Trillions in Transition: Growing our Way out of Climate Change?
on 30 November-11 December 2015. Read more about it here.
Derk Loorbach is director of the Dutch Research Institute For Transitions (DRIFT) and Professor of Socio-economic Transitions, both at Erasmus University Rotterdam, the Netherlands. Derk is one of the architects of the Transition Management approach as new form of governance for sustainable development. He has over one hundred publications in this scientific area and as an action researcher has been involved in numerous transition processes worldwide.
Roebin Lijnis Huffenreuter is philosopher of economics and sustainability innovation. He is a prize-winning author by the UN’s program on Global Environmental Change with his entry on GDP - Beyond Growth. His scientific publications concern economic transitions, sustainability and societal change. As an action researcher he has been involved in projects in The World Bank, alternative currencies, and financial technologies.
Because policymakers have assumed for years that growth is the one-size-fits-all solution to economic, social and ecological problems, the answer seems ‘yes’. However, we see policymakers being rather clueless about the multitude of solutions emerging ‘bottom-up’ in networks, communities, cities and companies that beg to differ. We take a so-called transition perspective to argue that there are a number of symptoms – perceived as crises or incidents in mainstream thinking with its myopic focus on growth - indicating emerging disruptive systemic shifts in our socio-economic systems. Given the huge problem-solving potential of the diversity of glocal solutions we pose a dual question: how can we deal with the inevitable phase out of the economic growth paradigm and how can we support the emergence of a new economic paradigm from translocal crowds?
Bursting the crazy carbon bubble
In Paris, most countries signed to commit the world to drastically decrease fossil fuel demand by 2035. And this should only be the start of an even more radical shift to net zero emissions by 2080. “It is unstoppable. No amount of lobbying at this point is going to change the direction,” said the UN’s top climate official. The UN’s COP21 climate summit is intended to mark the start of “the biggest investment boom of all time.” Transitioning to low-carbon societies will require an estimated USD $90 trillion investment to change the fossil-fuel energy system. This transition marks the beginning of the end of the fossil-fuel era and its growing carbon bubble .
As a result of shifting to zero emissions the world may well see the end of two and a half centuries of continuous economic growth. Even before the 2008-crisis the global economy showed signs of slowing down, and climate change visibly started to distort larger (eco)systems. Lacking a longer-term transition perspective, policymakers are clueless about countering these correlated downward trends, as for long economic growth policy and fossil-fuel investment have gone hand-in-hand. Why has there been so little recovery from the post-2008 crisis, especially through large-scale efforts to boost economic growth and CO2-mitigation? Why are tried-and-tested fiscal and monetary policies not functioning as safeguards to socio-economic and ecological crises? Why are both austerity and stimulus packages not drafted to provide a sustainable future?
One of the bitter answers to all these questions is that policymakers have mistakenly assumed that we will outgrow our economic, ecological and social problems. Despite many recorded boom-bust-cycles, the received view is still that growth is an unquestionable constant, the ultimate goal and prerequisite for social development and technological innovation. Growth has become a paradigm to which everything else is an odd exception. This generally accepted, but historically contested, idea is in the process of being debunked; by theory as well as in reality. Anyone who still argues that the dominant economic paradigm - based on unloading production and increasing consumption - can be sustainable is logically proven to be rather delusional. The idea is only tenable when assuming that economic, ecological and social debt can accumulate indefinitely; as if we live in a limitless world. There may be many forms of delusion, but none seems as irrational as the idea that our toxic way of life, depending on debt-based growth, is endless.
From our transition perspective , we are witnessing a number of symptoms – perceived as temporary crises or incidents through mainstream eyes with their myopic focus on growth. These symptoms indicate emerging disruptive systemic shifts in our socio-economic systems. Before we can (in hindsight) objectively identify the crucial tipping points, we must accept the ‘inconvenient truth’ that when the economy finally tips over - beyond growth - signs of the crash were visible long before 2015. Mainstream analysis ignores that the real causes of the crises lay in the structure, culture and practices of modern society. Economic thinking and policy is to a large extent part and parcel of dominant societal regimes which focus on improving efficiency to maximize quantitative growth. If indeed unbridled growth is so deeply ingrained in our dominant nations- and global markets-based institutions, we need to think outside this box to escape the historical pathways of unsustainability and fossil-fuel based growth.
Divesting our way out of the fossil-fuel era
Around the world a growing number of investors view climate change both as a material risk and as an investment opportunity. The dual-perspective motivates low-carbon investment and high-carbon divestment in portfolio strategies. The transition towards zero emission consists of phasing out the high-carbon economy. In the face of an imminent economic-cliff and disruptive energy transition, some investors do not divest but continue the ‘chicken-run’ and find comfort in the observation that bubbles are as old as markets, arguing that boom-bust cycles are nothing extraordinary. One should not fear falling off a cliff as long as there are growth opportunities; such as suggested by the upcoming climate change investment hype. We think any such comfort is misplaced and misleading, because the socio-economic and ecological excesses of recent years have reached a level exceeding any scale that has been measured before.
More problematic, the financial developments that led to the 2008-crisis and resulted in a continuation of sequential bubbles, in which the bursting of each bubble initiated the creation of another. These bubbles follow an almost symmetrical pattern, in which the rise in asset values is followed by a downfall of similar scale and duration. If this observation holds true in the climate case, we are in for a period of socio-economic decline and possible ecological collapse. This time is different. We cannot invest our way out of the crises, therefore we must look at other, unfamiliar, means of problem-solving.
Assuming that the real causes of the problems lay in the structure, culture and practices of our hyper-capitalist society - characterized by egoism, profit-motif and debt-based-growth - we suggest to look for suspects outside the usual scope. It’s not the marketeer, corporate leader, president, judge or consumer that comes up with the solution single-handed, but together as a crowd they can produce, test and use a multitude of possibilities to find a sustainable solution. Crowdsourcing is a distributed problem-solving and production model, “a type of participative online activity in which [one] proposes to a group of individuals of varying knowledge, heterogeneity, and number, via a flexible open call, the voluntary undertaking of a task.” Some familiar examples of crowdsourcing are: crowdvoting, crowdsearching, and crowdfunding.
If we look beyond the centralized political arena and mainstream economic discourse, there are a multitude of signs that actors are indeed proactively investing time, money and effort in alternative sustainable futures. Thereby seizing windows of opportunity, not only financially but also through experimenting with new business models, democratic systems, alternative currencies, cooperative energy production and so on. Large scale investors, universities, pension funds and churches are divesting, and multinationals, countries and cities investing heavily in sustainable energy. In a chaotic and unplanned manner crowds are taking rational and idealistic decisions to deviate from the mainstream. We consider such transformative social innovations to be translocal: they develop locally while being inspired by and linked into global networks and movements. Slowly, such developments are building momentum towards becoming disruptive forces that substantiate critical masses beyond the tipping points.
We propose to understand this emerging social innovation dynamic as a crowdsourced response to sustainability challenges. The dominant socio-economic (and therefore also political) idea that generic measures, models and goals provide direction and a basis for implementation is completely at odds with this disruptive reality which is fragmented, uncontrolled and driven by motivations such as idealism, happiness, satisfaction, well-being, joy and inspiration. Drives as powerful, or even more than, financial gains. Thus we see two worlds starting to collide: the mainstream of centralized power and economic growth with liberalized markets that seeks sustainability through optimization versus the network society that finds transformative solutions in a self-organized manner.
Transition perspective and governance
The transition perspective, rooted in historical studies about the dynamics of transitions, suggests that such a collision cannot be avoided nor damped. Rather, it will lead to chaotic, disruptive and shock-wise changes before social changes can converge and accelerate towards a new dynamic equilibrium. Unsustainability of our economic structures, cultures and practices literally means that they cannot progress along the path-dependent pathway indefinitely. And given the challenges of climate change and sustainability, they should not. It is hopeful to note that not only citizens, local governments and NGO’s have increasingly taken up transformative agendas, but also that the last few years business and investors are massively shifting financial investments from fossil based to renewable and sustainable. Taking a transition governance perspective, we suggest that we should shift focus to the dual question: how can we deal with the inevitable phase out of the economic growth paradigm and how can we support the emergence of a new economic paradigm from translocal crowds?
This implies a more strategic effort to understand and learn from emerging alternatives with regards to the new types of institutions, rules and regulations that could support an economy in balance with nature. It requires anticipating tipping points and crises by building up alternative narratives, measures and advocacy coalitions. In turn, this implies facilitating the emerging process of crowdsourcing solutions that work towards transformative change. And, designing new financial and monetary policies that not only include (environmental and social) externalities, but also make divesting and creating ecological and social value more interesting for regular investors. However important the global climate negotiations, such strategies followed internationally, nationally and locally will provide much more hopeful, sophisticated and ultimately promising strategies.
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 TRANSIT (TRANsformative Social Innovation Theory) is an example of an ambitious research project around transformative social innovation which is about empowerment and change in society.www.transitsocialinnovation.eu