There is a poignant quality about the darkness which lies at the heart of the current discourse on climate change. A panel discussion hosted by the London School of Economics in Mumbai recently served as a window to this reality. The keynote speaker was Lord Nicholas Stern, whose famous report to the British treasury says that climate change represents the greatest and most wide-ranging market failure in history. But the paradox of awareness and challenge came alive in a morality tale narrated by Stern’s fellow panellist, Anand Mahindra.
The story is about a village near Goa which used to grow an exquisite variety of watermelons. For the longest time, growers of these watermelons stuck to a tradition. The most delicious melons were not put on the market. Instead, they were given to the children of the village. In turn, the children saved the seeds and handed them back to the farmers, thus ensuring future multiplication of the best melons. But some farmers opted to maximize cash profits and began selling those perfect melons. The tradition soon fell apart. Gradually, the quality of melons declined. Today, Mahindra told the gathering, there are no melons growing in that village.
Neither the story, nor its message, is new. Heedless and short-term profit maximization is a dead-end street. Everyone agrees on that as theory. The problem lies in individuals, communities, companies and countries being able to detect the threshold of self-destruction in time. The still harder part is having the freedom to take corrective action on a significant scale.
Stern’s review on the implications of climate change is a watershed because a government-commissioned, establishment economist accepted and built upon what scientists, environmentalists and others with their ear to the ground have been saying for almost 20 years. One, that existing modes of production and consumption have put the human race on the course of self-destruction. And two, that the shift to sustainable modes is still half-hearted and dangerously slow.
The Stern review expanded freedom by making it possible for more economists and business people to enter this space without the fear that they will be dismissed as alarmist Cassandras. But how free is Stern to carry forward the logic of his own historic achievement?
The review shows it is time for global emergency measures similar to a war economy, where business-as-usual is put on hold and all material arrangements are reconfigured to ensure survival. But this means upsetting deeply entrenched assumptions about what is viable and desirable in the global economy.
As a development economist, Stern is already preoccupied with how to expand livelihoods while reducing ecological footprints. But can this be done just by shifting to low-carbon growth, as Stern implied in his recent talk? Our future depends on what lessons have been learnt from the greatest market failure in history. And these lessons must at least dent the fundamental assumption that still underlies market-driven globalization: that with an appropriate regulatory framework, the price mechanism and profit motive ensure efficiency and growth. This means grappling with what American economist Duncan Foley calls “Adam’s Fallacy”—the idea that the economic sphere of life can and should be separated from the rest of social life. And that in the economic sphere, pursuit of self-interest will be guided by objective “laws” to create socially beneficent outcomes.
That tale told by Mahindra did much more than illustrating the dangers of this fallacy. It gave the hint of a radical element—that in its pre-profit-maximization state, that community was perhaps organized around intrinsic values, such as enriching children’s lives. The joy of those best melons was treated as “priceless”, to be left outside the price mechanism. The tricky question before Stern, Mahindra and other leaders: is responding to climate change a managerial and technological task or a civilizational challenge? If the latter, can it be addressed without being clear about what needs to be treated as priceless?
Mahindra brought this issue to the forum by reminding the gathering why Mahatma Gandhi was opposed to India following the western model. Long before the term eco-footprint became current, Gandhiji knew it would take several earths for everyone to live as a few western nations were living, even in the 1940s.
The paradox is that this knowledge does not immediately expand Mahindra’s freedom of action. His company is one of India’s largest producers and exporters of sports utility vehicles. As an individual in the social sphere, he probably wants passionately to see his company transformed to a zero-footprint enterprise. But in that kept-separate economic sphere, his freedom is hemmed in by rules and assumptions which prevail even after their limitations have been acknowledged as the greatest market failure of all times.
Grappling with this conflict, attempting to heal the breach, is a valiant endeavour. Pretending otherwise or just focusing on the “business opportunities” created by climate change is to stay within the darkness of the old box.
Rajni Bakshi is the author of a forthcoming book, Bazaars, Conversation and Freedom. Comment at email@example.com