Will we look back on the economic crisis as an opportunity, asks Jonathon Porritt

It’s now 18 months since the global economy started on its downhill slide. On 7 August 2007, the banks simply stopped lending to each other when they realised they knew nothing about each other’s real credit-worthiness. We know a lot more now, and it’s been getting worse ever since, despite trillions of dollars having been made available to bail banks out, nationalise them, force them into mergers and so on.

Meanwhile, the soul-searching and blame-laying are in full swing. Who should really carry the can for such a cataclysmic collapse? Countless books have already been written; wise-after-the-event pundits are still having a field day, and lawsuits are pending.

From a sustainability perspective, there have already been some dramatic consequences. Around the world, governments have introduced recovery packages including massive outlays on energy efficiency, renewable energy, ‘smart grids’ and environmental technologies of every kind. The sums involved in Green New Deals are staggering. At last count (according to HSBC’s report, A Climate for Recovery), they amount to around $430 billion – around 15% of the total spend on all recovery packages.

“Maybe we’ll look back on the collapse in the global economy as precisely the shock we so desperately needed”

NGOs are quite rightly worried that the other 85% is still in the business of promoting carbon-intensive, earth-trashing investments... But even so, it’s more than the $400 billion which Lord Stern suggested earlier in the year would need to be spent annually to achieve the dramatic cuts in emissions that governments are theoretically signed up to. It’s very unlikely that more than a fraction of this last surge in investment would have been forthcoming if it were not for the collapse of the global economy.

But beyond that, it’s difficult to detect any serious comparisons being made between the collapse in capital markets and the impending collapse in the global environment. There’s been little commentary on the critical linkages between the credit crunch, the climate crunch and the impending resource crunch (around oil, food, precious metals and so on).

Take one example: debt. Governments the world over have been fuelling the engine of growth-at-all-costs with increased debt. Discourage savings; promote consumption through the availability of credit of every kind. Live for today by living on tick. Levels of personal debt have gone through the roof, with the active encouragement of politicians. The UK is one of the most indebted nations in the world.

In the States, David Walker, the former Comptroller General, has calculated that the national debt now amounts to the equivalent of $175,000 for every US citizen.

As our debts to banks and others have built up, so have our debts to Nature – in terms of the unsustainable depletion of natural resources, measured by the loss of top-soil, forests, fresh water and biodiversity.

Some time ago, the New Economics Foundation launched Ecological Debt Day, to mark the point in the calendar year at which society ‘exceeds’ the total volume of resources available to us annually. In 2008, their report demonstrated, we went into “overshoot” on 23 September. In 2005, it was 2 October. In 1995, 21 November. And in 1986, 22 December. The direction of travel is crystal clear, as are the moral consequences: this kind of deficit consumption is, in effect, drawing down on the capital entitlements of future generations.

This is exactly the kind of analysis we’ve developed in Forum for the Future’s latest publication, Living Within Our Means. The shock to the system from the near-collapse of our global banking industry has been traumatic – and it’s going to get a lot worse before it gets better. Even so, that’s nothing compared to the near-imminent collapse of the ecological systems on which we depend – particularly a stable climate.

It seems strange to say this now, but maybe we’ll look back on the collapse in the global economy and recognise it as precisely the shock we so desperately needed. Not another climate-induced shock (although they will be coming thick and fast), but an economic shock that compelled us to look much harder at the period of frenzied excess we’ve been living through. And to seize hold of that moment to advance some different ideas – on regulation, on reform of the Bretton Woods Institutions, on economic growth, on low-carbon innovation, and on getting ourselves out of this mess by laying the foundations for a very different kind of economy.

Jonathon Porritt is founder director of Forum for the Future and chairman of the UK Sustainable Development Commission. His book ‘Capitalism as if the World Matters’ (Earthscan, 2007) is available from www.forumforthefuture.org. Read his blog at www.jonathonporritt.com.

24 March 2009

Jonathon Porritt