Martin Wolf: prospects for civilisation in a zero sum economy

by Alex Evans | Jan 3, 2008 | Climate and resource scarcity

Martin Wolf opines in his blog that his last column of the year is possibly also his most important of the year.  He’s right.  His subject: prospects for civilisation if we move to a zero sum world economy.  His premise:

We live in a positive-sum world economy and have done so for about two centuries. This, I believe, is why democracy has become a political norm, empires have largely vanished, legal slavery and serfdom have disappeared and measures of well-being have risen almost everywhere. What then do I mean by a positive-sum economy? It is one in which everybody can become better off. It is one in which real incomes per head are able to rise indefinitely.  How long might such a world last, and what might happen if it ends?

For Wolf, the two issues that might trigger the end of a non-zero sum world economy are climate change and energy security.  You might argue for casting the net a little wider, to include water scarcity, agricultural yields, fisheries depletion and population – and their interconnections with each other and with energy and climate – but the basic analytical frame is still right. 

Wolf leaves his readers in no doubt about what he thinks is at stake: “fossilised sunlight and ideas have been the twin drivers of the world economy. So nothing less is at stake than the world we inhabit, by which I mean its political and economic, as well as physical, nature.”  For Wolf, you see, “a zero-sum economy leads, inevitably, to repression at home and plunder abroad.”  He explains –

In traditional agrarian societies the surpluses extracted from the vast majority of peasants supported the relatively luxurious lifestyles of military, bureaucratic and noble elites. The only way to increase the prosperity of an entire people was to steal from another one. Some peoples made almost a business out of such plunder: the Roman republic was one example; the nomads of the Eurasian steppes, who reached their apogee of success under Genghis Khan and his successors, were another. The European conquerors of the 16th to 18th centuries were, arguably, a third. In a world of stagnant living standards the gains of one group came at the expense of equal, if not still bigger, losses for others. This, then, was a world of savage repression and brutal predation.

In a positive sum economy, on the other hand, all of this changes. 

Democratic politics became increasingly workable because it was feasible for everybody to become steadily better off. People fight to keep what they have more fiercely than to obtain what they do not have. This is the “endowment effect”. So, in the new positive-sum world, elites were willing to tolerate the enfranchisement of the masses. The fact that they no longer depended on forced labour made this shift easier still. Consensual politics, and so democracy, became the political norm. Equally, a positive-sum global economy ought to end the permanent state of war that characterised the pre-modern world. In such an economy, internal development and external commerce offer better prospects for virtually everybody than does international conflict.

And this is why climate change and energy security cause him such shudders.  For:

“…the biggest point about debates on climate change and energy supply is that they bring back the question of limits. This is why climate change and energy security are such geopolitically significant issues. For if there are limits to emissions, there may also be limits to growth. But if there are indeed limits to growth, the political underpinnings of our world fall apart. Intense distributional conflicts must then re-emerge – indeed, they are already emerging – within and among countries.

The response of many, notably environmentalists and people with socialist leanings, is to welcome such conflicts. These, they believe, are the birth-pangs of a just global society. I strongly disagree. It is far more likely to be a step towards a world characterised by catastrophic conflict and brutal repression. This is why I sympathise with the hostile response of classical liberals and libertarians to the very notion of such limits, since they view them as the death-knell of any hopes for domestic freedom and peaceful foreign relations.

The optimists believe that economic growth can and will continue. The pessimists believe either that it will not do so or that it must not if we are to avoid the destruction of the environment. I think we have to try to marry what makes sense in these opposing visions. It is vital for hopes of peace and freedom that we sustain the positive-sum world economy. But it is no less vital to tackle the environmental and resource challenges the economy has thrown up. This is going to be hard. The condition for success is successful investment in human ingenuity. Without it, dark days will come. That has never been truer than it is today.

Now that is a column.  I’ll post a proper comment on it in the next couple of days.  But for now, just reflect on how rare it is to see a heavyweight commentator prepared seriously to consider the implications of a scenario in which the uncertainties on energy and climate change go against us. 

Wolf’s narrative here – on both problem and solutions – is situated at the ‘civilisation’ level.  It’s impossible to think intelligently about either the causes of a zero sum scenario, or about potential paths through it, without thinking hard about our capacity as people to take collective decisions; the risks if we fail to use that capacity effectively; our conception of the good life and the values that underpin it; and the question of whether we can recognise that in a situation of scarcity, interdependence and equity become the same thing.

In other words: Wolf’s solution narrative is commensurate with his problem narrative (c.f. David and my discussion of this in Climate Change: the State of the Debate).  

What a refreshing change from the legions of climate hacks who use the same hair-raising problem narrative as Martin Wolf – and then tell you that all you need do is turn off lights, recycle and remember not to leave your TV on standby.