Tag: manfred max-neef

Stepping Barefoot Into Mud: A New Economic Paradigm

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By Daniel Margrain

There appears to be a serious dereliction of duty on the part of the panoply of economic analysts and commentators within the legacy media to discuss the limitations of economic neoliberalism. On the contrary, these commentators and analysts regard the existing growth model as a panacea rather than the death knoll for society and the environment it undoubtably is.

Economic ‘experts’ who extol the virtues of the prevailing orthodoxy are discussed by the media commentariat in reverential tones and the discipline is viewed as if it is an exact science. Mainstream economists, chancellors of the exchequer, prime ministers, heads of the Bank of England and other ‘pillars of the establishment’, are widely regarded in this light.

What all these ‘experts’ agree on is their belief in the deluded notion that sustained economic growth is emblematic of societal progress. Very rarely are the premises upon which these ‘experts’ promote neoliberal economics challenged by commentators.

The UKs current chancellor, Jeremy Hunt, is part of a political establishment that continues to perpetuate the myth that the neoliberal economic growth model is the best way to curtail the threat of further economic crisis as opposed to recognizing it’s the major cause. Consequently, Hunt will continue to systematically push for policies that fly in the face of all available evidence.

The problems are as much to do with ideology and dogma as they are to do with incompetence. Rather than the global financial crisis of 2008 acting as a wake up call, Hunt and the likes of Kwarteng, Zahawi, Hammond and Osborne who preceded him, continue with the same poisonous model until the next crisis comes along, by which time they will continue with it until the one after that. And so it goes on. This is the economics of the madhouse.

Radical visions – development not growth

What is required is a radical alternative vision for society – a break from the concept by which everything has become a commodity to be bought and sold for profit. But who, other than a handful of creative thinkers in the academic sphere, are proposing alternative, imaginative visions?

One of the most ambitious ideas I’ve come across is that postulated by Pat Devine, whose thesis is closely aligned to that of the Chilean economist, Manfred Max-Neef. While recognizing the importance, geographically, of bringing production closer to consumption, Max-Neef argues that the root of the existing problem stems from how establishment economists perceive their academic discipline as being above, and separate from, nature and the biosphere.

According to Max-Neef, mainstream economists are ignorant about ecosystems, thermodynamics and biodiversity and regard nature as a subsystem of the economy.

Max-Neef argues that economics needs to be taught in a different way based in five postulates and one fundamental value principle:

1) The economy is to serve the people and not the people to serve the economy.

2) Development is about people and not about objects.

3) Growth is not the same as development, and development does not necessarily require growth.

4) No economy is possible in the absence of ecosystem services.

5) The economy is a subsystem of a larger finite system, the biosphere, hence permanent growth is impossible.

The fundamental value to sustain a new economy, says Max-Neef, should be that no economic interest, under no circumstance, can be above the reverence of life.

For far too long, humanity and the natural world has been subordinate to the imperatives associated with an economic growth paradigm that’s perceived by mainstream economists and politicians as being separate and distinct from them.

What Max-Neef is saying in the first point above is that the dialectical relationship between economy and people has to be restored in order for society and nature to function properly.

The distinction Max-Neef makes between growth and development in point three, is particularly significant. As the economist from Berkeley points out:

“Growth is a quantitative accumulation. Development is the liberation of creative possibilities. Every living system in nature grows up to a certain point and stops growing. You are not growing anymore, nor he nor me. But we continue developing ourselves… So development has no limits. Growth has limits. And that is a very big thing that economists and politicians don’t understand. They are obsessed with the fetish of economic growth.”

This fetishization of economic growth is arguably explained, in part, by the fact that the monetary offshoots that accrue as a consequence of this growth have, since the onset of ‘trickle-down’ neoliberalism, increasingly ‘gushed upwards’ towards the top of the socioeconomic pyramid.

Statistics indicate, for instance, that economic output (GDP) in the UK, adjusted for inflation, doubled during the peak of neoliberalism, from £687bn in 1979 to £1,502bn in 2011. However, over the same period, income inequality, as measured by the Gini coefficient, increased from 0.25 to 0.34.

In other words, during the peak era of neoliberalism, working people who have created the sustained increase in wealth in society, have seen their slice of the pie reduced. Max-Neef understands that the ruling class obsession with the fetish of economic growth is underscored by the fact that this is the class that disproportionately benefits the most from it.

The threshold hypothesis

One of the later works Max-Neef authored was the famous threshold hypothesis. This states that in every society there is a period in which economic growth brings about an improvement in quality of life. But only up to a point – the threshold point – beyond which, if there is more growth, quality of life begins to decline.

According to Max-Neef, the U.S, which he terms an “undeveloping nation” is already at that point with the UK not far behind. The logic of diminishing returns applies to other parts of the system that eventually results in net costs over the long-term.

These costs are quantified, not only in strict monetary terms, but also involve human capital – something which the economic-growth fetishists rarely factor in to their cost-benefit calculations.

The graph below, highlighting the impact of immigration on UK debt, is an example of how the mainstream economists of the OBR have failed to take into account Max-Neef’s threshold hypothesis:

It would appear that the OBR is suggesting the existence of a causal link between the reduction in government debt and the notion that immigration is a net economic benefit.

However, the ORB analysis doesn’t take into account the uneven distribution of wealth which negate the benefits accrued. It also omits other indicators such as reduced quality of life resulting from, for example, a lack of school places or other pressures on public services that mass immigration potentially brings.

Walking barefoot

It’s the apparent inability of politicians to view the economic growth paradigm as destructive that opens up spaces for alternative narratives of the likes of Max-Neef to fill.

After winning the Right Livelihood Award in 1983, two years after the publication of his book, Outside Looking In: Experiences in Barefoot Economics, the Chilean economist’s metaphor was inspired as a result of the ten years he spent working in extreme poverty in the Sierras, jungles and urban areas of different parts of Latin America.

It was during this period that the economist from Berkeley began to view his profession in a different light. What subsequently happened was to change his life for ever:

“I was one day in an Indian village in the Sierra in Peru”, recalls Max-Neef. “It was an ugly day. It had been raining all the time. And I was standing in the slum. And across me, another guy also standing in the mud…This was a short guy, thin, hungry, jobless, five kids, a wife and a grandmother. And I was the fine economist from Berkeley. We looked at each other, and then suddenly I realized that I had nothing coherent to say to that man in those circumstances, that my whole language as an economist was absolutely useless.”

Max-Neef continued:

”Should I tell him that he should be happy because the GDP had grown five percent or something? Everything was absurd. I discovered that I had no language in that environment and that we had to invent a new language. And that’s the origin of the metaphor of barefoot economics, which concretely means that is the economics that an economist who dares to step into the mud must practice.”

Max-Neef argues that economists are divorced from the kind of poverty that’s central to their theories:

“The point is, economists study and analyze poverty in their nice offices, have all the statistics, make all the models, and are convinced that they know everything that you can know about poverty. But they don’t understand poverty. And that’s the big problem. And that’s why poverty is still there. And that changed my life as an economist completely. I invented a language that is coherent with those situations and conditions.”

The ‘language’ Max-Neef alludes to relates to how human beings in developed countries have lost the capacity to understand. Despite our ability to accumulate knowledge, this capacity, in the absence of empathy, love and understanding is, according to Max-Neef, insufficient:

“You can only attempt to understand that of which you become a part. If we fall in love, as the Latin song says, we are much more than two. When you belong, you understand. When you’re separated, you can accumulate knowledge. And that is the function of science. Now, science is divided into parts, but understanding is holistic.”

For Max-Neef, poverty from the perspective of economists, can only be understood by living among people who are poor. Only then can economists understand that in such an environment there exists a different set of values and principles that are alien to the world of academia that cannot be learned or understood their.

“What I have learned from the poor is much more than I learned in the universities. The first thing you learn…is you cannot be an idiot if you want to survive. Every minute, you have to be thinking, what next? What do I know? What trick can I do here? What’s this and that? And so, your creativity is constant. But very few people have that experience. They look at it from the outside, instead of living it from the inside”, says Max-Neef.

The Berkley economist, continued:

“In addition, you have networks of cooperation, mutual aid and all sorts of extraordinary things which you’ll no longer find in our dominant, individualistic, greedy and egotistical society. It’s the opposite of what you find there. And it’s sometimes so shocking that you may find people much happier in poverty than what you would find in your own environment. This also means that poverty is not just a question of money. It’s a much more complex thing.”

What underlines Max-Neef’s message, perhaps more than anything else, is that mainstream economists in the ‘developed’ world see themselves as sophisticated, educated and cultured. They do this while building walls, pushing away to the margins the poor of the ‘developing’ world.

Ultimately, mainstream economists fail to acknowledge that the inherent contradiction of the neoliberal economic paradigm is such that it’s undermining the very foundations upon which ‘progress’ can be sustained in the long-term.

Stepping into the mud with the barefoot economist, Manfred Max-Neef

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By Daniel Margrain

Manfred Max Neef sits at a table near a notebook computer. On the wall behind him is a slide from a presentation.

The media’s trumping (excuse the pun) of economic growth over environmental concerns exemplified by their lack of any critique of the latter following yesterday’s (November 23) Autumn Statement announcement by chancellor, Philip Hammond, is a familiar, if rather depressing, narrative. The news from the government’s Office for Budget Responsibility (OBR) that growth forecasts for 2017 as a percentage of GDP are projected to fall by 0.8 per cent, largely due to Brexit-related affects, was perhaps expected.

But what is rarely questioned by the media are the consequences this prioritizing of growth as a central plank of the governments economic strategy has for the medium to long term sustainability of the planets ecosystems upon which the well-being, and even survival, of humanity depends.

The Green Party MP, Caroline Lucas raised her concern in the House of Commons that neither Hammond in his Autumn Statement – nor any of his Tory predecessors – “have ever mentioned the words ‘climate change’ in the year that’s the hottest on record and where parts of the country are under flood water.”

To all rational observers this is a particularly alarming state of affairs given that the government’s own 2015 National Security Strategy states that human-induced climate change is one of three tier-one threats – alongside international terrorism and cyber crime – that the UK currently faces. By subordinating climate change to a neoliberal economic growth model within a finite planet, amounts to willful ignorance and stupidity of the most serious and blatant kind, namely, because the consequences are potentially catastrophic for all living things.

Shifting the paradigm

Of all the recent discussions around the production of fake news, the inability of the mainstream media to bring the issue of climate change to the forefront of public discourse is probably the greatest dereliction of duty that can be brought to bear on the credibility of professional journalism.

But arguably just as unforgivable, is the media’s inability to bring political power to account in respect to the latter’s fetishization of the current growth model and to shift the discourse from a paradigm where this model is currently regarded to be a panacea among large swaths of the public, to one where it is widely regarded as the death knoll for society and the planet.

The November 22 edition of the BBCs current affairs Newsnight programme featured an extended piece on the current chancellor. Some of Philip Hammond’s former school friends were interviewed, all of whom described him as a highly intelligent figure who, after having completed his class work before everybody else, would often put his feet up on his desk in lessons. Hammond was portrayed by his friends as being so clever that he regularly outsmarted his teachers.

Having made large sums of money as a music promoter soon after having left school, Hammond fulfilled his youthful boast that he would become a millionaire by the age of thirty. But although well-educated, wealthy and well connected, this former Oxford graduate like so many other chancellors before him who have gone on to be the pillar of the political establishment, continues to promulgate the deluded notion that sustained economic growth is emblematic of societal progress.

Hammond is part of a Tory establishment that continues to perpetuate the myth that the current economic growth model is the best way to curtail the threat posed from the likelihood of further economic crisis as opposed to recognizing it’s the major cause. Consequently, Hammond will continue to systematically push for policies that fly in the face of all available scientific evidence.

Politician’s like Hammond know what is to be done but for ideological and dogmatic reasons they do the opposite. Rather than the global financial crisis of 2008 acting as a wake up call, Hammond and Osborne before him, continue with the same poisonous model until the next crisis comes along, by which time they will continue with it until the one after that. And so it goes on. This is the economics of the madhouse.

Radical visions – development not growth

What is required is a radical alternative vision for society – a break from the concept by which everything has become a commodity to be bought and sold for profit. But who, other than a handful of creative thinkers in the academic sphere, are proposing alternative, imaginative visions? One of the most ambitious thesis I’ve come across is that postulated by Pat Devine, who articulates in some detail, the processes by which the development of a democratically planned socialist economy can come into being.

Devine’s thesis is closely aligned to that of the Chilean economist, Manfred Max-Neef whose visionary holistic and philosophical appraisal of the existing model ought to go a long way in persuading people of the legitimacy of the planned socialist model. While recognizing the importance, geographically, of bringing production closer to consumption, Max-Neef argues that the root of the existing problem stems from how establishment economists perceive their academic discipline as being above, and separate from, nature and the biosphere.

For Max-Neef, economists know nothing about ecosystems, thermodynamics or biodiversity. “I mean, they are totally ignorant in that respect”, he said… “And I don’t see what harm it would do, for an economist to know that if the beasts would disappear, he would disappear as well, because there wouldn’t be food anymore. But he doesn’t know that we depend absolutely from nature. But for these economists we have, nature is a subsystem of the economy.”

Max-Neef argues that for the paradigm to shift, it is necessary for economics to be taught in a different way based in five postulates and one fundamental value principle:

1) The economy is to serve the people and not the people to serve the economy.

2) Development is about people and not about objects.

3) Growth is not the same as development, and development does not necessarily require growth.

4) No economy is possible in the absence of ecosystem services.

5) The economy is a subsystem of a larger finite system, the biosphere, hence permanent growth is impossible.

The fundamental value to sustain a new economy should be that no economic interest, under no circumstance, can be above the reverence of life.

For far too long, humanity and the natural world has been subordinate to the imperatives associated with an economic growth paradigm that’s perceived by economists and politicians as being separate and distinct from the former. What Max-Neef is saying in the first point above is that the dialectical relationship between economy and people has to be restored in order for society and nature to function properly.

The distinction Max-Neef makes between growth and development in point three, is particularly significant. As the economist from Berkeley points out:

“Growth is a quantitative accumulation. Development is the liberation of creative possibilities. Every living system in nature grows up to a certain point and stops growing. You are not growing anymore, nor he nor me. But we continue developing ourselves… So development has no limits. Growth has limits. And that is a very big thing, you know, that economists and politicians don’t understand. They are obsessed with the fetish of economic growth.”

This fetishization of economic growth is arguably explained, in part, by the fact that the monetary offshoots that accrue as a consequence of this growth have, since the onset of ‘trickle-down’ neoliberalism, increasingly ‘gushed upwards’ towards the top of the socioeconomic pyramid.

This is revealed by statistics which indicate that economic output (GDP) in the UK, adjusted for inflation, has over doubled from £687bn in 1979 to £1,502bn in 2011. However, over the same period, income inequality, as measured by the Gini coefficient, increased from 0.25 to 0.34. In other words, since the era of neoliberalism, working people who have created the sustained increase in wealth in society, have seen their slice of the pie reduced. Max-Neef understands that the ruling class obsession with the fetish of economic growth is underscored by the fact that this is the class that disproportionately benefits the most from it.

The threshold hypothesis

One of the later works Max-Neef authored was the famous threshold hypothesis, which says that in every society there is a period in which economic growth, conventionally understood or not, brings about an improvement of the quality of life. But only up to a point – the threshold point – beyond which, if there is more growth, quality of life begins to decline.

According to Max-Neef, the U.S, which he terms an “undeveloping nation” is currently at this point. The UK is not far behind. This is reflected in the growing concentration of wealth towards the one per cent at the expense of the 99 per cent. The logic of diminishing returns applies to other parts of the system that eventually results in net costs over the long-term.

These costs are quantified not only in strict monetary terms, but involve human capital too – something which the economic-growth fetishists rarely factor in to their cost-benefit calculations. Diane Abbot’s posting on Twitter yesterday (November 23) of an OBR sourced graph (see below) highlighting the impact of immigration on UK debt, is a case in point.

 
Nov 23

“OBR has also shown immigration reduces Government debt, because it is a net economic benefit.”

 

 

The ORB (and Abbot) present only a partial truth. While Abbot is correct in stating that “immigration is a net economic benefit because it reduces government debt”, the analysis doesn’t take into account other factors such as the uneven distribution of wealth described which negate the benefits accrued, or indeed, other (social) indicators such as reduced quality of life resulting from, for example, a lack of school places or other pressures on public services that mass immigration potentially brings.

Walking barefoot

It’s the apparent inability of politicians to view the economic growth paradigm as destructive that opens up spaces for alternative narratives of the likes of Max-Neef to fill. After winning the Right Livelihood Award in 1983, two years after the publication of his book Outside Looking In: Experiences in Barefoot Economics, the Chilean economist’s metaphor was inspired as a result of the ten years he spent working in extreme poverty in the Sierras, jungles and urban areas of different parts of Latin America. It was during this period that the economist from Berkeley began to view his profession in a different light. What subsequently happened was to change his life for ever.

“I was one day in an Indian village in the Sierra in Peru”, recalls Max-Neef. “It was an ugly day. It had been raining all the time. And I was standing in the slum. And across me, another guy also standing in the mud — not in the slum, in the mud. And, well, we looked at each other, and this was a short guy, thin, hungry, jobless, five kids, a wife and a grandmother. And I was the fine economist from Berkeley, teaching in Berkeley, having taught in Berkeley and so on.

“And we were looking at each other, and then suddenly I realized that I had nothing coherent to say to that man in those circumstances, that my whole language as an economist, you know, was absolutely useless. Should I tell him that he should be happy because the GDP had grown five percent or something? Everything was absurd.”

Max-Neef continued:

“So I discovered that I had no language in that environment and that we had to invent a new language. And that’s the origin of the metaphor of barefoot economics, which concretely means that is the economics that an economist who dares to step into the mud must practice.”

“The point is, you know, that economists study and analyze poverty in their nice offices, have all the statistics, make all the models, and are convinced that they know everything that you can know about poverty. But they don’t understand poverty. And that’s the big problem. And that’s why poverty is still there. And that changed my life as an economist completely. I invented a language that is coherent with those situations and conditions.”

The ‘language’ Max-Neef refers to relates to the way that we as human beings in developed countries have lost the capacity to understand. Despite our ability to accumulate knowledge, this capacity, in the absence of empathy, love and understanding, is according to Max-Neef, insufficient:

“You can only attempt to understand that of which you become a part”, says Max-Neef. “If we fall in love, as the Latin song says, we are much more than two. When you belong, you understand. When you’re separated, you can accumulate knowledge. And that is — that’s been the function of science. Now, science is divided into parts, but understanding is holistic.”

For Max-Neef, in order for professional economists to understand poverty, it’s necessary they live among people who are poor. Only then can economists understand that in such an environment there exists a different set of values and principles that are alien to world of academia that cannot be learned or understood their.

“What I have learned from the poor is much more than I learned in the universities”, said Max-Neef. “But very few people have that experience, you see? They look at it from the outside, instead of living it from the inside.”

The economist from Berkeley, continued:

“And you learn extraordinary things. The first thing you learn, that people who want to work in order to overcome poverty and don’t know, is that in poverty there is an enormous creativity. You cannot be an idiot if you want to survive. Every minute, you have to be thinking, what next? What do I know? What trick can I do here? What’s this and that, that, that, that? And so, your creativity is constant.”

“In addition, I mean, that it’s combined, you know, with networks of cooperation, mutual aid, you know, and all sort of extraordinary things which you’ll no longer find in our dominant society, which is individualistic, greedy, egoistical, etc. It’s just the opposite of what you find there. And it’s sometimes so shocking that you may find people much happier in poverty than what you would find, you know, in your own environment, which also means, you know, that poverty is not just a question of money. It’s a much more complex thing.”

What underlines Max-Neef’s message, perhaps more than anything else, is that the developed world that sees itself as sophisticated, educated and cultured, while pushing away to the margins the poor of the developing world by building walls, do so while failing to acknowledge that the kind of ‘progress’ the economists and politicians sitting in their plush offices aspire to, is in truth measured by the speed at which they are destroying the conditions that sustain life.

Barefoot economic values, TTIP & the democratic retreat.

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By Daniel Margrain

Equality before the law is one of the most fundamental principles underpinning justice. It is therefore an act of utter insanity to want to roll back the gains that has seen societies’ flourish as a result of the enactment of these principles and yet that’s precisely what the UK government like that of the US and 13 other EU members seem to be sleepwalking into rubber stamping.

Fifteen years ago, George Monbiot analysed the extent to which the UK government – through the dictates of the Private Finance Initiative (PFI)- had essentially become captive to the infiltration of the state by corporations’ on the national level. What is now being proposed transnationally, is essentially the capture of national sovereignty by multi-national corporations.

The Investor-state dispute settlement (ISDS), a procedural mechanism that allows foreign investors to sue states’ for damages in a tribunal of arbitration, have in recent years, increased in number and value. They are set to grow exponentially if the Transatlantic Trade and Investment Partnership (TTIP) which sets the provisions for ISDS, is allowed to go ahead as expected next year.

It will effectively mean that corporate lawyers across the EU and US will be allowed to overturn the laws of individual democratic governments’ with a view to them seeking massive compensation claims on behalf of the corporations they represent on the basis that likely “future anticipated profits” would be adversely affected.

The provisions of the draft agreement which was conducted in secret and only came to light after their contents were leaked to the media in March 2014, followed the results of a public consultation undertaken by the European Commission. Neither appears to have done anything to ally public concerns over the proposed deal which, should it end up being finalized in its current form will, as I will attempt to show below, have profound negative implications for Western democracy.

In December 2013, a coalition of over 200 environmentalists, labour unions and consumer advocacy organizations on both sides of the Atlantic sent a letter to the US federal agency responsible for trade policy, the United States Trade Representative (USTR), and European Commission demanding the ISDS be dropped from the trade talks, claiming that it was “a one-way street by which corporations can challenge government policies, but neither governments nor individuals are granted any comparable rights to hold corporations accountable”.

Clearly, the clauses in the trade agreement relating to investment protection are open to abuse, as is the undermining of national sovereignty resulting from this potential for abuse – issues that were tackled in a Guardian article by Owen Jones. Expanding on this, Martti Koskenniemi, professor of International Law, warned that the planned foreign investor protection scheme within the treaty, similar to World Bank Group‘s International Centre for Settlement of Investment Disputes (ICSID), would endanger the sovereignty of the signatory states by effectively allowing for a small circle of legal experts to be given the power to usurp democratic legislative procedures and standards.

Professor Colin Crouch describes TTIP as “post-democracy in its purest form”. By this he means it represents a deficit in democratic accountability in which the structures of the state have ceded their powers to the imperatives associated with multinational capital. Post-democracy in these terms equates to the shifting of power towards corporations’ where deals are often struck in secret out of the reach of public bodies whose democratic role is to scrutinize them in the public interest.

Whenever scrutiny is removed, the burden of both economic and environmental risk relating to deals between political elites and corporate lobbies, tend to tilt towards the public sphere who pick up the pieces by way of what economists euphemistically refer to as “externalities”. Often, for example, deals involve the construction of large infrastructural vanity projects including football stadiums, Olympic villages and the like, that usually come with negative knock-on environmental, ecological, employment and economic impacts.

The London mayor Boris Johnson’s less than transparent involvement in the Olympic Stadium deal between the London Dockland Development Corporation (LDDC) and Premier League football club, West Ham United, brokered by Lady Brady, is an example of how both the political and business elites mutually benefit from these kinds of potentially environmentally and economically (for the tax payer) damaging and secret deals.

As the Blatter scandal, and more recently, Sebastian Coe’s cozy relationship with Nike and his other underhand dealings illustrate, the corporate, government and national authority ties within the high echelons of sport, are indicative of a wider corruption, albeit an informal kind that, unless you happen to be foreigner, is rarely acknowledged within the British establishment.

In such cases, corruption is normally regarded to be an activity restricted to “tin-pot” dictatorships in the developing world rather than something that has arguably become “normalized” and symptomatic of a broader societal and economic malaise conducive to political life within formal Western liberal democracies’.

With virtually every public asset being up for grabs in the era of neoliberal globalization (and hence reduced to a crude form of exchange value by the elites), means that all aspects of our existence are to be potentially ceded to the altar of profit and multilateral economic growth. This is precisely the aim of TTIP.

But of course not all values are perceived in this crude narrow sense. Employment, environmental, and even food standards protection which TTIP is set to undermine, for example, are concomitant to the public good. Within the context of a finite planet, the same cannot necessarily be said of economic growth.

Another value that cannot be measured in strictly economic terms is happiness and contentment. Can it really be said with any conviction that we, in the first world, are generally happier and more content than people in the developing world?

Chilean economist Manfred Max-Neef brings some valuable insights into play within this area. Having worked for many years of his life in extreme poverty in the Sierras, in the jungle and in urban areas of different parts of Latin America, Max-Neef recalls:

“At the beginning of that period, I was one day in an Indian village in the Sierra in Peru. It was an ugly day. It had been raining all the time. And I was standing in the slum. And across me, another guy also standing in the mud — not in the slum, in the mud. And, well, we looked at each other, and this was a short guy, thin, hungry, jobless, five kids, a wife and a grandmother. And I was the fine economist from Berkeley, teaching in Berkeley, having taught in Berkeley and so on. And we were looking at each other, and then suddenly I realized that I had nothing coherent to say to that man in those circumstances, that my whole language as an economist, you know, was absolutely useless. Should I tell him that he should be happy because the GDP had grown five percent or something? Everything was absurd.”

He continues:

We have reached a point in our evolution in which we know a lot. We know a hell of a lot. But we understand very little. Never in human history has there been such an accumulation of knowledge like in the last 100 years. Look how we are. What was that knowledge for? What did we do with it? And the point is that knowledge alone is not enough, that we lack understanding….”

The overriding factor that has given Max-Neef hope in the poor communities that he has lived and worked in is:

“Solidarity of people… respect for the others. Mutual aid. No greed. Greed is a value that is absent in poverty. And you would be inclined to think that there should be more there than elsewhere, you know, that greed should be of people who have nothing. No, quite the contrary. The more you have, the more greedy you become, you know. And all this crisis is the product of greed. Greed is the dominant value today in the world. And as long as that persists, well, we are done….”

According to Max-Neef, the best principles of economics are based in five postulates and one fundamental value principle:

“One, the economy is to serve the people and not the people to serve the economy.

Two, development is about people and not about objects.

Three, growth is not the same as development, and development does not necessarily require growth.

Four, no economy is possible in the absence of ecosystem services.

Five, the economy is a subsystem of a larger finite system, the biosphere, hence permanent growth is impossible.

And the fundamental value to sustain a new economy should be that no economic interest, under no circumstance, can be above the reverence of life.”

In developing postulate three, Max-Neef explains:

“Growth is a quantitative accumulation. Development is the liberation of creative possibilities. Every living system in nature grows up to a certain point and stops growing. You are not growing anymore, nor he nor me. But we continue developing ourselves. Otherwise we wouldn’t be dialoguing here now. So development has no limits. Growth has limits. And that is a very big thing, you know, that economists and politicians don’t understand. They are obsessed with the fetish of economic growth” [My emphasis].

Crucially:

“…In every society there is a period in which economic growth, conventionally understood or no, brings about an improvement of the quality of life. But only up to a point, the threshold point, beyond which, if there is more growth, quality of life begins to decline. And that is the situation in which we are now.”

The aim of TTIP, is the promotion of multilateral economic growth (of which the ideology of progress is seen as emblematic). Paradoxically, this corresponds to the decline in the quality of life characterized by runaway climate change and the undermining of environmental protection that this implies.

The law of diminishing returns as inferred by Max-Neef, would suggest that humanity is currently at the threshold point. It’s up to us to determine our future path and those of our children and children’s children. In order to do that we need to break with the current socioeconomic paradigm.