How would a steady-state economy work?

The steady state economy is an idea that I became interested in a few years ago. What some might describe as a fringe economic movement, others might term an environmentally-responsible solution to the current unsustainable, runaway-growth mentality.

The steady-state economy proposes an alternative to an economy that seeks to expand and grow each quarter.

The idea is that – in developed, usually western, economies – many of us already have everything that we need. And if we already have everything we need, does it make sense to constantly extract more, produce more, spend more and strain the planet with more people and more things? Can the economy really grow every year, forever? At some point, should we not consider a transition to a stationary, or steady-state economy?

We live on a planet with limited resources.

Why is it a bad thing when consumer spending goes down? Why are people encouraged to go out and spend money to ‘stimulate the economy’? Encouraging the mindless consumption of cheap ‘Made in China’ goods is not good for the planet. Consider the energy that it took and pollution that it caused to create these goods, to ship them, to put them in stores… For what? So that we can buy more things that we don’t need, let them pile up in our houses and closets… and eventually donate them or send them to landfill?

What about the idea of minimalism? Of not expanding the economy, but redistributing the immense wealth that already exists? What about the billionaires who have so much wealth that they wouldn’t even notice if half of it disappeared? What about the plastic piling up in the oceans? Are we really better served by increased consumer spending?

A steady state economy is an economy of stable or mildly fluctuating size (1). An economy can reach a steady state after a period of growth, or after downsizing. A sustainable, steady state economy entails a stabilised population and stable per capita consumption. That’s not to mean that there’s no change – fluctuations may occur in the short term – but that long-term a stable equilibrium will emerge. Birth rates will approximately equal death rates, and production rates will equal depreciation rates.

With a stable population and a high quality of life for most or all citizens, a steady state economy is a more logical ambition, versus the constant expansion sought by the neoclassical macroeconomic policies. The steady state economy is also the predominant policy goal of ecological economics.

Contrary to popular belief, the steady state economy is not even actually a new idea. Various economists have long considered the transition from a growing to a stable economy, famously including John Stuart Mill, and Adam Smith in his work, The Wealth of Nations (see more on the history of the idea here).

Our economic system isn’t going to change over night, if at all, but critical reflection is an important component of it. There is benefit in initiating the conversation to consider new systems, rather than accepting the current one as a given. Capitalist economic expansion has certainly provided us with numerous benefits thus far, but consideration is warranted, as to whether this system ought to persist indefinitely into the future.

What do you think? Leave a comment and let me know.

Waste, packaging and pollution: Whose problem is it?

When it comes to responsibility for waste, packaging and pollution, we need to shift the burden away from consumers and regular citizens. When we often can’t even get the average person to recycle or compost, it’s clear that we need to enact change at the governmental level.

When the only way for someone to get some plastic-free greens and vegetables is to wake up early on a Saturday, and take the bus to their local farmers market, with their own reusables containers in tow, it’s clear that we have a problem.

We need to make circular, sustainable systems the norm, not something that requires an exorbitant amount of effort from the regular person who has more pressing things to worry about.

Therefore, we need change to come from above. From the companies, and the governments regulating their actions. Some may say that this will make us uncompetitive, to enact broad regulations prohibiting packaging or forcing companies to retain control over their products. It might make goods more expensive, again placing a burden on the poorest and most vulnerable members of society.

However, I think it’s also important to consider the flip side of this argument. Rather than thinking of what we might lose from these policies, we ought to think of what we have to gain. To be a leader in sustainability and environmental issues. To keep more plastic and trash out of our natural environment. To improve our health by not drinking or consuming all of the microplastics that are currently being released into our waterways and ingested by beings lower on the food chain.

There’s a lot to lose. But I think there’s even more to gain. We need to step up and convince corporations and our governments that these are issues that we care about and start implementing changes sooner rather than later. Because though individual actions may help, they can’t solve these issues on their own. Whose problem is it? It’s all of ours.

Can the subscription and sharing economies decrease consumerism?

“Click here to subscribe and own less stuff!”

Not a tagline you usually see. But is it true that the increasingly popular subscription and sharing economy business models could help reduce consumption and excess consumerism?

As more products are treated as services, many people are finding they don’t need to own as many things, but can instead pay for the right to use what they need. We see this across a number of domains, including music streaming, car and bicycle sharing, tools, or even designer handbags. What people are willing to pay for is not a product in and of itself, but for a solution to their problem.

The common denominator is that many people are choosing to own fewer things, and electing to pay for use on an as-needed basis.

Whether a shift to this business model alone will be enough to curb consumerism remains to be seen, but I see the change as a positive one regardless. In general, there seems to be a trend towards buying solution and experiences, not things. When people no longer feel the need to accumulate shelves full of music albums, a garage full of seldom-used tools or a closet full of designer clothes and handbags, we may find ourselves producing and consuming less stuff.

There are some cases where that mentality will certainly be harder to change. For some people, buying their first car is a right of passage, and likewise owning an expensive car may be a status symbol that some are unwilling to give up.

There are also some couple counter-arguments against the ability of the sharing economy to slow consumption. Some argue that those using these services may be a different segment than those who might opt to buy these objects in the first place. For example, the rental of designer handbags opens up the market to those who would not have purchased one in the first place, and some people who take Ubers might have walked, had the option not been available. These scenarios demonstrate how the sharing economy has the potential to increases the size of the market as a whole, thus increasing consumption.

Nonetheless, I see reason to be optimistic about the new opportunities created by the sharing and subscription economies. The shift away from direct product/object ownership can be seen as positive, supporting the more efficient use of resources, and hopefully providing additional benefits in terms of impact on the environment and the planet.

Why recycling is not enough

Growing up I was always taught to believe that recycling was the right thing to do, that it was a solution to the problem of generating waste.

When we recycle something, we tend to feel good about ourselves. We’re doing the right thing, we’re saving the planet, right?

Unfortunately the truth is that it’s not as simple as that. Due to contamination, the size of the pieces or lack of suitability, only about 20% all waste put in recycling bins actually ends up being recycled.

As I’ve mentioned before on this blog, and as many of you may be aware, China has recently stopped accepting the rest of the world’s plastic recycling, leading to huge issues with recycling piling up in other areas where we have nothing cost-effective to do with it.

Because of this, and a host of other reasons (including the massive amount of single use plastic currently being produced and ending up in our oceans, lakes and rivers, and then in 95% of our tap and drinking water, and the fact that even when recycled, there is only a limited number of times something can be recycled), we can’t just feel like by recycling we are doing our part. Before recycling should come 1) Eliminating – turning down single use plastic items like straws or utensils, 2) Reducing the use of plastic items 3) Reusing – reusing plastic bags or other plastic items multiple times and finally, when all other options are exhausted, then 4) Recycling.

In the end, recycling is not the golden solution that many of us were taught when we were kids. Not all materials have significant value in their recycled form, many are made of multiple material types (making them hard or impossible to recycle), some can only be recycled a limited number of times (recycled plastic gets downgraded each time, until it is no longer usable) and it takes significant energy and cost to transport, process and recycle materials.

While it can be depressing to realise that an action you felt good about is actually not as helpful as you thought, it’s important not to despair. Education is the first step, and there are indeed many small things you can do that will make a positive difference, including reducing, occasionally going without, educating others, and making your voice heard to corporations and your local governmental representatives.

What is the circular economy?

The concept of the circular economy (CE) has rapidly gained popularity over the past few years, and is currently being promoted by the EU, several national governments and many businesses around the world. There are numerous definitions of the circular economy, but perhaps the simplest is that it’s a cradle-to-cradle approach – one that aims to close the loop and bring consciousness and ownership to the entire lifecycle of a product.

It’s about manufacturers taking responsibility for their product from production through to disposal, recycling or reuse. It’s the same kind of system that many countries use for bottle recycling, for example. Bottles are sold with a small deposit fee to incentivise consumers to to bring them back, they are then collected by a retailer, shipped back to the manufacturer, cleaned and reused.

Now imagine this idea being implemented everywhere, for all kinds of products. No longer would you be left wondering what to do with old electronics that don’t work anymore, debating if you should just throw them out or spend time and effort to look up where you can recycle them, and then making a special trip to a special electronics recycling location that’s probably out of your way.

Or with clothes – H&M is one retailer that is now collecting old textiles, whether they can be reused as clothes or not. In exchange, they offer customers a discount coupon for their next purchase. Similarly, some sustainable razor companies now have programs where you can safely send back your old blades instead of throwing them away.

In this way, the circular economy aims to minimise waste, make the most of resources and reduce externalities. It’s in contrast to the traditional linear economy, which operates along a one-way chain of resource extraction, production, and disposal – which the manufacturer isn’t responsible for.

Moving away from the linear model will help promote a more sustainable society, allow us to design waste out of the system, and slowly separate productive economic activity from the consumption of finite resources.