The Club of Rome – a new path for world development
by John Pratt
Forty years ago the Club of Rome predicted that the global economic system would fail because it was unsustainable.
On 26 March 2009, New York Times Columnist Tom Friedman was interviewed by Leigh Sales on Lateline:
LEIGH SALES: You wrote in a recent column that perhaps this crisis is telling the US that the growth model it's created over the last 50 years is unsustainable, economically and ecologically. And indeed in your new book 'Hot, Flat and Crowded' you write what's needed in the US is a revolution, a green revolution.
What did you mean by that? And is what we're seeing in the US now a precursor to it?
TOM FRIEDMAN: I think it is. I think it's a precursor to what my Australian friend and environmental teacher Paul Gielding calls "the great disruption". And what he means by that, and sort of what I mean by that is I think two things happened in 2008/2009, Leigh. I think both the market and Mother Nature hit a wall. And they both hit a wall. And what they basically - the wall they hit was that we cannot keep raising standards of living for us, for our kids, the way we've been doing for the last 50 years.
What was that system? Well, in short it worked like this: we built an America - more and more stores - to sell more and more stuff, to more and more Americans, which triggered more and more factories in China, powered by more and more coal, that earn more and more dollars, that went to buy more and more T bills, that were recirculated back to America to build more and more stores, to sell more and more stuff.
And that cycle basically had become unsustainable for a number of reasons. One is the incredible imbalance of our consumption and China's savings, that we built all this huge horde of global dollars that basically triggered more and more people inventing more and more crazy ways to get higher yield out of those dollars, and that finally exploded in the mortgage and credit default swaps. that was one problem.
But the other problem is that this system really required living off and stripping off more and more stocks, stocks of natural resources, and not living off more and more renewable flows. And in that sense Mother Nature was telling us what the market was telling us: we can't do this anymore. That if we try to pass on this way of growing standards of living to our children, we're going to blow up.
What was missing in the system? What was missing in the system, Leigh, is that both the market and Mother Nature were not honestly pricing things. The market was not pricing the real risk of some of these derivatives and credit default swaps, and when you don't price the real risks of things, OK, and the real potential cost, then these kinds of explosions happen, because people go to excess. And at the same time we were not allowing Mother Nature to price the real cost of what we were doing climatically. The cost of putting all this CO2 in the atmosphere.
So we had a kind of unreal system. We were living, as a world community, as if there were no laws of gravity, either in the financial markets or in Mother Nature's universe. We could do whatever we want and there would be no cost. And I think what happened in 2008/2009, is that the real cost became so big, and they just smacked us right across the head. And therefore coming out of this, it seems to me we need to find a different way of raising standards of living, but it's got to begin with putting the real cost on things, the real cost of these derivatives, so people won't think they're free and therefore do crazy, reckless things, and the real cost of carbon in the atmosphere, so people don't think polluting the atmosphere is free, and therefore do crazy things.
It is becoming very clear that the future as forecast by the Club of Rome is now becoming a reality.
We have hit the wall. As we start to realise that we must change the global economy, we need to listen to the voices of those that predicted the collapse. We need to look for a new path.
Today the Club of Rome is developing a new vision for world development:
It is clear that the present path of world development is not sustainable in the longer term, even if we recognise the enormous potentials of the market and of technological innovation. New ideas and strategies will be needed to ensure that improved living conditions and opportunities for a growing population across the world can be reconciled with the conservation of a viable climate and of the fragile ecosystems on which all life depends. A new vision and path for world development must be conceived and adopted if humanity is to surmount the challenges ahead.
In response to this intellectual and practical challenge, the Club of Rome will undertake a three year programme on "A New Path for World Development" so as to achieve a better understanding of the complex challenges which confront the modern world and to lay solid foundations for the action which must be taken to improve the prospects for peace and progress.
The Club will focus on the following issues.
1. Environment and Resources
3. World Development
4. Social Transformation
5. Peace and Security
The Club will convene five small high-level expert meetings successively over the three year period, 2008 - 2010, one on each of the clusters of issues identified above. Each meeting should produce a clear statement on the issues, risks and opportunities ahead with an outline of the principal strategies and measures required in response. As the Programme proceeds, the insights and knowledge gained from each meeting will provide clear perspectives of constraints and opportunities as the context for the next meeting. By recognizing such linkages, the knowledge acquired will be cumulative and will produce innovative insights as the Programme proceeds.
As we look for solutions to the global situation it is becoming increasingly clear that the only way forward is a new path. We should listen to those who predicted the collapse nearly forty years ago. We must be willing to change and support those who are showing us some direction.