You will find the following interview very interesting! Many thanks to Prof. Lorenzo Fioramonti.
Andrea Licata: The issue of sustainability seems more important today than ever before. At the same time there are numerous interpretations of what sustainability really means. Which is your favorite definition of sustainability?
Lorenzo Fioramonti: I’m not a huge fan of the sustainability concept, as it is not ambitious enough. The idea of sustainability seems to imply that there is an inherent trade off between development and natural/human well-being. It suggests that our economic progress is by definition at odds with the planet’s ecosystems and therefore we must find a way to cope with that. By contrast, I believe we need to rethink our economic paradigm to make it fully integrated into the human and natural ecosystems. With a regenerated economy we can flourish within a thriving planet.
AL: Touching upon the topic of a sustainable economy, what do you think would make an economic system sustainable? Which role could the Internet play with regard to this?
LF: Our economic system is based on outdated notions such as the efficiency of economies scale, the idea that big is better than small and that production equates dominating natural resources for their commoditization. We need a totally different economic model, which challenges the top-down system of production in which consumers are always on the receiving end of the development process. In this regard, the Internet could be a formidable asset and paradigmatic example. The Internet now allows billions of people to become producers of knowledge that is shared (often for free) among peers. Internet users are not mere consumers, but they themselves act as creators (by generating knowledge) and connectors (by sharing information). What if the economy was redesigned as a network rather than a hierarchy? Users would be able to produce, consume and share among themselves. Mass production, with its unbearable human, social and environmental costs (e.g. waste and transport) would be a relic of the past, given that the networked economy would allow creators/connectors to customize their products and services, thus reducing waste and reducing transportation costs. While the 20th century was about a few markets with billions of clients, the 21st century will be about billions of markets with a few clients. If technology can assist (e.g. through 3D printing, etc.), this would be a paradigmatic shift.
AL: Regardless of the future economic developments, will the Internet gain importance according to you?
LF: There is no doubt. The Internet has become the founding pillar of the future economic system.
AL: In my blog I am talking about the issue of a “smart and soft” economy. What do you think about this concept? Is it a true perspective?
LF: I believe so. The networked economy is a smart and soft economy. This shift won’t happen over night and many powerful interests (including big multinational corporations) will conspire against it as it threatens the very foundations upon which these companies have built their wealth and power. But there is a growing realization that things can’t continue business as usual. So, we must all operate in concert to support the paradigmatic change.
AL: In your last book you questioned the value of e.g. the GDP indicator. Could you describe how you arrived at this understanding?
LF: The outdated economy of the 20th century was based on economies of scale, profound separation between producers and consumers and over-production. These are the key features of the gross domestic product (GDP), which I call the gross domestic ‘problem.’ As GDP only measures formal top-down systems of production, looks exclusively at market transactions (prices) rather than comprehensive value and entirely disregards the costs (human, social, environmental) of all forms of top-down production, it inherently supports the current paradigm of economic development. No country would be able to rethink its economy without rethinking GDP. Nowadays, any deviation from GDP-based development would trigger international sanctions, disinvestment and marginalization in the global economy. In some continents, like Europe, deviating from the GDP model (for instance by rejecting the fixed ration between deficit/debt and GDP) would cause significant sanctions to a member state and potentially lead to expulsion from the European Union. This is why rejecting GDP and finding better measurements of economic performance is the first step towards building the new economy.
AL: Apart from yourself, which other authors would you recommend to get a better understanding of the recent economic trends?
LF: Several economists are beginning to question our economic model. Some of them, like Joseph Stiglitz, look at how the current paradigm seems to reinforce inequalities. Others, like Amartya Sen, have long questioned our understanding of income (money) as development. Jeremy Rifkin and Chris Anderson, two experts of technological innovation, have been focusing on the possibility of building localized forms of production in the field of energy and manufacturing. Environmentalists such as Vandana Shiva have pointed out the need to build economic development out of local knowledge and participation, which is the opposite of what the current economy does. It dis-empowers citizens turning them into passive consumers.
AL: As an economist how do you see the discussion on the TAFTA/TIPP agreement? Do you think the United States of America and the European Union are going to come to an agreement on the critical points and implement it?
LF: I find the TAFTA/TIPP very dangerous. It is the last episode of a wave of trade agreements that are based on the old economic model. It’s founded on the erroneous conviction that global trade is an end in itself, that mass production is better than customization and that big companies are more efficient than small companies. It also contains several threats to accountability and democratic control, including the much-criticized investor-state dispute system. The US and Europe have been challenged by the rise of the so-called emerging markets and by the collapse of the Doha round. They are now trying to dictate their policies by merging into one gigantic free trade area. If we are serious about rethinking economic progress, we cannot support the TIPP. I fear Europe and the US have gone too far to back track (and the corporate interests behind the agreement are huge), but popular pressure could help derail the initiative.
Lorenzo Fioramonti is professor of political economy and director of the Centre for the Study of Governance Innovation at the University of Pretoria, South Africa. His most recent books are Gross Domestic Problem: The Politics Behind the World’s Most Powerful Number and How Numbers Rule the World: The Use and Abuse of Statistics in Global Politics. He blogs at globalreboot.org