January 13, 2010


World Resources Forum Workshop "Towards a New Economic Framework"

Keywords: Newsletter 

JFS Newsletter No.88 (December 2009)


JFS co-founder Junko Edahiro attended the First World Resources Forum
(WRF) in Davos, Switzerland from September 15 to 16, 2009. This article
introduces her presentation on a new economic framework as readers'
food for thought. Your comments and feedback are welcome!


Thank you, chairperson, for your introduction. I am honored to be here. Today I will talk about what I believe it will take to create a new economic framework so that our economies won't devastate our ecosphere, on which we all depend for survival. I will present some inspirational and promising initiatives and trends in Asia as well.

I have a multi-career working style, which may become more typical in a new economic paradigm. As a whole, I have been working as an interface among various stakeholders, governments, corporations, academia, NGOs and the public as well as a bridge between Japan and the rest of the world.

Japan for Sustainability is a "non-governmental communication platform" with a mission of dispatching information in the area of sustainability from Japan to the world so that we can help move the world and Japan a little more toward a sustainable future. We send out a steady flow of positive and encouraging information every day, from the fountain of hope we feel, despite the worsening situation around the world. Please visit our website to search or browse about what is going on in Japan and in Asia relating to sustainability, including new technologies, new products and services, governments' and citizens' initiatives, and enlightening cartoons!

The traditional Chinese and Japanese written characters for "economy" roughly mean "govern the country" and "save the people." In this deepest sense, economy was something to enhance people's well-being and happiness.

But when societies developed money-based economies, as in the case of most countries in the world, the emphasis shifted toward the "production, consumption and trade of material goods." The mental model most people have is "the more economic growth, the more income, the more well-being and happiness there will be." Money and economic growth became perceived as the ultimate purpose and GDP became a yardstick to measure our progress.

So humanity has been trying hard to grow its economies and increase GDP by increasing industrial production, but this also means increased use of energy, metal, steel and other materials. We have been very successful and we now have a much bigger GDP in most countries.

But we also have two problems. One is that we have exceeded the Earth's carrying capacity. For example, according to the latest "ecological footprint" analysis, we need 1.4 globes to sustain our activities. And the IPCC says that while the Earth can absorb only 3.1 billion tons of carbon from the atmosphere, we are emitting 7.2 billion tons of carbon into our atmosphere each year, more than double the absorption capacity of the Earth.

The other problem we face is that the promised well-being and happiness have not been delivered with economic growth and the increased GDP. This chart shows that although per-capita GDP has increased significantly in Japan, the percentage of people who are satisfied with their lives has been declining. Something is wrong with this picture.

I am sure that many of you are familiar with Herman Daly's Pyramid framework. Our economies and politics have just focused on a narrow area: how to use input for maximum output. Output is measured by GDP, but input is regarded to appear from somewhere without any cost. We don't care about how the input is linked to our natural capital, on which we all depend, and we don't think about how the inputs actually enhance our well-being and happiness.

JFS/New Economic Framework01

In order to create a more encompassing framework, I believe we need "double decoupling." Take CO2 as an example. Our CO2 emissions are calculated like this.

CO2 emissions = (population) x (GDP / population) x (energy / GDP) x (CO2 / energy)

The first decoupling is to break the link between GDP and CO2, which many companies and governments in developed nations have been focusing on. Efficiency, or, I would say "partial efficiency" driven by technologies, is the key here. We now have more efficient technologies and renewable energies for "more production with less CO2."

First-decoupling initiatives, such as Factor 4, Factor 10, MIPS and others, can be plotted here, linking built-capital and social capital to natural capital. We need to link social capital and well-being, and we need to have holistic efficiency to maximize the well-being per unit of natural capital.

JFS/New Economic Framework02

The key here is "sufficiency," and that is driven by our values and mental models. This is what I call the "second decoupling," a decoupling of well-being from GDP.

The Japanese had a long history of living with a mentality of sufficiency, which, unfortunately, we forgot. But if you go to an old temple in Kyoto, you are likely to find a Zen script, saying "I only know that I have enough," or "He who knows enough is enough will always have enough."

It is very encouraging that we now can see increasing attempts and initiatives to focus on sufficiency and holistic efficiency, from natural capital to well-being.

The GPI, Genuine Progress Indicator, a well-known alternative yardstick to measure our progress, eases our obsession with GDP alone by making the distinction between what we really want to increase and what we don't want to increase.

Genuine Progress Indicator

Have you heard of the "GNH" concept? This comes from Bhutan, a small developing nation in Asia. The former king, more than 30 years ago, said that Gross National Happiness, or GNH, is more important than Gross National Product, or GNP. GNH encourages us to think more deeply about what really matters, and about the ultimate purpose of our work and lives.

Bhutan: Creating Index to Measure People's Happiness

Ask your self this: Do we work and live to increase the GDP of our country? Or do we work and live to enhance our happiness? These are the four categories and nine pillars used to measure GNH and the ecosystem is included as a basis for well-being.

Also from Asia, Thailand has been advocating the "Sufficiency Economy" which was initiated by the King, with three principles: the "middle path," reasonableness and self-immunity to external shocks (like the economic crisis of 1997, triggered by globalization, that hit Thailand hard). These principles are clear in shifting the focus from expanding economic growth to forming a strong and stable foundation for sustainable development, and well-being for all, with local communities and communes as the foundation.

Increasingly many companies, large and small, including multinational companies, after listening to my talk on this, ask me how they can value the GNH concept and the idea of "sufficiency" in their companies. Many companies in Japan now realize that there is only a dead end in ever-lasting pursuit of sales growth.

In my country of Japan, some interesting new trends are revealing fundamental shifts in people's mental models. One is "de-ownership." For an increasing number of people, young people in particular, automobiles, books or clothes are not things to buy and own but just to use for their utility value, when wanted. I have been observing the basis and criteria to define a person's identity shifting slowly from "what you have" to "who you are."

An increasing number of young people in Japan don't seek a "life-long career" at one company, which has long been the norm, but instead want to choose something like what we call the "half-farmer, half-X" lifestyle, for example. The basic idea here is that people pursue farming, not so much as a business, but to grow food for their own family, while being constructively involved in society by realizing their own personal passions and missions, for example, "Half-farmer, Half-musician", "Half-farmer, Half-writer" or "Half-farmer, Half-NGO".

Japan's Growing Trend: Part-Time Farmers

"Half-Farmer and Half-X" to Create Rich Relationship between Community
and People

On the Herman Daly Pyramid, we can plot GPI as a truth-telling alternative to GDP, de-ownership and de-monetization to decouple GDP from well-being and happiness, GNH and Sufficiency Economy as guiding principles and as yardsticks for holistic efficiency, from natural capital up to the well-being of people. We may be able to think of a new indicator called "MIPH," for Material Input Per unit Happiness.

JFS/New Economic Framework03

Thank you for listening.

Written by Junko Edahiro