COST AND BENEFITS:The Club of Rome

<< COST AND BENEFITS:The Ethics of Conserving Depletable Resources

THE ETHICS OF CONSUMER PRODUCTION AND MARKETING:DSA Comments >>

Business Ethics MGT610

LESSON 32

John Rawls, on the other hand, argues that though it is unjust to impose heavy burdens on

present generations for the sake of the future, it is also unjust for present generations to leave

nothing for the future. We should ask ourselves what we can reasonably expect they might

want and, putting ourselves in their place, leave what we would like them to have left for us.

Justice, in short, requires that we hand over to our children a world in no worse condition than

the one we received ourselves.

The ethics of care support conservation policies similar to the ones Rawls advocates. Utilitarian

reasoning, too, supports Rawls' conclusions. Some utilitarians posit that the ethical thing to do

is to discount future consequences based on their uncertainty and distance from the future. We

are therefore clearly obligated not to take actions that will almost certainly harm tomorrow's

generations. However, since we can be less certain what the effects of our actions will be on far

distant generations, our responsibility towards them is somewhat diminished.

We cannot rely on market mechanisms to ensure adequate conservation for future generations,

however. The needs of future generations are so heavily discounted by markets that they hardly

affect prices at all.

Six reasons conspire to bring this about:

1. Multiple access - If several separate extractors can use a resource, then the shared access

will invariably lead the resource to be depleted too fast. As with several people with straws

in one milkshake, each owner's private interest is in taking it out as fast as possible.

2. Time preferences and myopia - Firms often have short time horizons under the stress of

commercial competition. This may under-represent the legitimate interests of future

generations.

3. Inadequate forecasting - Present users may simply fail to foresee future developments. This

may reflect a lack of sufficient research interest and ability to discern future changes.

4. Special influences - Specific taxes and other incentive devices may encourage overly rapid

use of resources.

5. External effects - There are important externalities in the uses of many resources, so that

private users ignore major degrees of pollution and other external costs.

6. Distribution - Finally, private market decisions are based on the existing pattern of

distribution of wealth and income. As resource users vote with their dollars, market demand

will more strongly reflect the interests and preferences of the wealthy.

Many observers believe that conservation measures are falling short of what is needed. Some

even maintain that future generations will have a quality of life much lower than our own.

Industrialized nations will need to convert from growth-oriented technologies to more labor-

intensive ones. In fact, our entire economic system may have to abandon the goal of steadily

increasing production: continual economic growth promises to degrade the quality of life for

future generations. This is because demand for depletable resources will continue to rise until

the resources simply run out. Then, living standards will decline sharply.

One group, the Club of Rome, predicted that a catastrophic collapse of goods and services will

result at some point in the middle of this century; by 2100 the world's population may even

drop below 1900 levels. More recently, the World watch Institute has concluded that even if the

Club of Rome's timetables were off, their conclusions were substantially correct.

Business Ethics MGT610

As our supplies of energy diminish, other moral concerns are raised. Though the U.S. has only

6% of the world's population, we consume 25% of its energy; 50% of the people of the world

get along with only 8%. Some seriously question whether high-consuming nations like ours can

be justified in using for its own sake the nonrenewable resources of the world that others are

too weak or frugal to use themselves.

In 1999, the price of petrol is the lowest it has been for over two decades, with large reserves of

oil stored by governments and corporations. Many other commodity prices are also at very low

levels. These present-day facts are all very different from the warnings issued in the early

1970s about a world-wide environment crisis and shortages of resources.

One of the best known warning voices was contained in the book "Limits to Growth",

published in 1972. It sold twelve million copies in 37 languages. Whilst the book did not

predict what precisely would happen, it stated that if the world's consumption patterns and

population growth continued at the same high rates of the time, the earth would strike its limits

within a century. The message was that this outcome was not inevitable. People could change

their policies - and the sooner the better.

The book was very controversial. Its note of warning jarred with the sense of optimism that

existed at that time. The 1950s and 1960s had been a period of immense economic growth in

both the Western and Communist worlds, both of which had a very low rate of unemployment.

There was a general belief in the Western world that another 1930s-type Depression could be

avoided as a result of government intervention in the economy. Additionally, it was assumed

that there was a standard (Western) formula for economic growth that could apply throughout

the Third World. All the West had to do was to win the Cold War and the future for the entire

world was assured.

Very little attention had been paid to the environmental consequences of economic growth.

Indeed, both capitalists and communists were convinced that there could not be much of an

environmental crisis. For capitalists, the market would solve any environmental problem (for

example, if resources were used too rapidly, then prices would go up and so usage would be

forced down), and Marxist dogma assured Communists that technology could solve all

problems.

Both political systems regarded criticism of their respective systems on environmental grounds

as nonsense. Each said that "Limits to Growth" was alarmist and the book was branded as

pessimistic and a threat to stable government. Although "Limits to Growth" sold well around

the world, government policy-makers ignored much of the essence of the warning. It is true that

the first ministries of the environment were established at this time and there were tougher

environmental laws introduced. But both political systems remained committed to the overall

idea that growth was good and that the environmental consequences could be solved by

administrative, legal and technological measures.

The Club of Rome

"Limits to Growth" was commissioned by The Club of Rome, a think-tank of scientists,

economists, businesspeople, international civil servants, and politicians from the five

continents. The Club began in an informal way at the behest of Aurelio Peccei, an Italian

businessperson based in Rome. In 1965, Peccei gave a speech on the dramatic changes taking

Business Ethics MGT610

place in the world, especially relating to science and technology. The speech attracted

considerable attention.

Alexander King, who had not previously known Peccei, received a copy of the speech. King

was a British scientist, who had been a scientific adviser to the British Government, and who

was then at the Paris-based Organization for Economic Co-operation and Development

(OECD), the organization of rich Western countries. King had similar concerns to Peccei about

the commonly-held veneration for growth that allowed little thought for any long-term

consequences, and decided to meet Peccei to see how these ideas could be followed up.

Peccei and King were not confident that either the market or technology could function as a

way of solving environmental problems. After calling together groups of economists and

scientists to discuss problems facing the world, they asked a group of computer experts at MIT

in the US to examine what would happen if people continued to consume such a high amount

of resources. This study became the basis of the "Limits to Growth" book.

The study had some obvious limitations, most of which stemmed from the use of computer

modeling. This was the first time that computer modeling had been used for such an ambitious

exercise. The success of such modeling depends on both the quality of data and the capabilities

of the computer. In 1970, methods of data collection were still rudimentary. Many countries,

for example, did not know the true size of their populations. There have been many

improvements in national data collection but, even today, we are still far from getting all the

data we need to produce accurate models. For example, there is debate in many countries on

how to work out the exact numbers of unemployed people, with official statistics usually being

lower than those of non-governmental organizations that work with unemployed people.

In addition, the quality of the model used was limited by the available computer technology and

could only use a low number of equations in its construction. Computer modeling has now

become more sophisticated with the far greater computer power that is available meaning that

models have become more complex. However, computer modeling still leaves a great deal to

be desired, as is evident with the failure of government finance departments to predict the size

of economic growth in the coming years.

Leaving aside the details of the projections, there is the question of the essence of the warning:

is the earth approaching its "Limits to Growth"?

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