As to posterity, I may ask ... what has it ever done to oblige me?
Thomas Gray, Letter to Dr. Wharton (1758)
Why should I care about posterity? What has posterity ever done for me?
Groucho Marx (1890–1977)
And when he saw him, he passed by on the other side ... Who was neighbour to him?
St. Luke’s Gospel, the Parable of the Good Samaritan
The new world order will be shaped by the underlying question: What is progress? Is it material wealth, or is it something more fundamental: the increased ability to create such goods as happiness, love and friendship (though we should not underestimate the part material wealth has in that)? But even if we think we have answered that question to our own satisfaction, there is another, more personal, question that looms: Why should I care? If I am as contented as can be expected and my world is well tended and well protected, why should I lift a finger?
And if I do decide to do some good, why should I do anything for anyone beyond my immediate circle? Who is my neigh-bour? Enlightened self-interest is based on the idea that I do good to others in order that they will do good to me. So I have no apparent reason to do good to those who are incapable of returning the favour. According to such a “contractual” view of ethics, ethical behaviour extends only to the boundaries of our extended community, since anyone who is beyond those boundaries is hardly likely to be able to reciprocate our good deeds. Most clearly of all, this view weakens our sense of obligation to do anything for posterity, since there is no way in which those who will be alive after we are dead can do anything to make our lives better or worse now.
And yet it is impossible to escape the fact that we fret about this. We fret not just about the volatility of the world, the waywardness of the markets, and the constant disruptions of the capitalist system. We increasingly fret about ourselves, the moral implications of the way we live and what it is doing to us: to our immediate communities—the cities, towns and villages where we live—and to us as individuals—as mothers, fathers, sisters, brothers, colleagues and partners. And also to the planet as a whole.
At the core of our discomfort is the commercialization of everything. One of the immediate reactions widely triggered by the financial crisis that began in 2007 was a groundswell of rage against conspicuous consumption. The 1980s view—when you’ve got it, flaunt it (as the Mel Brooks song goes)—sounded hopelessly out of touch by the end of 2007, and by mid-2009 it would have been dangerous to defend it in a public place. The discovery in late 2006 that in modern Britain 70 percent of three-year-olds recognize the McDonald’s symbol but only half of them know their own surname, or that the average ten-year-old is familiar with between 300 and 400 consumer brands but would be unable to name 15 wild birds, was poignant evidence for our fears. What sort of people were we becoming?
Our fear is that the individual has been effectively replaced by the consumer. In our nightmares we are dazed and bewitched shopaholics, wandering from one glittering promise to another, overweight and weighted down with useless stuff, clutching a pack of store cards and credit cards that we can’t afford. It is as if the dominant image of our time has become the shopping mall—each new one bigger, brighter, better than the last—with its myriad shop fronts, special offers, canned music and permanent artificial light.
And nothing seems sacred. The tendrils of consumerism have wormed their way into every corner of our lives, from (long ago) Christmas, to the pylon-sprouting, ski-worn mountains, to the wedding packages on the beach or even in the supermarket aisle, to the parental rituals of children’s birthday entertainers and goody bags, to the lovers’ rites of Valentine’s Day, to the telesales call on a Saturday morning, and to the language we use—where a relationship becomes a “deal,” an academic idea must be “sold,” and even crime is “business.”
Whether consciously or unconsciously, we worry about where this is leading. Since Oscar Wilde’s Lord Darlington, in Lady Winder mere’s Fan, pronounced that a cynic knows “the price of everything and the value of nothing,” it seems that we have all become cynics. If everything is defined by price, not value, then surely social fragmentation follows, since all that matters is a supply of cash rather than shared blood, community, friendship or beliefs. Yet we all know in our innermost being that price is not a reliable indicator of value. The words we use are a telling reminder of the point: what has no value is valueless; what has immense value is priceless.
As communitarian networks retreat and commercialization moves in to take their place, we are aware, at some level, of the harsher implications. With increased efficiencies, clearer targets and the commercial pressure to do more with less come the inevitable corollaries: the risk of the waning influence of hard-to-price factors such as professional ethics, dedication beyond the call of duty and the kindness of strangers; and the often unspoken thought that “it’s nothing to do with me.”
The effects are complex, and we should be beware of oversimplifying. At its best, the retreat of social ties and pressures has helped to increase tolerance. From the trivial level of what we wear and the gradual relaxing of class-related exclusions from clubs and paddocks, to the deeper level of removing racial and sexual barriers to the prize positions of power and influence, the individualization of the world has opened up benefits to millions who were previously shut out. At its worst, however, it has introduced a dangerous compartmentalization: the ability to walk by on the other side has rarely been greater, as we gingerly avoid involvement in other people’s battles or sufferings. How, in this individualized world, can we preserve a sense of obligation? What do we teach our children? It is significant that the idea of duty seems to be coming back into public discourse, as something we yearn to retrieve from an earlier stage of history—albeit without the perceived trappings of patronization, hypocrisy and intrusiveness.
What heavy irony, too, lies in the fact that, in the most connected and networked age by far in the history of humanity, we also have fewer permanent ties and bonds to each other. Communities in every old sense have faded, and in their place have come new and fluid “social networks” populated by restless shoals of seekers brought together by algorithms communicated through server farms in California. Is this the Teilhard de Chardin paradox in action: that only when we are One are we one—or, in other words, that only when we are fully converged with each other do we become complete persons? Is it Simmel’s world: the world in which the urban metrop olis drivesus to objectify and put a price on everything, and in which the only route to psychological survival is to specialize and take our solitary place in an increasingly fragmented and patternless world, like so many misshapen pieces from a giant jigsaw puzzle without a picture on the lid?
Perhaps both the urgency of the question “Why should I bother?” and the sharpness of the fear over isolation, privatization and fragmentation would be in some way soothed if it seemed that access to progress and self-improvement was more equitable; if it seemed that anyone, regardless of birth or background, could have a chance of participating in the fruits of the marketplace. Then, at least, it would be possible to believe that the injustices of the last generation might truly be cancelled out in the next, and that the parents who had spent a life trapped in poverty might realistically expect their children to enjoy a life of choices and comfort.
But the fact is that whole swathes of people down the ages have been denied not just equal but any kind of reasonable opportunity. Karl Marx was right to pillory the society of his time for the way in which it denied the working classes the fruits of their labour, even though he was wrong in predicting the increasing antagonism of capitalists and workers and had no inkling of the possibility of the modern welfare state or—more generally—of a capitalism that would end by making the large majority of the population think of itself as middle class.
But this has been the outcome, so far, for only a relatively privileged minority at the global level—the majority of whom live in developed countries. And while formidable progress has been made in recent decades in many developing economies, too, it is clear to all that the prospects for vast numbers of human beings remain bleak.
There are many, too, who are left behind in even the wealthiest societies. One of the most important writers on the subject, the American author Ken Auletta, first popularized the idea of a section of American society that had dropped out of the normal social structure in his 1982 book The Underclass. By his account, this was a group not merely defined by poverty, but belonging largely to four categories: the passive poor (long-term welfare recipients), the hostile street criminals (dropouts, drug addicts), the hustlers (dependent on the underground economy) and the traumatized (drunks, drifters, the homeless, released mental patients). By its broadest definition, the American under-class has been reckoned to comprise 36 million people at around the turn of the millennium.
In many of the modern cities of the rich West there are areas that are effectively ghettos of the marginalized, sometimes separated from the wealthiest by the shortest of distances. In London, the borough of Tower Hamlets, close by the wealthy, cosmopolitan City, is home to a 65,000-strong Bangladeshi community, the largest such group outside Bangladesh. Much of the population comes from Sylhet—a rural area of northern Bangladesh—and speaks Sylheti, a dialect with no written form. In Paris there is the notorious problem of the banlieues, with their heavy concentrations of North African immigrants, accompanying poverty and regular outbursts of violent protest. Parallels have been widely drawn between colonial apartheid in Algeria, in which native medinas were kept isolated from the European neighbourhoods, and an urban profile that keeps residents of the banlieues trapped at a perpetual distance from the bourgeois centres of wealth and opportunity. They may be overstating the case, but all accept that there is a serious problem.
There are the marginalized in poor countries, too, where the rapid improvements in overall living standards have left large sections of humanity behind. China has been a remarkable success story, with continuous economic growth since 1978 during which per capita incomes have more than tripled and the number of extremely poor people has decreased significantly. However, it is widely recognized that living standards in rural areas in central and western China remain extremely low. Income difficulties have widened sharply in the last two decades. India has its Dalits, traditionally the lowest castes or “untouchables,” estimated in the 2001 census to number over 160 million, or 16 percent of the population. Discrimination is widespread: many Dalits are bonded workers, and many are striving to pay off debts incurred generations before. In 2005 there were 110,000 registered cases of murder, rape and other atrocities committed against Dalits—the true figure is commonly assumed to be massively higher, since crimes against Dalits seldom get reported or go to trial. Despite great strides forward in average incomes, Brazil is well known for the tragedy of its street children, and throughout Latin America charities estimate that there are 40 million children living on the streets, with three dying from malnutrition every minute and widespread incidence of abuse and prostitution for those who manage to stay alive.
Then there is the continuing stain of slavery. By some accounts, in 2007 there were still 27 million people globally who worked in virtual slavery (although the International Labour Organization estimates that the figure is closer to 12.3 million)—the largest number (albeit probably the smallest percentage of the total human population) that has ever been enslaved at once. One antislavery organization claims evidence that present-day slaves have been sold for as little as $40 in Mali as young adult male labourers. And then there are over 200 million children aged from 5 to 14 who are at work around the world, according to UNICEF. Some of them are born into bondage; others are sold by their parents or abducted. They are to be found in agriculture, industry, domestic work and the sex trade.
In some cases whole regions are being left behind. According to the International Monetary Fund’s 2008 report on Africa, the per capita GDP of sub-Saharan Africa, excluding Nigeria and South Africa, is $435 a year, of which 44 percent comes from exports, mainly of natural resources. Without that income from natural resources, very little of which ever gets back to the mass of ordinary people in these countries, average per capita GDP would be $244, or around 66 cents a day—less than one-hundredth of the figure in Britain. Poverty remains endemic throughout the continent, even though recent years have seen improved growth in many countries.
In some countries, even with the best will in the world, it is hard to see how economic development can make significant progress. Burkina Faso is a small, landlocked, mostly flat country in West Africa, covering 274,200 km2. The population is around 16 million, the majority of whom are farmers of cash crops such as cotton, peanuts, sesame, rice, millet and vegetables. Life expectancy is 50, and the median age 17. Low rainfall, poor soil, lack of communications, a low literacy rate, and a stagnant economy are all long-standing problems. The Sahara is slowly advancing south; the country is regularly wracked by droughts. Unless commodity resources happen to be discovered beneath the ground, it is hard to see any reason not to try to emigrate, and many do. Poverty seems to be a fact of geography.
In other countries the problem is history. Angola, for example, ought to be as rich as Switzerland. It has some of the most fertile farming land in Africa; it has rich resources of diamonds, bauxite and petroleum; it has a beautiful coast; and it is large: 1.2 million km2—about the same size as South Africa, or twice the size of Texas. And yet decades of civil war have produced an economy and society in shambles. Life expectancy is just under 40, infant mortality is extremely high (about two in ten), and many people have lost legs and arms because of land mines. The population of 13 million is one of the poorest on the planet, and, beyond oil and mineral exports, which are tightly controlled by the government, the only livelihood is a ragged patchwork of subsistence farms.
And then, more moving and more terrible somehow than the statistics, are the individual stories. Looking the facts in the face is never easy, but when they are statistical it is easier to be detached. There is a Tearfund video made in January 2008 entitled Bring Childhood Back to Life which can be found on YouTube. It tells the story of Rachel Casarvo, a 13-year-old Ugandan girl, whose parents both died of AIDS in 2001, leaving her to look after six children on her own. She tells the story of her days: cooking and cleaning, getting her siblings to school and tending them when they are sick. She talks in a matter-of-fact way. And then she says simply, “I miss my parents.” Humanity has such a propensity for compartmentalization that, like it or not, we can separate ourselves from what is going on in another continent most of the time. But a story like Rachel’s brings it home that a young girl, so like my own daughters in her humanity, is one of the human beings behind the anonymous statistics.
Yet poverty is surely not inevitable, and the problem not intractable. The modern world does have the resources and the technology to deliver reasonable living standards to everyone. If you take the latest World Bank statistics, the total GDP of the world divided by its population produces an average income per head about equivalent to the standard of living in Turkey or Russia. This calculation is certainly simplistic, but it does remind us that we could at least theoretically provide every member of humankind with a standard of living that, though not rich by any means, is well beyond poverty (and beyond the incomes of well over half the world’s population, bearing in mind that actual income distribution is skewed toward the rich).
In practice can this ever happen? No. It would require a global consensus and commitment that are humanly impossible to achieve. (Why? We will come back to this question in Chapter 8.) We have to accept as a matter of practical fact that the road to poverty eradication involves creating the means to economic development, rather than relying on some idealistic grand bargain of redistribution, and that it will be a long haul. And, also as a matter of practical fact, progress in poverty eradication will have to depend primarily on the markets. Imperfect, unpredictable, often brutal in their effect, they must nevertheless remain our main hope. According to the International Finance Corporation, recent years have seen $4 of private investment flow into developing countries for every $1 in official development assistance. Remittances from overseas workers have also become a significant source of capital for some developing countries. In the case of India, such flows amount to some 3 percent of GDP; in the case of the Philippines they amount to as much as 12 percent.
Foreign direct investment into developing countries has fallen sharply since the onset of the global financial crisis: as always, poorer societies bear the brunt of adjustment. But it remains probable that private direct investment will over time continue to dominate the flow of capital to these areas. Foreign investment often has a mixed impact on developing economies and societies: it needs oversight, and it needs a strong sense of corporate responsibility on the part of investors if it is to deliver sustained value. But—as with the markets in general—the Churchillian defence applies. Foreign investment has often failed to benefit developing economies, yet there is no alternative to (effectively overseen, effectively governed) foreign investment as the main source of international capital for the development of most emerging markets.
Of course the markets need to be backed up. Official aid is vital. So, too, is voluntary work. The academic Michael Tanner, senior fellow at the Cato Institute in Washington, estimated some years ago that the monetary value of unpaid voluntary work in America was $176 billion. There do not seem to be any estimates at all for Africa—we can only imagine. What is clear, though, is how much hope is given to people in the world’s poorest countries by dedicated, uncorrupt organizations that do their best to make a difference with sparse resources. The British journalist Matthew Parris, in an article in the Times published in December 2008 about his return to Malawi after forty-five years’ absence, described how the Christian charity Pump Aid not only helped people keep their village wells clean but, on a more profound level, also helped them to work with “honesty, diligence and optimism”—by giving them back a belief in themselves.
There are also specific intervention mechanisms that are obviously effective. For instance, in 2000 at the World Economic Forum in Davos, a group including the Bill & Melinda Gates Foundation, the World Health Organization, the World Bank, UNICEF and the vaccine industry in both industrialized and developing countries launched the Global Alliance for Vaccines and Immunization—or GAVI for short. The aim is the worldwide expansion of childhood vaccination to significantly reduce childhood mortality before 2015. GAVI estimates that of the more than 10 million children who die before reaching their fifth birthday every year, 2.5 million die from diseases that could be prevented with vaccines—largely pneumococcal diseases or rotavirus (a severe form of diarrhea). Since its launch, GAVI has vaccinated more than 200 million children and claims to have prevented over 3 million deaths. The effectiveness of well-funded, focused and collaborative action like this is plain for all to see.
One of the most remarkable development phenomena of recent decades has been the spread of microfinance. In 1974 an economics lecturer at the University of Chittagong in Bangladesh lent $27 to a group of women who made bamboo furniture in the nearby village of Jobra. They had previously had to take out usurious loans in order to buy bamboo; they then sold these items to the moneylenders to repay them, with barely any profit to show for their work. The traditional banks—predictably—were loath to make tiny loans at normal interest rates to such poor people, who were classified as high risk and deemed unlikely to be able to repay the loans. What the economics lecturer discovered was that in fact the women were very good credit risks, and that lending to them at reasonable rates enabled them to develop their small businesses on a sound basis. Thirty years later that same economics lecturer, Muhammad Yunus, won the Nobel Peace Prize, and microfinance—financial services for the very poor—had achieved a resounding record of success in reaching the excluded and assisting small groups of people to take control of their own lives. In 2006 it was estimated that there were around 90 million beneficiaries of microfinance worldwide. The majority of users are women, because they control the household funds and because they are so often responsible for the productive work done in the community. Time and time again, the experience has been of very low default rates on microfinance lending. This first step in connecting these women to a wider world through marketing what they produce is a powerful means of empowerment. It may not make people rich; nonetheless, it is profoundly transformative.
Eradicating poverty is not a fantasy. The US economist Jeffrey Sachs has summed up the problem: “Ours is the first generation in the history of the world with the ability to eradicate extreme poverty. We have the means, the resources and the know-how. All we lack is the will.” But progress will be long drawn out, and elementary mathematics highlights the scale of the challenge. In some of the poorest countries of the world, average incomes are perhaps $200 per year. At a sustained growth rate of 10 percent—which requires very strong economic performance by any standards—halfway through this century income per head would still be less than that of Brazil today. In other words, our grandchildren will still be struggling with development issues that will be easily recognizable to students of contemporary affairs. Corruption and civil disorder will probably still disfigure some of the most disadvantaged countries in the world. And poor people will still bear the brunt of natural disasters. The problem of world poverty will not have been solved to the satisfaction of the human conscience in the lifetime of anyone presently alive.
But if the poor will always be with us, does this make it too easy to give up, too easy to conclude that the effort is not worth the candle? Why should I do anything for posterity? This is really two separate questions. First, what good would it do anyway, what difference would it make? And, second, what has all this got to do with me?
As for the first question, there clearly are differences that can be made. We have touched on some above—the direct interventions and the less direct, all of them helping to alleviate suffering where it is most acute and create opportunity for human beings to fulfil their potential. We might think, too, of Tim in Kolkata with his two hundred children from the streets of the city. Even one child’s life lived fully is difference enough. And the second question: What has all this got to do with me? This demands a detailed response. But, before we turn to it, what about the other great anxiety of the age of globalization—climate change and environmental degradation? Can our planet cope?
Fears about planetary exhaustion have been with us for a long time. When, in A Christmas Carol, Scrooge explains why he refuses to donate to the poor who will not enter a workhouse (“If they would rather die, they had better do it, and decrease the surplus population”), Dickens is putting into his mouth the ideas of Thomas Malthus, an eighteenth-century English clergyman who—in his An Essay on the Principle of Population, first published in 1798—achieved huge influence in his lifetime and beyond for raising the alarm about population growth. He saw the earth’s resources running out in the face of relentlessly increasing numbers of people following the Industrial Revolution, and argued against the Poor Laws and the repeal of the Corn Laws on the grounds that these were measures that would merely make matters worse by increasing the population. His fundamental assertion that population could not increase logarithmically forever is believed to have helped Darwin form the theory of natural selection.
In 1972, Malthusian thinking lay behind an influential book entitled The Limits to Growth. This report, commissioned by a think tank known as the Club of Rome, set out to explore how far exponential economic and population growth could continue in a world with finite resources. It unleashed a torrent of alarm, furious argument and heated criticism—and clearly touched a public nerve. Many read into the book predictions that were not there, or perhaps were only implied by some of the formulas used by the authors: for instance, that the earth’s supply of oil would run out by 1992. But the overriding thought that humanity was running out of food and fuel was a populist hit, sparking off a whole literature of predictions and proposals involving everything from mining asteroids to grey goo (a large mass of replicating nanorobots).
A common thread of these resourcecentric fears has always been that the poorer populations would drag back more advanced societies because of the sheer scale of their needs. The thought behind much of the argument was: How were the rich countries going to restrain the poor countries from threatening their well-being?
Today the dominant fear about our planet is the more dramatic catastrophe that could be caused by global climate change. Resources are still finite, of course, but there is a greater readiness now to believe in the power of human inventiveness and technology to maximize resource extraction and efficiency. Global warming, on the other hand, could be the prologue to a tragedy of unimaginable scale. The world already feels like a less predictable and hospitable place as it is racked by increasing incidences of drought and flooding, fire and storm, melting and freezing. At one of Uganda’s two national newspapers, the Daily Monitor, in 2008 it was decided that for the first time in its history the paper should carry a weather map—the reason being that, for the first time anyone could remember, the country’s weather had become malignly unpredictable.
Not that everyone greets the prospect of climate change with alarm. There is special pleading in several developed countries claiming to welcome a degree of global warming. Scientists may condemn them as trivial or irresponsible, but the fact that these voices exist could affect the political resolve to act at the highest level. In November 2008, for example, a group made up mainly of university economists and anthropologists released a report pitted directly against the leading publicists of global-warming disaster such as the former US vice president Al Gore and the British conservationist James Lovelock. The group said that global warming might not be the unmitigated disaster that it was often represented to be: indeed, that for certain northerly regions such as Canada, Russia and Scandinavia it might be quite welcome. One of the group, Robert Mendelsohn, an economics professor from Yale, pointed out the benefits for Canada—from a longer growing season to the opening up of shipping routes through the Northwest Passage. Others pointed out the benefits of tourism in previously inhospitable cold regions. Another, Benny Peiser, an anthropologist from John Moores University in Liverpool, argued that the current slow upward trend in global temperatures could prove beneficial to human health, and said that in periods of warming there tended to be “thriving societies” with greater than normal progress in economic and social development. Meanwhile, from another angle, Patrick Michaels, of the Cato Institute, suggested that scientists have a natural interest in alarmism, since bad news leads to government action and government action usually leads to funding research, which is the key to scientists’ professional advancement.
Yet the evidence is real and unavoidable. Some of it we can experience with our own senses. As we have noted in Chapter 4, pollution is now a major challenge for many emerging markets. And we should not find comfort too easily in the thought that this is a transitional problem of economies passing through the industrial phase of economic development. For one thing, pollution is not confined to big cities in emerging markets: in hot summers in Paris and Athens, cars have had to be banned from the centre at certain times to avoid the dangerous buildup of exhaust fumes. For another, it would require a heroic degree of optimism, given the sheer scale of urbanization under way over the next half-century, to believe anything other than that the volume of urban pollution is going to go on increasing even if some cities are successful in moving toward a cleaner environment.
Other evidence of damage to the planet is less likely to register with us in our daily lives and, while we may know it in the abstract, we need a jolt to bring it home. For me, such a jolt came when I saw extraordinary satellite pictures of Borneo, taken at five-year intervals from 1985 onward, which show clearly to the naked eye the massive reduction in forest cover. When this is represented graphically—as it is on the World Wildlife Fund’s Web site—the map of Borneo turns from a lush green to a parched yellow between 1985 and a projected version of how it is likely to look in 2020. I have seen with my own eyes the beauty of the primeval forest of Borneo. I have seen how sustainable logging can preserve its essential character and its biodiversity. I have also seen the impact of unsustainable and destructive exploitation on an environment that is fragile, precious and effectively irreplaceable.
The picture is similar in South America. The Amazon rainforest is disappearing at an average rate of about 1 percent a year. This means that, if it keeps up that rate, within less than fifty years it will be half gone. Again, satellite photographs graphically capture the progressive deforestation. Currently about 6.7 million km2 of forest—about half the planet’s remaining rainforest and the largest and most species-rich tract of tropical rainforest in the world—the Amazon rainforest lost over 200,000 km2 of trees in the decade leading up 2005 in Brazil alone. In December 2008 the Brazilian government said that satellite imagery had shown deforestation accelerating again for the first time in four years, owing to illegal logging and high commodity prices.
Finally, there is all the evidence that is scientifically known and statistically measurable but that the naked eye cannot see. Notwithstanding scepticism in some quarters about the effects of global warming (in many ways an unfortunate term), there is no denying the remorseless rise of the major “greenhouse gases” (that absorb and emit radiation) in the atmosphere. Taking the global long-term trends of the five major gases that contribute to global warming (carbon dioxide, methane, nitrous oxide, CFC-12 and CFC-11) and putting them on a graph, there is no mistaking the trend. The growth trajectory for carbon dioxide, methane and nitrous oxide is a straight line heading upward. Only the two CFCs—the gases used in refrigerators—show recent declines in their growth rates (an example of concerted action that works). Since 2000 there have been particularly sharp accelerations in global CO2 emissions, to more than three times the level of the 1990s.
How can this trend be reversed? The arithmetic is brutal. At present, average CO2 emissions per head are 7 tonnes per year. Just to prevent the earth’s mean temperature from rising more than 2 degrees by 2050 requires that this be reduced to around 2 tonnes per year: i.e. around India’s present level—but half that of China, one-sixth that of Europe and one-tenth of North American levels.
Even more clearly than in the case of poverty, this challenge cannot be left to the market alone to meet. Until the world has an effective framework for charging those who emit CO2 into the atmosphere, there is no economic incentive not to do so. The damage it does will not be visible for many years, and, when it is, it will not be attributable to any particular agent. All it costs is the common good. The climate, as economists say, is the quint-essential “commons,” the public good that is free to everyone. When the Stern Review, the most comprehensive review ever carried out on the economics of climate change, was published in October 2006, the author Nicholas Stern announced at the launch that the world would have to muster “all the economics we can bring to bear” on climate change to prevent a catastrophe. He continued, “The science tells us that greenhouse gas emissions are an externality; in other words our emissions affect the lives of others. When people do not pay for the consequences of their actions we have market failure. This is the greatest market failure the world has seen.”
That is why government must give the market direction. And, given the right direction and the right incentives, harnessed instead of paralysed, the market can be a very powerful servant of humanity in tackling climate change. A precondition for this is human cooperative endeavour. The United Nations Climate Change Conference in Copenhagen at the close of 2009 is a huge potential opportunity. One of the key issues that has to be resolved is how to price the output of carbon dioxide so that markets can begin to work on restraining it. The two main pricing mechanisms proposed are (i) to charge a tax on each tonne of carbon dioxide emitted into the air and (ii) to place a cap on total emissions and then let polluters trade emission permits. As, for example, Steve Lohr of the New York Times has argued, economically, a cap-and-trade system has the same goal as a tax, putting a price on CO2 emissions, but it goes about it differently. Such a system has some political advantages. The biggest polluters, who would have to invest the most to make changes, could be given allowances to start with. It can also deflect the anger over higher costs and enable governments to use their allocations to buy political support, since permits are the equivalent of cash. Precisely for this reason, some economists advocate an explicit tax as the clearest price signal to the energy marketplace, and one that is less susceptible to political tampering and manipulation than a cap-and-trade system.
Whichever route is chosen, what Eileen Claussen, president of the US Pew Center on Global Climate Change, said in her remarks on emissions reductions in 2002 remains as true as ever:
If you are a business, or an investor, the market is the environment within which you operate. And as society comes to grips with climate change, the rules of the market will change. The climate will stop being free. There will be a cost for emitting carbon. From the business perspective, that will be the most important new reality. And it will require some adjustment. Those who understand that reality, and make the adjustment, will not only survive but thrive. Because in every change there is opportunity, and the rewards flow to those who seize it first. But by the same token, those who ignore this new reality and fail to adjust will pay the price. The market is a harsh arbiter. It will figure out quickly enough who’s done a good job of managing their carbon risk, and who has not. If you want to make sure you’re a market winner in the carbon-constrained world of the future, and not a loser, the time to start is now.
Moreover, the sobering thought is that the technological means and resources to meet the challenge are available. There are numerous examples of practical initiatives that have the potential to make a difference in very local ways. One such innovation—developed by the Energy and Resources Institute of India, a uniquely influential body working at the intersection between ecological and development challenges—is the solar-powered lamp. This device, conceptually simple like so many truly valuable innovations (microfinance is another example), brings light to homes in small villages with no access to electricity, at minimal costs to the environment. “Lighting a billion lives” is the Institute’s watchword. If this vision can be realized in the coming years, it could have a profound impact on rural poverty (as microfinance has had), and at the same time deliver its benefits on a low-carbon basis.
This is just one example. The general point is that sustainable growth and the transition to a low-carbon economy can be achieved by common endeavour at a reasonable cost. According to a report by the McKinsey Global Institute in the summer of 2008, it is possible to conceive of action on climate change that supports two apparently contradictory objectives at the same time: stabilizing greenhouse gases and maintaining economic growth. Reconciling these two objectives means that “carbon productivity” (the amount of GDP produced per unit of carbon equivalents emitted) must increase dramatically: from approximately $740 GDP per tonne of CO2 today to $7,300 GDP per tonne of CO2 by 2050—a tenfold increase, comparable to the labour-productivity increases of the Industrial Revolution. However, the “carbon revolution” must be achieved in one-third of the time that economic transformation took then, in order to maintain current growth levels while keeping CO2 levels safe. McKinsey reckon that the macroeconomic costs of this carbon revolution are likely to be manageable, being in the order of 0.6 percent to 1.4 percent of global GDP by 2030. Borrowing could potentially finance many of the costs, thereby effectively limiting the impact on short-term GDP growth. In fact, depending on how new low-carbon infrastructure is financed, the transition to a low-carbon economy could increase annual GDP growth in many countries.
However, it is clear that the threat of climate change cannot be addressed in isolation from the challenge of poverty. There is no prospect of global agreement on a significant shift to low-carbon economic development that does not encompass equally significant support for poorer countries determined at all costs to raise material standards of living. There is no alternative, therefore, to a common endeavour that is comprehensive in its scope and has no historical precedent in its ambition.
Yet the history of common endeavour is only partially encouraging. Most examples of success have depended on either narrow focus or strong leadership. The eradication of smallpox was a success. It was precise and effective—as was the campaign to curb use of CFCs in the 1990s. The demonstration of strong leadership has achieved impressive results just often enough in world history to give a reasonable expectation of hope. The naval supremacy of Britain in the early nineteenth century gave it the power to move to suppress the slave trade and outlaw slavery in British colonies. The European Recovery Program, or Marshall Plan, of 1948 would never have come into being without the leadership of the US president Harry Truman and the US Secretary of State George Marshall, whose speech at Harvard in June 1947 included the following patient vision:
It is logical that the United States should do whatever it is able to do to assist in the return of normal economic health in the world, without which there can be no political stability and no assured peace. Our policy is directed not against any country or doctrine but against hunger, poverty, desperation, and chaos. Its purpose should be the revival of a working economy in the world so as to permit the emergence of political and social conditions in which free institutions can exist.
But when leadership becomes more fractured, progress is more difficult. World trade negotiations are an example. In the post-war period, under US leadership, agreement on world trade made material progress. Latterly leadership has been more multiplex, and the project has become more complex—which is all evidenced in the painful lack of progress at the Doha round of talks. It has to be hoped that this is not an augury for international negotiations on climate change. Wherever common endeavour is needed, the parochial and the short term are real and present dangers. The serious challenge will be in settling which countries bear what share of the burden of adjustment. As one South African commentator put it, it is as if the developing countries have been invited to join the rich countries for dessert toward the end of an expensive dinner, and then asked to split the bill. Figuring out how to share the burden without watering down global targets will require at least as much political courage and leadership as was shown by Truman and Marshall in 1948.
There are clear implications in all this for agents beyond governments—for voluntary associations, businesses and individuals. Common endeavour demands a response by all and at every level. In a world where so much of the life of the human spirit has been privatized, where individualization has swept through society, we must consider how the possibility of constructive action helps to answer the question of why we should indeed consider doing something for posterity—whatever it may or may not have done for us.
Which brings us back to the question posed at the end of the last chapter. Is the issue really the end rather than the means? Is the real villain carbon-intensive economic development—rather than its servant, the capitalist market? Has the human species become addicted to (carbon-intensive) economic growth? And if so, how do we free ourselves from this addiction?
What is clear is, first, that the rich know—or should know—what the answer should be as soon as they face this question. They know somewhere in themselves that there are diminishing marginal returns to incremental wealth—that the second glass of wine never tastes as good as the first one, that enough is eventually enough. They can be seduced into the pursuit of rarity—antique coins, classic cars, vintage wines, fashionable art and so on—and be persuaded to pay for them precisely because of their distinctiveness. But when confronted with the question, they know these are optional extras. Enough has become enough.
The poor of the world, needless to say, have a different perspective. “God dares not appear to a starving man,” Gandhi once said, “except in the guise of bread.” And, by extension, we can hardly expect the emerging world not to strive for what the developed world takes for granted—first, clean water and electricity, then air conditioning, mechanized transport and all the rest of it. Conversely, the developed world may be prepared to agree with the proposition that enough is enough, but it is not at all clear that it would agree so readily that less is enough.
Each needs the other as partner to meet the twin challenges of the reduction of material poverty through economic growth (because there is no other way) and the shift to a low-carbon economy for the benefit of our grandchildren (and beyond). We have to wrestle with the two problems together and collectively. There is no alternative, and success in time is not guaranteed. And we need all the victories we can get: hence the importance of the emerging international framework based on the G20 process; hence the importance of the Doha round; hence the importance of Copenhagen. Hence the importance of continuing these processes even when their results at any given event may be disappointing.
And the other thing to which there is no alternative is the market. The development of poorer countries needs it; the development of a low-carbon economy needs it. It is clearly neither perfect nor sufficient for either challenge; it is equally clearly indispensable. Without it, we condemn poor countries to endless marginalization, and we guarantee that the low-carbon economy will remain largely a matter of rhetoric. Working with the grain of the markets, on the other hand, humanity can harness a force that is deeply engrained in its own nature to achieve what can easily seem to be the impossible.
All this involves the denial of compartmentalization. It will demand an integrated response from all of us as members of society, as institutions and as individuals. Governments alone cannot save the planet.
Businesses—of all kinds, in the real economy or in the financial system—cannot therefore take the view that this is none of their business. As was argued in the last chapter, their challenge—made all the more pressing by the huge breakdown in public trust and confidence in recent years—is to recognize the values on which the value (i.e. long-term sustainable shareholder value) of their business depends. And, at this juncture in the history of our development, those values are inextricably linked with the question of those twin challenges and how we face them.
“Corporate social responsibility” has entered the lexicon of business in recent years, as it should. Latterly there is a trend to replace it with the term “corporate sustainability.” Either expression is a reminder of the broad responsibility that businesses need to accept. There is of course always the danger that the words become part of the rhetoric of brand management—empty slogans that have no real impact on behaviour. There is also the subtler danger that corporate social responsibility is defined and departmentalized—or compartmentalized—into a range of activities carried out by a “CSR function” as an adjunct to the mainstream business.
The danger lies in mistaking the activities of the CSR function (the charity sponsorships, the community action, the educational mentoring, etc.)—valuable though those unquestionably can be—for facing up to the all-embracing need to accept the responsibility of building the business in a way that sustainably enhances the common good. Corporate social responsibility is not just about community support; corporate sustainability is not just about managing the company’s carbon footprint. It is about the strategic objectives, and indeed the raison d’être, of the company itself.
Does this conflict with the job of maximizing shareholder value? Only if that is interpreted as a short-term project. But it is no part of the responsibility of a board to focus on the short term. There is no question but that the markets—that anonymous term that is in fact the sum of countless voices of investors and traders—have often pressured boards and managements in recent years to do exactly that. Some of the results of such pressure are now plain for all to see, and the breakdown in society’s trust in the system has been the result.
The response has to be renewed commitment to the real task of sustainable value maximization. And it is clear that this has four elements. First, there is of course the direct and basic responsibility to earn as good a return as is sustainably possible on the capital entrusted to the company by its shareholders. No broader understanding of business responsibility can be an excuse for fuzzy and unrealistic strategic objectives, poor competitive positioning, or operational inefficiencies. And, second, it is perhaps standard textbook wisdom that, in order to earn the best return over time, businesses need to nurture their customer relationships and service. But increasingly these days this in turn requires them to demonstrate a wider commitment to the community and the environment. It is not for nothing that so many retail businesses nowadays market “green” or “fair-trade” products. What was once unusual—even quirky—is now commonplace, and is a response to growing consumer consciousness of wider connections. The cynic might argue that some of this is tokenism, or that it remains marginal in significance. But if the consensus on the entangled issues of poverty and climate change is right, it would be wiser to see this as a rising tide.
What is indisputable is that a third element of value maximization—the way a business engages with its people—takes us straight into the realm of sustainability and social responsibility. As argued in the last chapter, the vast majority of people want to be able to see themselves and the work they do, the business they are in, as making a contribution to society. And it is abundantly clear—as any businesses that have regular graduate recruitment programmes will know—that the next generation of management demands to know what the policies of the company are for meeting the challenge. Moreover, anyone who has seen the way in which community involvement exhilarates colleagues in the workplace cannot fail to recognize the impact this has on their engagement with their work. Nothing better illustrates the importance of a holistic approach to the well-being—and therefore effectiveness—of people at work. I recall meeting a colleague at a business processing centre in Hyderabad, India: he had recently returned from a two-week project with the charity Earthwatch on Lake Baikal in Russia, where they had helped in the work of cataloguing the extraordinary fauna and flora of the world’s largest body of fresh water. His bubbling enthusiasm for all he had experienced spilled over into his workplace, and was infectious all around. The consciousness-raising value of this and the countless other ways in which people from the workplace engage with the wider world—whether close at hand or far afield—is priceless.
The fourth element of sustainable value maximization is therefore the way that the business engages with the communities in which it operates (which may mean a very local focus in the case of a small business, or a broad global canvas in the case of large multinational corporations). If there was ever a time when this was an optional extra, that time has gone. From politicians to the media, to people in the business, to the customers and to shareholders, the expectations are increasingly clear and vocal. And this means that any business that values its brand, and understands how the brand represents—or should represent—the essence of the company’s self-understanding and raison d’être, will see this challenge as integral to sustainable success. It means that the company has to be able to ask—and give a satisfactory answer to—the question: How does the business we do contribute to the common good?
And boards and senior managements need to be able to explain the answer convincingly to their own people. (In the case of banking, for example, how do specific financial products contribute to human welfare and economic development?) This is not just a matter for strap lines and sales manuals: it should be a central task of training and development programmes to help employees understand how their roles make this contribution. And if that begs an uncomfortable question, then it is the corporate social responsibility of the company, at board level, to face up to that question. (For the record, I believe that, while banking has had much to answer for in recent years, as discussed in the last chapter, it is an activity that is essential to sustainable economic development. Strong, efficient, well-supervised banks with a drive to innovate and to provide suitable, profitable services, and staffed by people with integrity and commitment, are a sine qua non of effective market economies and modern social development, the relief of poverty and our future as a low-carbon economy.)
All these elements are mutually reinforcing. Good customer relationships and engaged people are essential to profit growth. Community commitment nurtures customer relationships and people development. Sustainable profits underpin investment in people and community. Remove any of the components and the circuit is broken. The older, simpler, Friedmanite idea that the sole job of a business is to create profit for shareholders has proved insufficient to sustain value and—in the end—a bad deal for shareholders. Sustainable profit and corporate social responsibility are not in conflict: they are interdependent.
It is in this context that companies need to approach the sensitive issue of remuneration. There has been widespread discomfort with the way the markets have widened income disparities—even if most recognize that it is hard to escape the laws of supply and demand to any great extent, and harder still in an increasingly open world where many people can move and far more jobs can move. Governments need to regulate for transparency and to eliminate distortion, as they certainly will—and should—in the financial markets in the wake of the recent experience. For it has become clear that in many cases there has been far too much focus on the short term and—to say the least—insufficient alignment with the real long-term interests of the company and its owners. But, as a matter of practical fact, the laws of supply and demand operate in the market for people as well as in the market for goods and services. And they will always produce differentials. We will return to the question of the challenges this poses for individuals later in this chapter. For now, we need to recognize that the markets are always liable to cause tension within society (as Polanyi highlighted so clearly), and the question of what is enough of a reward is not—as a matter of social reality—something that interests only the individual and the employer. Getting the balance right, so that companies have and retain the management they need to achieve sustainably profitable growth—with all that this means for the common good—is one of their most important corporate social responsibilites.
Other institutions—charities, churches, community organizations, schools, etc.—in fact any organizations that seek to have a life beyond the term of their current people—face analogous responsibilities. They, too, have brands, or reputations, to nurture and develop. Indeed, there are some charitable brands that are as old and well established as any corporate brand: the Red Cross carries a reputation nurtured carefully since 1863, the National Trust since 1895, Oxfam since 1942. At their best, like corporations at their best, such organizations are sustained, consciously or unconsciously, by attention to the same four basic elements of value. Any such organization that depends on donor support has a responsibility analogous to the corporate profit objective: the responsibility to deliver results that represent a “return” on the funds—the duty to perform and be efficient. Then, secondly, the analogue to the customer relationship of the corporate world might be said to be the challenge of providing good services to those intended to benefit from the organization’s activities. And, so far as people engagement and community commitment are concerned, exactly the same responsibilities apply as in the case of any commercial business. There is more in common—and perhaps increasingly more in common—between these worlds of business and of noncommercial organizations than the ideology of market fundamentalism would have wanted to acknowledge.
Finally, there is that question we left hanging earlier in this chapter: What has all this got to do with me? There is, in other words, the challenge of what might be described—in parallel to corporate social responsibility—as individual social responsibility. We have seen in the previous chapter how the market has an apparently inevitable tendency to create inequality. Often (and especially latterly) its distorted operation has created far too much inequality. Yet differentiation will always be there—only the degree of it is variable. And therefore there will always be those who have not merely more than others, but more than they could conceivably need. There are only two possible responses to this fact for those of us in this position: we can, in effect, shrug our shoulders; or we can hear the still, small voice of conscience. That voice reminds us—if we listen—that something is owed by the affluent. And a debt not paid makes a debtor who is guilty. Hence that voice. We often hear affluent people speaking of wanting to “give something back to the community”—the very phrase conveys a sense that something is owed. At its worst, this response may be little more than a transaction à la Melmotte: doing something because it is expected, and because it wins social points. In which case it is simply one more transaction of the kind discussed by Simmel—the objectification of human relationships through the medium of money and exchange. At its heart, this is not giving back what is owed: rather, it is a transaction that is an investment.
At its best, though, a different—and deeper—form of transaction takes place when we respond to that voice. The giver discovers that his or her spirit becomes involved, and may then even experience an inkling of a sense that the debt is not just being repaid in the giving, but being forgiven. And the sense that the debt is forgiven in the giving can then bloom into a sense that the debtor is forgiven—for all the imperfections through which the affluence has been generated, and for all the presumption that the affluence may have generated in its time.
How far do we take this? What are the specific obligations to the wider world of those who are in the top half of the scale of world income? Of those whose carbon footprint is well above the world average? Of those, in particular, who occupy senior positions and leadership roles in well-paid industries? Of anyone who, from a global perspective, counts as wealthy?
The answers certainly include extensive giving—and the ancient biblical principle of tithing (i.e. donating 10 percent of earnings) is surely not nearly enough in the case of the affluent who earn more—and often far more—than needed for any definition of a reasonably comfortable life. “What is enough?” is a question that demands an individual, personal response. But the litmus test is surely whether it is both real and significant and feels like a costly personal commitment in response to the challenge.
No less important is the question of talent and time. And, in the context of the frenetic lives of the modern affluent, it is perhaps time above all that is the true scarce resource, and the giving of time that is the bigger sacrifice. For that reason—because of its importance to the wholeness of the human being—it is perhaps subjectively even more important than the money donated.
Which reminds us that, like its corporate parallel, individual social responsibility cannot be an optional extra or an adjunct to a life focused purely on work (or pleasure). The response thus goes well beyond the giving of time, talent and money. The responsibility involves the whole person: it cannot be limited by compartmentalization, or discharged just by writing cheques. And the more the whole person is involved, the more we will discover an old truth about giving and receiving, and about redemption and renewal. To borrow and adapt words associated with a figure from medieval times who can seem impossibly remote from our modern life experience—St. Francis of Assisi—we will discover that it is in giving that we are forgiven, and in forgiving that we receive.
And if we do not discover this, we risk discovering something else about ourselves—as we shall see in the next chapter.