Toward A True-Cost Economic Model: Cheater Economics, Fair Play, & Long-Term Survival

Over the next century communities worldwide will experience an unprecedented shift of weather instability. Extreme weather events are ecological spasms often driving economic spasms and regional collapses. Concerned citizens and opinion leaders need to prepare before these eco-spasms proliferate. Far from being prepared, most leaders and power brokers are not mindful of the rethinking that is required. This working paper and appendix offers a brief economic vision, a set of economic principles, and list of problematic trends to help respond to the challenges as we work for a better day. –Randy Hayes


Foundation Earth’s Strategic Response:

It would be foolhardy to think that restructuring the global economy for long-term deep sustainability is an easy task, but we aren’t the type of people to give up. We will make this meaningful shift or we will go down fighting. Foundation Earth will put forth its solutions as thoughtfully and powerfully as we can, given our humble resources. Together we can help ensure that nature’s life support systems are healthy and that biological diverse systems, particularly large wild areas, are protected. Such systems are key to humanity’s wellbeing and the entire web of life.

There is indeed an “invisible hand” which left to its own devises promotes general good. That hand turns out to be nature’s ways – nourishing all things. The industrial economic invisible hand could best be called “Cheater Economics” (externalizing pollution costs). We call for a “True Cost Economy” based on nature’s ways.

This campaign can be thought of a twenty-five year process to help foster such a shift. In [Dick] Cheneyesque fashion, the known unknowns and the unknown unknowns present sizable difficulties. Nature has a non-linear way of being. Will the soft landing of a semi-elegant twenty-five year economic transition be possible? Certainly not if we are headed to a four degree world. It will more likely be mini-collapses and rebuilding. We will prepare for both scenarios as best we can.
Nature’s “invisible hand” left to its own devises may indeed promote general good, but our collective campaign for a better world will need an active and visible hand. Please let us know what else you think we should be looking at and how you might help to enact this vision. Additional information on the model & the context of this work is included in Appendix I. The basic vision includes:


If I had a lot of money, I couldn’t afford to live as well as I do.

– Mike Roselle, grassroots organizer and a founder of Earth First


The Vision Starts with an Integrated Set of Goals:

In this “age of plenty” vast numbers experience a deep spiritual hunger. Our current global economic system is achieving insufficiently and desperately needs to be changed. The goals of a better society aren’t so hard to imagine. In a simple straightforward sense we want highly educated/ecologically astute people, high levels of political and spiritual freedom, low infant mortality, low impact/low throughput lifestyles, clean environment with wild beautiful natural places, and a small gap between the greater and least financially well off people. We want to live in a close and proper relationship to nature, our communities, and the institutions we create. Arguably this would mean a rapid transition to a smaller primarily regional economy with less production and consumption, while improving likelihood of dignified and happier lives. It starts with selecting where you want to grow (wisdom, art, culture…) and where you want to degrow (pollution, industrial workaholic lives, intolerance…).

Picturing the New Era:

A smaller economy tingles with vitality while producing and consuming less. Businesses respect the laws of nature and integrate principles of ecology. Systems function well within the carrying capacity of regional and global ecosystems. People value the fundamental cycles of life, understanding that nature supports all life, now and in the future. No one exports problems to other societies or to future generations. Everyone faces the reality of a true cost economy and benefits from it. If anyone pollutes, they pay the true cost of the hazards and damages. Conserving stuff, along with the inclination to consume less, lightens the true cost. In the new era, everyone appreciates that natural resources cannot be owned. They cannot be exploited – not for very long. There are no “corporate socialists in free market clothing” receiving subsidies. Market capital gravitates to sustainable solutions.
Yes, all this boils down to economic details. We exercise financial discipline. We balance budgets. We maintain financial reserves. We leverage debt with caution. We interact with other economies as partners – actually, as family members. There are still markets, mostly local, and we still seek to profit, but we internalize ecological and social costs through a truly transparent balance sheet of assets and liabilities. Yes, we seek increased prosperity, but we don’t attach this sense of wellbeing to the growth of stuff. We tie our sense of wellbeing to infinite possibilities in a finite physical world.
Central to the new era we will see that exploding populations will have stabilized and in fact declined dramatically. Via our numbers and by our commitment to future generations, natural systems rejuvenate beneath our reduced footprint. Food and agricultural systems will be much more focused on bioregional economies. Picture continental networks of more self-reliant local economies. Most of what is traded at the global level is art, culture, and ideas.
Effective governing requires informed people and a commitment to a set of just and wise principles. That is not where we are starting from yet we must shoulder our responsibility to work for the continuance of all life. Some believe that an economic paradigm shift from unaccountable exploitation is not only necessary, but unavoidable. What set of principles might this be built from? Here is a starting point that needs your help to improve.

12 Key Principles Guiding a Holistic Economy Include (no particular order):

  1. Interdependence Principle: A societal recognition that nature nourishes all things is a higher value then human self-interest. The economic rules reward solving problems together over personal aggrandizement. Any market system is subservient to nature’s laws. Cooperation not competition is the social doctrine and basis for the new economic order. Industrial advance crushing nature’s ways for the sake of capital is a thing of the past.
  2. Responsibility Principle: Each generation leaves less and less of an ecological footprint, despite the population size, consumption rates, or technology choices. Every human has the duty to protect diversity within the whole. Nature has an inalienable right to exist, flourish, and evolve. Hard work to personally get ahead would still have a place in the system, but beyond sustainable consumption levels, family education, and retirement security most of any economic proceeds would need to support broader values.
  3. Carrying Capacity Principle (Sometimes called Planetary Boundaries): Free markets are not free from ecological limits. The economy and society must work to keep population, rates of consumption, and technologies in synch with (below) global, continental, and bioregional carrying capacity limits. The carrying capacity of a biological region needs to rule its human economy. Institutions of educational research and public governance need to be set up to better understand, and communicate appropriate operating spaces.
  4. True Cost Principle: When pollution externalities are internalized into the price you pay for goods and services, the “ecologically cleanest is the cheapest”. Wind and solar would be cheaper than dirty coal. Organic tomatoes or cotton would be cheaper than toxic tomatoes or cotton. When that is achieved we have more of a “True Cost Economy” and a more level business “playing” field. In a True Cost Economy the search for a bargain works for us instead against us. Dumping pollution into the river or sky is a form of “Cheater Economics” and has to stop. The True Cost Principle is analogous to the Polluter Pays Principle or the Internalization by Design approach. While everyone likes a bargain, it needs to be an honest bargain.
  5. Non-commodification of Nature Principle: Non-renewable resources (soil, water, land, primary forests etc.) aren’t to be treated as a commodity. Of the three basic categories of economic relationship include ownership, stewardship, and partnership the third one is to be emphasized in the general economy. Stewardship still implies some patriarchy (ex: I will steward you…), while partnership shows a more authentic reciprocity.
  6. Precautionary Technology Principle: When the consequences are possibly cataclysmic (such as cancer death) employ a “when in doubt play it safe” approach. This is what a mother does when raising her child and what we should do regarding the planet we live upon. The “burden of proof” lies with the initiator. Problem shifting is unacceptable. There are times when policies and laws should buffer nature from the market. This should especially be employed with all new technologies (see quote at end of this section). Envision the precautionary principle as a major part of technology policy.
  7. Compassionate Local Self-Reliance Principle: Employing the “Small is Beautiful” approach. Community-based, local production for local markets; trading within and among communities; new-style bartering without the traditional growth concept inherent to today’s money; and trading values for values, satisfying real needs, while helping others, rather than inventing new ones will be the approach of this economy. Maximize local, regional, and continental self-reliance, while actively helping other adjacent regions or elsewhere on the planet maximize their self-reliance (foreign aid policy). This is the care economy not the personal profit economy. Adhere to the subsidiarity(1) approach, while valuing place & community.
  8. Prosperity Principle: The economic system is set up to help all (now and the future) earn and enjoy financial and food security, success, or good fortune. Greedy individual advance at the expense of others would not be tolerated.
  9. Ecological Literacy Principle: Wild nature, operating according to its own laws, is our principle teacher. Nature’s laws are immutable and a higher order then human laws. Members of public governance are responsible to understand the principles of biosphere ecology and to help all constituents to understand nature’s ways such that all can support the whole. There is no economic development or social justice on a dead planet.
  10. Public Governance Principle: Employing ecological literacy with other humanistic values, society must debate the legitimate functions of public governance and then fund it to fulfill those functions in a thoroughly competent manner. This includes deciding the level of the social safety net. Government regulation is not the enemy. Appropriate government regulation is key to protect the whole for this and future generations of the entire web of life. As E.F. Schumacher clarified, a sensible political economy fits nature and human nature.
  11. Closed Loop Principle: The economy needs to essentially be a zero waste, closed loop, sustainable production and consumption system. This is especially true for non-renewable resources.
  12. Feedback Principle: Every living system must have accurate feedback to self-correct. Note the distorting effects of many current measures of progress and welfare such as the Dow Jones Index or GDP. Accurate and holistic measures need to be employed such that people see what they need in a timely manner (i.e. some items weekly, monthly, quarterly, annually, by decade, by century, etc.) to make mid-course corrections. The new parameters will measure levels of public health and education, standards of nutrition, housing, gender equality, use of renewable resources, use of non-renewable resources, the degree of local self-reliance, and the success a closed-loop, zero-waste sustainable production and consumption system. There will be indicators of preventative health, ecological restoration, society’s capacity to resolve conflicts, and more.

(1) Subsidiarity is an organizing approach or principle that matters ought to be handled by the smallest, lowest or least centralized competent authority.

All of our current environmental problems are unanticipated harmful consequences of our existing technology. There is no basis for believing that technology will miraculously stop causing new and unanticipated problems while it is solving the problems that it previously produced.

– Jared Diamond


Problematic Trends:

As we ponder an economic transition, what trends should we be cognizant?

  • The Age of Irresponsibility: Primarily the last sixty years of the industrial revolution (late 1700s to now) fostered a misguided vision of unbounded consumer freedoms along with adding billions of people. This has shredded much of the planet’s web of life and weakened our life support systems.
  • There is strong evidence that the IPCC, with its thousand scientists, significantly underestimated the speed and momentum of greenhouse gas-driven ocean heating and biospheric stresses. We are faced with the need to make rapid and dramatic changes in the way we do nearly everything.
  • It may be necessary to reduce GHGs by 80% by 2020 (8 years form 2012) to stay below 2 degree centigrade average temperature rise even though a two-degree rise is risky to life, as we have known it.
  • Solutions commensurate with the scale and timing of the biospheric problems are not in popular dialog. A sense of what to do in the short, medium, and long-term isn’t broadly understood. Structural solutions leading to a new economic model won’t likely be popularized in time to lead to any semi-soft landing.
  • The biosphere will become more spastic. Extreme weather events will increase. The earth’s capacity to support life will decrease. Declining natural systems is linked to greater social inequity.
  • The Living Planet Index reports that 1/3 of the natural world has been obliterated. The rate of destruction is increasing in most sectors. Our home planet is fast becoming uninhabitable.
  • Industrial agriculture is degrading or destroying the soil of one third of all land. Resource abuse of those life support systems may be a bigger problem than climate change.
  • Floods and droughts from extreme weather events will disrupt major food production such that the planetary population in 2100 could be less than at the beginning of the century. Disease will be more prevalent when antibiotics quit working.
  • Eighty percent of the people in industrialized countries currently live in big cities. By 2050 the 80% in big cities figure will be worldwide. There are about a ¼ million more people a day to feed and a ~¼ billion women who want to plan their families, but lack access to such planning services.
  • The current economic problem was not brought on by Wall Street financial excesses, though there were many. Nor is it because of the commitment to growth, though that exacerbates problems. At its core the crisis is brought on by an ongoing lack of understanding and respect of the ecological principles that effectively are the operating system for the planet.
  • Most elected officials and key agencies are subservient to big business; hence we don’t have “public governance”. For instance, US Treasury Dept. is too much of an arm of Wall Street. A few decades of incremental efforts to fix problems have little to show for the effort.
  • Virtually all social change movements in the US are not involved in un-electing bad guys and electing wiser, committed people. [Exceptions in environmental movement, at the national level, include Sierra Club, League of Conservation Voters, and Defenders of Wildlife.]
  • Americans, left largely uneducated about ecological/economic realities and unorganized, are relatively helpless and will do little but watch the decline until that changes.
  • Regarding the current global economic malaise, a return to business as usual is not at all a likely option. One may see slow growth for a while with high unemployment, but it will not get back (at least not for long) to a sense of a flourishing economy with strong growth.

Note: Additional information on the model and the context of this work is included in Appendix I.