Environment and Employment

A Reconciliation

Philip Lawn

• Publisher: Routledge
• Year: 2009
• Print ISBN: 9780415539876
• eBook ISBN: 9781134060375
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Mounting evidence suggests that GDP growth is damaging the natural environment and unlikely to be ecologically sustainable in the long-run. At the same time, an annual GDP growth rate of around three percent is regarded as the minimum necessary to prevent unemployment from escalating. Clearly, a trade-off exists between environmental goals and employment goals, yet this trade-off has been largely ignored or denied.

This book aims to resolve the environment-employment dilemma by suggesting ways and means to achieve low rates of unemployment, or preferably full employment, in the context of a low-growth or steady-state economy. In search of a solution to this dilemma, this book seeks to answer the following questions:

• What existing paradigms offer a possible foundation for further investigation into issues dealing with both the environment and employment?

• What specific initiatives can be implemented to deal with unemployment given that any potential solution must be consistent with responsible macroeconomic policy?

• To what extent can ecological tax reform provide a solution to the environment-employment dilemma?

• Under what circumstances is it clear that certain forms of employment generation are antithetic to the goal of ecological sustainability?

• How can more favourable employment-generating opportunities be exploited in ways which lower unemployment or achieve full employment without the need for ecologically-destructive GDP growth?

This book will no doubt stimulate a broader discussion on the issue, and it may just begin a process that leads to the eventual emergence of a viable policy strategy to generate a sustainable, full employment future. This book will be of interest to decision-makers, civil servants, researchers, and NGO employees as well as students of environmental and ecological economics and issues related to employment and unemployment.

Part I
An introduction to environment and employment

1
Why focus on the connection between the environment and employment?

Philip Lawn

Introduction

The growth of real Gross Domestic Product (GDP) is a policy goal pursued by almost every national government.¹ In view of rising environmental concerns, most national governments have begun to focus on how a range of economic and social goals can be realised without undermining the ecosphere’s capacity to sustain the economic activity that is central to their achievement—a condition often referred to as ‘sustainable development’. Because the growth of real GDP remains a prime policy objective, it is abundantly clear that two presumptions are being made with respect to sustainable development: (a) the accomplishment of most economic and social goals requires the continued growth of real GDP; and (b) the continued growth of real GDP need not threaten the capacity of the natural environment to sustain the higher output levels deemed necessary to achieve most economic and social goals.

In direct contrast to this position, there are a number of commentators who, because of alleged biophysical limits to growth, take particular umbrage with presumption (b). They have consequently urged for the growth of economic systems to be curtailed to satisfy the condition of ecological sustainability (Georgescu-Roegen, 1971; Meadows et al., 1972; Ehrlich et al., 1980; Goodland and Ledec, 1987; Ehrlich and Ehrlich, 1990; Daly, 1991, 1996, 2008; Gowdy, 1994; Lawn, 2000, 2007; Lawn and Clarke, 2008). Indeed, some of these commentators have argued that all but impoverished nations should immediately commence a rapid transition towards a steady-state economy (Daly, 1991; Lawn and Clarke, 2008).² A relatively new group of economists—labelled ‘ecological economists’—also hold this view but believe there is a more pressing reason why nations should make this transition.³ They argue that growth becomes economically undesirable well before it becomes ecologically unsustainable.⁴ Given this, they insist that achieving sustainable development will require economic systems to be stabilised at a physical scale much smaller than their maximum sustainable scale (Max-Neef, 1995; Daly, 1996; Lawn, 2007). Ecological economists have therefore called for an immediate cessation to the high-growth policies being widely adopted by the governments of industrialised nations.

There is little doubt that if the approach being advocated by ecological economists were adopted it would severely limit any immediate rises in the real GDP of wealthy nations and eventually preclude the growth of real GDP altogether. In the process, it would also lead to the emergence of a major policy dilemma. It is widely recognised that unemployment is an instrumental factor behind many social maladies and the rise in income disparities within nations (Theodossiou, 1998; Harding and Richardson, 1998; Burgess and Mitchell, 1999). Given the existing institutional arrangements in most countries and projected increases in population, a growth rate of around 2 to 3 per cent is generally regarded as the minimum required to prevent unemployment from escalating. With this in mind, the following question arises: how can low rates of unemployment, or preferably full employment, be achieved in a low-growth or steady-state economy? Ecological economists have been largely silent on this issue. Their failure to adequately respond to this question has significantly harmed their cause. But ecological economists are not alone in their failure to deal with the environment-employment dilemma. Whereas many ecological economists are guilty of ignoring the employment implications of their environmental position on growth, economists of other persuasions, as Part II of this book will testify, have paid little attention to the environmental implications of GDP growth. Worse still, many economists (and non-economists) have failed to deal appropriately with both environmental and employment concerns.

This book attempts to deal with the many issues that arise when seeking an answer to the above question. Although few of the chapters deal with this question directly, they all provide valuable insight into one of more of the following issues that must be considered when reconciling any potential conflict between environmental and employment goals. They include:

• What existing paradigms offer a possible foundation or worthy starting points for further investigation into issues dealing with both the environment and employment?

• Within the context of a sustainable economy, what specific initiatives can be implemented to deal with unemployment given that any potential solution must be consistent with macroeconomic realities and responsible macroeconomic policy?

• To what extent can ecological tax reform (ETR)—a recently conceived policy initiative involving tax impositions on resource depletion/pollution and tax cuts on labour/income—provide a solution to the environment-employment dilemma?

• Under what circumstances is it clear that certain forms of employment generation are antithetic to the goal of ecological sustainability?

• How can more favourable employment-generating opportunities be exploited in ways that lower unemployment or achieve full employment without the need for ecologically destructive GDP growth?

Of course, for this book to have any contributive value, it needs to be established that a potential conflict exists between the goals of ecological sustainability and full employment. In addition, it must be shown that unemployment is a social scourge of such proportions that its continuance cannot be morally justified— thereby rendering the full employment objective a moral imperative. Much of the remainder of this chapter is devoted to the second of these requirements. The first requirement is dealt with in Chapter 2.

For two main reasons, it was felt that an entire chapter (Chapter 2) should be devoted to demonstrating why there is a potential conflict between the goals of ecological sustainability and full employment. Firstly, many commentators do not believe that any such conflict exists because: (a) they regard the continuous expansion of economic systems as both desirable and ecologically unsustainable; or (b) where ecological limits are recognised, they overestimate the capacity of a sustainable economy to generate sufficient jobs to achieve full employment. With respect to (b), many observers overlook the physical basis of many employment-creating forms of economic activity—a fact not only revealed in Chapter 2, but also empirically supported by Jollands et al. in Chapter 11. By doing so, these observers overestimate the extent to which employment levels can be increased simply by altering the mix of jobs within a sustainable economy (e.g., by transferring labour from manufacturing to service-sector jobs).

Secondly, demonstrating the economic undesirability of, and ecological limits to, the continuous physical expansion of economic systems demands a detailed explanation of relevant theoretical principles and supporting empirical evidence. May I say that the need to elucidate the ‘limits to growth’ position does not arise because of past failures on the part of the scientific community to adequately explain this position. Many before me have successfully demonstrated the vacuity of the ‘sustainable growth’ position even if they have been less effective in transfusing this knowledge and understanding to the general public. However, given the mainstream position on growth—i.e., that continuous growth is ecologically sustainable—the ‘limits to growth’ position warrants reiteration which, to do adequately, requires a thorough debunking of many pro-growth arguments.

Coverage of the book

In order to demonstrate why there is a potential conflict between the goals of ecological sustainability and full employment, Chapter 2. begins with a brief overview of three alternative views of the relationship between economy, society, and the natural environment. From this, a coevolutionary world-view is adopted to show that the throughput of matter-energy needed to fuel the economic process must increase over time should a nation continue to grow its economy. With this in mind, six sustainability precepts are established as a means of demonstrating that an ever-increasing rate of throughput and, therefore, a continuously expanding economy, is ecologically unsustainable. Also explained is how the growth of an economic system will eventually become ‘uneconomic’ and that a so-called economic limit to growth is likely to precede the ecological limit.

Evidence is then provided to show that most wealthy nations have surpassed their economic limit to growth and that the economies of most of the world’s nations have grown beyond their biophysical carrying capacity. The evidence is subsequently used to indicate that the majority of the world’s nations, should they aspire to achieve sustainable development, are already severely constrained in their capacity to increase real output levels to lower unemployment, let alone to attain full employment.

Following a thorough debunking of three major pro-growth arguments designed to subvert the limits to growth position, Chapter 2. continues by demonstrating that the world’s richest countries appear to be engaged in an undesirable trade-off between employment and environmental goals with the countries impacting least on the ecosphere paying a significant price in terms of a high unemployment rate. It is because of this trade-off that it is suggested that the attainment of the twin goals of ecological sustainability and full employment will require much more than an increase in efficiency and a transfer of employment from the dirty sectors to the green sectors of the economy.

As for the remainder of the book, Part II includes three chapters on how Post-Keynesian economics has previously dealt with environmental considerations and what it potentially offers as the basis for future examination of the environment-employment dilemma. Post-Keynesian economics constitutes a useful starting point given that it is a school of thought that has focused a great deal of its attention on the causes of unemployment. As such, it has already established much of the foundation required to deal with one half of the environment-employment dilemma.

In the first of these three chapters, Chapter 3, Mearman goes straight to the heart of the issue by drawing upon data obtained from a questionnaire distributed to a number of leading Post-Keynesian researchers and eminent Post-Keynesian sympathisers. Also utilised by Mearman is data gathered from interviews with two renowned Post-Keynesian economists and an audit of prominent Post-Keynesian and heterodox journals. The central aim of the interviews and questionnaire was to determine: (a) whether the leaders in the field believe that Post-Keynesian economists have neglected environmental concerns; (b) if so, why this is the case; and (c) how Post-Keynesian economists might, i...

Table of contents

• Routledge Studies in Ecological Economics
• Contents
• Figures
• Tables
• Contributors
• Acknowledgments
• Part I An introduction to environment and employment
• Part II Post-Keynesian economics and the environment
• Part III Guaranteed employment versus guaranteed income
• Part IV Ecological tax reform and the double dividend
• Part V Jobs versus the environment
• Part VI Conclusion
• Index