09.09.2022 |

Transform the economy to avoid social collapse and climate breakdown

We are standing on a cliff edge (Photo: CC0)

If current efforts are not accelerated dramatically in this decade, continued poverty and inequality and rising climate change will cause social collapse in vulnerable regions, according to a landmark analysis by an international team of scientists and economists. Humanity’s future on Earth will be vastly more peaceful, more prosperous and more secure if societies do everything in their power to transform economic systems this decade than if they do not, is one of the key messages of the book published by Earth4All, a platform of experts convened by The Club of Rome, the Potsdam Institute for Climate Impact Research, the Stockholm Resilience Centre and the Norwegian Business School. “We are standing on a cliff edge,” said Jorgen Randers, one of the authors of “Earth for All: A Survival Guide for Humanity”, who also co-authored the Club of Rome’s groundbreaking report “The Limits to Growth” five decades ago. “In the next 50 years, the current economic system will drive up social tensions and drive down wellbeing. We can already see how inequality is destabilising people and the planet,” he warns. “Unless there is truly extraordinary action to redistribute wealth, things will get significantly worse.” He argues that societies are creating vicious cycles where rising social tensions, exacerbated by climate breakdown, will continue to lead to a decline in trust. “This risks an explosive combination of extreme political destabilisation and economic stagnation at a time when we must do everything we can to avoid climate catastrophes.” But the good news is that the world can still keep global temperatures below 2°C and approach an end to poverty by 2050 by enacting five ‘extraordinary turnarounds’ that break with current trends and provide a framework for a fair, just, and affordable economic transformation.

The book, which was published in German on September 6th and is to be launched in English on the 20th of September, is the result of a two-year research project that brought together scientists, economic thinkers and a team of ‘systems dynamics’ computer modelers. It explores two scenarios beginning in 1980 and ending in 2100. These scenarios which are dubbed “Too Little, Too Late” and “The Giant Leap” explore how population, economies, resource use, pollution, wellbeing and social tensions might change this century depending on decisions taken this decade. The first scenario looks at what will happen if we continue on our current destructive path. It assumes that the world will continue with the economic policies from the last 40 years. GDP will continue to grow, the rich get richer while the poor fall farther behind, creating extreme inequalities and growing social tensions within and between countries. “In this scenario, the model indicates that regional societal collapse, driven by rising social tensions, food insecurity and environmental degradation, is more likely than today. Regional and global crises are often not caused by a single event like one crop failure, but cascading failures made worse by climate change, chronically dysfunctional governments and system failures,” said Per Espen Stoknes, co-author and director of the Centre for Sustainability at Norwegian Business School. In this scenario, global temperatures will soar to about 2.5°C by 2100, significantly exceeding the target of the Paris Agreement. The poorest economies will face the most extreme conditions and will have difficulties adapting to climate impacts. Later in the century, around two billion people will be living in areas that are close to the limits of human habitability. All societies will be reeling from rolling shocks of extreme heat, drought, crop failure and floods.

The second scenario is far more optimistic and argues that we can also achieve the fastest economic transformation in history. If me make ‘The Giant Leap', it will be possible to keep temperatures below 2°C above pre-industrial levels, stabilise the population well below nine billion people, reduce material use and approach an end to extreme poverty globally by 2050 – a generation earlier than in the pessimistic scenario. Social tension will decrease and wellbeing rise throughout the century because of greater income equality. In order to achieve this, societies would need to adopt immediate action across five interconnected turnarounds: Empowerment, inequality, poverty, food and energy. “Out of hundreds of potential solutions, we have found five interconnected turnarounds that represent the simplest and most effective solutions that we must start implementing this decade to build economies operating within planetary boundaries by around 2050,” said Johan Rockström, director of the Potsdam Institute for Climate Impact Research. First, women need to be empowered to achieve full gender equity by 2050. Second, gross inequality needs to be addressed by ensuring that the wealthiest 10% take no more than 40% of national incomes. “The wealthiest 10% currently have 50% of global incomes,” explains Owen Gaffney, author and global sustainability analyst at the Stockholm Resilience Centre. “Effective progressive taxation, including wealth taxes, can easily provide the funds needed for The Giant Leap. These solutions will also help redistribute wealth which will go a long way towards reducing polarization and building the trust and legitimacy governments need to take giant leaps.” Third, poverty needs to be ended through reform of the international financial system, lifting 3-4 billion people out of poverty. “Our economic and financial systems are broken, and we are reaching dangerous levels of inequality,” said Sandrine Dixson-Declève, author and co-president of The Club of Rome. “Do we want to create the first trillionaire or do we want to create functional, fair democratic societies?” Fourth, a transformation of the food system is needed to provide healthy diets for people and the planet and fifth, we need to transition to clean energy to reach net zero emissions by 2050.

The authors underline that economic transformation is affordable. They write in their key messages that the investment needed to build a more resilient civilization is likely to be small: in the order of 2-4% of global income per year for sustainable energy security and food security. “That’s less than our current annual subsidies to fossil fuel industries. This is easily affordable, and it will create millions of jobs,” says Sandrine Dixson-Declève. She explains that “The Giant Leap” does not mean an end to economic growth. However, it is the end of “directionless economic growth that is destroying societies and the planet”. The authors call for the creation of a novel financial innovation, the Citizen’s Fund, to tackle inequality, reduce greenhouse gas emissions, and provide a safety net for the most vulnerable through economic shocks. The fund would distribute the wealth of the global commons to all people as a Universal Basic Dividend. “What is missing is coalitions of politicians willing to make it happen,” said Dixson-Declève. This is echoed by Per Espen Stoknes who said: “We have known shocks were coming our way since 1972, and yet the response has been denial.” He highlights that it is now time to hold governments accountable for the future and push for strong governance models flexible enough to deal with today’s complex challenges. (ab)

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