CHAPTER 2

SUSTAINABILITY BY THE STATE, NOT MARKETS OR TECHNOLOGY

November 11 is not a traditional Chinese holiday. Singles Day (a reference to its date of 11/11) was originally a time for China’s youth to “celebrate” their singlehood. They would gather in cafés and restaurants and have a day for themselves, without obligations to partners or family.

Singles Day ballooned from these humble beginnings into something unrecognizable. It is now the largest shopping day in the entire world, thanks to the efforts of Chinese e-commerce companies like Alibaba. In 2017, Alibaba alone sold US$25.3 billion worth of merchandise—a lot of it probably unneeded—in just twenty-four hours, beating last year’s record by 40 percent.1 Alibaba launched the day with a huge midnight celebration in Shanghai with appearances by Western celebrities such as Nicole Kidman and Pharrell Williams. Singles Day is now vastly larger than Black Friday in the US, which in the same year had a relatively piddling US$5 billion worth of online sales.2 China now sells more in a single day than all of Brazil sells in an entire year.

A few months later, Jack Ma, along with several other global business tycoons, contributed to a US$1 billion fund for new, low-carbon investments.3 This was hailed as further proof that the business community was taking the problems of climate change and sustainability seriously (especially as politicians, especially in the US, were looking as though they were wavering on the issue). The irony is that the narcissistic shopping frenzy of Singles Day is probably the biggest single organized mass-shopping contributor to carbon dioxide emissions the world has ever known. To be clear: US$1 billion is a lot of money, and one hopes the money is put to good use. But the amount pledged by multiple billionaires pales in comparison to the mammoth sales of Singles Day—just one of the many e-commerce sales days that happens globally each year.

Think about how many products were sold on Singles Day. Then think about how many resources and how much labor was used to make all those goods. Then, finally, think about how many of those goods were truly needed by those buying them; after all, these shoppers were not willing to buy them under normal circumstances and were instead taken up in the consumerist frenzy of a nationwide shopping spree. Then think about the carbon footprint of delivery and all that waste packaging—hundreds of tons of it. Finally, there is the untold cost of disposal of unused or wasted products. All these costs are not paid for because the whole attraction of Singles Day is that prices are at their lowest, seducing buyers by externalizing cost. Yet people do not criticize these practices.

The introduction described the choice faced by developing countries: pursue “sustainability” or pursue “development,” as defined by our economic theories of the day. Developing countries need to improve living standards for their people, many of whom are still poor. However, all current models for development are unsustainable, in that they overconsume resources. Without thinking of an alternate economic model, forcing sustainability on developing countries would doom people to perpetual poverty while not tackling the unrealistic aspirations they are led to believe they can have.

However, many commentators—especially those operating in the Western media—largely deny or are ignorant of this dilemma. Instead, they argue that countries can pursue sustainability and Western-style living standards at the same time. These commentators point to the free market and technology as the ways that plenty can be provided to the world’s entire population, without risking the Earth’s scarce resources or creating intolerable living conditions. Our current lifestyles, even if they are massively unsustainable now, will be sustainable in the future, due to the development of new technology, and mostly from investments by Western corporations.

This is not just an argument made by antienvironmentalists; even those who sincerely support sustainability efforts buy into it. They argue that new technologies have already brought down the emissions of advanced countries and note that investment in renewable energy has already increased tremendously without widespread government interference or intervention, proving that a stronger state presence in the economy is not necessary. Minor tweaks and subsidies are all that are needed.

This hope in the free market can be seen even among proponents of renewable energy, especially during the antienvironment, pro-fossil-fuel Trump administration. Blogs and newspapers across the world have tried to present the view that, even if President Trump supported American coal, oil, and natural gas, the world would still be fine. HuffPost published a piece with the headline “The March of Renewable Energy Is Unstoppable Even by President Trump.”4 The New York Times reported that the “American energy market has already shifted away from the most polluting fossil fuels, driven more by investors and economics than by federal regulations.”5 The Financial Times released a long feature piece soon after President Trump withdrew from the Paris Climate Accord, titled “The Big Green Bang: How Renewable Energy Became Unstoppable.”6

This was echoed in the highest offices in the land: former president Barack Obama, writing in Science, hoped that “putting near-term politics aside, the mounting economic and scientific evidence leaves me confident that trends toward a clean-energy economy that have emerged during my presidency will continue. . . . The economic opportunity for our country to harness that trend will only grow.”7

Prosustainability policies are wrapped in the rhetoric of “green jobs” or “the renewable energy industry”: an assertion that sustainability is not good on its own terms but rather in terms of what it can provide for a country’s continued economic growth. Until very recently, sustainability policies had to be hidden within platforms for “resource- and energy-independence,” implying that overusing resources was acceptable so long as those resources didn’t come from abroad.

In this view, if sustainability efforts close off some economic opportunities, shave off a percentage point of economic growth, increase unemployment by a point, or disrupt certain key industries, then they are a failure. These groups want to tackle sustainability without sacrificing economic growth, intervening in the business practices of global companies and the global economy, or even considering all possibilities.

This approach is a mistake, and serves to distract people from the economic, social, and political transformations needed if the developing world is to survive. The mainstream is fixated on growth, prosperity, and progress. Rather than hoping that market dynamics or technological innovation will save the world and alleviate poverty, developing countries need to take matters into their own hands: their states must pursue sustainability as the key pillar of their political philosophy and shape it without the baggage of the flawed narrative of today (as addressed in chapter 1). This requires a true paradigm shift delivered through a new political philosophy.

This chapter will discuss why a faith in free markets and technology as panaceas is ill-suited to tackle the thorny and complex issues of sustainable development, especially in large developing nations. The key institution of society—the state—has to take the lead and not abdicate its ideas, born out of a different context, to the rich nations of the world or, even worse, to mainstream economists and business schools.

According to the market-based view of sustainable development, as the world economy continues to grow, resource consumption will increase. This will both make resources scarcer and increase prices, thereby achieving an equilibrium between supply and demand. Commentators argue that market forces would thus contribute to a less resource-intense economy:

1.   Increased input prices would carry through to the final product, increasing their price. This would lower demand and thus the level of resources consumed.

2.   Increased input prices would also “unlock” resource stocks that are normally uneconomical to exploit. This would lead to an increase in the supply of even nonrenewable resources. For example, oil that is too expensive to extract at $40 a barrel is suddenly economical at $80 a barrel, “increasing” the available supply of oil. It may make “cleaner” nonrenewables, such as natural gas and nuclear power, more competitive, leading to a more diverse energy base.

3.   Increased input prices would open a business opportunity for more resource-efficient production. Whether through new technologies or new business models, this would allow consumers to live more extravagant lifestyles without using as many (now-pricy) resources.

Thus the market-based approach would argue that the properly functioning free market would automatically resolve the problems associated with diminishing resources. Government intervention and management are thus unwarranted, as the market would automatically resolve these social problems. In fact, state action could hinder the development of these new opportunities, by diverting resources toward areas that are less efficient and optimal.

This approach is based on a great deal of faith in market forces—“the invisible hand”—to correct human behavior in the economy. Market forces would, by themselves, lead to a better equilibrium, due to each of us acting in our own self-interest. This is hubris.

A related approach relies on the hope that some new technological invention would allow the world to keep consumption high while using far fewer resources. Thus people in the developing world would not need to moderate their expectations: technology would allow all of them to live a life of high consumption.

These approaches reinforce each other. Increasing resource prices (through market forces) would encourage the development of energyand resource-efficient technology. This technology might also make it easier to extract difficult resources, increasing supply. Thus the combination of market forces and technological innovation would lead to a new equilibrium of high consumption and low resource use.

The market-based approach has the benefit of not requiring anyone to make a difficult choice about how to best allocate resources, as the market would magically handle things on its own. It is a convenient way to shift responsibility elsewhere. That can be appealing to governments that rely on business or corporate support, as what is ultimately best for these businesses would end up being best for wider society (not to mention the government and the politicians who run them). It can also be a relief for governments worried about the short-term political effects of sustainability policies: states, democratic or nondemocratic, may be wary of restricting the consumption of scarce resources (or those with severe associated externalities, such as fossil fuels or carbon dioxide) by their populations, who may be likely to exert political pressure against any controls.

There are several reasons why the free and unregulated market cannot be truly sustainable. None of these reasons are radical; they are all part of any introductory economics course. Despite this, these ideas seem to have been forgotten by those looking at market-based solutions to sustainable development, who often do not take the insights from these concepts to their logical conclusion.

The first concept to consider is external cost, or a cost placed on a third party. Almost every economic action places a cost on someone else. This cost may be incurred by the consumer directly, or may have been incurred at some point along the production chain, from extraction, through conversion and consumption, and finally to disposal. These costs are not reflected in the market price, which reflects a balance between private demand and supply. When private cost (i.e., the price) is low, market demand is high. This means that the market equilibrium—where private benefit equals private cost—have a higher level of consumption than the social equilibrium—where social benefit equals social cost.

The standard example of an externality is pollution. Waste from industry, power plants, or vehicles has numerous negative effects—be they respiratory illness; increased toxicity in the air, water, and soil; and even lowered property values—on third parties. Even when the final product is ostensibly “clean,” extracting the raw materials often creates pollution. Neither the producer nor the consumer pays these costs. As these costs do not figure into a private cost-benefit calculation, polluting products are thus overconsumed, and pollution is overproduced.

This externality is the economic justification for antipollution regulation: to reduce, if not remove, the gap between the private optimum and the social optimum. Regulation can aim to

•     Increase the private cost of polluting production (e.g., taxation on pollutants)

•     Reduce the social cost of production (e.g., mandating the use of clean production techniques)

•     Directly reduce the amount of polluting production (e.g., closing polluting factories and stopping production)

Externalities are an accepted part of economic theory: they are the go-to justification for government regulation of the economy. However, we rarely grasp the full scale and extent of the external costs of consumption. For example, climate change was called the “greatest and widestranging market failure” by British economist Sir Nicholas Stern in the 2006 Stern Review on the Economics of Climate Change, in that carbon emissions (and the resulting climate change) were an external cost created by every economic action in the modern economy.8

The external costs of consumption emerge at every part of the production chain. Take our use of cars. Some obvious externalities are the external costs from vehicle exhaust, as well as the lost time and health effects from traffic congestion. But the manufacturing process also has environmental consequences, as does the mining of the metals and minerals needed, none of which are included in the final price. Shipping of parts and final products also has external costs. Auto manufacturing is increasingly located in areas with lax labor standards; the falling price of cars is paid for by illness and injury among auto workers in places as far afield as Bangladesh and Alabama. Mass adoption of cars worsens congestion in cities, which has effects on public health, the environment, and urban planning (due to the expansion of suburbs and roads). Finally, the use of petroleum and diesel in cars has its own social costs, sometimes going as far as triggering outright war.

The consumption of meat also has external costs. The environmental consequences of raising livestock is high: pollution from farming, carbon emissions from livestock, soil erosion from overgrazing, and deforestation from expanding pastures. But there are other external costs. The overuse of antibiotics as a cheap and easy way to control infection and encourage livestock growth have increased antibiotic resistance in bacteria, which have spread to humans. Industrial livestock farming has transformed other parts of agriculture, encouraging the growth of corn and soybeans for feed, rather than staple crops or fruits and vegetables. Finally, a meat-based diet can have significant health effects, such as increased rates of heart disease. An increasingly unhealthy population places costs on the whole society by burdening the public health system and losing productivity from sick workers.

One economic phenomenon whose external costs have not been accounted for is the rise of digital and internet technology. Again, this has environmental costs; smartphones and other digital products use minerals from mines that often have poor environmental controls and safety standards (see Figure 2.1). The drive for greater openness and connectivity has also led to a more unstable system, which can easily be toppled by an unruly algorithm, human error, or criminal intent. Digital connectivity is also transforming economies. The rise of e-commerce has cut out huge parts of the supply chain: although retail jobs do not necessarily pay well, they at least pay better than the low-skilled, low-paid, and insecure jobs in the massive “fulfillment centers” of the major e-commerce companies.

This is the reason why e-commerce deals are often so cheap: the costs of fulfillment and delivery are pushed downward and outward, to affect workers, their families, and wider society. Yet it’s something people do not consider when they order a product. This happens now hundreds of millions of times every day as some human “robot” is sent to pick, pack, and serve yet another craving by another mindless consumer who has not considered the ramifications of his or her decision, yet wants to have the results as soon as possible.

Figure 2.1 Some of the externalities that stem from the smartphone. These are merely some of the direct, first-order effects that come from the purchase of an individual phone. There are more disturbances and externalities that emerged when the smartphone became more widespread. Yet even with these, the business model can still be one where a consumer gets a phone for free.

Evidence shows that much of the increase in consumption in recent years in advanced economies is not due to increasing incomes (which have stayed roughly constant, if not decreased, over the past several decades), but rather because goods are significantly cheaper and financing is more easily available. Buy things you do not need with money you do not have, to impress people you do not like. Much as how a fast-food chain needs consumers to consume ever-increasing amounts of junk food, the financial sector looks to provide easy money as a way to expand its reach and power. Going cashless also plays into this: no longer will people’s consumption be restricted by whether or not they have enough cash in their wallet. Going without something, especially as goods become cheaper, will no longer be part of the purchasing dilemma. Swipe and it’s yours.

But we rarely ask why these goods and services have become so much cheaper: low wages, poor working conditions, too-easy access to credit, cheaper commodities, and other economic changes have contributed to “lower” prices, larger quantities, more variety, and unsustainable overconsumption. This is taught in business schools to supposedly bright minds as the way to make money and build companies.

In 2010, the Harvard Business Review published a piece that asked companies and firms to internalize their externalities, as the public was becoming more aware of externalities, and the impact of externalities was becoming easier to measure.9 This led to a spirited response by a fellow of MIT’s Sloan School, who argued that an awareness of externalities “invites misinterpretation, misunderstanding and mischief”: “If everything is increasingly interrelated—and it is!—then who won’t be aggrieved? Who won’t be wounded? Who won’t be disadvantaged? Who won’t be harmed—or see themselves as harmed—in some meaningful way? What won’t be an externality to some third party?”10

In the eyes of this research fellow, it would be too difficult to sustain the free market if we accounted for externalities; given that the free market is prima facie good, then accounting for externalities must be bad. This view led him to some strange conclusions, such as his assertion that “‘Pollution’ enabled the most innovative product innovations of the time.”

Although the MIT professor shied away from honestly confronting the failures of the free market, he did get at the core issues. Every economic activity in the marketplace does place some external cost on some third party. This would infer a much greater role for government intervention and management of the economy in order to alleviate the gap between private and external cost. Rather than shy away from that, we should accept the responsibility to transform our economies far more than we have been willing to thus far. It is the ultimate and arguable sole role of the government to protect the public good in the interest of the welfare of the collective.

The second reason that the free and unregulated market cannot be truly sustainable is that there is a mismatch between the private interest to consume as much as possible and the collective interest to sustainably manage common shared resources. This is also an old idea: the concept of the “tragedy of the commons” was first used by William Forster in 1833 to refer to unregulated grazing on the unowned, public commons. The idea was picked up over a century later by the ecologist Garrett Hardin in 1968, who popularized the term as applied to any public resource. Although the popular term refers to a modern (and Western) phenomenon, communities and societies across the world and across history have faced issues around resource management. Asia in particular has several examples both of societies that successfully managed public resources (such as the Thai preindustrial system for managing increasingly scarce forests or the Japanese management of fisheries) and of those that failed (the depletion of Korea’s forests and the collapse of how Indian villages managed what was uncharitably called “the wastes” by colonial officials).11

In short, the tragedy of the commons describes how shared, unregulated, and unowned resources are often overexploited. Any one person’s consumption has no significant effect on overall stocks, so people believe they can use as much as is personally feasible. However, this calculus is true for everyone else; everyone uses as much as they can, and so the resource stock is eventually depleted or exhausted. There are some common themes to “common” resources:

1.   The resource stock, be it a forest, a fishery, or the atmosphere, needs to be large enough so that any one person’s use of it will not have a significant effect on supply (and thus increase prices). Thus, the usual market forces from increased exploitation would not apply.

2.   The resources are not “owned,” formally or informally. Without an owner, no one has an interest in preserving the level or quality of the resources.

3.   The fixed costs of exploiting the resource are low. Some unowned resources (such as undersea oil) require a large level of up-front capital, restricting the number of entities that can exploit it. “Common resources,” such as fisheries and forests, are cheaper to exploit, thus allowing a large number of people to consume them.

4.   It is difficult to enforce rules and regulations governing the resource. This makes it difficult for industries to collectively develop regimes that can sustainably manage resources on their own. Any agreement can fall apart due to lack of trust or fears of defection.

5.   The market does not send the proper signals that indicate when a resource stock is in danger of being exhausted. When these signals are sent, it is often too late to reverse course.

The tragedy of the commons can be seen with the collapse of the world’s major fisheries. Each individual fisher has an incentive to fish as much as possible (and especially more than his or her competitors). The cost of launching a fishing boat is fixed; the more fish that are caught, the higher one’s income. The problem is that every fisher is operating under the same calculus, leading to massive overfishing. Even as the fishing industry began to realize that fishing needed to be constrained in order to preserve fisheries, there was still a heavy incentive to “cheat”: to illegally overfish in order to sell much more fish than anyone else.

For much of history, when demand for fish was relatively low and fishers fished locally with small vessels, fishery stocks were not under threat. However, as catches grew in size and as demand for fish increased, the total catch grew to unsustainable levels. Fishers could now catch enormous amounts of fish, spurred by new technologies: larger nets, longer-range boats, sonar and radar systems to track schools of fish, and cooling systems to preserve large catches.

It took the almost complete collapse of fisheries in the North Atlantic to encourage Europe and the US to start to implement regulations to manage fish stocks. Markets did not do much to avoid this major resource collapse. The industry also realized the threat that overfishing presented, and so tried to self-regulate the size of the catches. Although some fisheries have been able to recover, others, such as the fishery of the Atlantic Northwest cod, may be gone forever.

Another example of the commons are forests. Individual farmers and landowners clearing land or selling timber may not affect the size of the overall forest. However, if every farmer or landowner eats a small amount into the forest, it will rapidly shrink.

Forests are difficult to manage or control. For one, they cover a large area, making it difficult to monitor where illegal logging may be taking place. Indonesia has nine hundred thousand square kilometers of forest; Brazil has four million square kilometers of forest. If both these forests were countries, they would be the thirty-third and sixth largest countries, respectively. The equipment needed for logging is also relatively cheap and easy to move, meaning that illegal logging can take place at times and places that are difficult to monitor.

This has had dire effects on the world’s forests. The Amazon rainforest has lost about 20 percent of its total forest cover; the WWF predicts that deforestation could severely damage up to 60 percent of the Amazon by 2030. In Southeast Asia, a third of the rainforest has been lost, with some countries (e.g., Thailand) losing as much as 43 percent of forest cover.12 Chapter 9 will deal with one of the major repercussions of Southeast Asia’s deforestation: the annual haze from forest fires, raging on the island of Borneo, which blankets Singapore, Indonesia, and Malaysia every year. It will argue that the only hope is strong government intervention, and that markets and technology can only play a peripheral role to save the world’s oldest rainforests and its indigenous inhabitants as well as the iconic orangutan.

The third reason that the free and unregulated market cannot be truly sustainable is that it does not include the effects of power. Those who benefit from overconsumption tend to be wealthier, giving them more power in both the marketplace and the political process. They also tend to be fewer in number, which helps them organize and demand, as a collective, privileges and protections from the government.

By contrast, those who suffer the external costs of privileged consumption tend to be poorer, with fewer resources to pressure for change or to protect themselves from external costs. They also tend to be larger in number, which complicates their ability to organize as effectively and exert political pressure. They are sometimes more desperate, living in or close to poverty; they may therefore decide to suffer through external costs rather than risk what little income they have.

Without some way to resolve this power gap, overconsumption will continue, as those who benefit will fight to preserve their privileges and offload their costs on the wider population.

The effects of power are not unknown to economists. Power differences have been used to justify protections for organized labor, minimumwage legislation, and collective bargaining, all of which serve to increase the power of the employee vis-à-vis the employer. Power has also been used to justify antitrust legislation, to prevent monopolies from abusing their market power to bully suppliers and customers.

However, in many cases, the free market orthodoxy ignores the impact of power on economic negotiations. It assumes that people (or even nations) go into transactions as equals and are fully capable of turning down an economic transaction if it places too heavy a burden. As we all know from the global supply chain, which provides everything from T-shirts to iPads, this is utter nonsense. The same applies to smaller and poorer countries signing trade deals, or even agreements like the Trans-Pacific Partnership, which purportedly had environmental protection as one of the positive objectives.

We have not expanded our definition of the “powerless” to match our new resource-constrained reality. Arguing that the poor are able to make a conscious economic decision from a position of power when it comes to scarce resources is to hide from the truth and neglect their real deprivation and desperation.

What about technological development? Why is a deus ex machina not a viable pathway for sustainable development?

To reiterate, a technological approach to sustainability would hold that increasingly scarce resources would drive up input prices. This would encourage innovators and inventors around the world to develop new technologies—either significant improvements in energy or resource efficiency (thus reducing supply costs) or an entirely new technology that does not rely on scarce resources—to keep costs low.

Thus there would need to be market signals that encourage the development of sustainability-supporting technology—namely, high resource/input prices. And that can only come from the state, as markets thrive on a free ride until it is too late to correct. If the market encourages business as usual—perhaps due to the significant upside and profits from the mass externalization of cost and the underpricing of resources—then the market signals and business opportunities that motivate technologies will not emerge.

The tribulations of the electric car show how market dynamics can hurt the development and adoption of more sustainable technologies. Although they wouldn’t be the cure-all they are often claimed to be (electric cars have significant environmental externalities), they would alleviate some vehicle pollution and carbon emissions. In the first decade of the twenty-first century, environmentalists, policymakers, and even some car companies hoped that high oil prices would finally encourage drivers to ditch gas-guzzling cars for cleaner hybrid and electric cars. As the production of electric cars increased, economies of scale would bring prices down, allowing electric cars to compete with their gas-fueled brethren.

Almost ten years later, electric cars have yet to gather significant market share. Countries that made bold statements about bolstering electric car usage, such as the US in 2008 and Germany in 2016 (when chancellor Angela Merkel declared that all German cars would be electric by 2030), have seen no increase in demand. In Germany, for example, only 1.5 percent of the 3.4 million new car registrations in 2016 were electric or hybrid cars. By contrast, 20 percent of Germany’s new car registrations were gasguzzling SUVs.13 And this is Germany, which is, by any reckoning, a leader both in automotive technology and the adoption of renewable energy through the preferential government treatment of green energy sources in the Erneuerbare Energien Gesetz, or Renewable Energy Act.14

The only cars with any mass appeal are gas-electric hybrids; the only fully electric cars are sold as luxuries. Demand for inefficient SUVs has recovered from its previous low. Car companies have pointed to the price of oil as the major reason why electric cars have failed to take off. The 2008 financial crisis caused oil prices to collapse—thus undercutting the consumer incentive to buy an electric car (perhaps showing that buyers are ultimately more concerned with price, prestige, and comfort than any “green” characteristics). Oil prices are extremely volatile, changing according to macroeconomic conditions, geopolitical tensions, collusion by oilproducing countries, new technologies, speculation, and even just the vagaries of the market. Thus the market signal for a more sustainable kind of car is nonexistent. If electric cars are to take hold (and, again, they are not the panacea they are sometimes claimed to be), strong government intervention is needed.

Some innovation does happen ex nihilo. However, if a technology that can greatly improve sustainability is created, there is no mechanism to get this technology into the hands of the developing world. The developing world generally does not have the resources to purchase expensive equipment and technology. Relying on technology means little if the developing world—where the sustainability challenge mostly lies—does not have the money to buy it, because the creators of this technology are driven not by social causes but invariably by power and greed (as opposed to making a decent and fair profit).

Recognition of this latter issue has been a major stumbling block in climate change negotiations. Developing countries understood that they lacked the resources to purchase expensive technology for power generation and renewable energy, and polluting and carbon-emitting options were relatively cheap. Thus, developing countries asked for help from richer, more advanced economies to purchase new technology: the Green Climate Fund (which became a sticking point for advanced economies, who largely did not want to pay).

Finally, the experience of developing countries shows that these economies often lack access to tried and tested technologies. Millions around the world lack access to basic sanitation, the technologies for which have been available for over a century. If through the free market the developing world can’t even get basic toilets, let alone advanced collection, treatment, and disposal facilities, to the people who need them, how can we expect developing countries to get the newest, most innovative, and most expensive technologies?

This is not to say that technology will play no role in solving the sustainability crisis. I often work with technology companies to push their managers to think about how their technologies could be used to solve our most pressing social and environmental problems. But the creation of technology is, at best, merely one step in the process. Many of the technologies to solve some of the world’s most persistent development problems already exist, but have yet to be adopted and implemented on the mass scale needed. For example, the technical solutions to clean the Ganges River are well known. However, the barriers to cleaning the Ganges are not technological but economic and political.

The same is true for any solution to the sustainability challenge. Technology is merely a tool—perhaps an essential or even necessary one, but not one that can be used without direction. That “direction” is provided by proper pricing and public policy, which are both the remit of the state.

On the national scale, we need something to provide direction. The free market is not exerting this role properly, encouraging technologies with unclear social applicability. The government would be far more capable of ensuring that technology is applied to the right kinds of problems.

The only sure way to reduce the external costs of consumption, which affect all aspects of a sustainable future, is to directly reduce unnecessary and wasteful consumption, which is currently hardwired into our economies. This will lead to a number of difficult choices. What do people deserve to have access to? What level of consumption is reasonable, and what level is unreasonable (and should therefore be subject to control)? What resource stocks are at risk of overexploitation, and how can their collapse be prevented by state intervention?

These issues boil down to a single question: In a more resourceconstrained and environmentally stressed age, how should people’s economic choices and actions be governed? These cannot be left to free markets or the self-serving motives of tech wizards. This governance requires someone, or something, to make decisions about society and the economy. That something is the institution of society: the state.

Market-based solutions are based on the belief that no one person or institution needs to make the tough choices about what is deserved and undeserved. However, the persistence of external costs and underpriced resources, and the subsequent growth of vested interests and overconsumption shows that unmanaged and unregulated markets lead to flawed outcomes and prevent societies from creating a more sustainable economy.

Relying on the market or hoping for some new technological development is not a delegation of responsibility, but an abrogation of it. Hope is not a plan for a planet that is being assaulted on all fronts. Instead, states in the developing world need to own up to their responsibility to manage their economies and societies to overcome the flaws of the free market, manage the expectations of their people, and provide a sustainable upward path for the hundreds of millions who still live in poverty and drudgery.

But there is yet another element of the free-market model that must be discussed, one that makes it impossible to reconcile with sustainability. This is the hyperfocus on growth at all costs, fueled by consumption and underpriced resources. Chapter 3 will examine this problem in greater detail, and why it restricts any move toward sustainability by governments and companies.