Excerpt from The Plundered Planet: Why We Must – and How We Can – Manage Nature for Global Prosperity, by Paul Collier (Oxford University Press, 2010). Reprinted with permission from the author.
From Chapter 1. Poverty and Plunder
Regulation requires good governance. The planet’s natural assets are mostly on and under land controlled by the world’s 194 governments, which vary greatly in their competence and their accountability to citizens. A convenient way of thinking about the planet’s land area is to group it into four equal quadrants. The developed countries in that wealthy club, the Organisation for Economic Co-operation and Development, account for 80 percent of the world economy. However, they control only one of the land quadrants. At the other end of the spectrum, the countries that have missed out on development—the bottom billion—account for merely 1 percent of the world economy, yet they, too, also have one of the land quadrants. The third quadrant belongs to Russia and China and their satellites. The final quadrant is everyone else: essentially, the emerging market economies. In each of these political arenas, global natural order depends upon the incentives for plunder being countered by effective regulation.
Regulation requires good governance, but most of the societies of the bottom billion have had weak governance. The consequence might be summarized in another simple formula: nature + technology – regulation = plunder. Plunder has dominated the history of the exploitation of natural assets in the poorest societies. What should have been the lifeline by which these societies haul themselves out of poverty, has instead produced wasted opportunity. Although basic economics suggests that the value of natural assets is dissipated by an equally costly struggle over possession, more sophisticated analysis shows that the outcome of that struggle can be even worse. Basic economics just predicts its cost to the participants, but not to bystanders. Because of this potential for harm the discovery of natural assets can turn into a curse. While the societies of the bottom billion have been the most vulnerable to plunder, even middle-income countries have been put at risk. Ernesto Zedillo, the former president of Mexico, views current Mexican society as a tragedy for which oil is responsible. It has dragged the society down when it could have lifted the economy up.
The poor governance of natural assets also happens in the wealthy countries of the OECD. At the national level governance of natural assets is usually satisfactory, but this stops at the border. Sometimes nature does not respect frontiers. For those natural assets and liabilities that are global, such as the fish of the oceans and the carbon of the skies, plunder is currently the standard. Indeed the most energetic plunderers of these global natural assets are the companies and citizens of the rich societies. Regulation is necessary, yet most economists are doubtful. Their suspicion is not unjustified: rules are not set by Platonic Guardians wisely guiding our societies; they are set by the balances of political pressures. A well-functioning democracy will formulate the rules that most people want, but what people want depends upon what they understand. I wrote The Bottom Billion because I recognized that until citizens were better informed about the distinctive problems of the poorest countries democratic governments would adopt “gesture politics.” Policies that looked good in the headlines were preferred to more effective policies too sophisticated to be appreciated. In a democracy, regulation of the natural world can be no better than popular understanding of why it is needed and the rules that govern nature will reflect any misunderstandings.
In the rich countries, where decades of unprecedented economic growth have induced rapid social change and religious belief has waned, nature has become the last constant. It is seen as under siege, threatened by the march of scientific technology. The “birth of the modern” is commonly dated to the end of the Napoleonic Wars in 1815. It was not long before nature was being enlisted into the diagnosis of the discontentment of civilization. By 1821 the French-German Enlightenment philosopher Baron d’Holbach was writing, “Man is only unhappy because he does not understand nature.” If only we could get back to nature we could get off the psychiatrist’s couch.The more prosperity has distanced us from nature, the more we have demanded that governments protect it from science. And the more emotive the issue involved the more it is apparent, as with stem-cell research and genetically modified food.
Agriculture, as the economic activity that most directly impinges on nature, has borne the brunt of these sentiments. But the misunderstandings of ordinary citizens offer fertile opportunities for special interests. Regulation not only protects, it redistributes. Regulations can be manipulated by interest groups to their advantage and in the rich countries the agricultural lobby has thrived on popular misunderstandings which, through our aid programs, have extended to Africa. With their organic cultivation practices, production for self-sufficiency, and family organization, small farmers in developing countries are perceived as the last bastion of the pretechnological, precommercial, preindustrial lifestyle, a “peasant” lifestyle that needs to be preserved. As the peasant and industrial lifestyles have further diverged, reflecting the growth of our economies and the stagnation of theirs, the peasant lifestyle has come to emblemize a harmonious life. The development NGOs, dedicated as they are to the eradication of poverty, also reflect the environmental concerns of the wealthy countries that fund them. Their attitude to a local farming economy can therefore border on the schizophrenic: they want both change and preservation.
The victims of today’s curtailment of stem-cell research are tomorrow’s incurables. But the victims of the anti-science, pro-peasant regulation of agriculture are today’s poor. Curtailing technology and discouraging the commercialization of African agriculture have tended to increase the price of food, and food is the main item of expenditure for poor households. Here’s a final formula: nature + regulation – technology = hunger.
Environmentalists versus Economists?
Environmentalists and economists have been cat and dog. Environmentalists see economists as the mercenaries of a culture of greed, the cheerleaders of an affluence that is unsustainable. Economists see environmentalists as romantic reactionaries, wanting to apply the brakes to an economic engine that is at last reducing global poverty.
The argument of this book is that environmentalists and economists need each other. They need each other because they are on the same side in a war that is being lost. The natural world is being plundered: natural assets are being depleted and natural liabilities accumulated in a manner that both environmentalists and economists would judge to be unethical. But the need for an alliance runs deeper than the practical necessities of preventing defeat. Environmentalists and economists need each other intellectually.
In 2009 Sir Partha Dasgupta, an economist at Cambridge, comprehensively reviewed how the profession has analyzed the natural world. His conclusion was that it “remains isolated from the main body of contemporary economic thinking.” Even when economists incorporate nature, they treat it as they do any other asset: natural capital is simply part of the capital stock, to be exploited for the benefit of mankind.
Since the Stern Review of the Economics of Climate Change of 2006 one aspect of the natural world—that it is warming—has suddenly slammed into the economic mainstream. Lord Stern commanded sufficient respect to force the profession to pay attention to the costs of global warming and the options for mitigation. The result has been an acrimonious battle among economists as different models have produced widely differing results. Yet as Stern has stressed, the key issues are not technical, they are ethical. Policy choices should turn on the responsibilities of the present generation to the future. Yet mainstream economics has blundered into climate change guided only by an ethical framework that is simply inadequate to deal with nature because it ignores rights. Rights are central to the ethics of the natural world: the rights of the present versus the future, and my rights versus yours. Environmentalists bring a fundamental insight that economists have missed. Nature is special: our rights over the natural world are not the same as our rights over the man-made world. Economists need that insight in rethinking the ethical assumptions made in their models.
It will come as no surprise to most people that economists need an injection of ethics. Survey evidence finds that economics students tend to be more self-interested than other students. Either economics attracts the selfish, or worse, it inculcates greed. Economists indeed assume that people are interested only in their own consumption, yet paradoxically, economists judge the world according to an ethical framework that is selfless in the extreme: Utilitarianism. As adopted by economists, Utilitarianism is an austere, universal value system that is impossibly demanding; according to its judgments even noneconomists are selfish. Given the gulf between the values economists use to judge the world and the values they assume ordinary people to hold, many economists conclude that ordinary people cannot be trusted adequately to protect the interests of the future: they are ostriches. Economists share Plato’s view that the ideal government would be composed of wise Guardians, although, of course, those Guardians should be economists rather than philosophers. In advocating an override of democracy, economists dig themselves deeper into ethical trouble. Nor is their approach realistic: government priorities will inevitably reflect the preferences of their citizens.
Yet in this, too, economists can learn much from environmentalists. One of the founding texts of modern environmentalism is Our Plundered Planet, by Fairfield Osborn. Originally published in 1948, Osborn—who was then the president of the New York Zoological Society—sought to awaken ordinary citizens to the unsustainable exploitation of nature.
The Plundered Planet proposes a synthesis in the practical value systems used by environmentalists and economists. Environmentalists are right that each generation has responsibilities for natural assets that it does not have toward other assets. But economists are right that nature is an asset, to be used for the benefit of mankind. We are not curators of the natural world, preserving nature as an end in itself. We are not ethically obliged to preserve every tiger, or every tree. We are custodians of the value of natural assets. We are ethically obliged to pass on to future generations the equivalent value of the natural assets that we were bequeathed by the past. The natural world indeed presents us with distinct obligations, but those obligations are essentially economic.
In the proposed alliance between environmentalists and economists the common enemies are the ostriches and the romantics. The ostriches will plunder the natural world. Sometimes plunder takes a form that is instantly recognizable as unethical. But more often the true consequences of an apparently legitimate action have to be teased out from a chain of decisions. As a result, plunder goes largely unrecognized. In the countries of the bottom billion there is a complex chain of decisions the end result of which is that natural assets are being extracted without sustainable benefit to ordinary citizens. In the rich countries activities that until recently were innocuous, now accumulate natural liabilities. In each case, the culprits are largely unaware of their culpability. The romantics will leave the potential of the natural world untapped; preserved rather than harnessed. The lifeline for the bottom billion will not be seized.
The poorest countries need rapid economic growth and this creates a potential tension between poverty reduction and the preservation of nature. Environmentalists have been right to stress that economic development must be sustainable, but economists bring the insight that sustainability need not imply preservation. If environmentalists insist on the preservation of each aspect of the natural world they are liable to find themselves on the wrong side in the struggle against global poverty.
Plunder and romanticism are so rife precisely because ordinary citizens are insufficiently informed about the opportunities and threats that nature poses to have forced governments into effective regulation. In the task of building an informed citizenry the starting point is an ethics of nature that people in societies with widely different value systems can understand and accept. Neither the romantic variant of environmentalism that sees nature as an end in itself, nor the austere universalism of economic Utilitarianism, can provide such a foundation. The most difficult wars to win are those that must be fought on two fronts. It is more straightforward, psychologically more satisfying and dramatic to have only a single enemy. Views can be aligned on a continuum, with the good and the true at one end and the bad and the wrong at the other. The romantics among environmentalists and the Utilitarian Platonic Guardians among economists see nature as a single-front war. The romantics regard economic growth as the enemy; the Platonic Guardians regard the values of ordinary citizens as the enemy. But most struggles in development are not like that: sanity lies in the middle rather than at the extremes. Aid provides an example. It is neither a panacea nor a menace.
In this book I am going to try to turn the exploitation of nature and its assets into a two-front war, expanding what is currently noman’s land into a place where all but the romantics and the ostriches can feel at home. The romantics and the ostriches each tap into a range of emotions: the romantics on guilt, fear and nostalgia; the ostriches on greed and optimism. But the devil need not have all the best tunes: effective solutions to vital problems that have been intractable lay where they always have—in the center.
Excerpted from The Plundered Planet by Paul Collier. Copyright © 2010 by Paul Collier. All rights reserved.
Paul Collier CBE is is a heavyweight economist, in the same league as Joseph Stiglitz and Jeffrey Sachs. He’s an Oxford professor and a former head of research at the World Bank, as well as being a UN and British government adviser. He is an authority on war and democracy, he has addressed the UN general assembly and has given a seminar at 10 Downing Street. In 2010 and 2011, he was named by Foreign Policy magazine as one of the year’s top global thinkers.
Paul Collier – The Plundered Planet
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