Economic Reform

The third major change that we must make involves rewriting the world's economic rule-book. Whether we like it or not, the global market economy has firmly established itself as the framework within which the majority of the world's people now choose their individual and collective paths. The market economy as we know it, though, is deeply flawed, legitimizing and providing daily incentives for environmental ruin. As Al Gore clearly stated, "We make billions of economic choices every day, and the consequences are bringing us steadily closer to the brink of ecological disaster" (Gore, 1992, p. 185). Thus it truly can be said that in many ways the impending Sixth Extinction Crisis is in fact an economic crisis of global proportions.

If we have any aspirations to a future of environmental integrity, human prosperity, and a planet with a full complement of its biodiversity, then we must utterly transform the marketplace as we know it. Freely functioning markets are predicated on the principle of narrow self-interest (Pearce and Moran, 1994), yet our present market system fails in many respects to provide us, its participants, with all of the information necessary to fully evaluate where our interests lie. The true costs of our decisions are often hidden from us; they are eventually shifted onto society or the natural environment as we happily go on our way. The market also sharply insulates the individual and his or her self-interest from the interests of society. Thus the markets daily put each of us on a collision course with the world around us. It is obviously in our collective best interest to preserve the Amazon forest, if for no other reason than to maintain the oxygen-producing dynamo that some have called the "lungs of the earth." But it is equally clear to a Peruvian campesino who must feed his fam ily, that his interests lie in cutting another hectare of the seemingly endless forest.

The net effect is a world in which "our commercial systems conflict with everything nature teaches us" (Hawken, 1993, p. 5). We are driven to consume resources as if they were endless, and we heedlessly dispose of the dross. Instead, we need to consider our most distant goals, like making sure that "biodiversity is still approximately present in 100-plus years from now" (Janzen, 1994) and embrace economic paradigms that will help us to reach those milestones.

Of course, a change of this magnitude in a structure as firmly entrenched as the global economy will require a wrenching, concerted effort by governments, businesses, and individuals everywhere. Global mechanisms including the United Nations and beyond must play a role. But the key to the solution lies in devising mechanisms that harness the power of the decisions that 6.1 billion people make every day as we spend, work, save, and consume. Here are a number of the most important changes we must strive to make:

1. Transition to a steady-state economy. Classic economic theory measures economic progress with continuous gains: gains in production, gains in consumption, gains in profits. Yet as Paul Hawken asks: "What is the logic of extracting diminishing resources in order to create capital to finance more consumption and demand on those same diminishing resources?" (Hawken, 1993, p. 5). The current economic paradigm is that the economy is isolated from the natural world, with exchanges circulating between business and consumer endlessly. The energy and materials consumed by the economy do not actually enter the system; they merely exist external to the economy. Some economists, however, have envisioned a different, open arrangement in which the economy exists together with the resources it uses and the waste it produces in a balanced steady state (Daly, 1997). Rather than growth, the steady-state economy's drive is to foster development of a better quality of life within the bounds of the ecological system of the earth.

2. Include the true costs of products in the cost to the consumer. The market economy as we currently know it fails to account for many of the costs associated with the production and consumption of most goods. For example, when you drive your car and burn gasoline, who pays the costs associated with the respiratory illnesses you are causing by polluting the air? What about the costs of a changing climate that the CO2 and NOx coming from your tailpipe are contributing to? These costs to the collective society—created both when a product is made and when it is consumed—are rarely included in the price paid by consumers. Alfred Pigou, an economist in the first half of the twentieth century, formalized our thinking about these "external" costs—that is, costs that are left out of the modern economy. Following this logic, biodiversity and the environment are not protected because their value (or the cost of its loss) is not included in the pricing structures that shape consumers' behavior (Meffe and Carroll, 1997). This idea of market failure has spurred much research into how the hidden costs of our consumption can be adequately included in the prices we pay. The essence of most proposed solutions is charging the producers of goods for the resources that their products degrade and the wastes that their products create. The producers, of course, would then pass on those costs to consumers, who would then be able to evaluate the true costs of the products they buy. Products that were more efficiently made, creating less waste, would be cheaper than energy-intense, polluting ones—finally reflecting their true environmental and social costs.

3. Change our measures of economic progress to include the use and degradation of resources and natural systems. Many of the most commonly used metrics of economic output continue to ignore the diminish-

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