achieved? Oxford Review of Economic Sustainable Consumption/RQGRQ(DUWKVFDQ
3ROLF\t
-DFNVRQ7LPEConsuming Paradise? Towards
+LUVFK)UHGSocial Limits to Growth. Revised a social and cultural psychology of sustainable
HGLWLRQ/RQGRQDQG1HZ<RUN5RXWOHGJH
+07  )DFLQJ Global Challenges: supporting
people through difficult times. 3UH%XGJHW 5HSRUW
/RQGRQ+07UHDVXU\
+REVRQ .  Competing discourses of
sustainable consumption: does the rationalisation
of lifestyles make sense? ,Q -DFNVRQ D t
consumption&KDSWHULQ-DFNVRQHGD
-DFNVRQ 7LP D Motivating Sustainable
Consumption – a review of evidence on consumer
behaviour and behavioural change /RQGRQ
6XVWDLQDEOH'HYHORSPHQW5HVHDUFK1HWZRUN
-DFNVRQ7LPELive better by consuming less? Is
there a double dividend in sustainable consumption.
 -RXUQDORI,QGXVWULDO(FRORJ\

+XQHNH0The Face of the Un-consumer: an -DFNVRQ7LPDQG9LFWRU$QGHUVRQRedefining

empirical examination of the practice of voluntary Prosperity – essays in pursuit of a sustainable
simplicity in the United States. Psychology and economy./RQGRQ(DUWKVFDQ6'&IRUWKFRPLQJ
0DUNHWLQJ
,($  World Energy Outlook 2008 3DULV
,QWHUQDWLRQDO(QHUJ\$JHQF\
,)6  The IFS Green Budget January 2009.
-DFNVRQ 7LP  Material Concerns: pollution,
profit and quality of life/RQGRQ5RXWOHGJH
-DFNVRQ7LPDQG0LFKDHO-DFREVCarbon Taxes
and the Assumptions of Environmental Economics.
/RQGRQ,QVWLWXWHIRU)LVFDO6WXGLHV
,0)World Economic Outlook 2008. Washington
'&,QWHUQDWLRQDO0RQHWDU\)XQG
,QJOHKDUW5RQDOGDQG.OLQJHPDQQ+'Genes,
culture and happiness%RVWRQ0,73UHVV
,3&&  Climate change 2007: Mitigation.
Contribution of Working group III to the Fourth
$VVHVVPHQW 5HSRUW RI WKH ,QWHUJRYHUQPHQWDO
3DQHO RQ &OLPDWH &KDQJH &DPEULGJH &DPEULGJH
In Barker, THG*UHHQ)XWXUHVIRU(FRQRPLF*URZWK.
&DPEULGJH&DPEULGJH(FRQRPHWULFV
Jackson, Tim, Wander Jager and Sigrid Stagl
 Beyond Insatiability – needs theory and
sustainable consumption, LQ / 5HLVFK DQG , 5ÔSNH
(eds) Consumption – perspectives from ecological
HFRQRPLFV&KHOWHQKDP(GZDUG(OJDU
-DFNVRQ 7LP DQG 1LF 0DUNV  Consumption,
Sustainable Welfare and Human Needs - with
reference to UK expenditure patterns 1954-1994,
University Press.
,732(6  7KH 2LO &UXQFK VHFXULQJ WKH 8.pV
energy future. First report of the Industry Taskforce
RQ3HDN2LODQG(QHUJ\6HFXULW\/RQGRQ,732(6
-DFNVRQ7LPDWhere is the wellbeing dividend?
Nature, Structure and Consumption Inequalities.
(FRORJLFDO(FRQRPLFV
-DFNVRQ7DQG10F%ULGHMeasuring Progress?
A review of adjusted measures of economic welfare
in Europe. Report for the European Environment
$JHQF\*XLOGIRUG8QLYHUVLW\RI6XUUH\
-DFNVRQ7LPDQG0LULDP3HSSHUConsumerism
/RFDO(QYLURQPHQW
-DFNVRQ 7LP E The Challenge of Sustainable
Lifestyles &KDSWHU  LQ State of the World 2008 –
Innovations for a Sustainable Economy. Washington
'&:RUOG:DWFK,QVWLWXWH
as theodicy: an exploration of secular and religious
meaning functions in consumer society. In
Thomas, Lynn Consumerism: religious and secular
perspectives/RQGRQ3DOJUDYH

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 117

-DFNVRQ 7LP DQG (OHQL 3DSDWKDQDVRSRXORX 
Luxury or Lock-in? – an exploration of unsustainable
consumption in the UK 1968 – 2000. Ecological
(FRQRPLFV
Jackson, Tim, Eleni Papathanasopoulou, Pete Bradley
DQG $QJHOD 'UXFNPDQ  Attributing Carbon
Emissions to Functional Household Needs a pilot
framework for the UK. International Conference on
Regional and Urban Modelling, Brussels, Belgium.
-XQH
Jackson, Tim, Eleni Papathanasopoulou, Pete
%UDGOH\DQG$QJHOD'UXFNPDQAttributing UK
Carbon Emissions to Functional Consumer Needs:
methodology and pilot results. RESOLVE Working
3DSHU8QLYHUVLW\RI6XUUH\2QOLQHDWZZZ
VXUUH\DF XNUHVROYH'RFV:RUNLQJ3DSHUV
5(62/9(B:3BSGI
-DFREV0LFKDHOThe Green Economy/RQGRQ
Pluto Press.
-DPHV2OLYHUBritain on the couch: why we’re
unhappier compared to 1950 despite being richer.
/RQGRQ$UURZ%RRNV
-DPHV2OLYHUAffluenza./RQGRQ9HUPLOOLRQ
/DQFDVWHU.HOYLQA new approach to consumer
theory-RXUQDORI3ROLWLFDO(FRQRP\
/D\DUG5LFKDUGHappiness/RQGRQ3HQJXLQ
/HZLV'DYLGDQG'DUUHQ%ULGJHUThe soul of
the new consumer: Authenticity – what we buy
and why in the new economy. /RQGRQ 1LFKRODV
Brealey.
/LHQW] %HQQHW DQG .DWKU\Q 5HD  The 2001
Professional’s Guide to Process Improvement:
Maximizing Profit, Efficiency, and Growth.&RORUDGR
$VSHQ3XEOLVKHUV,QF
/RUG&OLYHA Citizen’s Income – a foundation
for a sustainable world. &KDUOEXU\ 2[IRUG -RQ
Carpenter Publishing.
/\QDV0DUNHigh Tide./RQGRQ)ODPLQJR
0DGGLVRQ $QJXV  Contours of the World
Economy 1 – 2030: essays in macro-economic
history2[IRUG2[IRUG8QLYHUVLW\3UHVV
0DUPRW0LFKDHOStatus Syndrome – how your
social standing directly affects your health./RQGRQ
Bloomsbury.

.DKQHPDQ 'DQLHO DQG 5REHUW 6XJGHQ  0DUPRW0LFKDHODQG5LFKDUG:LONLQVRQHGV

Experienced Utility as a Standard of Policy Evaluation. Social Determinants of Health nd (GLWLRQ 2[IRUG
(QYLURQPHQWDO 5HVRXUFH(FRQRPLFVt Oxford University Press.

.DVVHU7LPA Vision of Prosperity. Thinkpiece 0DZGHVOH\(PPDIndia’s Middle Classes and

for the SDC’s Redefining ProsperitySURMHFW/RQGRQ
SDC.
.DVVHU 7LP  The High Price of Materialism.
&DPEULGJH0DVV0,73UHVV
.H\QHV-RKQ0D\QDUGEconomic Possibilities
for our Grandchildren. Essays in Persuasion. 1HZ
<RUN::1RUWRQ &R
.LHUNHJDDUG 6ÔUHQ  The Concept of Anxiety:
A Simple Psychologically Orienting Deliberation on
the Dogmatic Issue of Hereditary Sin. Reprinted
DV 9ROXPH 9,,, .LHUNHJDDUGpV :ULWLQJV 3ULQFHWRQ
Princeton University Press.
118 3URVSHULW\ZLWKRXW*URZWK"
the Environment'HYHORSPHQWDQG&KDQJH

0D[1HHI 0DQIUHG  Human-scale
development: conception, application and further
reflection/RQGRQ$SH[3UHVV
0F&UDFNHQ *UDQW  Culture and Consumption,
Indiana University Press, Bloomington and
Indianapolis.
0F.LEEHQ %LOO  Deep Economy – the wealth
of communities and the durable future.1HZ<RUN
+HQU\+ROW &R
0($  Ecosystems and Human Wellbeing:
Current States and Trends. :DVKLQJWRQ '& ,VODQG
Press.
Sustainable Development Commission
0HDGRZV 'RQHOOD -RUJHQ 5DQGHUV DQG 'HQQLV
0HDGRZV  Limits to Growth – the 30 year
update./RQGRQ(DUWKVFDQ
0RQELRW*HRUJHHeat – how we can stop the
planet burning./RQGRQ3HQJXLQ
1&&  Shopping Generation /RQGRQ 1DWLRQDO
Consumer Council.
QHINational Accounts of Wellbeing – bringing
real wealth into the balance sheet /RQGRQ 1HZ
Economics Foundation.
QHI  A Wellbeing Manifesto /RQGRQ 1HZ
Economics Foundation.
1RUGKDXV :LOOLDP  A Review of The Stern
Review on the Economics of Climate Change’,
2IIHU $YQHU  The Challenge of Affluence.
2[IRUG2[IRUG8QLYHUVLW\3UHVV
2p1HLOO -RKQ  Living Well – within Limits:
wellbeing, time and sustainability. Thinkpiece
IRU WKH 6'& VHPLQDU /LYLQJ :HOO t ZLWKLQ /LPLWV
$SULO  /RQGRQ 6XVWDLQDEOH 'HYHORSPHQW
&RPPLVVLRQ 2QOLQH DW ZZZVGFRPPLVVLRQRUJ
XNSDJHVUHGHßQLQJSURVSHULW\KWPO
2UPHURG 3DXO  ,V WKH FRQFHSW RI oZHOOEHLQJp
XVHIXO IRU SROLF\ PDNLQJ" 7KLQNSLHFH IRU WKH 6'&
VHPLQDU /LYLQJ :HOO t ZLWKLQ /LPLWV $SULO 
/RQGRQ 6XVWDLQDEOH 'HYHORSPHQW &RPPLVVLRQ
2QOLQH DW ZZZVGFRPPLVVLRQRUJXNSDJHV
UHGHßQLQJSURVSHULW\KWPO
2XOWRQ 1LFKRODV  Competition and the
Dispersion of Labour Productivity amongst UK
Journal of Economic Literature, 456HSWHPEHU
1RUPDQ -HVVH .LWW\ 8VVKHU DQG 'DQQ\ $OH[DQGHU
From here to fraternity: perspectives on social
responsibility/RQGRQ&HQWUH)RUXP
1RUWKFRWW 0LFKDHO  A Moral Climate – the
ethics of global warming/RQGRQ'DUWRQ/RQJPDQ
and Todd.
1XVVEDXP 0DUWKD  Frontiers of Justice:
disability, nationality and policy design.&DPEULGJH
Cambridge University Press.
2(&'  Growing Unequal? Income Inequality
and Poverty in OECD countries 3DULV 2UJDQL]DWLRQ
for Economic Cooperation and Development.
2(&'  International Comparisons of Labour
Productivity Levels 3DULV 2(&' 2QOLQH DW ZZZ
RHFGRUJGDWDRHFGSGI
2(&'  Towards Sustainable Consumption: an
economic conceptual framework3DULV2UJDQL]DWLRQ
for Economic Cooperation and Development.
2IIHU $  A Vision of Prosperity. Thinkpiece
WR WKH 6'& ZRUNVKRS 9LVLRQV RI 3URVSHULW\
1RYHPEHU/RQGRQ6XVWDLQDEOH'HYHORSPHQW
&RPPLVVLRQ 2QOLQH DW ZZZVGFRPPLVVLRQRUJ
XNSDJHVUHGHßQLQJSURVSHULW\KWPO
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK"
Companies. 1,(65 3DSHU QR  /RQGRQ 1DWLRQDO
Institute of Economic and Social Research.
3HSSHU0LULDP7LP-DFNVRQDQG'DYLG8]]HOO
Values and Sustainable Consumer Behaviours.
International Journal of Consumer Studies. Special
issue on Sustainable Consumption. Forthcoming.
3HUH]&DUORWDTechnological Revolutions and
Financial Capital, The Dynamics of Bubbles and
Golden Ages.&KHOWHQKDP(GZDUG(OJDU
3(5,  Green Recovery: A Program to Create
Good Jobs and Start Building a Low-Carbon Economy.
$UHSRUWE\WKH3ROLWLFDO(FRQRP\5HVHDUFK,QVWLWXWH
8QLYHUVLW\ RI 0DVVDFKXVHWWV $PKHUVW 6HSWHPEHU
 :DVKLQJWRQ '& &HQWHU IRU $PHULFDQ
Progress.
3RODQ\L .DUO  Great Transformation – the
political and economic origins of our time. Reprinted
8FNßHOG%HDFRQ3UHVV
3RUULWW-RQDWKRQCapitalism – as if the world
matters/RQGRQ(DUWKVFDQ
3XWQDP5REHUWBowling Alone: the collapse
and revival of American community 1HZ <RUN
Simon and Schuster.
119
5DSS+LOGHFulfillment and Prosperity: a neo-
Gandhian vision 7KLQNSLHFH WR WKH 6'& VHPLQDU
o9LVLRQV RI 3URVSHULW\p 1RYHPEHU  /RQGRQ
6XVWDLQDEOH 'HYHORSPHQW &RPPLVVLRQ 2QOLQH DW
ZZZVGFRPPLVVLRQRUJXNSDJHVUHGHILQLQJ
prosperity.html
5HD\'DYLG&ROLQ5DPVKDZDQG$GDP+DUYH\
Process Intensification: Engineering for Efficiency,
Sustainability and Flexibility. 2[IRUG %XWWHUZRUWK
Heinemann.
5LW]HU*HRUJHThe McDonaldization of Society.
1HZ<RUN3LQH)RUJH3UHVV
5REH\QV ,QJULG DQG 5REHUW YDQ GHU 9HHQ 
Sustainable Quality of Life – conceptual analysis
for a policy-relevant empirical specification. 013
UHSRUW  %LOWKRYHQ 1HWKHUODQGV
(QYLURQPHQWDO$VVHVVPHQW$JHQF\
5RWKPDQ 'DOH  Environmental Kuznets
Curves – real progress or passing the buck? A case
for consumption-based approaches. Ecological
6FKXPSHWHU-RVHSKThe Theory of Economic
Development 5HSULQWHG LQ  /RQGRQ
Transaction Publishers.
6FKXPSHWHU-RVHSKCapitalism, Socialism and
Democracy5HSULQWHGLQ/RQGRQ5RXWOHGJH
6FKXPSHWHU -RVHSK  History of Economic
Analysis.5HSULQWHGLQ/RQGRQ5RXWOHGJH
6FLWRYVN\7LERUThe Joyless Economy2[IRUG
Oxford University Press.
6'&  A Sustainable New Deal – a stimulus
package for economic, social and ecological
recovery /RQGRQ 6XVWDLQDEOH 'HYHORSPHQW
Commission.
6'& D Redefining Progress. Report of the SD
Panel consultation on Progress/RQGRQ6XVWDLQDEOH
'HYHORSPHQW &RPPLVVLRQ 2QOLQH DW ZZZVG
FRPPLVVLRQRUJXNSXEOLFDWLRQVGRZQORDGV
5HGHßQLQJ3URJUHVVYSGI
Economics 
5XWKHUIRUG -RQDWKDQ  Wellbeing, Economic
Growth and Recession. Thinkpiece for the SDC
ZRUNVKRS/LYLQJ:HOOtZLWKLQOLPLWV0DUFK
/RQGRQ 6XVWDLQDEOH 'HYHORSPHQW &RPPLVVLRQ
2QOLQH DW ZZZVGFRPPLVVLRQRUJXNSDJHV
UHGHßQLQJSURVSHULW\KWPO
6DUGDU=LDProsperity: a transmodern analysis.
7KLQNSLHFHWRWKH6'&VHPLQDU9LVLRQVRI3URVSHULW\
1RYHPEHU/RQGRQ6XVWDLQDEOH'HYHORSPHQW
&RPPLVVLRQ 2QOLQH DW ZZZVGFRPPLVVLRQRUJ
XNSDJHVUHGHßQLQJSURVSHULW\KWPO
6FKZDUW] 6KDORP  Value orientations:
Measurement, antecedents and consequences
across nations. ,Q5-RZHOO&5REHUWV5)LW]JHUDOG
6'& E The Role of Nuclear Power in a Low-
Carbon Economy/RQGRQ6XVWDLQDEOH'HYHORSPHQW
Commission.
6'& F I Will If You Will 5HSRUW RI WKH 8.
6XVWDLQDEOH &RQVXPSWLRQ 5RXQG 7DEOH /RQGRQ
6XVWDLQDEOH 'HYHORSPHQW &RPPLVVLRQ1DWLRQDO
Consumer Council.
6'&  Redefining Prosperity: resource
productivity, economic growth and sustainable
development /RQGRQ 6XVWDLQDEOH 'HYHORSPHQW
&RPPLVVLRQ2QOLQHDWKWWSWLQ\XUOFRPFNXXUO
6HQ $PDUW\D  Development as Freedom.
2[IRUG2[IRUG8QLYHUVLW\3UHVV
6HQ$PDUW\DThe Living Standard&KDSWHU
*(YD(GVMeasuring attitudes cross-nationally
- lessons from the European Social Survey/RQGRQ
Sage.
6FKZDUW]6KDORPA theory of cultural values
and some implications for work$SSOLHG3V\FKRORJ\
LQ&URFNHUDQG/LQGHQHGV
6HQ $PDUW\D  The Living Standard. Oxford
(FRQRPLF3DSHUV
6HQ$PDUW\DCommodities and Capabilities.
 $PVWHUGDP(OVHYLHU

6FKRU -XOLHW  The Overspent American: 6KHHULQ&DUROLQHUK Material Flow Accounting.
upscaling, downshifting and the new consumer. (FRQRPLF7UHQGV1R-XQH
1HZ<RUN%DVLF%RRNV

120 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission

6KHOWRQ%HWK$QQHVariations in Divorce Rate
by Community Size: a test of the social integration
explanation.-RXUQDORI0DUULDJHDQGWKH)DPLO\

81'3  Human Development Report 2[IRUG
Oxford University Press.
9HEOHQ 7KRUVWHLQ  The Theory of the Leisure
Class5HSULQWHG*UHDW0LQGV6HULHV/RQGRQ
6PLWK$GDPAn Inquiry into the Nature Prometheus Books.
and Causes of the Wealth of Nations (reprinted
1HZ<RUN0RGHUQ/LEUDU\
6REHU ( DQG ' :LOVRQ  Unto Others—The
Evolution and Psychology of Unselfish Behaviour.
+DUYDUG8QLYHUVLW\3UHVV&DPEULGJH0$
6RORZ 5REHUW . A Contribution to the Theory
of Economic Growth. Quarterly Journal of Economics
9LFWRU 3HWHU D Managing without Growth –
slower by design not disaster. &KHOWHQKDP(GZDUG
Elgar.
9LFWRU 3HWHU E Managing without Growth.
Thinkpiece for the SDC workshop ‘Confronting
6WUXFWXUHp $SULO  /RQGRQ 6XVWDLQDEOH
'HYHORSPHQW &RPPLVVLRQ 2QOLQH DW ZZZVG

6RSHU.DWHExploring the relationship between
growth and wellbeing. Thinkpiece for the SDC
6HPLQDU/LYLQJ:HOOtZLWKLQ/LPLWV)HEUXDU\
/RQGRQ 6XVWDLQDEOH 'HYHORSPHQW &RPPLVVLRQ
2QOLQH DW ZZZVGFRPPLVVLRQRUJXNSDJHV
UHGHßQLQJSURVSHULW\KWPO
6RURV*HRUJHThe New Paradigm for Financial
Markets. the credit crisis of 2008 and what it means.
/RQGRQ3XEOLF$IIDLUV
6RUUHOO 6WHYH  The Rebound Effect: an
assessment of the evidence for economy-wide
energy savings from improved energy efficiency$
UHSRUWE\WKH6XVVH[(QHUJ\*URXSIRUWKH8.(QHUJ\
5HVHDUFK &HQWUH /RQGRQ 8. (QHUJ\ 5HVHDUFK
*URXS
6WHUQThe Economics of Climate Change: the
Stern Review &DPEULGJH &DPEULGJH 8QLYHUVLW\
Press.
6ZDQ $ODQ  Economic Growth and Capital
Accumulation(FRQRPLF5HFRUG
7RZQVHQG 3HWHU  Poverty in the United
Kingdom – a survey of household resources and
standards of living/RQGRQ3HQJXLQ
81  World Population Prospects: the 2006
Revision +LJKOLJKWV :RUNLQJ 3DSHU 1R (6$3
:3  81 'HSDUWPHQW RI (FRQRPLF DQG 6RFLDO
$IIDLUV1HZ<RUN8QLWHG1DWLRQV2QOLQHDWZZZ
XQRUJHVDSRSXODWLRQSXEOLFDWLRQVZSS
:33B+LJKOLJKWVBUHYSGI
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK"
FRPPLVVLRQRUJXNSDJHVUHGHILQLQJSURVSHULW\
html
YRQ:HL]VÀFNHU(UQVW$PRU\/RYLQV/+XQWHU/RYLQV
 Factor Four: halving resource use, doubling
wealth./RQGRQ(DUWKVFDQ
:DFKWHO 3DXO  The Poverty of Affluence – a
psychological portrait of the American Way of Life.
1HZ<RUN7KH)UHH3UHVV
:DOO 'HUHN  Prosperity without Growth.
7KLQNSLHFH IRU WKH 6'& ZRUNVKRS &RQIURQWLQJ
6WUXFWXUH $SULO  /RQGRQ 6XVWDLQDEOH
'HYHORSPHQW &RPPLVVLRQ 2QOLQH DW ZZZVG
FRPPLVVLRQRUJXNSDJHVUHGHILQLQJSURVSHULW\
html
:HEHU 0D[  The Protestant Ethic and the
Spirit of Capitalism. Translated by Talcott Parsons.
1HZ<RUN&KDUOHV6FULEQHUpV6RQV
:+2  Prevalence, severity and unmet need
for treatment of mental disorders. Journal of the
$PHULFDQ0HGLFDO$VVRFLDWLRQ
:LONLQVRQ5The impact of inequality: how to
make sick societies healthier./RQGRQ5RXWOHGJH
:5,The Weight of Nations – material outflows
from industrial economies :DVKLQJWRQ '& :RUOG
Resources Institute.
:ULJKW 5REHUW  The Moral Animal – why we
are the way we are/RQGRQ$EDFXV
121
Endnotes
1 Introduction
1  ELOOLRQSHRSOHLVWKHPLGUDQJHSURMHFWLRQ
IRUJOREDOSRSXODWLRQE\DFFRUGLQJWR
WKH8QLWHG1DWLRQV'HSDUWPHQWRI(FRQRPLF
DQG6RFLDO$IIDLUVODWHVWSURMHFWLRQV81
8  6HHIRUH[DPSOH/D\DUGQHI
+DLGW$EGDOODKHWDO2QoVRFLDO
UHFHVVLRQpVHH5XWKHUIRUG1RUPDQ
2QZHOOEHLQJDQGLQHTXDOLW\VHH
-DFNVRQD
7KHORZHUHQGRIWKHUDQJHLV 9 This evocative phrase comes from the Indian
ELOOLRQZKLOHWKHKLJKHUHQGLVELOOLRQ HFRORJLVW0DGKDY*DGMLO*DGMLODQG*XKD
2  81'37KHULFKHVWE\FRPSDULVRQ 
HDUQRIWKHZRUOGpVLQFRPH 10 6RURVS
3 ‘Be moderate in prosperity, prudent in 11 6HHKWWSQHZVEEFFRXNKL
adversity’, advised Periander, the ruler EXVLQHVVVWP
RI&RULQWKLQ%&o3URVSHULW\WULHVWKH 12 9LFWRUD E
IRUWXQDWHDGYHUVLW\WKHJUHDWpFODLPHG5RVH
.HQQHG\PRWKHURI-).DQG5).
2 The Age of Irresponsibility
4 For useful summaries of these impacts see
IRUH[DPSOH%URZQ&KDSWHU9LFWRU 1  7DNHQIURPDVSHHFKE\WKH8.3ULPH
D0F.LEEHQ&KDSWHU1RUWKFRWW 0LQLVWHUWRWKH8QLWHG1DWLRQVLQ1HZ<RUN
0RQELRW3RUULWW&KDSWHU )ULGD\th6HSWHPEHU6HHZZZ
%RRWK&KDSWHUV 6WHUQ IWFRPFPVVFFEHDGGDF
/\QDV,($*1'DQG,732(6 IGFKWPO
DPRQJVWPDQ\RWKHUVLQFOXGLQJRI 2  2Q,0)SUHGLFWLRQVHH:RUOG(FRQRPLF
course the SDC’s own report on Redefining 2XWORRN,0)SxivIRU2(&'
Prosperity6'&DQGWKHYHU\XVHIXO VHHKWWSQHZVEEFFRXNKL
0LOOHQQLXP(FRV\VWHP$VVHVVPHQW0($ EXVLQHVVVWP RQoßQDQFLDO
 PDUNHWVpVHH6RURVRQoVWDJàDWLRQp
5 The most widely cited statistic from Stern’s VHHKWWSQHZVEEFFRXNKL
LQàXHQWLDOUHSRUWRQWKHHFRQRPLFVRIFOLPDWH EXVLQHVVVWP RQIRRGULRWVVHH
FKDQJH6WHUQLVWKDWDQDQQXDO
LQYHVWPHQWRIRIJOREDO*'3FRXOGDYHUW
an estimated cost from climate change of
RIJOREDO*'3
6  7KH*JURXSZDUQHGRIWKHWKUHDWRIULVLQJ
oil prices to global economic stability as early
DVZZZLQGHSHQGHQWFRXNQHZV
EXVLQHVVQHZVJZDUQVRIRLOSULFH
WKUHDWWRJOREDOHFRQRPLFVWDELOLW\
IRUH[DPSOHKWWSQHZVEEFFRXNKL
ZRUOGVWP
3  5REHUW3HVWRQo7KH€EQEDLORXWp%%&
2QOLQHZZZEEFFRXNEORJVWKHUHSRUWHUV
UREHUWSHVWRQWKHBEQBEDLORXW
html
4 Source data are from The EconomistGROODU
based Commodity Price Index (accessed at
www.economist.com)
KWPO7KHIHDUVSHDNHGLQ-XO\ZKHQ 5  6HHIRUH[DPSOHZZZJXDUGLDQFRXN
RLOSULFHVUHDFKHGDEDUUHO7KRXJKWKH\ EXVLQHVVGHFJROGPDQVDFKV
fell sharply in the following months, the long executivesalaries
term concern is widely acknowledged. See for 6 In Varieties of Capitalism Peter Hall and David
H[DPSOHWKH,($pV:RUOG(QHUJ\2XWORRN,($ 6RVNLFHGHßQHWZRPDLQW\SHVRI
DQGWKHUHSRUWRIWKH,QGXVWU\7DVNIRUFH FDSLWDOLVWHFRQRP\LQWKHGHYHORSHGZRUOG
on Peak Oil and Energy Security (ITPOES ‘liberal market economies’ and ‘coordinated

7 On income inequality in developed nations
VHH2(&'RQJOREDOGLVSDULWLHVVHH
81'32QWKHHIIHFWVRILQFRPH
LQHTXDOLW\VHH0DUPRW:LONLQVRQ
0DUPRWDQG:LONLQVRQ
122
market economies’. It’s instructive up to a
SRLQWWRUHàHFWRQVRPHRIWKHGLIIHUHQFHV
between these economies in approaching
UHFHVVLRQ:HUHYLVLWWKLVSRLQWLQ&KDSWHU
7  0RVWUHFHQWVWDWLVWLFVRQ8.FRQVXPHUGHEW
taken from ‘Debt Facts and Figures – Compiled
st )HEUXDU\pSXEOLVKHGE\&UHGLW$FWLRQ
2QOLQHDWZZZFUHGLWDFWLRQRUJXNGHEW
statistics.html
3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
8  6RXUFHGDWDDUHIURPWKH2IßFHIRU1DWLRQDO
Statistics (accessed at www.statistics.gov.uk).
9 Formally known as the public sector net debt,
WKHQDWLRQDOGHEWPHDVXUHVWKHoßQDQFLDO
liabilities issued by the public sector less its
KROGLQJVRIOLTXLGßQDQFLDODVVHWVVXFKDV
EDQNGHSRVLWVp6HHIRUH[DPSOHWKH216
IDFWVKHHWRQ*RYHUQPHQWDQG3XEOLF6HFWRU
'HEW0HDVXUHV2QOLQHDWZZZVWDWLVWLFVJRY
XNDERXWPHWKRGRORJ\BE\BWKHPHSXEOLFB
VHFWRUBDFFRXQWVGRZQORDGVGHEWBKLVWRU\SGI
10 On rising inequality and increasing relative
SRYHUW\LQWKH8.tDQGLQRWKHUGHYHORSHG
QDWLRQVtVHH2(&'7KHUHSRUWQRWHV
that ‘The gap between rich and poor and the
number of people below the poverty line
have both grown over the past two decades.
7KHLQFUHDVHLVZLGHVSUHDGDIIHFWLQJWKUHH
quarters of OECD countries. The scale of the
trend. See, for example, the speech at Cooper
8QLRQ1HZ<RUNRQ0DUFKth2QOLQH
DWZZZEDUDFNREDPDFRP
UHPDUNVBRIBVHQDWRUBEDUDFNBREDPBSKS
20 Citibank quote is from the Financial Times July

21 Citigroup had to be rescued by the US
JRYHUQPHQWRQrd1RYHPEHUZLWKDQ
LQMHFWLRQRIELOOLRQDQGWKHXQGHUZULWLQJ
RIPRUHWKDQELOOLRQLQULVN\DVVHWV
22  )7FRPo:RUOG:LOO6WUXJJOHWR
0HHW2LO'HPDQGp2QOLQHDWZZZIWFRP
FPVVHHDIGGEI
EKWPO
  5HGHßQLQJ3URVSHULW\
1 From Zia Sardar’s ‘thinkpiece’ for the
Sustainable Development Commission
FKDQJHLVPRGHUDWHEXWVLJQLßFDQWp,QWKH 6DUGDU
ßUVWßYH\HDUVRIWKHst century, however, 2  6HHLQSDUWLFXODUWKHoWKLQNSLHFHp
the report reveals that income inequality fell contributions to the SDC project from Tim
LQWKH8. .DVVHU-RKQ2p1HLOO$YQHU
11 3UH%XGJHW5HSRUW+07S 2IIHU+LOGH5DSS=LD6DUGDU
12 6RXUFHGDWDIRUDUHIURPWKH2IßFH DQG.DWH6RSHU2QOLQH
IRU1DWLRQDO6WDWLVWLFVDFFHVVHGDWZZZ DWZZZVGFRPPLVVLRQRUJXNSDJHV
VWDWLVWLFVJRYXN'DWDIRUDUHHVWLPDWHG UHGHßQLQJSURVSHULW\KWPO
RQWKHEDVLVRI1DWLRQDO6WDWLVWLFVGDWDWRHQG 3  7KHUHDUHVWURQJUHVRQDQFHVKHUHZLWK0DU\
6HSWRQOLQHDWZZZVWDWLVWLFVJRY 'RXJODVpXQGHUVWDQGLQJRIFRQVXPHUV
XNFFLQXJJHWDVS"LG ZLWKDQDGGLWLRQ
RI€EQPDGHIRUSXEOLFPRQH\DOUHDG\
contributed to the most recent bank bailout.
+LVWRULFDOGDWDEHIRUHDUHDYDLODEOHIURP
7DEOH%LQWKH3UH%XGJHW5HSRUW
DYDLODEOHDWZZZKPWUHDVXU\JRYXN
htm
13 6HHWKH&,$:RUOG)DFWERRN2QOLQHDW
KWWSVZZZFLDJRYOLEUDU\SXEOLFDWLRQV
as attempting to ‘create the social world and
ßQGDFUHGLWDEOHSODFHLQLWpDQGDOVRZLWK
Peter Townsend’s groundbreaking analysis
of poverty, in which he argued that people
can be said to be poor when their resources
are ‘so seriously below those commanded
by the average individual or family that they
are, in effect, excluded from ordinary living
patterns, customs and activities’ (Townsend
WKHZRUOGIDFWERRNUDQNRUGHUUDQNKWPO
6HHDOVR,0)GDWDDYDLODEOHRQOLQHDWZZZ
VWDWLVWLFVJRYXN,0)
14 See The Economist, Race to the Bottom,
)HEUXDU\th2QOLQHDWZZZ 4 
HFRQRPLVWFRPGDLO\QHZVGLVSOD\VWRU\ 5 
FIP"VWRU\BLG  6
15 6RURVSHWVHT
16 6HH*UHHQVSDQ 7 
17 ,QSDUWLFXODU*UHHQVSDQKLPVHOIDQGVHYHUDO
other free market economists believed
WKDWVHOILQWHUHVWZRXOGUHVWUDLQßQDQFLDO
S5DWKHUWKDQEHLQJDERXWPRQH\
or material possessions as such, Townsend
claimed, poverty is about the inability to
participate actively in society.
6DUGDU
%URZQDQG*DUYHU
6HHIRUH[DPSOH/D\DUG'RODQHWDO
 -DFNVRQD
)URPDSROOXQGHUWDNHQIRUWKH%%&E\*I.
123GXULQJ2FWREHU5HVXOWVDYDLODEOH
DWKWWSQHZVEEFFRXNQROVKDUHGEVS
KLSGIVBBBKDSSLQHVVBJINSROOSGI
LQVWLWXWLRQVIURPWDNLQJH[FHVVLYHULVNV 8 The Living Standard6HQZDVRULJLQDOO\
18 The Economist$VKRUWKLVWRU\RIPRGHUQ published in Oxford Economic Papers, an
ßQDQFHth2FWREHUS economics journal, but is usefully reproduced
6HQDORQJZLWKH[FHUSWVIURPVRPHRI
19 Barack Obama (amongst others) has offered
Sen’s later essays on the subject in Crocker
a convincing historical perspective on this
DQG/LQGHQ6HHDOVR6HQ

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 123

9  $FWXDOO\WKHUHLVVRPHGLVDJUHHPHQWDVWR frailty does have interesting lessons for
whether the concept of utility is about the government policy which I shall return to
‘satisfactions’ received from commodities or later.
WKHGHVLUHVIRUWKHP6HQEXWWKLV 21 6HQS
distinction need not concern us here.
22 $QGDOVRZLWK7RZQVHQGpVFRQFHSWRI
10 7KLVGLVWLQFWLRQOHGWKHHFRQRPLVW.HOYLQ poverty.
/DQFDVWHUWRGHYHORSDVRSKLVWLFDWHG
23 In Development as Freedom6HQIRU
theory of ‘attributes’ which attempted to
example, he argues explicitly that freedom is
JHWURXQGWKHGLIßFXOW\WKDWFRPPRGLWLHV
both the means and the end of development.
are not the same as satisfactions. There is
also an extensive and useful discussion of 24 5REH\QVDQGYDQGHU9HHQ
the relationship between satisfaction and 25 1XVVEDXP
material commodities in modern needs
WKHRULHVVHHIRUH[DPSOH'R\DODQG*RXJK
4 The Dilemma of Growth
0D[1HHI(NLQVDQG0D[1HHI
-DFNVRQHWDO 1  %DXPROHWDOS
11 For a discussion of trends over time in the 2 For more insight on the symbolic role of
8.VHH-DFNVRQDQG0DUNV-DFNVRQDQG
3DSDWKDQDVRSRXORX
12 6HH$QGHUVRQIRUDFRQFLVHDQDO\VLVRI
WKHOLPLWDWLRQVRI*'3DQGDGLVFXVVLRQRI
alternative economic indicators. See Jackson
FRQVXPHUJRRGVVHHHJ%DXPDQ
'RXJODVDQG,VKHUZRRG'LWWPDU
%DXGULOODUG-0F&UDFNHQ2QLWV
relevance for sustainable consumption see
-DFNVRQLQSDUWLFXODUD EEE
DQG0F%ULGHHJIRUDVXUYH\RIWKH 3  %HUJHU
literature on adjusted economic indicators – 4  %HONHWDO
RUJUHHQ*'30RUHUHFHQWO\WKLVLVVXHKDV 5  'RXJODV
EHHQDGGUHVVHGLQGHSWKE\WKH6HQ6WLJOLW] 6 For a more detailed exploration of Indian
&RPPLVVLRQRQWKH0HDVXUHPHQWRI(FRQRPLF attitudes to the environment, see for
Performance and Social Progress set up by H[DPSOH0DZGVOH\(
3UHVLGHQW6DUNR]\DQGGXHWRUHSRUWVKRUWO\
&0(363
13 Defensive expenditures are those incurred
as a result of the need to ‘defend’ against
activity elsewhere in the economy. The costs
7  $VDQWKURSRORJLVW*UDQW0F&UDFNHQ
describes it.
8 Support for the relevance of income as a
factor in wellbeing also emerged from Defra’s
of car accidents and cleaning up oil spills have
this character. Positional expenditures can be
seen as a special case, in which expenditures
– on positional goods – are necessary
mainly to defend our social position. Though
these expenditures makes sense at an
UHFHQWZHOOEHLQJVXUYH\'HIUD7KRXJK
QRWWKHPRVWLPSRUWDQWLQàXHQFHLQFRPH
clearly emerged as a contributing factor in
the survey.
9 Evidence of the importance of relative income
ZDVßUVWKLJKOLJKWHGE\5LFKDUG(DVWHUOLQ
individual level it is perverse to count them
cumulatively as an addition to wellbeing.
14 Data on each of these countries can be
found in Ruut Veenhoven’s ‘World Happiness
'DWDEDVHpDYDLODEOHRQWKHZHEDWZZZ
HXUQOIVZUHVHDUFKKDSSLQHVV
15 6RXUFH:RUOGZDWFK,QVWLWXWH6WDWHRIWKH
:RUOG)LJ5HGUDZQIURPGDWDLQ
,QJOHKDUWDQG.OLQJHPDQ
16 6HH2UPHURG2p1HLOO
17 .DKQHPDQQDQG6XJGHQ
18 Statisticians say the two scales have different
‘orders of integration’. For a more detailed
GLVFXVVLRQRIWKLVLVVXHVHH2UPHURG
19 2IIHU
20 $OWKRXJKWKLVLQVLJKWLQWRDSDUWLFXODUKXPDQ
124 3URVSHULW\ZLWKRXW*URZWK"
)RUPRUHUHFHQWFRQßUPDWLRQVHH
(DVWHUOLQ'RODQHWDO 
10 2IIHU
11 Data from the Health Survey for England,
0DGKDYL%DMHNDO1DWLRQDO&HQWUHIRU6RFLDO
5HVHDUFKFLWHGLQ0DUPRW6HHDOVR
:LONLQVRQ0DUPRWDQG:LONLQVRQ
12 The most notable exception to the rule that
higher social grades show higher satisfaction
is in the domain of community, where the
lower social grades profess themselves more
VDWLVßHGRQDYHUDJHWKDQWKHKLJKHUJUDGHV
13 2IIHURSFLW6RPHKDYHXVHGWKLV
argument to explain the life satisfaction
SDUDGR[PHQWLRQHGLQ&KDSWHU
14 6RXUFH'HIUD'HIUD3HUVRQDO
Communication.
Sustainable Development Commission
15 6HHIRUH[DPSOH/D\DUGQHI 'DWDIRU$XVWULD*HUPDQ\-DSDQDQGWKH
-DPHV 1HWKHUODQGVWDNHQIURP:5,$QQH[
16 Data are taken from statistics compiled for 3RLQWVIRUHVWLPDWHGXVLQJOLQHDU
the Human Development Report, available
RQOLQHDWWKH81'3ZHEVLWHKWWSKGUXQGS
RUJHQVWDWLVWLFV
17 Data are taken from statistics compiled for
the Human Development Report, available
RQOLQHDWWKH81'3ZHEVLWHKWWSKGUXQGS
RUJHQVWDWLVWLFV
8 Source data for individual nations taken
18 Data are taken from statistics compiled for
the Human Development Report, available
RQOLQHDWWKH81'3ZHEVLWHKWWSKGUXQGS
RUJHQVWDWLVWLFV
19 There are some notable recent attempts to
GHYHORSWKLVßHOGRIVWXG\LQSDUWLFXODU+DQV
5RVOLQJpVLQWHUDFWLYH*$30,1'(5SURMHFW
Online at www.gapminder.org
H[WUDSRODWLRQVRYHUWKHSHULRG
'DWDIRUWKH8.IURP6KHHULQ'0&
takes domestically extracted resources, adds
in resource imports and subtracts resource
exports. It doesn’t account for the resources
oHPEHGGHGpLQßQLVKHGDQGVHPLßQLVKHG
goods.
IURP(,$7DEOH+*&2o:RUOG&DUERQ
Dioxide Emissions from the Combustion and
Flaring of Fossil Fuels per Thousand Dollars
RI*URVV'RPHVWLF3URGXFW8VLQJ0DUNHW
Exchange Rates.’ World carbon intensity
is calculated using total emissions data in
7DEOH+&2LQWKH(,$GDWDEDVHDQGZRUOG
*'3GDWDDWFRQVWDQWSULFHVPDUNHW
20 There is a strong correlation (the R value H[FKDQJHUDWHVWDNHQIURP,0)GDWD
RQWKHJUDSKEHWZHHQSHUFDSLWD*'3 DYDLODEOHRQOLQHDWZZZLPIRUJH[WHUQDO
DQGOLIHH[SHFWDQF\EXWDUHODWLYHO\ZHDN SXEVIWZHRZHRGDWDLQGH[DVS[
GHSHQGHQF\WKH[FRHIßFLHQWRQLQFRPH
growth.
21 Data are taken from statistics compiled for
the Human Development Report, available
RQOLQHDWWKH81'3ZHEVLWHKWWSKGUXQGS
RUJHQVWDWLVWLFV
22 )UDQFRHWDO
23 In the conventional model, resources are
often excluded from the equation and the
main dependencies are thought to be on
labour, capital and technological innovation.
24 For more detail on (and critique of) this
9  6RXUFHGDWDIRUWKHSHULRGIRU
IRVVLOIXHOVWDNHQIURP(,$7DEOH
GDWDIRUHVWLPDWHGXVLQJOLQHDU
H[WUDSRODWLRQRYHUWKHSHULRG
Data for COHPLVVLRQVWDNHQIURP(,$
7DEOH+&2
10 6RXUFHGDWDDVIRU)LJXUHQRWHH[FHSW
WKDWOLQHDUH[WUDSRODWLRQVIRU*HUPDQ\DUH
EDVHGRQDVKRUWHUSHULRG
11 These numbers are taken from Druckman
DQG-DFNVRQEDVHGRQUHVXOWVIURP
WKH6XUUH\(QYLURQPHQWDO/LIHVW\OH0$SSLQJ
XQGHUO\LQJPRGHOVHHIRUH[DPSOH%RRWK 6(/0$IUDPHZRUN6LPLODUUHVXOWVIRUWKH
&RPPRQDQG6WDJO$\UHV 8.KDYHEHHQUHSRUWHGIURPRWKHUVWXGLHV
9LFWRUE LQFOXGLQJ&DUERQ7UXVW-DFNVRQHWDO
25 ,)6 -DFNVRQHWDO'HIUD+HOP
D
12 6RXUFHGDWDIURPWKH86*HRORJLFDO6XUYH\
5 The Myth of Decoupling 6WDWLVWLFDO6XPPDULHV2QOLQHVLQFHDW
1  81(33UHVV5HOHDVHRQWKHODXQFKRIWKH KWWSPLQHUDOVXVJVJRYPLQHUDOVSXEV
*UHHQ(FRQRP\,QLWLDWLYH/RQGRQnd FRPPRGLW\VWDWLVWLFDOBVXPPDU\LQGH[
2FWREHU KWPOP\E$YDLODEOHIURPWKH86%XUHDXRI
2  ,3&&7DEOH630 0LQHVGDWDDUFKLYHIRUHDUOLHU\HDUVKWWS
3  ,3&&S PLQHUDOVXVJVJRYPLQHUDOVSXEVXVEPP\E
html
4  6HH)LJXUHLQ(,$
13 6HHIRUH[DPSOHo'LJJLQJIRUYLFWRU\pThe
5  'DWDIURP7DEOH(*LQWKHInternational Economistth1RYS
Energy Annual 2006(,$
14 ,WpVDOVRWUXHWKDWHIßFLHQF\WHFKQRORJLFDO
6  'DWDIURP7DEOH(*LQWKHInternational progress) is itself a driver of economic
Energy Annual 2006(,$ growth. The problem of ‘rebound’ is discussed
7  0HDVXUHGDV'LUHFW0DWHULDO&RQVXPSWLRQ further in Chapter 6.
'0&SHUXQLWRI*'3LQGH[HGWR 15 This relationship is sometimes called the
(QYLURQPHQWDO.X]QHWV&XUYHDIWHUWKH

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 125

 HFRQRPLVW6LPRQ.X]QHWVZKRSURSRVHGWKDW partly because the target is to get down to
DVLPLODULQYHUWHG8VKDSHGUHODWLRQVKLSH[LVWV the lower end of the range of atmospheric
between incomes and income inequality. concentrations, and partly because we might
(YLGHQFHRIWKHLQFRPH.X]QHWVFXUYHLV need reductions in CO to do more work,
DOVRGLIßFXOWWRßQG2(&')RUPRUH particularly at the margin, than reductions in
GLVFXVVLRQRIWKH(QYLURQPHQWDO.X]QHWV other greenhouse gases.
&XUYHK\SRWKHVLVVHHHJ*URVVPDQDQG 23 7KH81ORZPLGGOHDQGKLJKHVWLPDWHVIRU
.UXHJHU-DFNVRQ5RWKPDQ SRSXODWLRQLQDUHELOOLRQELOOLRQ
16 %RRWKSDJHHWVHT DQGELOOLRQ81
17 $\UHVS 24 7KHUXOHRIWKXPEKHUHJLYHV
18 6HH(KUOLFK EXWWKHHUURUWHUPLVVOLJKWO\ODUJHU
7KHDFWXDOYDOXHLVDOLWWOHRYHU
19 6HHIRUH[DPSOH$33*
25 6RXUFHFDOFXODWLRQVIRUWKLVVWXG\XVLQJGDWD
20 ,WIROORZVIURPWKH,3$7HTXDWLRQWKDWWKH
IURP(,$,0)81DQG
average annual growth in emissions ri over
WDUJHWVIURP,3&&
DQ\JLYHQSHULRGVDWLVßHVWKHHTXDWLRQUi
Up[Ua[Ut), where rp is the
average population growth rate, ra is the
average growth in per capita income and rt
is the average growth (or decline) in carbon
LQWHQVLW\0XOWLSO\LQJRXWWKHIDFWRUVRQWKH
right hand side of the equation gives the
DSSUR[LPDWHoUXOHRIWKXPEpUi # rpUaUt.
This approximation works very well for small
percentage changes (a few per cent per
annum). It needs more care in application
when the rates of change exceed this. It
can also be shown that when per capita
income and population rates are positive, the
estimated technology improvement rate is
26 Though the numbers here refer to carbon
emissions, the same basic arithmetic applies
ZKHQFRQVLGHULQJßQLWHUHVRXUFHWKURXJKSXWV
scarce forestry resources or biodiversity
impacts.
27 ,($([HFXWLYHVXPPDU\DYDLODEOHRQOLQH
DWZZZLHDRUJ:(2
28 1XFOHDUSRZHUFRXOGFHUWDLQO\EHDGGHGWR
this theoretical list. But even if the issues
around waste disposal and decommissioning
could adequately be addressed, its
contribution would be severely limited by
resource constraints in the context of a
continually expanding global demand (SDC
always slightly higher than the actual rate. So E
the rule of thumb provides a robust indication
29 (NLQV6HHDOVR(NLQV-DFNVRQ
RIDVXIßFLHQWUDWHRILPSURYHPHQWWRDFKLHYH
YRQ:HL]VDFNHUHWDO
target reductions.
30 6WHUQS[YL
21 The error term in calculating the technological
improvement rate using the rule of thumb in 31 6HHWKH&OLPDWH&KDQJH&RPPLWWHHpVßUVW
WKLVFDVHLVOHVVWKDQ5DWHVRIFKDQJH UHSRUW&&&2Q6WHUQpVUHYLVHGHVWLPDWH
for raZHUHFDOFXODWHGXVLQJZRUOG*'3GDWD VHHo&RVWRIWDFNOLQJJOREDOFOLPDWHFKDQJH
DWFRQVWDQWSULFHVPDUNHWH[FKDQJH GRXEOHVZDUQV6WHUQp*XDUGLDQth June
UDWHVWDNHQIURP,0)DYDLODEOH RQOLQHDWZZZJXDUGLDQFRXN
RQOLQHDWZZZLPIRUJH[WHUQDOSXEVIW HQYLURQPHQWMXQFOLPDWHFKDQJH
ZHRZHRGDWDLQGH[DVS[ scienceofclimatechange For PwC estimate
VHHo7LPHIRUGHHGVQRWZRUGVp*XDUGLDQrd
22 ,3&&HVWLPDWHV7DEOH630WKDWWRVWDELOLVH
DWPRVSKHULFFDUERQDWEHWZHHQDQG
SSPUHVXOWLQJLQDQHVWLPDWHJOREDO
WHPSHUDWXUHWRo&DERYHWKHSUH
industrial average) emissions would need to
SHDNEHIRUHZLWKUHGXFWLRQV
RQOHYHOVE\7KHHTXLYDOHQW
(pro rata) target range for carbon dioxide
HPLVVLRQVLQZRXOGEHVRPHZKHUH
EHWZHHQDQG0W&2. Here it
is assumed that global emissions today are
DURXQG0W&2 and that we would
want to achieve something towards the
ORZHUHQGRIWKDWUDQJHVD\0W&2 –
126
-XO\RQOLQHDWZZZJXDUGLDQFRXN
HQYLURQPHQWMXOFDUERQHPLVVLRQV
climatechange
32 +HOPE6HHDOVR1RUGKDXV
33 $FULWLFDOLVVXHKHUHLVWKHH[WHQWWRZKLFK
climate change investments do or do not
enhance economic productivity. Whilst
investments which improve resource
productivity (for example) may offer positive
returns, and investments in renewables
FRXOGEHFRVWVDYLQJSDUWLFXODUO\DVIRVVLO
fuel costs rise, enhanced early investments
in renewables, in CCS and in ecosystem
3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
 protection may not always be productive in other process design changes (see for
DQDUURZHFRQRPLFVHQVHVHH&KDSWHUDQG H[DPSOH/LHQW]DQG5HD5HD\HWDO
$SSHQGL[ 
8 For an exploration of national trends in labour
6 The Iron Cage of Consumerism productivity and their impact on growth see
0DGGLVRQSHWVHT)RUDGLVFXVVLRQ
1 Extract from ‘Pack behaviour’ an article about
RQSURGXFWLYLW\DWßUPOHYHOVHH)UHHPDQ
the vulnerability of banking giant Santander,
The Economist1RYthS
2  1XPHURXVFRPPHQWDWRUVRYHUWKHFRXUVH
of the last century or more have picked up
on this anxiety, both as an epidemiological
fact and as a systemic aspect of modern life.
1RWDEOHFRQWULEXWLRQVLQFOXGH$ODLQGH%RWWRQ
(PLOH'XUNKHLP)UHG+LUVFK
2OLYHU-DPHV.LHUNHJDDUG
-RQDWKRQ5XWKHUIRUG7LERU
6FLWRYVNL
3  7KHWHUPoLURQFDJHpZDVßUVWFRLQHGE\0D[
DQG6KDZDQGIRU8.ßUPVVHH2XOWRQ

9  1XPEHUVFLWHGLQ9LFWRUD
10 The hypothesis that technological change is
a key driver of growth is a key component
RIWKHVRFDOOHG6RORZ6ZDQJURZWKPRGHO
3URGXFWLRQRXWSXWGHSHQGVRQWKUHHVRFDOOHG
oIDFWRUVRISURGXFWLRQpODERXUFDSLWDODQG
materials. Early growth theories suggested
that growth could be predicted mainly on the
basis of how much labour and capital was
available. But these models failed to account
:HEHULQThe Protestant Ethic and the
for the ‘residual’ growth after expansions in
Spirit of Capitalism to refer to the bureaucracy
capital and labour had been factored in. In
that he saw emerging as a constraint on
HFRQRPLVWV5REHUW6RORZDQG7UHYRU
individual freedoms in capitalism. But there
Swan independently argued that this residual
are also elements in Weber’s work where
could be explained by technological progress
he uses the same concept to characterise
consumerism itself as the following quote
VKRZVo,Q%D[WHUpVYLHZWKHFDUHIRUH[WHUQDO
goods should only lie on the shoulders of the
“saint like a light cloak, which can be thrown
DVLGHDWDQ\PRPHQWr%XWIDWHGHFUHHGWKDW
the cloak should become an iron cage.’ (op
6RORZ6ZDQ
11 6HH6RUUHOOIRUDQLQGHSWKGLVFXVVLRQRI
the rebound effect.
12 6HH-DFNVRQ&KDSWHUIRUDPRUH
GHWDLOHGGLVFXVVLRQRIWKLVSRLQWVHHDOVR
*HRUJHVFX5RHJHQ'DO\
FLWS7KLVWKHPHKDVEHHQSLFNHGXS 13 6HH6FKXPSHWHU)RU
and applied to consumerism more explicitly more detailed discussion of the relevance
E\VRFLRORJLVW*HRUJH5LW]HU
4 For a more formal exposition of the basic
economics here see for example Begg et al
$QGHUWRQ+DOODQG3DSHOO
For its relevance to the environment see
-DFREV'DO\%RRWK9LFWRU
E
5 This is probably the one place where the
standard economic model pays any attention
to the physical reality of keeping activity
of Schumpeter’s work in this debate see
5XWKHUIRUG:DOO%RXGHU
%RRWK
14 &DUORWD3HUH]GHVFULEHVKRZFUHDWLYH
destruction has given rise to successive
‘epochs of capitalism’. Each technological
revolution ‘brings with it, not only a full
revamping of the productive structure, but
eventually a transformation of the institutions
of governance, of society, and even of
going. The gradual degradation of capital
goods is foreseen explicitly by the laws of
thermodynamics.
6 It’s important to note that capital is not the
RQO\UHTXLUHPHQWKHUH0DQDJHPHQWSUDFWLFH
organisational changes and training are also
FULWLFLDOLQLQFUHDVLQJSURGXFWLYLW\LQWKHßUP
LGHRORJ\DQGFXOWXUHp3HUH]
15 For an extensive recent treatment of creative
innovation as the ‘origin of wealth’ see
%HLQKRFNHU
16 /HZLVDQG%ULGJHUHJ
17 For more empirical evidence see, eg
&]VLNV]HQWPLKDO\LDQG5RFKEHUJ+DOWRQ
)UHHPDQDQG6KDZHJ
18 %HON
7 The commonest way to increase capital
productivity has been to increase the capital 19 'LFKWHU
utilisation factor, making sure that machinery 20 6HH%HONHWDO-DFNVRQDQG3HSSHU
and buildings are fully utilised, for example $UPVWURQJDQG-DFNVRQ$UQGWHW
through continuous batch processing and DOHJ

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 127

21 9HEOHQ+LUVFK6HHDOVR%RXUGLHX ZDVRQO\WULOOLRQSHU\HDU&RVWDQ]DHWDO
%DXGULOODUG 
22 &DPSEHOO 11 :RUOG(QHUJ\2XWORRNZZZLHD
23 0F&UDFNHQ&KDSWHU RUJ7H[WEDVHQSVXP:(2680
pdf Reference scenario (business as usual)
24 &XVKPDQS
LQYHVWPHQWLVWULOOLRQ$FKLHYLQJD
25 %RRWK&KDSWHU SSPVWDELOLVDWLRQZRXOGFRVWWULOOLRQ
PRUHWKDWWKLVDQGDFKLHYLQJDSSP
7 Keynesianism and the Green New Deal VWDELOLVDWLRQZRXOGEHDGGDQRWKHU
trillion to this cost.
1  $FKLP6WHLQHU([HFXWLYH'LUHFWRURI81(3
FRPPHQWLQJRQWKHODXQFKRI81(3pV*UHHQ 12
Economy Initiative in the Independent on
6XQGD\th2FWREHU
2 ‘The green lining to this chaos’, leading article
in the Independent on Sundayth October
 13
3  7KLVLVZK\WKH8.*RYHUQPHQWRSWHGIRU 14
DUHGXFWLRQLQ9$7UDWKHUWKDQLQLQFRPH 15
WD[LQWKHßVFDOVWLPXOXVSDFNDJHVHWRXWLQ
1LFKRODV6WHUQpVUHYLHZRQWKH
economics of climate change, famously
DUJXHGWKDWIRUDVOLWWOHDVRI*'3ZH
FRXOGVDYHRXUVHOYHVFRVWVDVKLJKDVRI
*'3ODWHURQ
'%S
3(5,S
6HH*RXJK&KDSWHUDQG$SSHQGL[
$
WKH3UH%XGJHW5HSRUW+07 16 See eg, The Guardianth December
Increases in income tax are more likely to be 2QOLQHDWZZZJXDUGLDQFRXN
put away as savings than reductions in tax on EXVLQHVVGHFJHQHUDOPRWRUV
consumables. Even so, the Treasury estimated gmac
WKDWXSWRDKDOIRIWKH€ELOOLRQVWLPXOXV
17 o863RUQ,QGXVWU\VHHNVPXOWLELOOLRQGROODU
WKURXJKUHGXFHG9$7PLJKWHQGXSDVD
bailout’. Telegraphth-DQXDU\2QOLQH
reduction in credit card bills rather than an
DWZZZWHOHJUDSKFRXNQHZVQHZVWRSLFV
increase in spending.
KRZDERXWWKDW86SRUQLQGXVWU\
4  ,QDGHßQLWLYHVWXG\RIVßVFDOSROLF\86 VHHNVPXOWLELOOLRQGROODUEDLORXWKWPO
economist Cary Brown argues that this was
18 o)DFLQJ*OREDO&KDOOHQJHVVXSSRUWLQJSHRSOH
largely because the federal public spending
WKURXJKGLIßFXOWWLPHVp3UH%XGJHW5HSRUW
stimulus was undermined by spending cuts
/RQGRQ+07UHDVXU\
and tax hikes at local and state level.
19 7KH$PHULFDQ5HFRYHU\DQG5HLQYHVWPHQW
5 3DXO.UXJPDQo)UDQNOLQ'HODQR2EDPD"p
$FWRIt'LVFXVVLRQ'UDIW2QOLQHDW
1HZ<RUN7LPHV1RYHPEHUth
KWWSDSSURSULDWLRQVKRXVHJRYSGI
6 ‘Finding a way out of the Economic Crisis’, 5HFRYHU\5HSRUWSGI
th1RYHPEHU%%&UHSRUWHU1LFN
20 This could include the establishment of ‘green
Robinson’s newslog and interview with Paul
bonds’ to promote sustainable investment,
.UXJPDQLVRQOLQHDWZZZEEFFRXNEORJV
as proposed by Climate Change Capital and
QLFNURELQVRQßQGLQJBDBZD\BRXWB
others.
RIBWKHBHFRQRPLFBFULVLVKWPO
21 %RWKWKH86DQGWKH8.FDULQGXVWU\VXSSRUW
7  &LWHGLQo*OREDO*UHHQ1HZ'HDOt81(3*UHHQ
SDFNDJHVKDYHHOHPHQWVRIWKLV€ELOOLRQ
Economy Initiative’. Press Release at London
RIWKH8.SDFNDJHLVIRULQYHVWPHQWLQWKH
/DXQFKnd2FWREHU2QOLQHDWZZZ
development of green vehicles. See for
XQHSRUJ'RFXPHQWV0XOWLOLQJXDO'HIDXOWDV
H[DPSOHKWWSQHZVEEFFRXNKL
S"'RFXPHQW,'  $UWLFOH,'  O HQ
XNBSROLWLFVVWP
8  *OREDOO\HQYLURQPHQWDOLQGXVWULHVDUHZRUWK
22 The scale of the investment needs to achieve
WULOOLRQGROODUVDOUHDG\DQGDUHOLNHO\WR
8.FDUERQUHGXFWLRQWDUJHWVZDVVSHOOHG
H[SDQGE\DWOHDVWLQWKHQH[WGHFDGH
RXWLQWKH&OLPDWH&KDQJH&RPPLWWHHpVßUVW
9  *1'S UHSRUW&&&SXEOLVKHGLQWKHVDPH
10 ,QDSDSHUSXEOLVKHGLQHFRORJLFDO week as the PBR.
HFRQRPLVWV5REHUW&RVWDQ]DDQGKLV 23 6'&
colleagues estimated that the value of global
24 +07
HFRV\VWHPVHUYLFHVDPRXQWHGWRDURXQG
WULOOLRQSHU\HDU$WWKHWLPHWKHJOREDO*'3 25 ,)6

128 3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission

26 7KRXJKPRVWSHRSOHDVVRFLDWH.H\QHVpQDPH
with using public sector money to stimulate
economic demand in times of crisis, his
LQàXHQFHRQWRGD\pVPDFURHFRQRPLFVUXQV
much deeper than that and provides the basis
for the idea that high street spending is the
NH\WRHFRQRPLFVWDELOLW\$V-DPHV$KLDNSRU
and demand are balanced. If demand falls
below supply in a given year, companies
hold more in stocks and set these off against
future demand. If demand rises above supply
they draw down stocks and build them up
next year.
12 This is illustrated in slightly more complexity
SRLQWVRXWo)XQGDPHQWDOWR.H\QHVpV LQ$SSHQGL[
development of the multiplier concept.. is the
13 1HWH[SRUWVDUHWKHVXPRIH[SRUWVPLQXV
YLHZWKDWLQVXIßFLHQWFRQVXPSWLRQVSHQGLQJ
LPSRUWV1RWHWKDWWKHàRZVFRQWULEXWLQJ
is the principal limitation on the growth
WR*'3DVVKRZQLQ$SSHQGL[RPLWQHW
of aggregate demand, hence, income and
exports, since the diagram doesn’t show the
employment creation.’
foreign sector.
27 *1'S
14 This form of production function is called a
28 2(&' &REE'RXJODVSURGXFWLRQIXQFWLRQ
15 7KHGp$OHVVDQGURPRGHOGLVFXVVHGODWHULQWKH
8 Macroeconomics for Sustainability chapter has this form. For other attempts see
1  %RRWKS $\UHVDQGYDQGHQ%HUJK&RPPRQDQG
6WDJO&KDSWHUVDQG
2  $\UHV
16 This is one of the reasons why it was so easy
3  %(556HHDOVR-DFNVRQ
QRWWRVHHWKHßQDQFLDOFULVLVRIFRPLQJ
4  -DFNVRQHWDO'UXFNPDQDQG-DFNVRQ *URZWKLQWKH*'3ZDVVWURQJHUWKDQIRUHFDVW
 IRUDQG
5 This idea has a long pedigree (Jackson and 17 6HH&RPPRQDQG6WDJO'DO\
-DFREVHJDQGZDVWKHPRWLYDWLRQIRU
WKH8.*RYHUQPHQWpVFDOOLQWKH(QHUJ\
White paper for a ‘Supplier Obligation’ – a
mechanism for capping carbon emissions
associated with sales from energy suppliers.
(NLQV&RVWDQ]D/DZQ)RU
DQRYHUYLHZVHH-DFNVRQDQG0F%ULGH
See also the interim report of President
6DUNR]\pVQHZO\HVWDEOLVKHG&RPPLVVLRQRQ
WKH0HDVXUHPHQWRI(FRQRPLF3HUIRUPDQFH
6  $FWXDOO\WKHUHpVDQRWKHUIXQGDPHQWDO DQG6RFLDO3URJUHVV&0(363
question here which is, even if you can, 18 The model is described in more detail in a
should you make money from all these WKLQNSLHFHKHSUHSDUHGIRUXV9LFWRUD
WKLQJV"'RHVWKHLQFUHDVLQJFRPPHUFLDOLVDWLRQ DQGLQKLVUHFHQWERRN9LFWRUE
of the simpler, more creative bits of our
19 3RYHUW\LVWUDFNHGXVLQJWKH8QLWHG1DWLRQpV
lives change the nature of the activities
Human Poverty Index. The model simulates
WKHPVHOYHVIRUWKHZRUVH"7KHUHDUHFHUWDLQO\
the ability to affect this index through
some who argue that it does. Jonathan
redistributive policies and through health
5XWKHUIRUGpVWKLQNSLHFHIRUWKH6'&
cites Paulo Virno’s argument that post–Fordist
economic activity is focused on the ‘life of the
mind’.
7  'DO\S
8  0LOOFLWHGLQ'DO\&KDSWHU
.H\QHV
9  'DO\
10 To make the sums add up, the expenditure
PHWKRGRIDFFRXQWLQJIRU*'3DOVRLQFOXGHV
net exports (i.e. exports minus imports) of
traded goods.
11 7KHQDWLRQDODFFRXQWVZKHUH*'3LV
computed annually) tend to ‘force’ an
HTXLOLEULXPEHWZHHQWKHGLIIHUHQW*'3
measures by making adjustments for stocks
DQGLQYHQWRULHVKHOGE\ßUPV7KLVLVDOVRRI
course the practical means by which supply
spending. The model also contains a forestry
submodel, which looks at changes in
forestation. Since this is less relevant for the
8.LWLVQRWGLVFXVVHGIXUWKHUKHUH
20 7KH7RURQWR$JUHHPHQWVLJQHGLQZDV
DQLQIRUPDOSUHFXUVRUWRWKH.\RWR3URWRFRO,W
set a target for reducing carbon emissions in
GHYHORSHGFRXQWULHVE\EHIRUH1RW
a single signatory achieved the target.
21 6HHIRUH[DPSOH%RVFK+D\GHQ
*ROGHQDQG)LJDUW
22 *RU]/RUGHJ
23 )RUFRPSDULVRQ8.FRQVXPSWLRQZDV
RI*'3LQ3XEOLFVSHQGLQJZDV
JURVVLQYHVWPHQWZDVDQGQHWH[SRUWV
ZHUH
24 France has now more or less abandoned its
KRXUZHHNSROLF\%RXGHU

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 129

25 %RVFKS ‘aloneness’ rather than ‘loneliness’. But as an
26 6HHGp$OHVVDQGURHWDO$NH\IHDWXUH indicator of the degree of fragmentation of
of this model is the production function communities it is a useful tool.
which includes explicit reference to both 5  'RUOLQJHWDO0DUN(DVWRQpV%%&UHSRUW
energy resources and the capital stock. It also
DVVXPHVQRQVXEVWLWXWDELOLW\EHWZHHQWKHVH
two.
27 6HH&KDSWHUDQG,($
28 $VZLWKDOOPRGHOOLQJH[HUFLVHVLWLVZLVH
to view the results of these studies with
caution. Both models have some limitations.
7KHPDLQOLPLWDWLRQRIWKHGp$OHVVDQGUR
study is that it is not calibrated against
LQFOXGLQJ3URI'RUOLQJpVTXRWHLVDWKWWS
QHZVEEFFRXNKLXNVWP7KH
index measures a weighted average of the
QXPEHUVRIQRQPDUULHGDGXOWVRQHSHUVRQ
households, recent inhabitants (people who
have moved to their current address within
the last year) and people renting privately.
6 Increased divorce rates have themselves been
linked to declining social integration. See
historical data. For this reason, the exact
VL]HRIWKHoVXVWDLQDELOLW\ZLQGRZpLVGLIßFXOW
to ascertain. The Victor study is calibrated
against Canadian econometric data, but
also has some limitations, principally the
absence of a monetary sector in the model.
‘For simplicity it is assumed that the Bank of
HJ6KHOWRQ
7 2QPRELOLW\DQGODERXUSURGXFWLYLW\VHHo/DFN
of labour mobility hurts EU productivity’. New
Europeth6HSWHPEHU2QOLQHDW
ZZZQHXURSHHXDUWLFOHVSKS
8  6HHQHI
9  6PLWKS
Canada, Canada’s central bank, regulates the
PRQH\VXSSO\WRNHHSLQàDWLRQDWRUQHDUWKH 10 6HQS
WDUJHWOHYHORISHU\HDUp9LFWRUD 11 See for example the groundbreaking work
&KDSWHU of the Young Foundation’s Local Wellbeing
29 ,QDGGLWLRQDVZHVKRZLQ&KDSWHUWKH SURMHFWZZZ\RXQJIRXQGDWLRQRUJXN
state is an absolutely vital ‘commitment KRPHWKHPHVORFDOZHOOEHLQJ
device’ for achieving sustainability. 12 6RSHU
30 6HH&RVWDQ]DHWDO81(3'HIUD 13 6HHDOVR%XQWLQJRQZRUNOLIHEDODQFH
 14 .DVVHU
31 7KLVFODLPLVPDGHH[SOLFLWO\LQWKH8.*1' 15 6HH+DPLOWRQ
*URXSUHSRUW*1'S 16 On downshifting and voluntary simplicity see
32 Interestingly, this problem has the same (W]LRQL(OJLQ+DPLOWRQ
basic structure as the problem of funding 6FKRU:DFKWHODPRQJVWPDQ\
public sector spending in a welfare economy. RWKHUVIRUDGHWDLOHGH[DPLQDWLRQRIWKH
Investment in social goods may less pros and cons of the idea of living better
SURGXFWLYHLQWKHVKRUWWHUPDQGPDNHV E\FRQVXPLQJOHVVVHH-DFNVRQEIRU
no direct contribution in a conventional VRFLDOSV\FKRORJLFDOHYLGHQFHVHH.DVVHU
production function (except perhaps in 
maintaining the labour supply), but is 17 5LFKDUG*UHJJ*DQGKLpVVWXGHQWRULJLQDOO\
nonetheless essential for social welfare and published his paper on ‘Voluntary Simplicity’
LQGHHGWKHIRUWKHORQJWHUPVXVWDLQDELOLW\ in the Indian Journal Visva Bharati Quarterly.
RIWKHHFRQRP\*RXJKVHHHVSHFLDOO\
&KDSWHUDQG$SSHQGL[$
9 Flourishing – within limits
1 Ben Okri, ‘Our false oracles have failed. We
need a new vision to live by.’ The Timesth
2FWREHU
2  3XWQDP
3  5XWKHUIRUG1RUPDQHWDO
Jonathan Rutherford is from the leftwing
WKLQNWDQN&RPSDVV-HVVH1RUPDQIURPWKH
rightwing thinktank Policy Exchange.
4 Strictly, speaking this is an index of
130
18 (OJLQ
19 &VLNV]HQWPLKDO\L
20 6HHWKH)LQGKRUQ)RXQGDWLRQ9LVLRQ
LQ$FWLRQ$QQXDO5HSRUWDYDLODEOH
RQOLQHDWZZZßQGKRUQRUJDERXWBXV
DQQXDOUHSRUWSGI
21 On Plum Village see www.plumvillage.org
22 2QWKH6LPSOLFLW\)RUXPVHHZZZ
VLPSOLFLW\IRUXPRUJLQGH[KWPORQ
'RZQVKLIWLQJ'RZQXQGHUVHHKWWS
GRZQVKLIWLQJQDWXUDOLQQRYDWLRQRUJLQGH[
html
3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
23 $XVWUDOLDQGDWDIURP+DPLOWRQDQG0DLO VWDWLVWLFVFUHGLWFDUGLQGXVWU\IDFWVDQG
86GDWDIURPWKH0HUFN)DPLO\)XQG SHUVRQDOGHEWVWDWLVWLFVSKS
SROO6HHDOVR+XQHNH+DPLOWRQ 6  6FKZDUW]
6FKRU
7 It also strikes the balance between novelty
24 6HH.DVVHU%URZQDQG.DVVHU and tradition differently.
*DWHUVOHEHQHWDO
8  7KLVßQGLQJZDVßUVWGHPRQVWUDWHGIRUPDOO\
25 6HHIRUH[DPSOH$UPVWURQJDQG-DFNVRQ
%HGIRUG(YDQVDQG$EUDKDPVH
3HSSHUHWDO+REVRQ
26 -DFNVRQE6'&F
27 On wage disparities see, for example Bradley
2QGLVFRXQWHGORQJWHUPFRVWVVHH
6WHUQ2QVLJQDOOLQJVWDWXVVHH6FKRU
%XQWLQJ2QWKHoVKRSSLQJ
JHQHUDWLRQpVHH1&&
28 ‘Enormous shopping complex opens’. BBC
QHZVth6HSWHPEHU2QOLQHDW
KWWSQHZVEEFFRXNKLHQJODQG
ORQGRQVWP
29 2IFRXUVHLWLVGLIßFXOWIRUJRYHUQPHQWWR
E\WKHJDPHWKHRULVW5REHUW$[HOURG
9  6HH+DOODQG6RVNLFH7KHDXWKRUV
DOVRLGHQWLßHGDJURXSRIFRXQWULHVZKLFK
clustered together in a form they called
0HGLWHUUDQHDQFDSLWDOLVP
10 $EVROXWHOHYHOVRIXQHPSOR\PHQWLQ*HUPDQ\
DUHFRQVLGHUDEO\KLJKHUWKDQLQWKH8.
DQGKDYHEHHQVLQFH*HUPDQUHXQLßFDWLRQ
although they have been coming down
steadily over the last decade.
11 'DWDIRU86$*HUPDQ\DQG'HQPDUNIURP
WKH,/2RQOLQHVWDWLVWLFDOGDWDEDVHDWKWWS
ODERUVWDLORRUJ7KH8.GDWDRQWKH,/2
database (as in several other international
do this, while economic stability relies on
LQFUHDVLQJFRQVXPSWLRQ*RYHUQPHQWLWVHOILV
GHHSO\FRQàLFWHGKHUHDQGFDQRQO\UHVROYH
this by addressing the macroeconomics of
sustainability.
30 -DPHV$SSHQGL[DQG
10 Governance for Prosperity
1  )URPDQDUWLFOHIRUWKH+XIßQJWRQ3RVWE\
Peter Hall – Professor of European Studies
DW+DUYDUGDQGFRDXWKRURI9DULHWLHVRI
&DSLWDOLVP2QOLQHDWZZZKXIßQJWRQSRVW
FRPJOREDOHFRQRPLFFULVLV
OLBQBKWPO
2 This question was evident for example in the
clash during one of the Redefining Prosperity
workshops between Jonathan Rutherford
(from the political left) arguing for more
VWDWHDQG-HVVH1RUPDQIURPWKHSROLWLFDO
right) arguing for less state. For a useful – and
still relevant – discussion of the ambivalent
political economy of the welfare state see
GDWDEDVHVLVZRHIXOO\RXWRIGDWH7UHQGV
IRUWKH8.DUHFDOFXODWHGXVLQJ/DERXU)RUFH
6WDWLVWLFV2QOLQHDWZZZVWDWLVWLFVJRYXN
67$7%$6(
12 6HHHJ(VWHYH]$EHHWDO&XOSHSSHU

13 6HH.DVVHUpVSUHVHQWDWLRQWRD5(62/9(
VHPLQDUDWWKH8QLYHUVLW\RI6XUUH\1RYHPEHU
2QOLQHDWZZZVXUUH\DFXN5(62/9(
14 For example, the unemployment rate in
Canada (a liberalised market economy) has
fallen slightly, at least until the end of the
period while unemployment in Sweden (a
coordinated market economy) has risen by
almost a quarter.
15 2QOLQHDWZZZKXIßQJWRQSRVW
FRPJOREDOHFRQRPLFFULVLV
OLBQBKWPO
16 For background on the evolution of social
EHKDYLRXUVVHH:ULJKW6REHUDQG
:LOVRQ$[HOURG
17 This tension is what the historian Polanyi
*RXJK
3  o5HGHVLJQLQJJOREDOßQDQFHpThe Economist
OHDGHU1RYHPEHUthS
4  6HH2IIHU
5  2QSDUHQWKRRGVHH2IIHU&KDSWHU
RQVDYLQJVUDWHVVHHo6DYLQJLQWKH:RUOG
6W\OL]HG)DFWVp:DVKLQJWRQ'&:RUOG%DQN
DYDLODEOHRQOLQHDWZZZZRUOGEDQNRUJ
UHVHDUFKSURMHFWVVDYLQJVVDYLQZOGKWP
2QFRQVXPHUGHEWVHH&UHGLW&DUG,QGXVWU\
)DFWVDQG3HUVRQDO'HEW6WDWLVWLFV
FDOOHGWKHoGRXEOHPRYHPHQWpRI
society.
18 ‘People power vital to climate deal’.
*XDUGLDQth'HFHPEHU2QOLQHDW
ZZZJXDUGLDQFRXNHQYLURQPHQW
GHFHGPLOLEDQGFOLPDWHSROLWLFV
environment
19 6HHIRUH[DPSOH'R\DODQG*RXJK
+HOOLZHOO/D\DUG
RQOLQHDWZZZFUHGLWFDUGVFRP

Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 131

11 Transition to a sustainable economy Appendix 2
1 From a speech on ‘shared prosperity’ that Towards a Sustainable Macro-Economy
Obama made in Janesville, Wisconsin, 1  7KLVLVVLPLODUWRWKHEDVLFIRUPRIWKHPDFUR
)HEUXDU\thZZZEDUDFNREDPD
FRPUHPDUNVBRIBVHQDWRUB
EDUDFNBREDPBSKS
2  6HHHJZZZFDPHFRQFRPVXLWHB
HFRQRPLFBPRGHOVPGPHKWP
3  6KDULQJWKHZRUNLVDOVRDQHVVHQWLDOSUH
UHTXLVLWHIRUEXLOGLQJDVXVWDLQDEOHPDFUR
HFRQRPLFPRGHOLQ3HWHU9LFWRUpVD
study of the Canadian economy, although he
does not constrain the production function
LQGLFHVWRVXPWR
2 Investment is shown in the table in each
target and condition dimension. In practice, it
is most likely that some targets (ecosystem
HFRQRP\VHH&KDSWHU maintenance eg) will only be undertaken
4  6HHIRULQVWDQFH78&6HPLQDUUHSRUW2QOLQH XQGHUVSHFLßFFRQGLWLRQVHJSXEOLFVHFWRU
DWZZZWXFRUJXNWKHBWXFWXFI social).
FIP"UHJLRQDO  3 For example, the Surrey Environmental
/LIHVW\OH0DSSLQJ6(/0$IUDPHZRUNLVDQ
HQYLURQPHQWDOLQSXWRXWSXWPRGHOWKDWFDQ
Appendix 1
be used to attribute the carbon emissions
The SDC Redefining Prosperity3URMHFW DQGRUUHVRXUFHVDVVRFLDWHGZLWKGLIIHUHQW
1 Redefining Prosperity6'&LV ßQDOGHPDQGFDWHJRULHV'UXFNPDQHWDO
DYDLODEOHRQWKH6'&ZHEVLWHZZZVG 'UXFNPDQDQG-DFNVRQ-DFNVRQHW
commission.org.uk DO
2 Securing the Future'HIUDLV
DYDLODEOHRQWKH*RYHUQPHQWpVVXVWDLQDEOH
GHYHORSPHQWZHEVLWHZZZVXVWDLQDEOHB
development.gov.uk
3  $UHSRUWRQWKLVZRUNtRedefining Progress
4  7KHSDXFLW\RIEDVLF8.,2VWDWLVWLFVLVQRZ
ZHOONQRZQ2IßFLDODQDO\WLFDOWDEOHVIRU
WKH8.KDYHQRWEHHQSURGXFHGVLQFH
in spite of a commitment by the Labour
*RYHUQPHQWWRSURGXFHWKHPDQQXDOO\IURP
6'&DtLVDOVRDYDLODEOHRQWKH6'&
ZHEVLWHZZZVGFRPPLVVLRQRUJXN
4  -DFNVRQDQG$QGHUVRQ
132
DQGDUHTXLUHPHQWLQ(8OHJLVODWLRQ
to submit updated analytical tables to
(XURVWDWRQDWOHDVWDßYH\HDUO\EDVLV/LNH
WKHDEVHQFHRIXSWRGDWHXQHPSOR\PHQW
statistics in the ILO database, this failure of
WKH8.*RYHUQPHQWWRWDNHHVVHQWLDOVRFLDO
and environmental indicators seriously is
positively embarrassing given its claims for
international leadership in sustainability.
3URVSHULW\ZLWKRXW*URZWK" Sustainable Development Commission
Sustainable Development Commission 3URVSHULW\ZLWKRXW*URZWK" 133
 Published by the Sustainable Development Commission†0DUFK

$UW'LUHFWLRQAndy Long, Design 3RVLWLYH and Andy Long

Photography © Jerome Dutton &RYHUDQGSDJHV

Andy Long © SDC SDJHV
© Marcus Lyon/BioRegional SDJH