Venice, I realized, is the antithesis of creative destruction, it exists to conserve and appre-ciate a past, not create a future. But that is exactly the point. The city caters to a deep human need for stability and permanence… Venice’s popularity represents one pole of a conflict in human nature: The struggle between the desire to increase material well-being and the desire to ward off change and its attendant stress. So observed the longest-serving U.S Federal Reserve chairman Alan Greenspan in his memoir aptly titled The Age of Turbulence.
But what Greenspan meant by change wasn’t ordinary change after all human beings have been dealing with changing seasons, changing sovereigns and so forth throughout most part of human history. One can safely argue that man likes change. But that he only likes ‘gradual change’ as suddenness instills fear; fears of the unknown and the anxiety of whether he would be able to deal with that uncertainty or not.
For instance, people typically enjoy the monsoon but are afraid when it becomes wild or if otherwise stormy clouds gather unexpectedly. Likewise they are comfortable with perfect market competition such as numerous traditional ‘bazaars’ that are marked by changing dynamics and where players have become accustomed to rivalry over time. But they get worried if any big player suddenly emerges, such as a big foreign competition.
Despite this inborn fear, the economic system man lives in today is driven by nothing but sheer change – and one that is extremely fast paced. Harvard economist, Joseph Schumpeter said in 1942 that a market economy will incessantly revitalize itself from within by scrapping old and failing businesses and then reallocating resources to newer, more productive one.
The perennial gale of creative destruction, he said, while refers to the process of industrial mutation that continuously revolutionizes the economic structure from within, constantly destroying the old one, constantly creating a new one.
From a producer’s perspective, this phenomenon is largely driven by price with profits being the single biggest clearing factor for resources to move from one part of the economy to another. The price in turn is reflective of consumer demand; and in roughly the last four decades this demand has been primarily a function of (a) aesthetics and convenience and (b) conspicuous consumption.
While it is the desire of aesthetics, convenience and comfort, which broadly speaking, triggers the demand for new and improved capital and consumer goods, it is conspicuous consumption which sets off a rat race to consume more, thereby creating more and more demand.
Thorstein Veblon, the 19th century American economist who coined the term, conspicuous consumption, defined it as ostentatious personal expenditure which does not satisfy any physical need but rather a psychological need to gain esteem from others. He noted that an individual’s purchase of goods and services is tied to what used to be called “keeping up with the Joneses”. For example, if Hanna has a blackberry then Nash must have one too.
These characteristics are intricately entwined with another inherent trait found in modern human beings: any gain in contentment is transitory. The initial euphoria of a higher standard of living soon wears off as the newly affluent adjust to their better status in life the new level is quickly perceived as “normal”, states Greenspan in The Age of Turbulence.
Hence, the higher the intensity of convenience and conspicuous consumption, the more volatile consumer demand would be, leading to fast paced capricious changes as visualized by Schumpeter’s creative destruction.
So the question is not whether sustainability is equal to prosperity, welfare or growth. But, whether sustainable development is compatible with contemporary capitalism and its innate feature of creativedestruction a phenomenon that is growing rather xponentially in today’s age of hyper globalization. In essence, sustainable development is a process of change in which the exploitation of resources, the direction of investments, the orientation of technological department and institutional change are all in harmony and enhance both the current and future potential to meet human needs and aspirations, states UN’s Brundtland Commission Report.
It also involves rhetoric of reassurance that we can have it all economic growth, environmental conservation, social justice; and not just for the moment but in perpetuity, without any necessary painful changes. But if we were to look for sustainable development, where would we find it?
As a discourse, there is a lot of it about. But can we identify any tangible practices and policies inspired by, committed to, and achieving sustainable development? The obvious answer is ‘no’, and that is because the majority of these ideals are in contrast with free market liberal ideology which is intrinsically obsessed with short term profits and ephemeral comfort.
Some often argue that profit maximization is inevitably the only right way to ensure sustainable development today and tomorrow, because one can forecast changing wants and demand, profit and pricing, demographic trends and so on.
But anyone who has read textbook economics and finance knows well the myopic nature of financial analysis. The problem is simply built in, as most project evaluations, and economic forecasts cover three or four decades at its maximum with majority of analysis based on net present value of money, that is, calculating tomorrow’s value in today’s terms. S,o there goes all concern for the future – besides human beings are yet unable to decide as to what is the right price of mother nature.
The Way Forward
Even if we assume for a brief moment that men driven by their desire to maximize their profit will suddenly start sacrificing it in the interest of mother earth at large, chances are that things won’t work. This is because our habits of excessive consumption, irrational convenience and epistemological arrogance have to be discarded as well.
Abandoning the socio-economic practices of our parents might be a painful process, but it seems the only way forward. Concern for the earth, for fellow humans and concern for our own generation demands that we revisit the ideological foundations of our economic system.
We have to change the way we live, change the way we consume and also change our concept of growth. The current downturn has already made inroads for this sort of corrective thinking, giving us both the light impetus and the right direction. But, these changes must be gradualunlike the calling of the Green Radicalists, that, like most movements for sudden change, implant fear into human hearts. So while keeping in mind that Rome wasn’t built in day, let us allow ourselves to pursue what Howard Zinn describes rightly in his article, ‘The Optimism of Uncertainty’: “We do not have to wait for some grand utopian future. The future is an infinite succession of presents, and to live now as we think human beings should live, in defiance of all that is bad around us, is itself a marvelous victory”.
- Alan Greenspan: The Age of Turbulence
- Brundtland Commission Report, UN, 1987
- John S. Dryzek: The Politics of the Earth: Environmental Discourses