Production and Consumption Mantra: Greed is Good?
“Greed, for lack of a better word, is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures, the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge, has marked the upward surge of mankind.” (Internet Movie Database, 2010 & Wikipedia, 2010a)
Those words are from a famous fictional character named Gordon Gekko, the main character and antagonist of the 1987 film Wall Street and the 2010 film Wall Street: Money Never Sleeps, both directed by Oliver Stone. In the first film, Gordon Gekko “create nothing but takes everything”, which is an undesirable outcome yet the choice of (almost) everyone. This situation reflects the “Prisoners’ Dilemma” scenario in games theory where “confess, confess” to maximized self gain is the dominant but not the collective best outcome. Due to the fear that opponent may choose “confess”, two prisoners in separated cells will tend to “harm” each other for the benefit of own self. Hence, fear, selfish and greed merged into a powerful symbiosis that contributes towards unsustainable consumers’ lifestyles and production decisions, which can be grouped into three categories. There are (a) unethical profit-maximizing production, (b) luxury and corrupted lifestyles, and (c) war and weapon built-up.
Unethical profit-maximizing production
Being greedy are of course legally right as long as no laws is broken. However, “is greed good?” That is the question Gordon Gekko asked in the Wall Street: Money Never Sleeps. Here, the question will be is being greedy the right way towards sustainable production? From the economics perspectives, at least one person claim “yes, greed is good” – Adam Smith of the classic school. Through his theory of invisible hand, market can achieve efficiency when consumers and producers try to be greedy by maximizing their utility and profit respectively. However, “efficiency” in this context has been limited to monetary efficiency in which maximize profit neither equal to maximize sustainability nor collective welfare. This results in negative externalities to the environment, exploitation of labor and social imbalance, which threaten sustainability.
Maximize profit implies minimized cost of production to the capitalist, which resulted in hidden damage to the environment. A World Wildlife Fund’s (WWF) advertisement on the first page of Business Week (28 June 2004) said it all, “the true cost of a dam never show up on a balance sheet”. Our Common Future attributes a full chapter to highlight the impact of industrial growth towards sustainability. It provides a list of classic examples including the ‘death’ of Lake Erie, the progressive river pollution like Meuse, Kibe and Rhine, and mercury poisoning in Minamata. A millennium list could easily expand those examples to the cases of BP oil leak, China’s poisonous toys, global green house effect and numerous local pollution damages. Not even the Kyoto Protocol or the subsequent Washington Declaration in 2007 could ease global environmental problems. With greed as the driving force of industrialization in developing countries, the world is changing as envisioned by Saruman, the wizard character in Lord of the Rings: The Two Towers: “The old world will burn in the fire of industry. The forest will fall and new order will rise.” Hence, environment ethics is needed against exploitation of nature in greed-driven production. Ecocentric (also known as biocentric) school urges for “land ethics”, claiming that a thing is right when it tends to preserve the integrity, stability and beauty of the biotic community. Like deep ecology school, both Daoism and ecocentric believes in interdependent between human and nature, thus see human as part of nature community, not conqueror of land. In Islamic perspective, environmental ethics started from the concept of din. According to Islamic teaching, environment/nature is not owned by human, but only trusted (amanah) by God for their sustenance. Thus, human must not only preserve the environment but have to repay God’s kindness to them through the concept of zikir (remembrance), ibadah (service) and khidmat (good work) for God. This make human relationship to nature as in the capacity of khalifah (viceregent) in which God will access the conduct of mankind (Quran 11:7, 18:7, 31: 20 & 22:65; as cited in Baharuddin, 2010: 135 – 137).
On the aspect of exploitation of labor, traditional economics believe that the fruits of growth (consist mainly of capitalist’s profit) will trick down to the whole community automatically through free market mechanism. cofeminism offers an interesting explanation. This school of thought believes male-dominated thinking (and therefore, decision making in production) is the problem for exploitation as well as unsustainable development. According to this school, patriarchy Western thinking based on dualism causes imbalance of power relationship that identify one party However, to maximize profit, cost has to be minimized, which may result in exploitation of labor group by the capitalist without the trickle-down effect. Thus, inequality gap will widen and middle class society will gradually vanish. As a result, domestic market lacks purchasing power to sustain economic growth, resulted in enthusiasm to export as important source of growth. Subsequently, export as an ad hoc attempt to support yearly growth, may not base on comparative advantage but merely as a desperate mean to sell over-produced goods, which domestic market lack the purchasing power to buy. Thus, this goes beyond exploitation of labor to wastage of scare resources that threaten sustainable development. On these matters, e more important than other (e.g. man over women or human over nature), resulting in discrimination or exploitation. In contrast, ecofeminist believes women tent to treasure relationship (including relationship with nature), more caring, less conflict and more willing to corporate for mutual benefit, which will promote sustainable development.
Regarding social imbalance, inequality can be seen from three perspectives, namely income inequality, economic sector inequality and geographical inequality. On income inequality, different education level may have been a factor. Psacharopoulos (2000) found that merely a small portion of population possessed a high education while a large population is literacy or low educational, thus will create an income inequality in an economic. So, the worrying point is that with commercialization of education nowadays, will the poor still have equal access to education? Besides, Bhagwati and Dehejia (1994) have shown that another source for widening income inequality is trade liberalization. International trade pushes adaptation of capital-intensive production which requires skilled rather than unskilled labor. Subsequently, wages of skilled labor will increase due to increase demand while wages of unskilled labor will decrease. Their findings are consistent with many other research such as Acemoglu (1998), Feenstra and Hanson (2001), USTDRC (2000) and UNCTAD (1997). Hence, international trade that in theory could bring mutual benefit has been in reality discriminatory against the weak (e.g. unskilled labor and less develop nations), which in turn resulted in unsustainable development. On economic sector inequality, high return in industrial sector as compare to agriculture sector (particularly basic food agriculture) resulted in distort investment in favor to the former sector. Even within agriculture sector, high crude oil price between 2002 and 2007 triggered the conversion of food agriculture to bio-fuel agriculture that yields higher profit. Consequently, food production reduced, inviting global food crisis sooner or later. As capitalist live a luxury life, unskilled workers and farmers fighting against the bite of poverty. This situation causes unequal development. Development gap also exist geographically, between urban and rural. The former is the home to ample investments and engine of growth while the later is left alone with its unprofitable agriculture activities. Despite intention of governments in both developed and developing countries to reduce this gap, greediness to maximize profit will jeopardize the effort. How about gaps between rich and poor countries? Gigantic efforts are needed to globally destroy the seed of greed in human first before any effort can become meaningful.
Luxury and corrupted lifestyles
Mahatma Gandhi once mentioned this world has enough to meet the needs of everybody, but not the greed of everybody. Over-consumption is clearly noticed in developed (rich) countries. A 24% of population that live in developed countries consumes 64% of meat, almost half the cereal, over 80% of metals, over 68% of chemicals and 92% of cars (Rogers, Jalal & Boyd, 2008: 67). Lust for power, popularity and wealth is seen as serious mental pollution in Daoism, which urges human to achieve emptiness and calmness by humbling themselves and controlling their desires beyond necessity. In Maslow’s hierarchy of needs, human wishes to have more than their needs. Greed drives human desire to have more of money, power and luxury lifestyle. Luxury lifestyle, particularly obtained through corrupted means or debt is a serious cause to unsustainable development. Greed plus egoism trigger chase for luxury, which in turn results in wastage of resources for unnecessary goods or consumption beyond sustainable level. Luxury and corrupted lifestyles can be viewed from four perspectives.
The first is demand and supply of non-necessity goods that drain all sort of natural and human resources. Luxury nowadays can range from consumption of exotic-endangered species in the developing East to space tourism in Western developed countries. Other examples include food wastage, mega-size structures and fast-changing fashion wears. Add to the list are some financial instruments trading which ‘create nothing’ but consumes resources and inefficiency of public transportation system that jams developing countries’ road with cars and pollution. Second is property investment (speculative buying) phenomenon that creates bubbles, which could bring down a big economy when burst like the subprime crisis in the United States. Greed drives people to buy property solely for resale and rental income. When more and more people invest in property, the price will rise, hence preventing genuine buyer (for residential purpose) to own house. Subsequently, demand for rental will rise, as the unaffordable have to resort to rent, thus justifying the property speculation scheme and prompt more property investment. The cycle (bubble) continues until it burst. However, before that happen, the sustainable ability of the economy has already suffered.
Third, greed also drives debt-financed consumption. A well known economist, Ravi Batra (1999) termed that as “artificial demand”. Greed, debt and growth sustainability have complex relationships. It is greed that encourages consumer to consume beyond their mean through borrowing. Financial institutions are willing to lend for maximizing interests and fees-based income, particularly through property loan and credit card lending. Financial lending and consumption growth ironically means economics growth. Monetary expansion policy through banking sector is actually money creation through expansion of loan (debt), yet debt is blamed as factor causing economics crisis. Hence, economics can growth with debt expansion but it is not sustainable while speculation and debt-funded luxury lifestyle are fertilized by greed. Forth is corruption, an evil that not only threaten sustainability, but powerful enough to collapse civilization. Greed again is the seducing factor. Corruption causes inefficiency in production, leakage of resources to non-production activities and widen inequality gap.
War and weapon built-up
War and preparation for/against war (weapon built-up) are grave threat to sustainable development, yet root causes that fertilize war remain unattended. Unsolved conflict leads to aggression. In large scale, war broke out between conflicting clans, countries or civilizations. But what lead to conflict? Why conflict cannot be resolved? Fight for superiority over differences may lead to conflict. Greed with hatred and egoism from all parties push the conflict beyond peaceful solution. If greed is on one side and “folly” on the other side, war may be avoided but not cheating and exploitation of the “folly” side. Imbalance of power leads to conquering of one towards another, either through physical warfare or economics colonization.
History has witness the colonization of ‘new world’ by European forces during the 1500s Mercantilist school era due to the 3G factors – gold, glory and gospel. In another words, it was eagerness to maximize gold, expand empire and spread religion. Centuries later, German invasion of Belgium, Luxembourg and France triggered the World War I. Declaration of war by France towards Germany after the later invaded Poland on 1st September 1939 triggered the World War II. Nonetheless, the seed of World War I was imperialist foreign policies of the great powers of Europe, such as the German Empire, the Austro-Hungarian Empire, the Ottoman Empire, the Russian Empire, the British Empire, France and Italy (Wikipedia 2010b). In addition, deep hatred between Germany and France after the defeat of Roman Empire by France in Napoleon War and France-Prusia War 1870 also contributed to both world wars. The price of World War I are deaths tool of 16 million plus wounded casualties of 21 million as well as spread of famine and disease (epidemic typhus, malaria and Spanish flu). Gross Domestic Product (GDP) in Austria, Russia, France, and the Ottoman Empire contracted 30% to 40% while Britain owed the United States US$4.4 billion of World War I debt in 1934 (Wikipedia 2010b, 2010c & 2010d).
On terrorism, Buruma & Margalit (2004: 16) believed the attack on the World Trade Center was seen as an attack on not only the New York City or the United States but also an attack on the West and its symbol the “occidental city”. New York City is connected to the idea of the city of Babylon, the sinful “City of Man”, where greed of capitalism flourishes. Furthermore, poverty and unsustainable development in countries such as Afghanistan, Somalia and Iraq have increased warfare and terrorism possibility as the people there have almost nothing to lose except their life in exchange of a place in heaven, monetary payment for terrorism acts or any other benefits offered to them. Therefore, to overcome terrorism or prevent any warfare, promoting ethnical sustainable development is the key, not economics oppression or built-up of weapon for annihilation of opposing parties.
Next (final part) ... Towards Sustainable Development
[This posting is extract from Chapter 1 of Sustainable development weltanschauung: Beyond theories into reality. [ISBN: 978-983-053-600-2]