Wednesday, March 13, 2013

Lagom is good enough

Lagom, a Swedish word, is perhaps a key concept for a really sustainable society.  According to popular but contested folk etymology, it is a contraction of "laget om" ("around the team"), a phrase used in Viking times to specify how much mead one should drink from the horn as it was passed around so that everyone received a fair share. The closest you could come in English would be: just right”.

Rob Dietz and Dan O'Neill authors of Enough is Enough, take on the task of how to build a sustainable economy in a world of finite resources. They say, ”Perhaps the most important number is one - one single blue green planet with finite resources that we all must share”

Enough Is Enough: finally a book of practical solutions to restore your hope!The book is well written and the arguments are convincing. Apart from all the facts in the book, each chapter has an introductory story with a nice personal touch. Contrary to most books in the genre, Dietz and O'Neill spend more pages explaining how a no-growth economy would look like rather than why perpetual growth is neither possible nor desirable. They do both jobs well.

Both authors are affiliated with the Center for Advancement of the Steady State Economy (CASSE). And “steady-state-economy” is the term the center use to describe a no-growth economy. They do ask their readers to come up with a more catchy and sexy term. However, trying to change the world is very different from selling soap, and I believe we underestimate people when we assume that we have to sell” them a catchy phrase.

In the first part of the book, Dietz and O'Neill debunk the ideas of decoupling” and trickle-down economics”. They do that well by providing a number of facts. For example, for every $100 of economic growth, only 60 cents reach the billion poor in the world. This is based on a report from the New Economic Foundation, available here. Clearly this is a decidedly inefficient way of distributing wealth. As they state: someone is profiting from economic growth, but it is not the world's poor.”

There are a number of interesting observations or ideas discussed in the book. For example:
·      Just as several aspects of our current society have all reinforced each other—for example, population growth, competition, cheap oil and technology; crisis situations also have such self-reinforcing sides. The authors point out that we should expect such cascading effects in the process of building a steady-state economy as well.
·      The best ways to achieve well-being are those that take time, consume none or few resources, and are for free.
·      The purpose” of the financial sector is to facilitate and intermediate between business and investment, and the costs for this is a burden to the rest of the economy. The fact that the financial sector takes an ever increasing share of the economic growth is not a sign of health or of any improvements in our livelihoods.

In parts two and three of the book, Dietz and O'Neill outline the strategies of reaching a steady state economy (part two) and the actions to be taken (part three). Both parts of the book are very interesting. One can also see that here the authors, self admittedly, are in unchartered territory. This is reflected in some redundancy and a vague division between parts two and three.

They call for changes on a number of strategically selected institutions in our economy and attitudes in our society. In their opinion, investments should generate social and environmental returns instead of financial returns; labor productivity can be perused to reduce and minimize unpleasant work, but not to take away jobs that bring joy and meaning; new forms of ownership (e.g. social enterprises) need to be developed and some existing forms (e.g. cooperatives) need to be revitalized instead of us being stuck in the choice between private and public; and finally we need to rethink our relationship to nature. They refer to these four thoughts as the foundation” of a steady growth economy.

In their opinion, ten pillars of policy directions” are needed. They include:
1.     Limit resource use and waste production
2.     Stabilize population
3.     Distribute income and wealth equitably
4.     Reform monetary and financial systems
5.     Change the way we measure progress (goodbye GDP)
6.     Secure full employment (by job-sharing and guaranteed jobs)
7.     Rethink how businesses create value
8.     Replace the culture of consumerism with a culture of sustainability
9.     Stimulate political debate about limits to growth
10.  Change national goals regarding growth and improve international cooperation

With these “pillars” in place, we can move towards a society that is sustainable and equitable and where human well-being is the centerpiece of life. Dietz and O'Neill present an appealing vision of how such a transformed society could look like.

Such a transition will require changes in institutions, laws, constitutions, attitudes and distribution of wealth. I find that the book mixes “hard” and soft” factors (see the list above) in a not so clear way. In fact, for the soft factors there is often no path on how to get there. It is one thing to say that we want more equality. There is, I believe, already a broad public agreement on this, but still differences are forever increasing. This example shows that there is a fundamental need to re- distribute assets and not just to change attitudes.

Like many others, the two authors question the use of GDP measure. “What is measured is managed” the saying goes and the authors concur, but I am not very convinced by that argument; we have measured poverty or unemployment for decades, we still didn't get rid of it. It is not because Chinese leaders have decided on a number and being competent, they have a GDP growth of 9 percent; similarly, it is not because European leaders do not have sufficiently ambitious growth targets (on the contrary they have very ambitious targets which they never reach!) that their economies stumble a percent or two over decades.

In real life, the mechanisms that drive growth are rarely related to the measurement of GDP. Politics of the normal kind hardly affect GDP growth in the medium and long-term, because it is mainly the acts of corporations, the effects of technology and energy, and the growth, age and behavior of populations that determine what kind of growth we will have. In the very short term, governments can influence growth by introducing tax cuts, subsidies or austerity measures etc. The key economic agentscompanies and consumersdon't care about GDP. Companies don't invest, expand or make profits or losses with an eye to the effects of the GDP. And consumers don't buy flat screen TVs to boost the GDP. Some of the most spectacular periods of economic growth occurred before there were any GDP measurement and public GDP targets.

By all means, do away with GDP; it is a rather meaningless measure. However, don't expect that to change too many things. And therefore don't put your bets on alternative measures either. They do play a role visualizing certain developments and they are therefore good to develop, but they are no game changers.

The weakness of the book is, in my view, that the authors don't address how to change the logic of property, profit (and other forms of capital accumulation) and competition. They write A key question, then, is whether the profit motive is compatible with a non-growing economy”. In another part they say that higher labor productivity is almost always converted into higher production because business owners are beholden to profit motives. Although they do see the problems, their prescriptions fall short of addressing them. The book discusses the enormous gap in wealth in the world today, where 50 percent of the world's population shares 1 percent of global wealth. But there are no proposals in the book that will turn this around.

I look forward to the next book by Rob Dietz and Dan O'Neill where they advance their ideas further. They are on an important track: Enough is Enough is indeed good enoughLagom!

You can read the authors introduction to the book here.



    This is an excellent observation, and one which can be applied to a wide variety of people writing about sustainable economics. As I see it the destructiveness of the current economic system is driven by a pair of cultural norms:

    1. Private, for profit, credit markets.
    2. Unbounded competitive accumulation of consumption rights

    The alternative is:

    1. Non profit community based credit the purpose of which is not to make money' but to create and maintain useful infrastructure.
    2. Socially bounded accumulation of consumption rights

    An important aspect of the second principle is that retirement security should be based on social credit built up through supporting the elderly during one's working prime. The idea that private 'savings' are a form of conservative, prudent economic behavior is a mistake. The security of future consumption is based on the long term health of the human and ecological communities in which we are imbedded. The institution of financial savings accelerates overall rates of production and consumption and thereby injures the community's future health rather than improving it or to maintaining it at an acceptable level. This claim is not a form of left wing propaganda; It is a cold hard physical reality, as many middle class people who have worked hard and behaved 'prudently' according received economic wisdom are about to find out in a very unpleasant manner.

    1. I agree that the idea that you can save "wealth" individually is a strange notion, as we need to renew resources again and again. What you do seem to accomplish is that you save your social position and your share of future wealth to some extent by your savings, but we can't save wealth as it is a social construct dependent on the shape of the future. Thirty years ahead, the dollars or the Euros may have as little value as they would have if you brought them to an alien civilization today.