Tim Jackson with his book “Prosperity without Growth,” has stressed the need to review our current economic system. The dominant economic model based on continued growth has brought humanity to the brink of social, environmental, and financial disaster. Aim
The purpose of this report is to (a.) Explain the current economic system and identify conditions that may lead to a more sustainable economy; (b.) Create a vision and strategy for Colourful Corporation to participate and contribute successfully to this new more sustainable economy, and ;(c.) Outline the impacts that this will have on the CEO’s governance of the company.
Current Economic System
Growth is the all consuming objective in today’s economic system. Whether a capitalist nation such as the US and most of Europe, state-capitalists like China and Russia; the one unifying goal that links this global economic system is the idea and pursuit of continued growth. Today’s global economy has grown to be five times larger than what it was fifty years ago. At current rates our economy would be eighty times the size by the end of the century, looking to support a global population exceeding nine billion (Jackson, 2010). The impact on the world’s ecological systems and climate threatens to be nothing less than catastrophic and the pressure on natural resources overwhelming. An entire school of economists, including Tim Jackson believe the current economic system and the reliance on continued growth is unsustainable (Jackson, 2010). Current Economic Model
A brief simplistic model of how our current economic system works. Businesses and firms use inputs (raw materials, energy, technology, infrastructure, people, etc…) to produce goods and services. The revenue earned from providing these goods and services provide people with incomes. This enables people to buy these goods and services as well as save. These savings are then invested into firms and businesses directly or through the banks or stock exchanges. These people invest their money on the idea and expectation of returns on their investments (Quaker in Britain, 2009).
Firms require these investments to:
Improve efficiencies and labour productivity in supplying products and services, to develop and expand existing markets, increase share and margins, and invest in innovation and technology. Invest in innovation and technology to meet (and drive) future consumer aspirations, needs, wants. Fulfilling the demands of consumerism increases the demand on inputs (Jackson, 2010). Growth is essential for this model to work; to create and meet consumer demand and provide employment for increases in manpower via population growth and labour productivity. We are all locked into this economic system whereby continued growth is essential (Jackson, 2010). Growth is Unsustainable
We live in a finite world which can only offer a limited amount of resources and able to absorb only a limited amount of waste. By 2100, the global economy would be 80 times larger than it was 50 years ago (Jackson, 2010). It doesn’t take a mathematician to work out that as we continue to grow and take resources out of the ecological system faster than we can replenish them; sooner or later we are going to run out of resources. We are already feeling the effects of this exponential growth on our ecological systems. From 1950-2000 Global GDP grew by US$31 trillion dollars. Accompanying this growth in GDP however, is a host of negative effects. Carbon dioxide concentration increased by 60ppm (parts per million). There was an increase in surface temperature (Northern hemisphere) of 0.55 degrees Celsius. The loss of tropical rainforests and woodlands increased by 22%. Fisheries exploited increased by 70%. The rate of destruction of biodiversity increased by 320% (Tancey, 2011). As the economy grew five times larger, there has been the degradation of sixty percent of the world’s ecosystems (Quaker in Britain, 2009). Tim...