Green Capitalism

In the first seven years of this Century, global GDP (PPP) has grown at 6.65% per annum to USD65 Trillion (IMF data, Oct 08).  In doing so we added the resource demands and waste production equivalent to 150 years worth of China’s economy at the beginning of that seven year period to our planet.

Is it surprising that oil is running out, water wars are forecast, fish stocks are dwindling, food prices soaring and waste mountains piling up?   And this is starting to happen before global warming makes its impact on our planet.

Gross Domestic Product is the commonly accepted metric for quantifying economic growth.  Put simply, it is the total amount spent on consumption and on investment into ‘tangible’ assets.  It includes the amount we spend on food, clothing, cars and other consumables.  It also includes the cost of all the buildings we build, mines we dig, plant, machinery and equipment we buy.  It includes the cost of building the space station and the clean up after Hurricane Katrina.  It includes the Iraq war, traffic accidents, the petrol we burn and the electricity we consume.

If that doesn’t trigger a few warning bells, consider this.  If the global economy continues to grow at this rate, Global GDP will be 150 Trillion by 2020 and a quadrillion by 2050.   And if you think the current financial crisis solves the problem, think again.   Even a halving of global growth (which would leave most of the developed world in permanent recession) would still see an increase in GDP to 100 trillion by 2020, adding another 400 of those Chinese economies to our planet.

GDP is constantly adjusted for the effects of inflation - if we didn’t Zimbabwe would have the biggest economy on the planet!  Each month the IMF increase historic GDP figures to account for current inflation rates.

Clearly this is not sustainable.  Yet all governments strive to maximise the GDP of their country because economic growth leads to improved living standards and helps to alleviate poverty and extend the life expectancy and quality of that life for the 6.5 billion people on this planet.

The Commonwealth Scientific and Research Organisation of Australia (CSIRO) has  identified that every dollar of Australian GDP requires 7.65 Megajoules of energy; 2.12 kilowatt hours of electricity, 3.21 sq meters of land, 41.32 litres of water and produces 1.02 kg of Carbon Dioxide equivalent  - [CSIRO Balancing Act 2005]

We cannot stop economic growth, but nor can we continue with our current economic model of dig up, ship out, ship back and throw away.

To preserve our quality of life while maintaining growth, our current economic model will have to change.    This will usher in a new economic paradigm, that of ‘Green-Capitalism’

In the same way that labour and capital learned to live with one another in the last century so must the supporters of economic growth and the proponents of environmental protection come to a working relationship in this century. 

This will happen and it will happen far sooner than people expect.