Sustainable development in a post Keynesian perspective: why eco-development is relevant to post Keynesian economics

Abstract

While sustainable development is a unanimously accepted watchword today, the article aims to show that the post Keynesian school, although it did not emphasize environmental issues and sustainable development as such, has tools that make it relevant on this topic. Indeed, post Keynesian sustainable development can be close to Ignacy Sachs’s eco-development, which is inspired by Michal Kalecki. Thus, post Keynesianism and eco-development share the same position related to economic growth. They meet, via the concept of radical uncertainty, on the importance of the precautionary principle. If the implications of the principle of effective demand seem to oppose them, these divergences can be easily overcome.

Key words:

• Sustainable development
• eco-development
• Kalecki
• Keynes
• post Keynesian

JEL classifications:

• B59
• E12
• O11

Notes

¹Davidson (2002) reminds us that ecological concern or the economic implications of the depletion of resources have been significantly ignored and should be dealt with by the Journal of Post Keynesian Economics. For Robinson, “The consumption of resources, including air to breathe, has evidently impoverished the world” (1977, p. 1336), leading her to wonder “what is growth for?” (p. 1337). Another insight of the growing interest of post Keynesians in sustainability issues can be found in the second edition of John King’s The Elgar Companion to Post Keynesian Economics (2012) where a sustainable development entry appears.

²The body that would later become the IFDA began in 1971 at the Founex Symposium on Development and the Environment, the first stage on a path that would subsequently include the United Nations Conference on the Human Environment and Development in Stockholm (1972), the Cocoyoc conference on alternative resource usage models (1974) and the Dag Hammarskjöld report (1975). Legally, the foundation was established in 1976 and dissolved in 1995. All of the IFDA’s published files can be found on the Dag Hammarskjöld Foundation Web site at www.dhf.uu.se/ifda/.

³Vivien (2005) has noted that even if the Rio Declaration does include the precautionary principle, and therefore seeks to extend the Stockholm declaration, it seems like a step backward or certainly in a different direction. This is because the demographic issue is less central here, with references to nature and the depletion of natural resources almost entirely disappearing, along with the idea that planning might be used as a way of reconciling diverse objectives.

⁴Proponents of zero growth would go further still and seek an alternative to development, a concept they consider “toxic” because it leads to a loss of identity, cultural homogenization, and an alignment on Western values (see Latouche, 1993; Rist, 1997).

⁵We can define the “power elite” as groups that are in power and can influence public opinion. This puts together political leaders from the Global North and the Global South, as well as executives of major transnational firms and media outlets that are often owned by such firms.

⁶As noted by Sachs, “Development is perceived far too often as a process contributing to all minimal material conditions of survival, expressed in terms of food, shelter, protection and health—plus education, described as a way to achieve these objectives. This vision is too restrictive since humans do not live from bread alone and their non-material needs must also be considered. Such needs include free access to culture, the possibility of exercising a creative activity in an appropriate work environment, friendship; and participation in public affairs” (Sachs, 1980, p. 68).

⁷Sachs has stressed the need “to be clear-minded and honest about dependency relationships to keep future analysis of cooperation and interdependency from starting with the premise that transparent relations between equal nations and peoples have ever existed. To various degrees and in various forms, many third world countries’ dependency on more developed nations can still be witnessed in unfair trade, technological servitude, the monetary system, investments, poor or bad industrialisation, media and communications emphasising the dominant perspective, etc … . Thus, whether via multinational firms or other major transnational systems, we still witness increased internationalisation of the most advanced productive system, one that benefits a space catering to private and/or privileged interests, rooted in the privatisation of benefits and advantages and the socialisation of costs. This happens at the level of each country suffering the social and human consequences of having been subjected to a technical-commercial system dominated by external forces; and at the level of the planet as a whole, which is ultimately affected in a variety of important environmental dimensions … . The main material and political-economic imbalances in today’s world stem largely from the great technological powers’ uncontrolled and irresponsible utilisation of resources; the unlimited desire for power of privileged groups that already monopolise resources; and the functioning of today’s technical-industrial-commercial system” (Sachs, 1980, pp. 125–126).

⁸Generally, institutional and power questions are key to all development processes, as demonstrated by Galbraith (1984). Kalecki (1943, 1964, 1966, 1971) also viewed all social progress as being conditioned by major institutional change, thus by alterations in the balance of power between dominant and dominated actors in a way favoring the latter. Godard (1998) emphasized the importance of civil society (defined as all of the organizations depending on neither the state, the market, nor business circles) and planners as the fulcrums of eco-development.

⁹In growth terms, however, there is no basic divergence between eco-development and strong sustainability. For instance, Godard has noted that “For proponents of eco-development, it is only after a period of transition leading to a reduction in international development inequalities that the question of a material limitation of global growth can be envisaged” (Godard, 1998, p. 223). This position is close to the one defended by the proponents of strong sustainability.

¹⁰Note that the “power elite” frequently orchestrate this instability consciously, and that it often turns out to be a smokescreen that—because it penalizes growth—helps them to demand greater sacrifices from the rest of the population, thereby exacerbating inequalities (see Kalecki, 1943).

¹¹Courvisanos (2012) develops an “eco-sustainable framework,” that is, an innovation and investment policy framework for sustainable development. This framework, borrowing from Lowe and Kalecki, has three main elements that drive innovation and investment: “(1) Agreed ecological sustainable rules (or conventions), including for capital investment that is resource-saving with long term sustainable carrying capacities (precautionary principle under fundamental uncertainty); (2) Perspective planning with flexible risk-adverse investment strategy (satisficing principle under iterative strategic planning of innovation and investment); (3) Cumulative effective demand with strong local niche market share for environmental-based goods and services (demand-oriented stimulus and support” (Courvisanos, 2012, p. 207).

¹²Similarly, Keynes considered that what he called technological employment, “due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour” (Keynes, 1930, p. 325), must reduce everyone’s burden and lead to a sharing of work so that people can devote time to noneconomic activities as well. We should note, nevertheless, that Keynes’s General Theory seems less enthusiastic about this, insofar as he considered working hour reduction policies to be premature, even if he did not reject them formally (see Keynes, 1936). On the other hand, Sachs has argued that “Shorter working hours would leave more time for self-production within domestic and communitarian sectors and outside of the market for good and services. Above all, it would mean more time for cultural activities, games and socialising” (Sachs, 1980, p. 136).

¹³This paragraph owes a great deal to Dostaler (2007). Berr (2009) offers an in-depth presentation of possible links between Keynes’s thinking and sustainable development.

¹⁴Keynes believed that “the attribution of rationality to human nature, instead of enriching it, now seems to me to have impoverished it. It ignored certain powerful and valuable springs of feeling” (Keynes, 1938, p. 448).

¹⁵“All these pretty, polite techniques, made for a well-panelled board room and a nicely regulated market, are liable to collapse” (Keynes, 1937, p. 115).

¹⁶These expectations fall into two groups: the first type (short-term expectation) “is concerned with the price which a manufacturer can expect to get for his ‘finished’ output at the time when he commits himself to starting the process which will produce it” (Keynes, 1936, p. 46); the second type (long-term expectation) “is concerned with what the entrepreneur can hope to earn in the shape of future returns if he purchases (or, perhaps, manufactures) ‘finished’ output as an addition to this capital equipment” (Keynes, 1936, p. 47).

¹⁷With his theory of effective demand, Keynes attached particular significance to entrepreneurs’ expectations (see Keynes, 1936, ch. 12).

¹⁸Which is why “the facts of the existing situation enter, in a sense disproportionately, into the formation of our long-term expectations; our usual practice being to take the existing situation and to project it into the future, modified only to the extent that we have more or less definite reasons for expecting changes” (Keynes, 1936, p. 148).

¹⁹Thus, “if we expect large changes but are very uncertain as to what precise form these changes will take, then our confidence will be weak” (Keynes, 1936, p. 148).

²⁰Lavoie (2006) has estimated that post Keynesian research can be associated with analyses developed by Georgescu-Roegen (1971), one of the main promoters of sustainable development.

²¹Jespersen (2004) has confirmed this perspective by noting that goods are currently being produced not because they are necessary but because their production helps in the battle against unemployment. In our opinion, however, the battle against unemployment and the satisfaction of essential needs are perfectly complementary objectives, whose realization must result from a development plan that the state formulates under civil society control.

²²As noted by Sachs, today, “Conservative dynamism makes us believe that the solution to all problems consists of fleeing ahead, i.e., of doing more of the same thing, as if economic growth by itself suffices to solve all problems, independently of how such growth is achieved, who benefits from it (or must make sacrifices because of it) and/or its substance or social and environmental price on a national or global scale” (Sachs, 1980, pp. 130–131).

²³For Sachs, “Eco-development postulates a research effort implementing all of the possibilities of modern science in an attempt to satisfy the real needs of the population, based on the potential of the resources found in the environment” (Sachs, 1980, p. 33).

²⁴By viewing the environment as regulation theory’s sixth institutional form, Zuindeau (2007) is also situated within this sustainable development perspective.

²⁵Keynes agrees with this position in the final chapter of his General Theory when he refers to the possibility that his ideas could in fact be implemented one day: “Are the interests which they will thwart stronger and more obvious than those which they will serve?” (Keynes, 1936, p. 383).

Additional information

Notes on contributors

Eric Berr

Eric Berr is associate professor in the Department of Economics at the University of Bordeaux, France.