Crises and Opportunities in Changing Times Reference document for the activities of the Crises and Opportunities



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Crises and Opportunities in Changing Times
Reference document for the activities of the Crises and Opportunities group at the

Global Social Forum/Bahia – January 20101


Carlos Lopes, Ignacy Sachs, Ladislau Dowbor
We all have our favorite crises. There are crises of values, pandemics, population growth, economic chaos, energy paradigm change, financial speculation, gaps in education, cultural pasteurization, poverty prevalent in the world, hunger, and lack of access to such prosaic a luxury as clean water. The issue is not to chose which crisis seems to be more threatening. The real threat comes from an impressive convergence of critical tendencies, the synergy of behaviors that may be understandable, but are certainly irresponsible, and frequently criminal, and which are destroying our fragile spaceship.
In recent decades we have closed the statistical horizon of the planet. Despite never-ending interpretations in detail, we know overall what is happening. And the image that emerges is simply tragic. Initially it was seen in fragments. In Rio de Janeiro, in 1992, we realized what was happening with the environment; in Vienna, with human rights; in Cairo, with population growth; in Beijing, with families; in Istanbul, with urbanization; in Copenhagen 1996, the social situation of the planet, and now we have seen, again in Copenhagen, the challenges of global warming. Today, even without planetary gatherings, we realize, from reports that cover areas from extinction of species to acidification of the oceans and the disappearance of rare metals, that we now face systemic challenges, where simple arrangements in the way we organize what we can call the overall management of society are not up to the task. Another world is possible, but most of all another management is necessary. The challenges are simply vital, in the most direct meaning of the word.
We are all adverse to catastrophism. We do not want to look like prophets of doom who only paint a bleak future. The Club of Rome went some way toward turning us against alerts that seemed premature. Today we are starting to evaluate the realism of these predictions in a more rational way. With information easily exchanged, the generalization and improvement of models, online accessibility to the most varied scientific data, allowing for the comparison of results from innumerous research centers, the future is no longer a vague threat, a wavering outline. In a way, and in our consciousness, the future has already arrived. In the strong stance adopted for the title of the Salvador Forum, it is a crisis of civilization.
We do also worry about keeping our feet on the ground, maybe not in our social dreams which may be infinite, but at least in our proposals. This realism has to be qualified. In most cases, as we see how difficult it is to obtain some tiny progress in pollution reduction or some protection for children in critical situations, we tend to think that setting high objectives is good for dreams but does not ensure good policies. Today, with the intensity of the threats to the planet, this view tends to change. We have to place on our realistic horizon actions which ensure the survival of species on land and in the oceans, the sustainability of our own civilization. What is the minimum that ensures survival? A politician can afford the luxury of thinking how to reduce his aspirations to obtain a favorable vote. He is being realistic. We, as visionaries, or concerned scientists, have to make clear what are the minimum necessary measures to avoid catastrophes and to guarantee a sustainable and dignified life.
Our task, in this sense, is to define the horizons of systemic results we have to achieve, not any longer as a dream for the “possible world”, but as an imperative for what is absolutely necessary. Armed with these systemic results, we will contribute to define strategies, proposals and agendas.
There is no doubt that we are all tired of having to do this. And tired of seeing proposals rejected or postponed, analyses being diluted due to supposed (and often well funded) scientific doubts, and the planet rocked in the cover-up so well qualified as business as usual. What is taking us away from business as usual, and transforming the crises into opportunities, is the fact that the crises affects a multitude of people and are becoming clearly evident. As the good human race we are, we are reacting in a realistic way; in other words, we are reacting, not when the water was around our ankles, but now that it is reaching our necks.
The intended exercise in this text, as we present arguments to stimulate discussion and trigger proposals, is to pinpoint the main areas of change and possible convergence of action plans. What we have ahead of us is an immense planetary task of drawing our efforts together, improving our knowledge of the challenges, and organizing an effective wide ranging scientific communication network, with the aim of generating a critical mass of knowledge for a variety of stakeholders. Paulo Freire defined our task well: we are peddlers of the obvious (andarilhos do óbvio). He used to say this in a humorous way, because good humor is part of the process. We want to stop killing ourselves from overwork in building useless things and destroying the planet. We want the prosaic quality of life, the pleasure of daily challenges, in peace, for everyone, and in a sustainable manner.
We made use of varied documents, contributions from numerous researchers, because our effort consists essentially in systematizing key points, to make joining forces easier. We relied particularly on the contributions of the Brasilia Conference on Crisis and Development, in March 2009, trying to build on progress already made.

I – THE SIZE OF THE CHALLENGES
Here we shall focus on what seem to be four main trends that threaten us. We have to save the planet, to reduce inequalities, to ensure access to decent jobs and to correct production priorities. Too big a challenge? We are not concerned in reducing our fall from the 20th to the 15th floor. We are concerned with not destroying ourselves.

Balancing Convergence

The chart we show below constitutes a summary of macro-tendencies during the historic period from 1750 until the present day. The scales had to be made compatible and some lines represent the processes for which we have only more recent figures. But as a whole, the chart shows the coming together of areas traditionally studied separately, such as demography, climate, automobile production, paper consumption, water contamination, extinction of ocean life and others. The synergy of the process becomes obvious, as does the size of the environmental challenges. ¹




Source: New Scientist (18 October 2008, p 40).

The New Scientist comment regarding macro-tendencies focuses directly on our own concept of economic growth:

Science tells us that if we are serious about saving the Earth, we must reshape our economy. This, of course, is economic heresy. Growth to most economists is as essential as the air we breathe: it is, they claim, the only force capable of lifting the poor out of poverty, feeding the world’s growing population, meeting the costs of rising public spending and stimulating technological development – not to mention funding increasingly expensive lifestyles. They see no limits to growth, ever. In recent weeks it has become clear just how terrified governments are of anything that threatens growth, as they pour billions of public money into a failing financial system. Amid the confusion, any challenge to the growth dogma needs to be looked at very carefully. This one is built on a long standing question: how do we square Earth’s finite resources with the fact that as the economy grows, the amount of natural resources needed to sustain that activity must grow too? It has taken all of human history for the economy to reach its current size. On current form, it will take just two decades to double.2
The convergence of tensions generated for the planet becomes evident. We cannot congratulate ourselves anymore for the increased fishing catches when we are extinguishing life in the oceans or when the increase in crop production is eliminating the aquifers and contaminating the planet’s fresh water resources. Not to speak of automobile production and the expansion of other production chains which generate climate change. The solutions have to be systemic. This broader view can – and it is only a possibility – trigger profound changes as we raise the overall level of awareness of the challenges.

The dilemma is clear: what development do we want? And for this development, what kind of State and regulatory mechanisms will be necessary? There is no way to minimize the size of the challenges. With 7 billion inhabitants – and 75 million extra per year – who adopt a steadily expanding level of consumption and utilize more and more powerful technology, our planet shows all its vulnerability. And we, our irresponsibility or helplessness.


The scandal of inequality

The eonomic expansion of recent decades has been fed on the earnings from productivity that new technologies have brought about. The distribution has been radically unbalanced. It is not the place here to study this process, but it is important to remember that the concentration of income on the planet is reaching absolutely obscene limits.3




Source: Human Development Reports (1992, p. 35 e 2005 p. 37)

The image of the champaign glass is extremely expressive because it shows who gets what of the overall content, and in general people are not aware of how critical the drama is. The richest 20% get 82.7% of the income. The poorest two thirds have access to only 6%. In 1960, the income earned by the richest 20% was 70 times the equivalent of the poorest 20%; in 1989 it was 140 times more. The concentration of income is absolutely scandalous and forces us to face the ethical question of justice, and social and economic drama of billions of people who could not only be living better, but also contributing to sustainable development. There will be no stability on this planet while the economy is organized around the interests of one third of the world’s population.

This unjust concentration is not due only to financial speculation, but its contribution is significant and, above all, it is absurd to divert the capital from obvious planetary priorities. The Economist brings strong figures concerning economic growth, generated essentially by technological progress in the production area, but appropriated by the so called “financial services industry”: “The financial-services industry is condemned to suffer a horrible contraction. In America the industry’s share of total corporate profits climbed from 10% in the early 1980s to 40% at its peak in 2007.”4

A clear gap is generated between those who generate technological innovations with the potential of producing socially useful goods and services – the engineers of the process, so to speak – and the financial intermediaries who take over the surplus and limit the options to short term profit maximization. The engineers of the process create important technological advances, but their use and commercialization are handled by financial, marketing and legal departments which dominate companies and take over their final destination. It is a system which has generated a deep divide between those who contribute to new potentials and those who take over the surplus.

When putting both charts together, the one from New Scientist concerning historic megatrends and the “champaign glass” from the Human Development Report, we reach a very obvious conclusion: we are destroying the planet for the benefit of one third of the world’s population. This is the basic reference which guides our future actions: revert the march of the destruction of the planet and reduce accumulated inequality.

It is important to remember that our main instrument to measure progress, Gross Domestic Product (GDP), measures neither one nor the other. It does not take into account the planet’s natural capital reduction, and in reality only shows us the national average intensity of the use of the production machine, not what is produced, for whom and at what costs. And the main motivator of private investments, profit, acts against both: it has everything to gain from the maximum extraction of natural resources and externalizing pollution costs, and has nothing to gain from producing for those who do not have money to spend. The fantastic possibilities that new technologies open to us are simply wasted.
The challenge of access to decent jobs

Inequality and sustainability are directly linked to the imbalances of inclusion in the production process. Manpower, our immense unused production capacity, looks more like a problem than an opportunity. In the present form of use of production factors and technologies, the productive inclusion is an exception. In Brazil, there are 190 million inhabitants. Of these, 130 million are of active age, of between 15 and 64 years. In the economically active population, there are 100 million people, which already shows us under-utilization. The employment statistics, on the other hand, show that there are only 31 million people formally employed in the private sector. We can add 9 million public servants to this number in the country and we reach 40 million. We are still a long way from the total. What do the others do? There are entrepreneurs, no doubt, as well as a mass classified as “autonomous”, besides approximately 15 million unemployed. As a whole, a huge mass of people are classified under the vague concept of “informal sector”, measured at 51% of the economically active population by IPEA (Institute of Applied Economic Research). The study underlines that “the existence of this portion of workers on the edge of the system cannot, under any circumstances, be seen as a solution for the market” (IPEA p. 346). This “portion” represents half the country. 5


The essential fact for us is that the present model under-utilizes half of the country’s production capacity. And to imagine that the growth centered in multinational companies, huge plantations of soya beans (200 hectares to generate one job) or even in a hypothetical increase of public jobs, will allow it to absorb this manpower is not realistic. To evolve to alternative forms of organization becomes absolutely necessary.
The drama in Brazil is representative of a broader universe: “Informal employment accounts for between one half and three quarters of non-agricultural employment in the majority of developng countries. The share of informal workers in the non-agricultural labour force ranges from 48% in North Africa and 51% in Latin America and the Caribbean, to 65% in Asia and 78% in sub-Saharan Africa”.6
In this way, the inequality drama seen above does not only constitute a problem of fair distribution of income and wealth: it also involves the productive inclusion of the majority of the population that is unemployed, under-employed or trapped in different types of informal activities. The ILO proposals concerning decent jobs, the World Bank concerns about the 4 billion that are excluded from the “benefits of globalization”, and the numerous initiatives centred on local development belong to the same drama: economic growth that leaves a huge part of the population out of the process is not sustainable. We are talking about almost two thirds of the world’s population to whom we block the access to finance, technologies, and the right of each individual to provide for his family.

Deformation of Priorities

The table below, extracted from the Human Development Report 1998, represents the deformation of priorities of the the use of our production capacity. The reading is simple: we cannot obtain the supplementary 6 billion to universalize basic education, but we can obtain 8 billion for cosmetics in the USA, and so on. The values are low because they are in dollars which were worth more at the time, but the contrast is evident. The 780 billion dollars spent on the military already added up to 1.5 trillion in 2008. And if we think about the trillions of dollars of public resources transferred during the 2008 financial crisis, we will have a real idea of the absurd disregard for human and environmental priorities.


THE WORLD’S PRIORITIES?

(Annual Expeniture) in Dollars

 


 

 

Basic Education for all

 


 

$6 billion*

Cosmetics in the USA

$8 billion

 

Water and sanitation for all

 

$9 billion

 

Ice-cream in Europe



 

$11 billion



 

Reproductive health for all women

 

$12 billion

 

Perfumes in Europe and the USA



 

$12 billion



 

Basic health and nutrition

 

$13 billion

Pet Foods in Europe and the USA

 

Business Entertainment in Japan



 

Cigarettes in Europe

 

Alcoholic drinks in Europe



 

Narcotic drugs in the world

 

Military spending in the world



 

 


$17 billion

 

$ 35 billion



 

$ 50 billion

 

$ 105 billion



 

$ 400 billion

 

$ 780 billion



 

* Estimated additional annual cost to achieve universal access to baisc social services in all developing countries.

Source: Euromonitor 1997; UN 1997g; UNDP, UNFPA and UNICEF 1994; Worldwide Research, Advisory and Business Intelligence Services 1997.

In: Human Development Report 1998, New York, p. 37

In reality, what needs to be expanded in the world today are basic services for the billions who barely survive, much more than diversified and fancy consumer goods. Some things should be accessible to everyone. The planet produces almost a kilo of grain per day per inhabitant and we have more than one billion people going hungry. The ten million children who die of hunger, no access to clean water and other absurd causes constitutes an unbearable scandal. But from the private investment point of view, solving essential problems generates no profits, and the orientation of our production capacity is radically deformed.
In terms of economic, social and environmental megatrends, we are drifting. We are destroying the planet in favor of a minority, in order to increase the supply of goods without any other criteria than monetary capacity, creating advanced technologies without allowing free access, reducing, instead of fostering, the capacity of people to make a living. The level of accumulated imbalances is exceeding the bearable limit. And we have as a background the huge task of organizing the transition to another productive energy paradigm, the post-petroleum era. There will always be people who expect an invisible hand to solve these challenges. Who are the dreamers here?

II –RESTORING Public MANAGEMENT CAPACITY

In the discussion of another world which we hope is possible, we have to evolve more towards the “how to” questions, the corresponding management mechanisms, the discovery of breaches that exist in the system, the opportunities for transformation. The world will not stop at a given time to start working in another way. It is up to us to introduce or reinforce the trends of change. Analysis of the decision making process and the search for instruments of change have become vital.


What emerges as the central line of thought, therefore, is the inadequacy of the decision making processes in various critical situations we have to face. Confronting the planetary environmental challenge demands collaborative processes and the building of negotiated agreements for the common good, or at least to avoid the common disaster. Interrupting the inequality cycle implies the displacement of the traditional vision that attracts investments to where the purchasing power is located, and therefore involves a radical change of the so called corporate governance, far beyond the present social responsibility cosmetics. Organizing productive inclusion of almost two thirds of the excluded population involves another logic for jobs, multiple and differentiated forms of insertion in the production of goods and services. Rescuing real priorities of the planet and humanity involves a more significant participation from the State, which with all its weaknesses, still constitutes the best instrument to coordinate the social efforts we make. But we need a State acting more as a regulator of society’s collective efforts. We have to rescue the systemic and long term vision, and the corresponding planning mechanisms. We are, in reality, talking about the creation of another political culture.7
Naturally, we all feel small when faced with changing processes of this magnitude. And we might think that setting such high challenges is not realistic. The fact is that no one is asking us if we want or not to face up to such tasks. Global warming is not waiting for us to agree, nor is the end of easy petroleum as the energetic cornerstone, nor the extinction of ocean life, nor the loss of forests, not even the Aids virus, not even…Reality is there, it is happening, whether we like it or not. Other forms of management are inevitable; the only realistic question is if we want to pay the small price now or a much higher one in the future.
A stronger and more democratic State

Criticisms concerning the size of the public sector usually result from ideological bias and little knowledge of reality. In the words of a director from the Ecole Nationale d’Administration, the famous ENA, improving the productivity of the public sector constitutes the best way to improve the systemic productivity of the society as a whole. The 2005 United Nations World Report on the Public Sector, shows the evolution that occurred from the traditional vision of “public administration” based on obedience, strict controls and concept of “authorities”, transiting through a phase where we appeared to have a more entrepreneurial form of administration, in the line of “public management” which, for example, gave us the concept of “city manager” in place of the mayor; and now the emerging modern viewpoint the report calls “responsive governance”.


This last form of organization implies that in public realms good management is obtained through intelligent and balanced articulation of the group of players interested in development, the so called “stakeholders”. It is a type of management looking to “respond” to the different interests in society. It is centred on widely participatory systems, and in any case, more democratic, in the line of “participatory governance”.
The evolution from traditional Public Administration to New Public Management was based on a private management view, supposing it would be more efficient. The more recent evolution towards Responsive Governance is based on a more public proposal, where the managers listen more to citizens, and where the citizens’ participation, through more democratic processes, is what ensures that administrators will be more efficient since they are more tuned in to what is expected of them. It is the difference between the authoritarian efficiency coming from above and the democratic efficiency of bottom-up decisiona making. The efficiency is measured not only by the results, but also by the process.
The table below helps visualize this evolution:
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