Princeton, £16.95, 346pp. £15.26 from the Independent Bookshop: 08430 600 030
The Economics of Enough, By Diane Coyle
Friday 20 May 2011
The 20th century was a hell of a party. But those of us who lived it seem determined to leave to our children the task of cleaning up the mess if they can - to pay off the debts and make the planet habitable again. Economist Diane Coyle catalogues the damage. We have, she says, "borrowed massively from the natural and human resources of the future – to an extent that standards of living will be lower... when people have to service our massive financial debts and live with unknown environmental changes."
Coyle is no eco-radical or closet anti-capitalist. She has no time for those who think we should cancel economic growth and maximise our happiness index instead. But she calls herself an "enlightened economist", and sees our "reckless disregard for the future" as unsustainable.
Our legacy to our children is piled high with environmental, economic and social debt - a triple whammy of climate change, the multi-trillion dollar overhang from the 2008 financial crisis, and a dreadful "demographic timebomb" of pension and health-care promises for an ageing population that the thinning ranks of future income-earners will not be able to meet. This is partly a "crisis of capitalism", arguably as great as the crisis of socialism two decades ago. But what troubles her even more is the accompanying crisis of governance. We have lost the will to tame the monsters. We no longer believe in the values and institutions that might do it. This she sees as a crisis of social capital or, to you and me, trust.
Our ever more complex world requires ever more trust in order to function. But, instead, we see a bonfire of trust. This makes it "impossible to safeguard the future". The nadir of trust was the day in 2008 when Lehman Brothers collapsed. She argues that what has followed is part of a wider "sense of near despair" that has frozen world trade and climate talks. "The sense of crisis is everywhere, reflected in public cynicism about politics and brought to the boil by a sense of urgency about the environment and the state of the economy."
This book has weaknesses. The chapter on the legacy of climate change is uncertain. Her examination of how we are drawing down natural capital such as forests and soils is cursory. She has little to say about the developing world. And, though she says many problems in finance and bad governance have arisen from the extraordinary rise of digital technologies, she offers nothing about how future technological innovation might help.
But the way she links the narratives of how we are ransacking our social, financial and ecological capital is truly scary. Western economies are only sustained by huge inflows of credit from poorer nations like China, and by drawing down natural capital and borrowing from the future. For her, capitalism is a brilliantly flexible tool for generating wealth and managing the complexity of modern life. But its recent fetish for a mythical free market has cut it loose from its roots of social legitimacy. Her insistence that the crisis is essentially one of trust and governance is important – and increasingly relevant as we watch our leaders failing to tame our reckless financial overlords.
Many of us concerned about climate change have long said that the technological solutions needed for a low-carbon future are available, and not so expensive. The problem lies in finding the will and organisation to do what needs to be done to save future generations. Coyle reveals this stasis as part of a wider inability to see what should be plain.
Is there a way out? Coyle calls for "the economics of enough", in which "mutuality and patience" combined with "due regard for the future" reassert themselves. "We need to internalize a sense of responsibility to others, including those not yet born, in order to restore the moral fibre that is needed for market capitalism to deliver social well-being."
As Coyle shows, the recent excesses are indeed exceptional. There was a world before Thatcher and Reagan. For much of the mid-20th century, we actually reduced the gap between rich and poor. Now the party is over, perhaps an ageing society will be more amenable than we imagine to cleaning up the mess. Enough, they may conclude, is enough.
Fred Pearce is the author of 'Peoplequake' (Eden Project Books)
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