Last updated on April 20, 2014 at 8:28 EDT

Avoiding Self-Organized Extinction: Toward a Co-Evolutionary Economics of Sustainability

April 26, 2007

By Gowdy, John

Key words: Biodiversity, climate change, co-evolution, collapse, generalized Darwinism, Walrasian economics, well-being, world systems analysis


The critical problems that scientists warned about decades ago are now upon us. There is a near universal consensus that global warming is human-caused and that its effects are now accelerating. Biodiversity loss and ecosystem disruption is now well-documented. The global connections between social disruption, resource use and environmental degradation are now all too familiar. This information is all the more disturbing in view of the well-documented collapse of scores of past civilizations whose cultural patterns of behaviour have been described as ‘self-organized’ extinction. Policies to deal with the issues of sustainability have been hampered by a one- dimensional economic theory that has until recently dominated pubic discourse. Using the concept of ‘generalized Darwinism’, this paper focuses on the contributions a revitalized science of economics can bring to the sustainability debate. It ends with a cautiously pessimistic assessment of the prospects for sustainability.

True crises are those difficulties that cannot be resolved within the framework of the system, but instead can be overcome only by going outside of and beyond the historical system of which the difficulties are a part.’

– Immanuel Wallerstein, World Systems Analysis (2004: 76)

‘No matter how cynical you get it’s hard to keep up.’ Woody Allen


Most current analyses of sustainability focus on one particular thing to be sustained, for example, particular ecosystems or economies, the human population or biodiversity. Sustainability for most economists means sustaining the output of market goods and services (Solow 1993). Biologists are concerned with maintaining the planet’s biological diversity and supporting ecosystems. Others are concerned about a deteriorating climate, continuing rapid population growth, the widening gap between rich and poor, disintegrating social institutions, and now the destabilizing effects of political and religious terrorism. It is increasingly clear, however, not only that these crises are interconnected, but also that they have the same root cause in a particular set of human cultural institutions and belief systems now dominating the planet. This core set of beliefs – radical individualism, insatiable wants, natural order – have a history going back hundreds if not thousands of years (Sahlins 1996). In the mid-twentieth century these beliefs became embodied in Walrasian economic theory. I use the term Walrasian welfare economics to describe the school of economic thought that came to dominate economic theory in the decades during and following WWII. It is also known as general equilibrium theory, The New Welfare Economics, or neo-Walrasian economics. The general term ‘neoclassical’ is used by most critics of economics, but today many economists who call themselves neoclassical are strongly critical of the Walrasian system (for discussions of the demise of Walrasian economics, see Bowles and Gintis (2000) and Koning and Jongeneel (1997)).

The basic tenets of Walrasian economics include the notions of ‘economic man’, social welfare being equated to market consumption, and efficiency as a scientific (‘positive’) goal. These notions drive the call for more economic growth, the global expansion of markets, and the complete commodification of nature as solutions to all social and environmental problems. The prevailing view of world leaders today, echoing the belief patterns in the declining periods of numerous failed human societies, is that the only way to deal with mounting social and environmental problems is to intensify the patterns of behaviour that led us to our current environmental and social crises (Diamond 2005; Turchin 2005). This optimistic view is in contrast to the many empirical studies showing that intensification cannot be a perpetual process. Eventually, escalating crises force paradigm changes in socio-economic systems.

This view is being challenged from within the economics profession by empirically-based models addressing the complexity of human behaviour and economic production. The dominant view is also being challenged by a recent but growing body of work examining the historical dynamics of entire societies (Diamond 2005; McDaniel and Gowdy 2000; Turchin 2005; Wallerstein 2004). This work looks at the co-evolution of individual and social behaviours (Bowles et al. 2002) as well as the co-evolution between human systems and the natural environment they ultimately depend on (Diamond 2005; Gowdy 1994; Richerson and Boyd 2005).

Before we define how the term co-evolution is used it is worthwhile to consider the magnitude of the conflict between the current human and natural systems and the resulting crisis in human sustainability. The effects of human numbers and economic activity on the rest of the planet are truly staggering. Most are familiar to readers of this journal but recent evidence about two immediate crises – climate change and biodiversity loss – is worth a quick review.

It is well-established that the increase in CO^sub 2^ levels from about 280 ppm in the 1800s to 380 ppm today is due primarily to human economic activity. This increase is unprecedented during the lifetime of our species. CO^sub 2^ levels have not been above 300 ppm for at least 400,000 years. During the Holocene (the past 11,000 years) CO^sub 2^ levels did not fluctuate more than 20 ppm, until the birth of the industrial revolution. Especially alarming is the sharp increase in CO^sub 2^ levels in recent years. In recent decades the increase in CO^sub 2^ levels has been about 1.5 ppm a year. But in 2002, 2003 and 2004 the increase jumped by 2.1 ppm, 2.5 ppm and 3.0 ppm, respectively (Brown 2004, atmospheric CO^sub 2^ peaks in March and April). The increase in the peak for April 2005 returned to 1.5 ppm so the long-term trend is unclear, but even with no surprises, climate change models show an increase in average world temperature of between 3.0C and 5.5C by the end of this century. Recent modeling suggests that increases in the upper part of this range may be the most likely (Hansen et al. 2005). Climate change of this magnitude is particularly alarming given the importance of climate deterioration in the collapse of past human societies (Diamond 2005).

Along with climate change, another recurring factor in the collapse of past societies is the humaninduced loss of renewable biological resources. In the past, human-induced biodiversity loss was confined to local ecosystems such as Easter Island and Mangareva. Today, catastrophic species extinction is global. The average rate of species extinction over the past hundred million years has amounted to only a few species per year. New species evolve at a rate of about one per year. It is estimated today that the extinction rate is between 300-3,000 species per year. This rate is accelerating rapidly and we have built up an ‘extinction debt’ that will push this rate up to tens of thousands per year (Tilman et al. 1994). According to some estimates, over the next century as many as half of the Earth’s species will either become extinct or will exist only as non-functional remnants (Meyer 2004). A number of biologists have reached the conclusion that nothing can now be done to change this reorganization of the planet’s biomass (Terbourgh 1999). Life on Earth will continue to be abundant but it will be a collection of homogenized species selected to be compatible with the global human presence. Human activity in the last 100 years or so has set the course of evolution for the next million years at least.

The human impact on the planet’s physical and biological systems was intensified by several orders of magnitude with the widespread adoption of agriculture some 8,000 years ago. This impact reached another level of intensity with the advent of the industrial revolution some 200 years ago. This revolution in productive capacity and social organization has been supported by a particular set of cultural myths and values glorifying material consumption and economic growth. Over the course of the twentieth century these key myths of Western culture became embodied in economic theory. Yet developments in contemporary economic theory offer hope. Dissatisfaction with the basic premises of economic theory have been commonplace since neoclassical economics appeared over 100 years ago, but they have had little or no impact. Recently, however, the tide is beginning to turn largely because the most telling criticisms of Walrasian theory are coming from within the mainstream of the economics profession (Kahneman 2003; Stiglitz 1994) and, most importantly, they are empirically-based which makes them impossible to dismiss out of hand.

The concept of co-evolution used in this paper simply refers to the historical and evolutionary connections between individuals, human social groups and the natural world. To most noneconomists these connections are self-evident. B\ut economic policy is driven by a worldview that ignores these connections. Standard theory assumes that consumption and production can be analyzed ahistorically and without reference to social and environmental context. Experimental economics, including behavioural economics and game theory, is revolutionizing the way economists see the world and role of the human species in it.

Rejecting the Walrasian straightjacket that enveloped economics in the mid-twentieth century does not constitute a total rejection of economic theory. A return to the basic principles that still define economics can make the field relevant once again to the sustainability debate. The core principles that defined classical economics are: the importance of individual incentives, production as a physical process limited by natural resources, and the recognition that individual behaviour is the key determinant of social outcomes. Building on these insights can shed light on the prospects for environmental, economic and social sustainability. The current move toward economic realism has opened the door to a co- evolutionary perspective by revealing the social and evolutionary nature of consumption and production.


In recent decades the theoretical foundations of Walrasian economics have all but collapsed. Its two pillars are a self- regarding model of behaviour (economic man or Homo economicus) and an equally atomistic model of production (perfect competition) that ignore the social and environmental foundations of real economic activity. These two building blocks are essential to the general equilibrium framework supporting contemporary cost-benefit analysis and economic prescriptions for sustainability. Both pillars have been demolished by theoretical intractabilities and empirical falsification (Gowdy 2004). Without Homo economicus and perfect competition it cannot be demonstrated that competitive market outcomes are efficient (the First Fundamental Theorem of Welfare Economics) and therefore intervention to correct ‘market failure,’ that is to establish the ‘socially optimal’ efficient outcome (the Second Fundamental Theorem of Welfare Economics), has no theoretical basis. This means that there is no theoretically justifiable basis for standard costbenefit comparisons of even strictly economic sustainability (Gowdy 2004, 2005).

Three recent developments within mainstream economics have great relevance for a coevolutionary perspective on the sustainability debate. These are (1) the rejection of radical individualism embodied in economic man, (2) growing dissatisfaction with the neoclassical depiction of the production process, and (3) the recognition that human well-being (utility) cannot be equated with market consumption.

Consumption is a social process

The key assumption that holds the Walrasian system together is that human behaviour is self-regarding. If individual choices are influenced by others in an interactive way the conditions for optimal allocation in the Walrasian systems cannot be established. There will not be a determinate solution to the mathematical model of consumer behaviour because the optimal level of consumption for each consumer depends on the consumption level of others (Henderson and Quandt 1980, 297). The Walrasian system has been clearly demonstrated to be theoretically inconsistent; welfare judgments cannot be made without considering the social context of human decision-making (Ng 1997). If the self-regarding premise is dropped, the whole logical and mathematical superstructure of the neo- Walrasian system collapses.

The current revolution in the economic theory of behaviour began when economists started to empirically test their theory’s most basic assumptions. When this was done in cooperation with other disciplines the Walrasian model failed its own test of success – it failed to predict real economic behaviour. Even the most sacred ‘laws’ of supply and demand are now subject to intense scrutiny, putting into question the obsession of economists with price incentives as the key to optimizing social welfare. Incentives do matter, but not only price incentives. In fact, price incentives may not be the most efficient means to change market behaviour and, at times, can have quite perverse consequences (Frey 1997). Rather than assume fixed and independent preferences that respond in predictable ways to price signals, economists have begun to stress the pervasiveness of other-regarding preferences and the importance of an individual’s personal history, interaction with others, and the social context of the individual choice.

The fact that preferences are social also calls into question the standard economic concept of rationality, that is, individuals on average form correct beliefs about the outside world including the behaviour of others. On the contrary, we know that most people form their beliefs based on everything from imperfect information to cognitive limits to religious indoctrination. Aggregate behavioural outcomes may be influenced by the presence of a small number of selfish or altruistic individuals (Camerer and Fehr 2006). New economic models of other-regarding behaviour and the recognition that individual incentives are context-dependent can offer a more realistic foundation for sustainability research and policy than the standard economic model.

Production is a biophysical activity

The classical economists (Marx, Malthus, Mill, Ricardo, Smith) recognized that production is a physical process using capital, labour and natural resources. But the fact that production requires physical inputs (natural resources and labour) was pushed aside and, over the course of the twentieth century, the categories ‘land’ and ‘labour’ were more or less banished from the theory of production. Everything became a kind of capital with the emphasis on ‘technology’, an amorphous concept more like the abstraction ‘utility’ than the reality of physical production. This is clear in the notion of the neoclassical production function. Consider the widely used Cobb-Douglas production function Q = AK^sup α^L^sup 1-α^ where 1 >α > 0. The parameter A is considered to be ‘pure technological change’, independent of productive inputs. Technology in the neoclassical system is some sort of amorphous force than can increase the productive power of the economy without limit. If the usual assumption is invoked that there are no diminishing returns to technology, there is no need to worry about the scarcity of productive inputs. Any particular scarcity can be overcome by applying more of the mysterious force called technology. So in the Walrasian model, not only is utility independent of society and the biophysical world, so is production. Not only is the agent of consumption a ‘homogeneous globule of desire’ (Veblen 1898:389), that desire can be satisfied by a ‘homogeneous globule of technology.’

The standard response of economists to environmental threats is to insist that technology and substitution will solve any problem. Typical is Easterbrook’s (2005) review of Jared Diamond’s book Collapse. Easterbrook’s technological utopianism borders on the hysterical: ‘Above us in the Milky Way are essentially infinite resources and living space. If the phase of fossil-driven technology leads to discoveries that allow Homo sapiens to move into the galaxy, then resources, population pressure and other issues that worry Diamond will be forgotten.’

The problem of accounting for nature in standard economics is exacerbated by the fact that standard economics has no real theory of production. Neoclassical production theory is not a model of production but rather a theory of how a given amount of resources are allocated. Neoclassical growth theory models merely allocate growth rates of inputs, or ratios of growth rates, rather than the inputs themselves. These models do not depict production in any engineering, physical sense. Following the approach of Walras, they ignore time as an unfolding historical phenomenon.

Ecological economists have made progress in describing the relationship between economic activity, social institutions and environmental features using input-output analysis and systems of social and natural resource accounts. The extended version of input- output analysis, the Social Accounting Matrix (SAM), gives a concise view of economic activity and the interconnections between economic sectors, household characteristics and social institutions. A further extension with natural resource accounts (NRAs) provides for a supporting environmental/natural resource base in terms of inputs and outputs. Economic, social and environmental transactions are captured by IO, SAM, and NR accounts, respectively. With a quantitative description of these flows, a SAM-NRA model can be used to analyze complex scenarios of economic, social and environmental change.

Recently, a number of economists have taken a co-evolutionary approach to modelling human activity, economic activity and biophysical inputs. Building on the work of Georgescu-Roegen and others, Giampietro and Mayumi (2000) have developed a model that looks at the structure of the human economy in terms of two primary productive inputs: human labour power measured in hours per year and energy measured in Joules per year. From these two factors a number of relationships can be calculated characterizing the energy metabolism of a society mapped against human activity. Hall (2000) has constructed economic/ biophysical models for a number of countries and has used basic ecological and energy relationships to examine their prospects for sustainability. The void left by the demise of the Walrasian system is being filled by realistic models of the economy that recognize the importance of culturally conditioned behaviour and environmental constraints (Gowdy and Erickson 2005).

Subjective well-being, not consumpti\on, is the best measure of social welfare

A central tenet of economics is that well-being (happiness or utility) can be equated to income. With the ascent of Walrasian economics in the middle of twentieth century the ‘utility function’ describing individual happiness in broad terms became the ‘consumption function’ describing the allocation of a scarce resource (income) among an array of available consumer goods. In recent decades researchers in a number of disciplines have demonstrated unequivocally that happiness and income are only weakly correlated. Happiness depends on a complex mix of cultural conditioning and inherited predispositions. Psychologists have long argued that well-being derives from a wide variety of individual, social and genetic factors. More recently, economists have made significant contributions (Easterlin 2001; Frey 1997; Ng 1997). Methods have been devised, tested and calibrated to accurately measure levels of happiness across individuals and across cultures. The existence of sound, scientific measures of well-being has made it possible to determine directly the main contributors to well- being.

About one-half of the variation in self-reported well-being can be explained by inherited predisposition. Among the non-inherited factors, income is important but not overwhelmingly so. People in wealthier countries are generally happier than people in poorer countries (Diener et al. 1995), but even this correlation is weak and the happiness data show many anomalies. A consistent finding is that, past a certain stage of development, increasing incomes do not lead to greater happiness. For example, real per capita income in the USA has increased sharply in recent decades but reported happiness has declined (Blanchflower and Oswald 2000). Similar results have been reported for Japan and Western Europe. Studies of individuals also show, past a fairly low income level, a lack of correlation between increases in income and increases in happiness (Frey and Stutzer 2002). Security seems to be a key element in happiness. Large welfare gains would come from a focus on improving welfare based on those things that increase individual security, like health insurance, old age security, employment and job security. Mental health is also a crucial factor in happiness. Frey and Stutzer (2002) and Layard (2003) argue, based on happiness survey results, for more public spending on mental health, especially for the very young since apparently the first few years of a person’s life play a large role in their future happiness. Richer social relationships generally make people happier. This implies that welfare gains may be obtained from increased leisure time, and more public spending on social and recreational infrastructure. Finally, there is a well-established link between environmental quality and interaction with nature, and subjective well-being (Welsch 2002).

The implications of this research for sustainability are enormous. Not only is the obsession with growth and consumption leading to environmental crises from global climate instability to worldwide biodiversity loss, it is not increasing social welfare. There is even evidence that persons more concerned with material gain are actually less happy than the general population (Kasser 2002). Typically, economists assume there is a trade off between investing in environmental quality and immediate economic consumption (Solow 1993). In this framework, spending more money for environmental protection reduces welfare because that means sacrificing some consumption of market goods. But the new well- being research shows that reducing consumption (across the board) for those already well off may be a no cost or even win-win policy. Furthermore, in terms of human social evolution, having abundant leisure time was apparently the norm for most of human history. Humans lived as hunter-gatherers for something over 95% of the time our species has existed. Ethnographic evidence from historically existing hunter-gatherer cultures indicates that hunter-gatherers worked on average only a few hours per week to obtain the means for survival. The current work week in industrial economies – ranging from 35 hours in Western Europe to 60 hours in China – is certainly far above the norm in terms of human history (see the papers by Lee, Sahlins, Woodburn and others in Gowdy 1998).

Can these new co-evolutionary approaches to economic behaviour and physical production lead us to a sustainable society? The worldwide cultural obsession with increasing material wealth is not creating a happier society as promised and is dramatically altering the life support systems of the planet. So why is our global culture so slow to respond to these findings? Why does our culture continue to reward behaviour that is destroying the biophysical basis for human existence when that behaviour does not increase our well- being? A revitalized economics can shed some light on this question.


Economics reached its dominant position by focusing on individual incentives as the driving force in economic processes. In recent decades a restrictive interpretation of this insight has narrowed the policy focus of most economists on monetary incentives and on increasing economic output as the only means of promoting social welfare. But there is much to be gained by returning to the basic principles established by orthodox and heterodox economists alike; namely, that people respond to incentives, generally act according to their perceived best interests, and that the objective of public policy should be to insure ‘the greatest good for the greatest number.’ A framework for incorporating these basic economic insights is ‘generalized Darwinism’ (Hodgson and Knutsen 2004). It offers a way to integrate the role of individual incentives, broadly defined, into an analysis of the evolution of whole societies.

Generalized Darwinism is the proposition that social evolution, like biological evolution, can be understood in terms of the basic principles of variation, selection and inheritance of particular traits. This approach has the potential to provide a theoretical foundation for an empirically-based model of economic rationality and this has far-reaching implications for economic theory and public policy. Studies of cultural evolution have been limited by the conflict between methodological individualism and methodological collectivism. This conflict has frequently led to ‘either-or’ approaches that try to explain social phenomena solely by applying tools developed for individual behaviour, or by building social models that ignore the heterogeneous nature of individual actors. Contemporary Darwinism was designed to integrate levels of analysis – genes, individuals, and populations – and is wholly appropriate to analyze the relationships between individual behaviour, cultural norms and social evolution. The starting point of generalized Darwinism is that the evolution of cultural traits, like the evolution of biological organisms, is driven by the process of variation, selection and inheritance of those traits. Richerson and Boyd (2005), Hodgson and Knutsen (2004) and others argue that in studying the evolution of socio-economic systems there is no alternative to these core Darwinian principles. Other proposed analytical frameworks such as selforganization or Lamarckian evolution must logically fall under the umbrella of generalized Darwinism. It is also true that this framework is incomplete without an understanding of the specific details of how the Darwinian mechanism works to select particular patterns of human behaviour.

In human cultures, with elaborate systems of rewards and punishments, almost any kind of behaviour can be selected (Boyd and Richerson 1992). The plasticity of human nature provides the variation upon which selection pressures work. The critical question then is how disparate patterns of individual behaviour are selected and propagated by specific cultures. This question is critical to addressing the problem of the environmental and social stability of human cultures. Rewards and punishments are used in human cultures to pass on traits that may be culturally desirable in the short run but may be disastrous in the end (Diamond 2005).

The co-evolution of individual behaviour, culture, and economic institutions

A current line of research addressing the question of sustainability is analyzing in detail the history of entire cultures. The study of whole societies is, of course, a long- established tradition in anthropology. Especially influential today in culturalresource-institutional evolution is the pioneering work of Leslie White (1949) and Julian Steward (1955). Archaeological data and historical documents can provide the centuries-long time scales needed to examine the conditions for sustainability or collapse. Particularly revealing are studies of the long-term consequences of substituting technology for increasing resource scarcity (Erickson and Gowdy 2000; Tainter 1988). A striking fact is the sheer number of post-hunter-gatherer cultures that followed the pattern of overshoot and collapse. These include all the major Mesopotamian civilizations, the Mayans, the Anasazi of the US southwest, and the Indus valley. They all experienced a period of rapid resource use, rapid population growth then a relatively sudden economic, social and biological collapse (Diamond 2005).

Many cultures exploited their environments to a point at which they were so vulnerable they were unable to maintain the cultures they had so painstakingly established (Tainter 2000). Probably the best-known example is Easter Island. Over the course of about 500 years Polynesian settlers so eroded the resource base that the peak population of about 10,000 people was reduced to a few hundred living in a state of con\stant warfare and deprivation (Bahn and Flenley 1992; Erickson and Gowdy 2000; van Tilberg 1994). The burning question in the Easter Island case is why the population could not correctly assess their situation and change their socially destructive behaviour. It is a very small island – from the highest vantage point it is possible to see the whole island – and the destruction caused by deforestation should have been obvious. A similar pattern of overshoot and collapse also occurred on the islands of Mangaia (Kirch et al. 1992), Mangareva, Pitcairn and Henderson (Diamond 1997).

Some past societies, like Easter Island, have moved rapidly along the overshoot-and-collapse curve. Others took much longer to make the transition from a stable state to instability and collapse. But some post-hunter-gatherer societies managed to avoid the trap altogether. One society that apparently escaped the fate of so many others is the South Pacific island culture of Tikopia. Archaeological data indicate that Tikopia was headed down and had rapid population growth – but somehow managed to achieve a stable existence. Archaeological and ethnographic evidence indicates that the South Pacific Island of Tikopia is one of only a few cases of a successful transition from nonsustainability to sustainability (Erickson and Gowdy 2000). The island was settled about 3,000 BP and the first inhabitants quickly transformed the landscape through forest clearing and slash and burn agriculture. Many species of native birds were hunted to extinction and it appeared that the island was headed down the same overshoot and collapse path as in Easter Island. But somehow the people of Tikopia were apparently able to assess the precarious situation they were in and take corrective measures to prevent collapse. Sometime around AD 1700 archaeological evidence shows that pigs and dogs were eliminated from the island (Kirch and Yen 1982:353). Slash and burn agriculture was replaced with a ‘complex system of fruit and nut trees forming an upper canopy, with aroids, yams, and other shade tolerant crops under these.’ Some varieties of fish that once formed a significant portion of the diet were no longer eaten and from the ethnographic record considered tapu. The Tikopians also adopted a variety of customs to insure sustainable resource use and zero population growth (Firth 1967).

Something fairly unique about Tikopia allowed this culture to overcome institutional sunk costs and move to a sustainable way of living. This had something to do with the interaction between the characteristics of the resource base and the selection mechanisms for institutional change and institutional lock-in. The critical question then, in addressing the environmental and social stability of human cultures, is how disparate patterns of individual behaviour are selected and propagated by specific cultures. Rewards and punishments are used in human cultures to pass on traits that may be culturally desirable in the short run but may be disastrous in the end. In the cases of social collapse, sustainable patterns of behaviour are filtered out by cultural selection mechanisms and unsustainable patterns are reinforced. Understanding how this process works is critical to formulating effective sustainable social and environmental policies.


The word collapse is widely used to describe the fall of past civilizations (Diamond 2005; Tainter 1988) but the demise of most of these societies was not sudden or final. Remnant populations survived and they were usually able to migrate to other areas, sometimes without a dramatic decline in material well-being. But past societies collapsed local ecosystems and now humans are in danger collapsing globalsystems. Still it would be foolish to predict the imminent collapse of global capitalism. Such predictions have been made many times before and yet the system rolls on apparently unaffected by any of the potential calamities listed above. Yet if we ask not ‘when’ but ‘whether’ the current world system will collapse, the answer would seem to be a clear ‘yes.’ That answer comes not only from an examination of the current consensus on twenty-first century scenarios on climate change, fossil fuel exhaustion and the diffusion of weapons of mass destruction technology, but also on a growing body of research on past societies that have exhibited the same general pattern as our own.

So what can be done, if anything, to make the radical changes needed to avoid social collapse? Are current suggestions for sustainability policies feasible? The answer has to be a cautious ‘no’. But there is a glimmer of hope if the neo-liberal worldview driving public policy catches up with contemporary economic theory.

Sustainability and incremental policies – A wellestablished theory in economics is the theory of the second best (Lipsey and Lancaster 1956). Basically this theorem states that if the conditions for efficiency are violated in several markets, correcting the conditions in one market alone will likely move the economy further away from an efficient solution. Applied to sustainability it means that changing one thing alone will not move us closer to sustainability and may move us further away. For example, greatly improving energy efficiency would have the effect of reducing demand and lowering energy prices, so that more energy would be used (this is the rebound or Jevons effect).

Sustainable consumption – It is argued above that, because of demonstration effects and habituation, higher incomes do not make people happier. However, just because economic growth does not make us happier this does not mean that stopping growth will not affect our happiness. Many of us have become habituated to a steady stream of new products. Like any addiction we need more and more of the fix just to keep us in the same place. Moving to no-growth or steady state economy requires policies to address the psychological dependence on consumption being fostered by the global marketplace. A first step would be to strictly control advertising designed to foster a culture of consumption.

Sustainability and the illusion of the steady state- In the current context of globalization and economic ‘rationalization’, for one country to slow or stop economic growth would amount to unilateral disarmament. When economic growth slows, so does capital formation, meaning that a nongrowing country’s capital stock would quickly become outdated and non-competitive. Neither should the link between military power and economic growth be ignored. The world is now a single socio-economic system and as long as nations compete with each other for markets and military power it may not be desirable for one country or even one large region to move to a steady state economy. Added to this is the growth imperative of empires, including contemporary Western capitalism. When past empires ceased to grow, a variety of related destructive forces came into play.

Do cultures have free will? A dominant pattern of cultural evolution since the advent of agriculture is overshoot and collapse. Cultures seem to become locked into patterns of behaviour that were successful in early stages of development but dysfunctional in later stages. Over time cultures build up a complex superstructure of material capital, learned patterns of behaviour, and ethical systems. ‘Sunk costs’ include not only capital and technology but also social systems of beliefs justifying the established way of doing things. These social systems reinforce the power elites that invariably control complex societies. Those who have the most to lose by dramatic changes have the power to reward those who accept the status quo and punish those who do not.

Those few cultures, such as Tikopia, that were able to change course did so because they were apparently able to modify behavioural incentives to reward sustainable behaviour. Two kinds of societies that were able to do this are egalitarian societies with small populations that worked by bottom up consensus and top-down hierarchical societies like Tokugawa, Japan that could impose sustainability by decree (Diamond 2005). Neither of these models is feasible in today’s global market economy of competing nations.

These concluding comments may seem pessimistic but the history of the collapse of past societies – and the mounting evidence of our own unsustainability-strongly suggests that piecemeal change will not be enough. It is better to face the future realistically from where we are rather than to pretend that limited measures within a businessas-usual framework will get us through the population and resource bottleneck of the current century.

‘If a path to the better there be, it begins with a full look at the worst.’

– Thomas Hardy


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John Gowdy

Department of Economics, Rensselaer Polytechnic Institute, New York, USA

Correspondence: John Gowdy, Department of Economics, Rensselaer Polytechnic Institute, 110 8th Street, Troy, New York 12180, USA. Email: gowdyj@rpi.edu

Copyright Sapiens Publishing Feb 2007

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