Wow, great, optimistic piece on the way of the future and how it may all come to pass.
A little bit intellectual, but substantiated with real life examples of sustainable change.
QuoteI choose not to discuss policy issues so much as changes in underlying rules and institutions that could characterize 'naturalized capitalism' and enable both producers and consumers to keep within the natural limits laid down by the biosphere. I focus on changes in three sets of markets, which together span the entire industrial capitalist system.
1. Firstly, because energy is so important as the underpinning of the entire industrial edifice, and because the burning of fossil fuels has created such a problem, it is changes in the energy markets bringing about the substitution of renewable energy sources for fossil fuels that are of interest. Utilization of renewable energy sources, where the power has to be 'won' through the design and implementation of sophisticated technologies, will lead to an enhanced sense of responsibility and moderation. The shift to renewable energy sources is under way, but it could be accelerated by more potent use of capitalist instruments, such as financial instruments that allow numerous small renewable energy projects to be aggregated.
2. Secondly, it is changes in commodity markets that will drive recirculation of materials, and usher in a Circular Economy where one producer's wastes become another's inputs. These changes are being driven by shifts in consumer behavior that are translated into low carbon- and resource-intensive production that is propagated along entire value chains, and by changes in the electronic tagging of commodities traded on the great commodity exchanges.
3. And thirdly it is the finance markets that will develop new targeted investment vehicles, known as Green bonds or climate bonds, which will have the effect of shifting patterns of investment away from projects involving fossil fuels to those with lower resource- and carbon-intensity. It is the interconnections between these trends that will make them self-reinforcing and self-propagating, as the 'new shoots' of the green economy grow and connect with each other, through competitive emulation. I argue that this will generate a different kind of growth, intensive rather than extensive, where capitalist operations will generate increasing returns without extending the resource base. This would indeed be a different kind of industrial capitalism.
How do we see this process in motion?
QuoteThus the green economy will grow and propagate within the 'womb' of the fossil fuel economy, through interfirm connections. Small islands will start (as in eco-industrial parks) and they will then make connections with other firms and with each other, always through insistence on reducing resource and carbon intensity in their transactions. In this way the islands will link up to form archipelagos, and eventually come to dominate the entire economy. A vivid illustration would be provided by the ancient game of GO, where the players start with isolated stones and build up structures through interconnections (adjacent stones) and then eventually join them up so that they reinforce each other. (For an illustrative sequence, see Chart 1)
This is exactly the process we see in the formation of eco-industrial parks and their drive to create interconnections with each other, drawing more and more firms into their ambit and measuring their progress in reducing energy- and resource-intensity. Take some examples from China. In the eco-industrial park of Suzhou, there are multiple interconnections forming, with firms sharing some inputs and sharing some outputs, thus reducing overall resource intensity. The park was opened in 1994 as a cooperative development between Singapore and China, and after a rocky start it is now flourishing, having attracted more than 2400 foreign-invested firms, as well as local entrepreneurial firms, in sectors encompassing electronics, semiconductors, biotechnology, IT, biopharmaceutical and health care. The park's municipal managers deliberately follow a 'value chain completion' strategy in attracting new firms, identifying gaps in the existing value chains and seeking to fill them with new firms. Overall the firms in the park are notching up environmental performance standards that are vastly superior to those found in China generally, such as levels of chemical oxygen demand (COD) and sulphur dioxide emissions that are 1/18 and 1/40 of China's national averages, and its energy consumption levels to only 0.36tonnes of standard coal equivalent per 10,000 RMB.27 In 2008, Suzhou and its sister industrial park, Suzhou New and Hi-tech Industrial Development Zone, were both recognized as two of the first three approved EIPs in China. And there are many others moving in the same direction in China, such as Tianjin Economic Development Area with its ambitious eco-development plans.28
It would make sense to track the formation and propagation of such 'green economy' islands and their interlinkages, with measurement of their superior energy and resource intensity measures. Perhaps a new United Nations agency could be created for this purpose - the UN Green Economy Agency (GEA) - charged with responsibility for tracking the world's progress in forming, propagating and measuring the green economy.
http://www.power-eng.com/news/2011/08/1476264601/naturalizing-capitalism-the-next-great-transformation.html
Food for thought.........can our fragmented political and economic system replicate what is possible with the type of long-range, strategic planning that China is engaged in? QuoteThe capitalist spirit here is harnessed to invest in these new energy sources in the pursuit of profit, driving down the costs through the experience curve, and on the basis of finance that is becoming cheaper as the energy security of such investments becomes more attractive than fossil fuel investments. China is rapidly taking a leading position in all aspects of these new energy sources, driven by its extreme need, extreme pollution problems and exuberant capitalist spirit, and is building export markets for its renewable energy systems around the world.12 Through the magic of logistic industrial dynamics, the more that Chinese renewable energy industries build momentum, the more certain becomes their eventual supersession of the current energy system.13 When we add in China's planning system that directs finance towards favored investment, it could well have an energy system based on hydro, renewable and nuclear that generates more electric power than fossil fuels by 2030, and eclipses fossil fuels as primary energy source by 2050.14
But much of this thinking actually first originated in the US!!!!
QuoteIt was the American economist Allyn Young [54], in his 1928 Address to the British Association, who boldly posed the issue of increasing returns as the central question to be addressed in economic analysis of the modern industrial system. In place of seeing the genesis of increasing returns as a marginal issue, to be dealt with alongside externalities as something quaint and uncommon, Young grasped that the way that mass production industries go about building the market for their products, and on the strength of the expanded market are able to invest in specialized capital equipment, and as the market further expands are able to make use of specialized value chains of intermediate suppliers, sometimes aggregated altogether in industrial clusters - all this he saw as the central issues, to be the focus of analysis. If theory could not shed light on these processes, or simply ignored them, then it was theory without point or purpose. But now there is a point, and an urgent one: it is the use of the Smith-Young-Kaldor framework of increasing returns generated through circular and cumulative causation as the means of propagation of the capitalist green economy within the matrix of the old, fossil fuel economy.
Young insisted that it is not factor questions and supply-side issues that need to be addressed in accounting for increasing returns, but growth of markets, i.e. growth in demand. This demand-side emphasis is a singular characteristic of Young - an emphasis that mainstream economics has ignored at the risk of making itself irrelevant. Young insisted that firms in modern mass-production industries first address the market, and take active steps to build the market prior to making definitive investments in production. The other feature of such firms' investment behavior, which again did not escape the notice of Young, is their preparedness to sink large sums into investment in large-scale production systems that would be completely unwarranted by the current state of demand. Such investments are made with an eye on growing the market, through cost reduction as fast as possible-and where the cost reductions are based on prior investments in specialized capital equipment provided by specialist suppliers whose existence is made possible by the breadth of the market, as well as in internal efficiencies that are under the firm's direct control.
also, see this interesting new concept of an "Internet of Things":
QuoteChina provides the test case, where the model of a 'Circular Economy' has already been adopted as a national development strategy, in face of increasingly severe problems of resource access and waste dumping;16 but Germany and Japan are also well on the way to becoming economies where recirculation becomes the dominant paradigm. The smart firms can see that this is where profits are to be found, and are driving the pace of the transition.
Recirculation of resources will be enhanced as products themselves come to acquire IT-linked tags that describe their full life cycle history, including their provenance and the history of each of the materials involved in the production. Moves are already being taken in this direction, through tagging of products with radiofrequency barcode identifiers (RFID) and developments such as the 'Internet of Things' that will bring intelligence and traceability into the very core of the world's manufacturing system. Products will become individualized and traceable, just like websites today. It is notable that China has already identified the 'Internet of Things' as a goal to be achieved within the next five years, under its 12th Five Year Plan [40].