If the economy is circular, what shape is the consumer?
Originally published in The Mint, October 2017
We’ve come a long way since Brundtland in 1987. We have the global Paris Agreement on climate change. We have the UN Sustainable DevelopmentGoals. We have the UK Climate Change Act 2008 and the Climate Change Committee. We have the EU circular economy package.
We also have business taking sustainability seriously: no self-respecting multi-national corporation can get by these days without a strategy to “work together to manage resources in a way which has a positive influence on the natural environment and the communities in which we operate” or to “make sustainable living commonplace”.
And we have a discourse in the world of economics that is surely encouraging: economists such as Thaler, Ostrom and Kahneman have won the Nobel prize; august institutions such as the British Academy are actively tackling the notion of ‘sustainable prosperity’; and ever-greater coverage is being given to how to bring about a more sustainable future.
Wonderful. We’re on the right track. Everything’s going to be fine.
In 1987 I was 22 and working for a company researching UK property markets. Thatcher was in her pomp, the late 80s boom was underway (GDP growth in 1987 was 5.4%!) and the M25 had just been finished. My job was to identify and gather information on every commercial property development within a ten-minute drive of the new orbital. It turned out there were 1,279 of them. It took me a year.
Suddenly I found myself standing in front of high-roller suits explaining the dynamics of the development pipeline for business parks, and I discovered something startling. There were plenty of people who had access to the official statistics – but I’d stood in a muddy field in Hertfordshire and I really knew what it looked like out there. What it felt like.
It’s a lesson I’ve tried hard not to forget. Whatever it looks like when you read the reports, when you’ve examined the data and absorbed the strategies, try to remember: out there it’s muddy and messy and might actually be very different from in here.
It’s all too top down; and it’s all too supply side. High-end institutional strategies? Check. Commercially-coherent resource efficiency plans? Check. Documents written with the requisite and up-to-date buzzwords? Check. Millions of people demanding a more sustainable world? Ah.
The orthodox response refers to the ‘informed consumer’. Provide the consumer with all the information they need and they will choose accordingly. Mandate that a product’s sustainability credentials are on the pack, raise awareness of environmental issues and – hey presto! – the market will adapt. Consumers will of course want happier animals, fewer poor people, fewer hurricanes, cleaner water, and they’ll notice and carefully read all the detailed information provided by the kindly corporates and then they’ll obviously choose the most environmentally-friendly, socially-aware and economically-progressive option. Obviously.
What is actually obvious – and as I argued in my 2016 book ‘Bad Habits, Hard Choices’ – is that the notion of the informed consumer is tosh. It is as much part of the neo-liberal construct as efficient markets and shareholder value. Out there in the messy, muddy world there are, to be sure, many people who say the right things in surveys, and even a few people who try quite hard to buy sustainable goods and services.
But let’s not kid ourselves. The overwhelming majority of perfectly ordinary people in the developed economies are perfectly happy to keep buying as many of the things they want, as often as possible. ‘Sustainable development’ is a distant, jargon idea and, if they think about it at all, it is something they just hope or assume is being addressed by someone else.
Not only that. Given that consumer spending remains the dominant factor in determining this thing we call ‘economic growth’, every major economy depends on this behaviour. Even the UN’s Sustainable Development Goals include ‘Economic Growth’.
I am firmly of the view that, if we continue to focus only on the supply side of sustainable development, we shall inevitably fail. Ehrlich’s equation makes this obvious. Progressively improving the environmental-efficiency of our production systems cannot possibly compensate for the absolute increase in requirements that come from a (growing) population that demands ever-higher standards of living. The numbers just don’t stack up.
In the shorter term – by which I mean the next decade or so – we need innovative demand-side interventions. Price, despite everything you may have heard, remains the single most powerful determinant of which things people choose to buy. In ‘Bad Habits’ I propose something I called ‘SmartVAT’ that could begin to shift the system onto a more sustainable trajectory by decreasing the price of more sustainable options and increasing the price of less sustainable options. Other forms of eco-tax are, of course, available.
But this would only be a start. In the longer term, we will have to address the deeper stuff, the stories, narratives and myths that ultimately drive our choice sets. At present, we live in a (mental) world of interlocking concepts – growth, shopping, achievement, celebrity, wealth – that conspire to block the acceptability of the ‘sustainable’ alternatives – care, fairness, moderation, gentleness, satisfaction. Unless and until we began to formulate and express a full story of what a sustainable life might actually be life – and by that I mean a messy, muddy everyday story accessible and meaningful for millions of ordinary people – a path of genuinely sustainable development will not be possible.
My optimism that this might actually come to pass received a significant boost recently with a paper entitled “Narrative Economics” from Robert Shiller (Nobel Laureate 2013). Shiller does not address sustainable development per se but shows, with his customary eloquence and elegance (and also plenty of data) the powerful interaction between the stories we tell ourselves about what’s going on in the economy and what actually happens. In so doing he de facto sketches a way in which we might, conceivably, begin the project of formulating the new stories that we shall need and – simultaneously - of shaping the kind of economy we’ll need to be consistent with those stories.
It’s a project we have to undertake. It’ll be messy and muddy, but the alternatives are much worse.