New Economy, New Confusion?

There’s a big buzz around the “new economy” of sustainable development. But is anyone actually sure that that means, asks Peter Judge:  Growth,  or no growth?


The coincidence of financial and environmental crises, of financial meltdown and global warming, is too much to ignore. One crisis means we haven’t got any money, the other means we need to use less energy.

For some this is tragic: green changes will need punitive taxes. For others, this means we could be at the start of a putative new economy. One where growth is no longer a given, and there is no more waste. The Government environmental advisor, the Sustainable Development Commission, has had a go at defining all this in Prosperity Without Growth? report.

No growth? It’s certainly a question. If we are going to operate as close to zero-carbon and zero-materials as possible, does that mean we don’t have growth? It’s something that exercises the technology industry, which suggests, among other things more playful apps to keep things moving.

But really, no growth? That’s not the vision of the Aldersgate Group, a group of organisations which prepared the statement from Gordon Brown’s environmental business commission, set up in the wake of the Stern Review – the most widely known report on the global economic impact of climate change, which was produced by economist Lord Stern for the British Government.

“Low carbon does not mean low growth,” said Peter Young, chairman of the Aldersgate group, at the launch of the report, Driving Investment and Enterprise In Green Markets (PDF) . “It is one of the most powerful ways to get out of the current economic situation.”

Aldersgate believes “there is no inherent contradiction between regulating for high environmental standards at the same time as maintaining economic growth and stimulating wealth creation,” and the report argues that the environmental sector is growing fast, and Britain should be in there, making the most of its opportunities.

Leaders from organisations such as the TUC and the CBI (the unions and the bosses), gathered at the House Of Commons to launch it last week.
“We have the mother of all opportunities,” said Frances O’Grady, deputy general secretary of the TUC (Trades Union Congress . “We need to re-engineer the economy with a Green New Deal.”

“The momentum is building,” said John Cridland, deputy director general of the CBI (Confederation of British Industry). The new economy will use IT fiercely, to be more efficient, and to operate in all areas, without big transport bills.

This new industry could create new jobs, but it will be competitive, said Jim Brathwaite, chairman of the South East England Development Agency (SEEDA). A firm on the Isle of Wight led the early market for wind turbine blades, but now faces competition from the US.

But what does this competition mean in the new economy?

In the old economy, we could say that competition was good because the size of the overall pie kept growing, so anyone who missed out, could find another sector. In the new economy, if we are pushing for zero-carbon and zero-materials, can there be enough new sectors or will we have to face the fact that there will be those who lose out?

These debates will continue, and intensify, as this year moves on towards the COP15 United Nations climate change summit in Copenhagen, this December. I don’t think there will be answers, but I believe something must emerge.