LOOKING AT THE FUTURE:

Economic Choices for South Africa.

By Jeremy Acton

e-mail neweden@ct.lia.net

Contents

1. Introduction
2. Economic Growth and Social Complexity
3. Forecast for the Future?
4. A Positive Vision of the Future
5. Economic Growth vs. Social Development
6. The Need for a New Economic Order in South Africa.
7. Transition to a Sustainable Society.
8. Community Co-operation for Constructive Change.
9. A People Centred Economy
10. Conclusion

Introduction

This article introduces economic information that questions the sustainability of the present Growth oriented economy. It suggests that a new economic order is essential for the economic survival and right to self-determination of South African communities. It proposes an alternative people-centred economic system based on co-operative localised communities.

Economic Growth and Social Complexity.

Many economists have argued that the social and cultural development of a society generally improves with the growth in size of its economy. In the earlier days of its history, economic growth does allow a society to develop the complexity of its culture, in the arts, sciences, and services etc.

This is true of a society only when people are few and resources are plentiful, but if a society is driven by its social values to achieve more and more economic growth it will eventually reach the limits of its energy and environmental resources.

As resources become scarcer, a society will then find it increasingly difficult to maintain its attained level of complexity.

Eventually there comes a time when attempts at further economic growth begins to have real negative effects on the general population. These negative effects of growth manifest at local community level as increasing costs, pollution, environmental degradation, loss of vegetation, loss of biodiversity and soil. This process, unless stopped, inevitably results in poverty and hunger, disease, social isolation, unemployment, crime, violence, prostitution, alcohol and drug abuse, etc.

A society can therefore only sustain its level of complexity when it eventually limits its attempts at further growth and instead invests in:

1. the protection and maintenance of its natural ecosystems and agricultural land,
2. in greater efficiency in the use of energy and use of its resources, and
3. in the physical, social and spiritual upliftment and development of its people.

A Forecast for the Future?

Scientists are now warning that if the present growth trends in world population, industrialisation, pollution, food production, soil erosion and resource depletion continue unchanged, the limits to growth on this planet will be reached sometime within the next 100 years.

The most probable result will be a sudden and uncontrollable decline in industrial capacity, food supply and population.

Fig.1 The Future of the "Status Quo": Overshoot and Collapse

If world society proceeds along its historical path of economic growth and consumption for as long as possible without major policy change, a permanent economic downturn is inevitable within the next century.

Population and industrial output grow until a combination of environmental resource constraints eliminates the capacity of the capital sector to sustain investment. Industrial capital will begin to depreciate faster than new investment can rebuild it. As it falls, food and health services also fall, decreasing life expectancy.

(From Meadows, Meadows, and Randers: Beyond the Limits

In the Scenario of Fig. 1 the growth of the economy will stop and reverse because of a combination of limits.

Just after the simulated Year 2000 pollution rises high enough to begin to affect seriously the fertility of the land. (This is happening in the real world through contamination by heavy metals and persistent chemicals, through climate change, and through increased levels of ultraviolet radiation from a diminished ozone layer.)

In Figure 1 Land fertility had declined a total of only 5% between 1970 and 2000, but it is degrading at 4,5% per year in 2010 and 12% per year in 2040. At the same time land erosion increases. Total food production begins to fall after 2015. That causes the economy to shift more capital to the agricultural sector to maintain output but agriculture is also having to compete for investment with the resource extraction sector (Mining etc) that is also beginning to sense some limits.

In 1990 the remaining resources in the ground would have lasted 110 years at 1990 consumption rates. No serious resource limits were in evidence, but by 2020 the remaining resources will constitute only a 30-year supply. This shortage arises so fast because exponential economic and population growth increases consumption and decreases resources exponentially.

Between 1990 and 2020 the human population increases by 50% and industrial output increases by 85%. The use of non-renewable resources doubles. During the first two decades of the 21^st Century the rising population and industrial plant use as many non-renewable resources and the entire global economy used in the entire century before! So many resources are used that much more capital and energy is required to find, extract, and refine what remains.

Eventually, investment cannot sustain growth or even maintenance of existing systems, the limits of resources are reached, land is eroded beyond repair, and the economy collapses.

The stress of the growing economic problems will begin to manifest in the general population as an increase in violent crime, infant mortality, reduced life expectancy, poverty and hunger, disease, social isolation, unemployment, crime, violence, prostitution, alcohol and drug abuse,etc.

It should be noted that the decline in human population shown in Fig 1. relates specifically to shortages of food, materials,and services, and does not include human deaths due to AIDS, political or resource wars, epidemics, natural disasters, or criminal activity.

Unless we can adapt very soon, the future of the human race looks bleak

A Positive Vision of the Future.

It is possible to alter these growth trends and to establish a condition of ecological and economic stability that is sustainable far into the future, as shown in Figure 2. A state of global and local equilibrium could be designed so that the basic material needs of each person on earth are satisfied and each person has an equal opportunity to realise his or her individual human potential.

If the World’s people decide to strive for this second outcome rather than the first, the sooner they begin working to attain it, the greater will be their chances of success.

(From Meadows, Meadows and Randers: Beyond the Limits)

Figure 2: A Possible Future?

This future is ONLY POSSIBLE IF local communities and nations implement policies to ensure that:

1. The human population growth rate is limited to 2 children max. per family, and
2. agricultural land is protected, land degradation is reversed, and
3. Industrial output and consumption of goods per person is moderated, and
4. Technologies are developed to conserve resources, abate pollution and utilise non-nuclear renewable natural energy sources, and
5. The loss of biodiversity and natural ecological systems is reversed.

NOTE: that this scenario also assumes that we can double our resource base without creating extra pollution.

Economic Growth vs. Social Development

We must therefore clearly understand the vast difference between the concepts of Growth and Development.

Following the dictionary definitions:

TO GROW means "to increase in size by the assimilation or accretion of materials."

TO DEVELOP means "to expand or realise the potentialities of; to bring to a fuller, greater or better state"

When something grows it gets quantitatively bigger, i.e. "more of the same"

When it develops it gets qualitatively better, or at least different.

It is now necessary for politicians and industrialists to realise that their quest for economic growth is ultimately going to worsen the problems faced by society. The time has come that they should instead concentrate on the development of a sustainable economy and a new level of economic efficiency.

The Need for a New Economic Order in South Africa

Parents of today must realise that Figure 1 is the future that their children will be facing and that if their children are to enjoy a secure future, the human race is in great need of a new level of economic order.

Due to its history South Africa enjoys the potential and suffers the problems of being both a First World and Third World country at the same time. On the one hand we see cities with affluence, pollution, and technology, while on the other we have rural poverty and degradation, and beautiful open natural areas. Everywhere there is increasing unemployment, crime and other symptoms of social and environmental decay.

To achieve a new level of economic order South Africa needs to restructure its economy, and to discover a new social paradigm, in order to achieve higher levels of efficiency, security and freedom than we are able to enjoy at the present time. A new social structure and level of economic order and would ensure a sustainable society with increased efficiency and reduced consumption of energy and materials, without compromising present day standards of living.

Let us consider one simple, but obvious, example of increasing disorder in our society and how we need to change to solve our problems:

Commuting to work, engines idling at traffic lights, traffic congestion and road fatalities are clear examples of an economic system that is not running at optimum efficiency. People living in urban areas seldom see their neighbours as they commute in different directions to distant jobs. This daily pattern is contributing to the growing environmental and social disorders that are beginning to manifest in South African society.

Planners presently attempt to cope with the social disorders of our traffic flow problem by spending millions on roads, parking, traffic light systems,etc. to speed up traffic flow and accommodate more cars.These 'solutions' deal only with the symptoms of the problem but fail to address the root causes of the increasing traffic flow. Eventually the 'solutions' worsen the problem, by promoting an increase in the number of vehicles, thus furthering congestion, pollution and energy consumption.

If our society could reorganise itself by encouraging people to be employed within cycling distance (say 5 km) of their home, and children attended local schools, we would see an immediate reduction in traffic flow, fatalities, pollution, and energy consumption. Despite initial inconveniences in achieving this new economic reorganisation, the social benefits of this increased level of efficiency would be felt immediately across all sectors. This reorganisation could be achieved without economic or social disruption through a shared vision and common motivation of the people, and an accepted period of time as a transition period.

This simple but obvious example of how social reorganisation can reduce problems, could also be extended to other aspects of our society, especially with regard to food production, job creation, political and economic decisionmaking. It has already been made clear in this article and others that we cannot continue in the present way. South African citizens can, should and must evolve this alternative pattern.The first simple step in starting the process is getting to know your neighbours. and to share ideas on developing a community organisation and a localised community economy.

It is unlikely that the necessary radical changes to our economy will be speedily implemented by the present centralised State mechanisms. Those in centralised power need the present system to maintain their comfortable position.

It is at local neighbourhood level that we are experiencing the chaotic reality of the present system which is characterised by uncertainty, financial difficulties, unemployment, social isolation and crime.

It is at local neighbourhood level that the new level of economic order must arise.

The future is now, by necessity, in the hands of the people themselves. We urgently must work together with our neighbours towards developing a sustainable society at local and national level.

Transition to a Sustainable Society

A sustainable society is one that can persist over many generations, one that is far-seeing enough, flexible enough and wise enough not to undermine either its physical or its social systems of support.

A sustainable society is one that " meets the needs of the present without compromising the ability of future generations to meet their own needs." (World Commission on Environment and Development)

In order to be physically sustainable the material and energy throughputs of a society must fulfil three conditions:

1. Its rates of use of renewable resources must not exceed their rates of regeneration.

2. Its rates of use of non- renewable resources must not exceed the rate at which sustainable renewable substitutes are developed.

3.Its rates of pollution emission do not exceed the assimilative capacity of the environment

To achieve sustainability a society would:

1. Minimise Throughputs of energy and materials by reducing consumption and increasing the efficiency of recycling.
2. Raise limits as far as possible by means of affordable, environmentally responsible technologies.
3. Improve Environmental, Economic and Social information signals, and speed up reaction so society can look further ahead when it evaluates the costs and benefits of current choices and can choose intelligent responses to developing situations.
4. Prevent loss of biodiversity and erosion of agricultural land, and reverse ecological damage where it already exists.
5. Growth of population and capital must be slowed and eventually stopped.
6. Local communities should make every effort to develop economic self-reliance as a basis for dignity and self-determination.

Community Co-operation for Constructive Change

It should be noted that every living cell in our body has a cell wall, a boundary that permits it to live. A living community, and economy, and nation that is of benefit to its members also requires a clearly defined boundary to maintain its internal order, and to minimise the loss of its resources, skills, and land to other more powerful entities.

Each cell in our body also has a nucleus, or centre that organises the co-ordinated functions of the cell that give it life. So, too, should a community that defines its boundary, also create a centre that gives it identity, and which supports the activities of the community.

Communities with fewer internal social connections, and poorly defined neighbourhood boundaries are more open to predatory activities such as crime, harmful business practice, and the exploitation of their resources.

It is the recycling of value within a community that increases its well being, its social stability, and its resilience to adverse conditions.

If people truly want freedom and a better world for their children they would disengage as much of their money as possible from the globalised mainstream money systems at a local and at National level. South Africans should try to invest directly in their local community, in protecting their natural environment, and for the social good.

Localised co-operative communities that recycle cash flow, services and materials will achieve much more for themselves than by being isolated homeowners paying endless premiums to distant investment companies who claim that "your future is in good hands". (The best hands to hold any person’s future are always the ones that are attached to their own body, and their brain). Communities need to organise themselves to develop organic food production systems and local skills, to reduce the conditions of hunger and poverty that cause crime in their area.

If any local community can declare its own fiscal boundary by membership and agreement to support members’ businesses and community shops, there will be a greater chance of money being recycled within the community rather than to wealthy shareholders far away.

The People Centred Economy

The following chart clearly explains the characteristics of a "People-centred Economy" compared with our present "Growth oriented" economic system. These differences also represent clear choices that we must make to create a just and sustainable economic order

It is clear that an ecologically responsible, People Centred Economy is the only sustainable pathway to the future that will ensure the rights of all species, the stability of communities, the development of individual human potential, and the protection of the right to Self Determination.

Conclusion

It is hoped that this article provides South Africans with a clearer picture of some the factors that will affect their economic future and of the choices that must be made to ensure a securer future for their children.

Recommended Reading List

Dumont, R and Mottin. M "Stranglehold on Africa"

Schumacher, E.F. "Small is Beautiful: A study of economics as if people mattered."

Korten, D. "When Corporations rule the world."

Meadows, D.H, Meadows and Randers, J "Beyond the limits: A Sustainable Future or Global collapse?" Earthscan Publications

Mollison, B. "Permaculture: A Designers Manual" Tagari Press

Ward, M. "Fatal Addition" New Scientist 16 August 1997

Chomsky, N. "The Tyranny of Globalisation" Mail and Guardian June 13 to 19 1997

Conaty, P and Sattar, D. "Rediscovering Mutuality" Resurgence Magazine March/April 1998

A Corner House Briefing: "Patents on Life" Resurgence Magazine

Lang, P, "Plenty of Money" Resurgence Magazine March/April 1998

also "Ethical Investment- A Savers Guide"

and "LETS Work- Regenerating the Social Economy"

Toffler, A "The Eco-spasm Report" Bantam Books

Hallowes, D. editor "Hidden faces: Environment, Development, Justice: South Africa and the Global context"

Walker, K.R. "A Chinese Discussion on Planning for Balanced Growth: A summary of the views of Ma Yin-Ch’u and his Critics.

Time Magazine 30 October 1995 Vol.146 No18 "State of the Planet"

Sanlam: Demutualisation proposal: Policyholders circular and notice of extraordinary general meeting

Old Mutual : "The Demutualisation Proposal and what it means for you, the Old Mutual member".

Begon, Harper, Townsend: ECOLOGY Third Edition

Fourie, Frederick . C. v. N: "How to think and reason in Macroeconomics" (Juta)

Rifkin, J and Howard, T: "Entropy: A New World View."

Bethlehem, L and Goldblatt, M " The Bottom Line: Industry and the Environment" (Industrial Strategy Project, UCT Press.)