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Survival of the Cooperative
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

India’s great moral leader, Mohandas Gandhi, famously said that there is enough on earth for everybody’s needs, but not enough for everybody’s greed. Gandhi’s insight is being put to the test as never before.

The world is hitting global limits in its use of resources. The shocks can be felt each day in catastrophic floods, droughts, and storms, as well as in the resulting surge in prices in the marketplace. Whether people cooperate or fall victim to self-defeating greed will determine the world’s fate.

The limits to the global economy are new, resulting from the extraordinary size of the world’s population and the unprecedented spread of economic growth to encompass almost the entire world. There are now seven billion people on the planet, compared to only three billion half a century ago.

Average per capita income is 10,000 dollars, with the developed world averaging around 40,000 dollars and the developing world around 4,000 dollars. The world economy is now producing around 70 trillion dollars annually, in comparison with around 10 trillion dollars, in 1960.

China’s economy is growing at around 10pc annually. India’s is growing at nearly the same rate. Africa, long the world’s slowest growing region, is averaging annual GDP growth of roughly five per cent. Developing countries are growing at around seven per cent per year, and developed economies at around two per cent, yielding a global average of 4.5pc.

This is good news. Rapid economic growth in developing countries is helping to alleviate poverty. In China, extreme poverty has been cut from well over half of the population 30 years ago to around 10pc or less.

Yet, there is another side to the global growth story that must be understood. With the world economy growing at four per cent to five per cent annually, it is set to double in size in less than 20 years. The world economy will reach 140 trillion dollars before 2030, and 280 trillion dollars before 2050, if the current growth rate applies.

The planet will not physically be able to support this exponential economic growth if greed gets the upper hand. The weight of the world economy is already crushing nature, rapidly depleting the supplies of fossil-fuel energy resources that nature created over millions of years, while the resulting climate change has led to massive instabilities in terms of rainfall, temperature, and extreme storms.

These pressures are visible in the marketplace daily.

Oil prices have surged to more than 100 dollars per barrel, as China, India, and other oil importing countries join the US in a scramble to buy up supplies, especially from the Middle East. Food prices, too, are at historical highs, contributing to poverty and political unrest.

There are more mouths to feed, but people also have a greater purchasing power, on average. Heat waves, droughts, floods, and other disasters induced by climate change are destroying crops and reducing the supplies of grains to world markets. In recent months, massive droughts struck the grain producing regions of Russia and Ukraine, and enormous floods hit Brazil and Australia; now, another drought is menacing northern China’s grain belt.

There is something else hidden from view that is very dangerous.

In many populous parts of the world, including the grain growing regions of northern India and China as well as the US’s Midwest, farmers are using groundwater to irrigate their crops, depleting the water table. In some places in India, it has been falling by several metres annually over recent years. Some deep wells are approaching the point of exhaustion, with salinity set to rise as ocean water infiltrates the aquifer.

A calamity is inevitable unless that behaviour changes, which is where Gandhi comes in.

If societies are run according to the greed principle, with the rich doing everything to become richer, the growing resources crisis will lead to a widening divide between the rich and poor, and quite possibly to an increasingly violent struggle for survival.

The rich will try to use their power to commandeer more land, more water, and more energy for themselves, and many will support violent means to do so, if necessary. The US has already followed a strategy of militarisation in the Middle East in the hope that such an approach would secure energy supplies.

Competition for those supplies is intensifying as other countries begin to bid for the same (depleting) resources.

An equivalent power grab is being attempted in Africa. The rise in food prices is leading to a land grab, as powerful politicians sell massive tracts of farmland to foreign investors, brushing aside the traditional land rights of poor smallholders. Foreign investors hope to use large mechanised farms to produce output for export, leaving local populations with little or nothing.
In the leading economies, the rich have been enjoying increasing incomes and growing political power. The US economy has been taken over by billionaires and the oil industry. The same trends are threatening emerging economies, where wealth and corruption are on the rise.

If greed dominates, the engine of economic growth will deplete resources, push the poor aside, and drive society into a deep social, political, and economic crisis. The alternative is a path of political and social cooperation, both within countries and internationally.

There will be enough resources and prosperity to go around if economies are converted to using renewable energy sources, sustainable agricultural practices, and reasonable taxation of the rich.

This is the path to shared prosperity through improved technologies, political fairness, and ethical awareness.

Jeffery Sachs is professor of economics at Columbia University. This commentary was provided to Fortune by Project Syndicate.

 

By Jeffery Sachs

Jeffery Sachs is professor of economics at Columbia University. This commentary was provided to Fortune by Project Syndicate.

 
 
 
   
   
   
 
 
 

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