Plenty of Something (review)

Plenitude: The New Economics of True Wealth, by Juliet Schor (New York: Penguin Press, 2010). (Also published in paperback as True Wealth.)

Plenitude argues for an “ecological economics” which turns a lot of what we think about wealth upside down.  I agree with many of her basic ideas, but a number of details left me uncomfortable.

Schor argues for a view of wealth or “plenitude” which values four things: time, “self-provisioning” (self-reliance), “true materialism” (conserving the environment on which the economy depends), and investments in relationships.  Her basic insight is quite important: despite having a lot of “things,” we are facing planetary destruction in the form of climate change, species extinction, and depleting natural resources.

Schor argues that there are some things which don’t show up on economic balance sheets which are nevertheless forms of wealth, for example leisure time.  Another factor which does show up on the balance sheets — knowledge — is arbitrarily limited by law relating to patents and copyrights.  Advanced technology, leisure, and deepened relationships with our neighbors and our communities will leave us better off than we are today.

Schor discusses many environmental issues clearly of great relevance. She discusses the limits to growth, ecological footprint, the failure of conventional economics, and the Jevons paradox (which she calls the “rebound effect”). She vigorously condemns “business as usual” economics. If we learned to share more, we would not only strengthen community but also achieve environmental efficiencies.

This is a valuable book well worth reading. While I agree with Schor’s basic approach, there are a number of questions of detail which leave me uneasy.

1. She never discusses alternatives  to the Gross Domestic Product (GDP) which ecological economists have proposed as means of measuring wealth.  Ecological economists often attack the GDP. For example, if someone gets cancer, then it is good for the economy because it increases GDP. It provides employment for doctors, surgeons, and their medical staff. GDP increased, yet that doesn’t mean that cancer is a good thing.

One proposal is the “Index of Sustainable Economic Welfare” (ISEW), which included such things as Schor mentions — leisure time and environmental health. Others talk about the “gross national happiness” or “genuine progress indicators,” in which hailstorms and cancer are problems and not benefits. Even though all of this research supports her case, she never mentions it.

2. She seems to lose her stomach for the “limits to growth” thesis as the book progresses and the concept winds up somewhat vague. Does “limits to growth” mean that our standard of living — by any measure — will decline, stabilize, or grow? Is it possible that intensive growth (increases in efficiency, as opposed to increase in resource consumption) would be so dramatic that GDP or the ISEW would still increase?

All of this is left unclear. On p. 90 she says that we need to control “the pace of growth,” which implies that conventional economic growth will continue, but will not be quite as great. She seems to be willing to let the reader think that “green economic growth” is really possible, or at least that our standard of living will stabilize by some measure or other. I’m not so sure this is the case, and I wish that she had discussed this further, even if only to say that we don’t know.

3. There is little or no discussion of policy changes or political and social issues that need to be resolved.

For example, should we reform the monetary and banking system which many people argue is promoting economic growth? If the economy doesn’t grow, as she argues, won’t this mean that a lot of debt won’t be repaid and that the whole economy will collapse? Will renewable energy leave us with a lower material standard of living? What about policies such as cap and trade to limit greenhouse gas emissions and to limit resource depletion? What about a progressive income tax, or a “basic annual income” guarantee, to reduce the rampant inequality in the U. S. today? She does suggest that working fewer hours will mean that more people will have jobs (albeit with fewer hours), but this “job sharing” idea is a very different from the basic annual income or the progressive income tax.

At times she seems to leave the impression that this whole shift towards “plenitude” may just be a cultural shift, and wouldn’t require any policy changes at all. I don’t think this is what she wants to argue, but she leaves everything rather vague so it is hard to tell what exactly she wants to see happen.

4. There is scarcely any mention at all of vegetarianism or of food issues more generally. By eating vegetarian or vegan, we dramatically lower our resource use and at the same time improve our nutritional status. Switching to a plant-based diet is exactly and precisely what she is talking about elsewhere, because it is a case where we can use fewer resources and yet improve the quality of the food we’re eating. As a practical matter, I don’t think that humans are going to be able to deal with limits to growth and climate change without plant-based diets becoming the norm.  But none of this is discussed.

5. Two of her key points seem to cancel each other out. Part of the idea of “plenitude” is “self-provisioning.”  Yet another part is “community relationships.”  This sounds like two rhetorical flourishes headed in the opposite direction, one emphasizing dependence on others, the other emphasizing independence.

6. She believes that we can quantify the economic costs of ecological destruction. This is not just a question of missing details or a vaguely stated thesis, but something which is actually wrong. On p. 18, she discusses putting an economic cost on environmental damage. On p. 94, she speaks of the economic costs of soil erosion, desertification, species extinction, and other bad things. On p. 147, she speaks of economists who want to correctly value nature.

To fully explain what is wrong here would probably require a separate essay, but here goes my quick explanation. The environment is not part of the human economy; the human economy is part of the environment. This is a basic insight of ecological economics, and shapes the entire discipline, but I don’t think she sees it.

What could be the harm of speaking of the economic value of the environment? The basic problem is one of circularity when you get down to quantifying things. If we speak of the true economic value of oil, for example, we would have to value its services in an economy which . . . is largely supported by oil. The true value of oil, in this analysis, will turn out to be worth, well, whatever it is worth. There are ways of trying to get around this paradox, say by calculating the worth of oil in other terms: natural gas or the number of horses that could provide an equivalent amount of power, for example. But then we’d have to calculate the value of the natural gas and the horses, which would again depend on an economy largely powered by natural gas or horses. Whenever you tried to “do the math” you get wrapped up in circularities.

This can also lead to ludicrous conclusions. For example, what is the economic damage caused by climate change? Some years ago, a study concluded that the effect of climate change on the U. S. economy would be relatively minor, because most of the bad economic effects of climate change are on agriculture, and agriculture is a relatively minor part of the economy. To see why this is ludicrous, imagine that climate change were so serious that it completely wiped out all agriculture, but left the rest of the economy intact. We’d all starve to death even though this is just a small part of the economy.

The truth of the matter is that we have to decide what kind of world we want to live in. For example, it might be, 5 billion people living on a “European” standard of living, or it might be 1 billion people on a vegan diet. But whatever we come up with, we then have to shape our economy — the accounting system that we use to decide how well individuals and society are doing — on the basis of this vision. We don’t evaluate our environmental proposal for a livable world on the basis of our accounting system (“the economy”).

The whole idea of “cap and trade” is based on this insight. Yes, the version of cap and trade in Congress a couple of years ago was so ludicrous that it was not even worth debating, but the basic idea is sound. We set limits on the amount of carbon, methane, etc. that we want to put in the atmosphere each year, and then ration out the ability to pollute. (And strictly enforce it.) We set limits on the amount of soil erosion, groundwater depletion, and so forth, which is tolerable in the long run, and then ration out the ability to till the soil or use groundwater.

Many of these points are questions of detail or concerns about vagueness, which will not detract from the book’s value for the typical environmentally concerned reader. Schor has done a good job of describing some of the aspects of this future life — a vision I share, by the way. However, circumstances also demand radical new social and political policies, which will leave not a single aspect of human life on the planet nor a single individual untouched. Someone needs to be talking about these policies and about what kind of planet, in the end, we want to live on and how and whether we can get there.


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