Global warming, climate change, resource exhaustion: these are just a few of the major threats our planet is facing, right now. The researchers and policymakers who must address sustainability issues across society face a challenge so daunting that it may prove impossible to deal with. If not addressed properly, widespread environmentally harmful patterns of behaviour could result in socio-ecological collapse. If governments can utilise more realistic depictions of human behaviour, however, more effective interventions could be designed.
When it first emerged, the environmental sustainability thought was promising. This initial reassurance slowly faded away, as sustainability became overshadowed by our current capitalistic economic system.
Sustainability cannot be defined, let alone achieved, without considering human behaviour within the environmental context in which it occurs. Many environmentally harmful behaviours share the common factor of being deeply embedded in our daily activities. While pursuing personal interests, individuals freely impose negative effects on their shared physical and social environment. Accumulation of such small individual contributions results in a significant deterioration of common environmental qualities. Sustainability, therefore, is faced with a collective action dilemma: all will be better off if they choose to behave in environmentally friendly manners; nevertheless, it is individually better for each not to do so. Tackling such challenges thus requires a reconstruction of the relationship between economy and ecology as mutually interdependent dimensions.
Pursuing environmentally sustainable goals goes hand in hand with criticising free-market capitalism.
Neoliberalism is the predominant philosophy of our current economic system. Neoliberal economists mostly believe that, left free, markets will operate with utmost efficiency and fairness. They further consider human societies as a collection of individual beings that relate to one another as each follows its own interest and encourages the maximisation of self-interest. It hardly comes as a surprise that individually profitable, while collectively harmful, behaviour is facilitated by such a free-market system, offsetting global efforts to address collective issues and common resource dilemmas such as sustainability.
According to Kuznets, in his Nobel Prize lecture: “[a] country’s economic growth may be defined as a long-term rise in capacity to supply increasingly diverse economic goods to its population […]”. So, it makes perfect economic sense that we are so prone to over-consumption, which is harmful to the environment.
Infinite economic growth is at odds with the existing scientific knowledge of finite resources and the fragile ecology on which human beings depend for survival.
From this standpoint, the main culprit is not growth per se, but the ideology of growth which according to Fournier (2008) is “a system of representation that translates everything into a reified and autonomous economic reality inhabited by self-interested consumers”.
Grow, grow and…GROW!
Surviving, let alone thriving, in capitalistic economies requires individuals to continuously pursue growth and self-development. Being well in such a context requires fluidity, change, and growth. Therefore, the economic system encourages and facilitates taking risks; seeking new opportunities, and acquiring new skills, talents, interests, and preferences.
On the other hand, and as argued by Adams et al. (2019), the influence of psychological science has not merely been to provide a descriptive account of human experience. Psychology is actively used to promote some behaviours, habits and ways of being over others. Interestingly, proponents of neoliberalism have provided generous support to perspectives of psychological science (such as the positive psychology movement, which stresses personal growth and positive affect as essential self-goals). Hegemonic perspectives of psychological science have been a primary site for the reproduction of the neoliberal growth imperative. Examples include existing theories within social psychology which consider personal growth and development to be the pinnacle of human experience, a mark of optimal well-being! Indeed, a widely used scale of psychological well-being includes the dimension of ‘personal growth’ as a defining feature, which was endorsed at the highest levels in a survey conducted by Plaut and colleagues (2009) in the United States. Similarly, the growth imperative is evident in Dweck’s rather popular growth mindset: the belief that people can (and should) cultivate and extend their individual qualities (e.g., learning and intelligence) through effort and hard work.
There is no such thing as an “absolute free market”, dummy!
The extent to which a market is free cannot be objectively defined. Rather, it should be regarded within the political context of its emergence. In other words, the government is always involved in the underlying restrictions, rules and boundaries of the seemingly free market. An absolutely free market thus doesn’t exist. The challenge, then, is not to decide whether to regulate the market or not, but it is to design successful interventions and implement the appropriate regulations for various activities.
Governments can step into the marketplace to limit available choices by presenting options whose effects are certain and well-understood by the general public.
Despite free market economists’ belief, and as demonstrated by many academics including Thaler and Sunstein (2009) and Kahneman and Tversky (2011), individuals cannot make rational economic choices since it is impossible to account for every speck of information. As many factors commonly found in the socio-ecological environment can potentially lead to what Herbert Simon calls “bounded rationality”, governments can introduce a variety of regulatory measures designed to restrict or eliminate (e.g., ban on dumping of waste) choices with unknown environmental consequences. Although powerless to impose the urgently needed transition, psychology can provide valuable insights on how to design and implement such regulations by providing more accurate descriptions of the human mind and behaviour.
If not addressed properly, current widely practised environmentally harmful patterns of behaviour can potentially result in a socio-ecological collapse.
Understanding and properly addressing a dynamic global concern such as sustainability requires a paradigm shift or drastic changes in the present economic system. By becoming an important station for neoliberalism to further practice and scientifically justify its ideology, psychology has become crippled to impose the required systematic changes. However, it can provide governments and regulatory agencies with more realistic descriptions of human behaviour with regards to the context in which they occur, thus assisting the appropriate design and implementation of various policies and interventions. Through such diversification of their toolkit, governments can channel people’s behaviour into more environmentally sustainable ways. However, to what extent governments can be trusted, and whether or not regulatory efforts need to be accompanied by corporations in order to prove effective remain open questions…
Notes
- The views expressed in this post are of the authors and not the Department of Psychological and Behavioural Science or London School of Economics (LSE).
- Featured image by Sam Bark via Unsplash.
- Image of Earth by Pete Linforth via Pixabay.
References:
Adams, G., Estrada-Villalta, S., Sullivan, D., & Markus, H. R. (2019). The Psychology of Neoliberalism and the Neoliberalism of Psychology. Journal of Social Issues, 75(1), 189–216. https://doi.org/10.1111/josi.12305
Beckett, S. (1983). Worstward ho. New York: Grove Press.
Dweck, C. S. (2006). Mindset: The new psychology of success. New York, NY: Random House.
Kuznets, Simon (1971): “Modern Economic Growth: Findings and Reflections. Prize Lecture”, Lecture to the memory of Alfred Nobel, December 11, 1971.
Fournier, V. (2008). Escaping from the economy: The politics of degrowth. International Journal of Sociology and Social Policy, 28(11–12), 528–545. https://doi.org/10.1108/01443330810915233
Plaut, V. C., Adams, G., & Anderson, S. L. (2009). Does attractiveness buy happiness? It depends on where you’re from. Personal Relationships, 16, 619–630. https://doi.org/10.1111/j.1475- 6811.2009.01242.x
Simon, H. A. (1955). A Behavioral Model of Rational Choice. The Quarterly Journal of Economics, 69(1), 99. https://doi.org/10.2307/1884852
Simon, H. A. (1979). Rational decision making in business organizations. American Economic Review, 69(4), 493–513. https://doi.org/10.2307/1808698
Simon, H. A. (1990). Invariants of Human Behavior. Annual Review of Psychology, 41(1), 1–20. https://doi.org/10.1146/annurev.ps.41.020190.000245
Smil, V., & Diamond, J. (2005). Collapse: How Societies Choose to Fail or Succeed. International Journal, 60(3), 886. https://doi.org/10.2307/40204082
Thaler, R. H. (2000). From homo economicus to homo sapiens. Journal of Economic Perspectives, 14(1), 133–141. https://doi.org/10.1257/jep.14.1.133
Thaler, R., & Sunstein, C. (2009). Nudge: Improving Decisions About Health, Wealth, and Happiness. In Nudge: Improving Decisions about Health, Wealth, and Happiness (Vol. 47, Issue 4). Yale University Press.
Excellent article and a good food for thought. Governments can not be trusted and if unchecked they will definitely lead our planet towards socio-economic collapse.
Thanks for your comment Professor Oraee (dad)! 🙂
The untrustworthiness of governments was perhaps one of the biggest caveats to even the ideas of a great economist such as Keynes. Indeed such unreliability has been the embedded within neoliberal arguments for a long time now. However, “regulation” is not necessarily implemented solely and strictly by governments. Regulation of collective behaviour can and does happen through various norms (social), institutions, organisations, and so on. Moreover, I believe we tend to underestimate the power of legislations (laws), much like we underestimate the power of social norms in channeling behaviour. An illustration of what I mean would be to simply ban/limit/cap certain harmful activities and products, instead of relying on markets to regulate them through supply and demand. This is precisely what countries do with products such as harmful drugs or narcotics for example. We must acknowledge that an absolute free market is an illusion, much like the concept of “free will” itself. However, coming up with alternatives is much easier said, than done and this is perhaps the true caveat of an academic! 😉
Many thanks for your kind attention.
How do you propose governments enforcing such interventions at both the micro, behavior of individuals, and macro, environmentally unfriendly activities of large corporations, levels given the potential pushback by the former and disproportionate lobbying might by the latter? Regulations and legislations that were meant to deter very such activities have been stunted by influential private interest groups across the world. That is to ask, how do you foresee governments successfully marketing long-term stakeholder capitalism over the short-term profit minded shareholder maximization?
Hi Utkarsh. Many thanks for your comment. This is an excellent question! The untrustworthiness of governments was perhaps one of the biggest caveats to even the ideas of a great economist such as Keynes. Indeed such unreliability has been the embedded within neoliberal arguments for a long time now. However, “regulation” is not necessarily implemented solely and strictly by governments. Regulation of collective behaviour can and does happen through various norms (social), institutions, organisations, and so on.
I agree with you that a significant reason for which we have failed to impose environmental regulations is due to the huge lobbying of multinational corporations. I therefore believe that from a macro perspective, we are facing a political failure when addressing a social dilemma such as climate change. Therefore, global cooperation should replace current competitive attitudes. In other words, global cooperation should replace nationalism and competition. This is incredibly hard to achieve, especially due to the strong lobbying involved, however, I’m afraid that there is no other option, should we aim to sustain human beings on earth (or any other planet for that matter!).
Since top-down approaches should be coupled with bottom-up approaches in order to prove sufficient, on a micro level, consumers may be empowered to “react” and “resist” consumption of certain goods and services, imposing more pressure on certain corporations to reconsider their short-term profit maximisation in order to be able to sustain their business in the long-term. Therefore, from a micro perspective, governments may invest in various campaigns/movements/initiatives/etc. to increase consumers’ decision making competences while increasing environmental awareness. Other options to meet this end include for example, international environmental ratings and scores for goods and services (think of current quality standards but for how environmentally friendly that good/service/corporation is). Empowering consumers (“boosting” them) and raising awareness will result in more and more consumers demanding environmentally friendly products and reacting (boycotting, etc.) to the harmful ones. As you can see, in developed countries, more and more people are now aware of sustainability issues and are reconsidering the consumption behaviours and therefore more businesses (especially smaller/more recent ones) are trying to meet all such concerns.
To sum up, combining top-down approaches (i.e., macro level) with bottom-up ones (i.e., micro level) will (hopefully) push corporations towards reconsidering their current linear business models and replace them with more circular ones. However, a limitation to this is the issue of “corruption” and political failures which are quite common and we are currently witnessing yet another global political failure in the face of the pandemic. The only solution that I can think of is using technology and AI to make certain decisions instead of relying strictly on governments and institutions. That being said, there are numerous things to consider before jumping on computers and AI, hoping that their computational rationality would resolve all our current global issues. This is a double-edged sword that could potentially save, or ruin human lives. Therefore, AI may be called upon for assistance both on macro and micro levels, but with utmost care and caution.
I hope this addresses your question Utkarsh. There is a lot to say and so little space provided so, please feel free to pursue this further and raise any remaining question(s).
All the best,
Atrina
There are numerous strawmen here that need addressing, and if sustainable goals go “hand in hand with criticising free-market capitalism” it’s important to ensure that these criticisms are constructive. Free-marketers don’t believe that free-markets “operate with utmost efficiency and fairness”. Fairness is not an attribute of the free-market. Its outcomes are neither fair nor unfair. The market is an impersonal mechanism for coordinating dispersed information via prices that in turn produces the incentive to economise on scarce resources. To question the fairness of this process is to question the fairness of the need to economise; the fact that no single individual possesses all available information; and simply the existence of scarcity itself. To moralise over these realities is to derive an ought from an is.
As to claims of “utmost efficiency”, free-marketers simply believe that – compared to the alternatives, price signals are the most efficient mechanism for coordinating the necessary process of economisation at the lowest possible opportunity cost to each individual. What is the superior alternative?
The next strawman is “the ideology of growth” and that the “economic system encourages and facilitates taking risks; seeking new opportunities, and acquiring new skills, talents, interests, and preferences.” I assume by “economic system” you mean free-market capitalism. Under what alternate reality or economic system are people supposed to be uninterested in “taking risks; seeking new opportunities, and acquiring new skills, talents, interests, and preferences”? Is this a consequence of (or “encouraged” by) a particular economic system, or are these simply features of human nature? Would skills/talents/interests/preferences all vanish under socialism, communitarianism, anarchism or any other kind of “ism”? Again, this is deriving an ought from an is.
Ironically, growth turns out to be a large part of the solution to environmental problems. Think of the prisoner’s dilemma problem you laid out as mapped over a possibility frontier (PF). On one axis is individual wellbeing, on the other is environmental quality. If a country is poor and clean resources are costly then people in this country will sit right at the corner of the PF at max-wellbeing. The opportunity cost for caring about the environment is too high at their given budget constraint. But make them more well-off by increasing their wealth and resources, and you get the double-benefit of expanding the possibility frontier and moving the individual further along towards caring about the environment. This is only made possible by growing wealth and innovation.
The next strawman is that “[d]espite free market economists’ belief . . . individuals cannot make rational economic choices since it is impossible to account for every speck of information.” The reality is the complete opposite. That information is dispersed and that it is “impossible to account for every speck of information” is precisely the argument for reliance on prices as signal. The subsequent strawmen regarding rationality arises from critics’ interpretation of “rationality” as its literal colloquialism. In the economic context, rational simply means human behavior is not random and that there is a rationale behind their actions. In this context, the opposite of rational is not irrational, but rather arbitrary or random.
Markets of course fail. Everything fails. Governments and regulation fail too. The environment, and indeed anything, is not an issue to be falsely dichotomised between free-market capitalism and government regulation. The question is over which method fails the least badly, and where can the two be combined for a reliably superior outcome. The free-market can do a lot of good towards producing the necessary wealth required to sufficiently reduce the opportunity costs of a group’s efforts towards sacrificing some wellbeing for the sake of the environment. The government can do a lot of good by punishing negative environmental externalities and investing public infrastructure to implement environmental innovations. Let’s not joust around with caricatured views of capitalism, free-markets, neoliberalism etc. and instead make dispassionate enquiries into the kinds of painful but necessary trade-offs that need to be made in order to protect our environment, and how best to implement them.