Sustainable performance targets
We are have been geared to measure progress by how much growth has been achieved. Has the economy grown or contracted this year? Has output risen and have profits increased year over year? Have we earned more this year than last year? Have we manufactured more widgets, cleared more acres of land, mined more, made more, sold more? More…More…More…More…
Sharemarkets swiftly and harshly punish companies that fail to deliver an endless cycle of growth, while we need look no further than the front pages of our newspapers to understand the corporate and personal fear that results from a succession of quarters in which our overall economy fails to expand. It should be obvious however that expansion cannot however be infinite. There must indeed come a time when the resources that are needed as inputs to the system become short in supply and hence high in cost.
There must come a time when the market is saturated. There must come a time when the growth cannot be sustained in a sensible manner.
We’re there.
The interesting question is…where do we now go from here?
The answer is that we need a different target for success, and a new way of measuring success. Rather than a constant growth state economy (CGSE) we must instead develop and recognise the value of a Steady State Economic (SSE) model. Many will decry this as impossible, improbable, irrational, or even worse “downright disproven, socialist commune speak”. It is after all easy to point to the natural world and declare that “growth is the natural state of things”, and furthermore it is the proven way of successful human social and economic behaviour.
The reality is that the natural state involves both growth phases and balanced steady states. A single tree may grow, bud and be the genesis for an entire forest. However eventually the forest will reach a balanced state, once it has reached the edges of the resource boundaries available to it. At that point the net growth of flora and fauna within the forest ceases for the most part though there can be no denying that within that same forest an incredible richness of change and activity continues. The over expansion of any one element is generally counterbalanced by the emergence of a settling force that ensures the system is kept in check. Opportunities for individual growth and success continue - a steady state model is demonstrably still an active model rather than a static one.
We too are governed by that same reality. We have managed to skirt that only by the trick of externalising the full environment impact of our activities and thus by the sleight of hand of ignoring them as factors in our economic equations we have convinced ourselves that they are at worst irrelevant and at best non existent. AGW is nothing more than the debt of the long ignored externalities having reached a point where they are bursting back out from under the rug where we have too long swept them. Nothing more….and a whole lot more too.
Meanwhile, we must now recognise that one of the fundamental changes we must push through is one of systemic performance measurement. Businesses, individuals and State economies must recognise the inherent value of the “steady state”. This will require no small degree of re-evaluation in how we set targets, reward success, measure performance and encourage desirable action. Lowering the “per unit” ecological footprint of anything produced by business isn’t enough, if the gross output of the business is expected to infinitely rise. Only recognising that a steady state model is actually not only desirable, but also one modelled on the normal course of events in the world will create the necessary formula for truly sustainable economic and human activity.
Tags: Economy, Governance, Random thoughts, SSE