April 8, 2009 by Robert Kozinets.

Globalization. Digitization. Green Consumerism. All of them, as we’ve read in the last few posts, reducing economic growth, as measured by our most popular measures. Driving us deeper and deeper into this deep recession.

What’s the problem? What’s the problem with the current solutions being offered by world governments like the G20 alliance? What’s the problem with stoking the economy, with massive Keynesian spending projects matched by huge debt and enormous deficits? With building the IMF into the overfunded, legitimizing cavalry?

The problem is we’re working with the same flawed system. We’re legitimizing it and patching it with bandaids while we pump it full of borrowed-from-our-future resources. We’re measuring growth in the same flawed ways. We’re reifying expenditures and consumption levels far, far, over their sustainable, or even long-term workable, levels. We’re using GNP and GDP as the One Big Number. One Number to Rule them all. One Number to Bind Them to a system.

There’s a big problem with that. And it requires us to look at the One Big Number and question it. And question it again.

“The world has changed and we must change with it.” Isn’t that what President Obama said in his inauguration speech? Well, I think that real change has to start with changes in what we’re measuring, with how we are keeping score.

Gross National Product and Gross Domestic Product just aren’t doing the job anymore. Maybe we don’t need replace them entirely. But maybe we can supplement them, bring in something different. Or make them more subtle, less universal and totalized. Bring a little postmodern reflexive doubt into the economic realm, for once.

One of the best books I’ve read on this topic is by my York University colleague Peter Victor. Peter’s book is called “Managing Without Growth: Slower by Design, Not Disaster (Advances in Ecological Economics).”

Prof. Victor talks about how we have gotten into this mindframe where “economic” “growth,” measured and defined in certain very rigid ways (what I’m calling the “One Big Number” problem) by those with entrenched interests (One Big Number is easier to Rule With, remember), has become the over-arching policy objective of countries around the world, the way that governments, corporations, teams, and individuals are assessed, and the way that resources become allocated. Economic Growth is actually a fairly new ideology, emerging only about a half century ago, and Peter shows how it has become rooted to the loaded ideology of the notion of ‘progress.’

Peter argues three points convincingly.

1. First, that economic growth the way we’ve been doing it just isn’t sustainable in the long term. Period.
2. Secondly, he repeats the established finding that economic growth and income growth doesn’t seem to lead to happiness. There’s an inverted U-relationship. If you’re destitute, increases in income increase happiness, to some point. After that point, happiness tails off. In my observations of people, I’d say this works fairly well on an individual level, too.
3. Finally, he shows that economic growth doesn’t and probably won’t ever, eliminate poverty. It does, however, increase greenhouse gas emissions, and has lots of related consequences for the natural environment.

His work is related to the work by the Club of Rome, recent updated in The Limits to growth: A report for the Club of Rome’s Project on the Predicament of Mankind, where we see that, eventually, growth stalls out, flattens, declines, and then major disruptions in the biosphere begin to play havoc with human life.

This thinking raises some extremely important questions. These are the kinds of ideological, paradigmatic questions that the recent G20 activism, that the cracks in the global financial accord should draw us towards.

These are “Second Chance” questions to try to get out system on a better path.

These questions show us how accounting (well, at least measurement) is a critical component of making the world a better place. They ask us:

• What should we be focusing on?
• What should we be measuring as well as financial growth?
• How can we develop qualitatively as a society? What would that look like?
• Can we measure global equality and opportunity, instead of residual measures like GDP?
• Can we measure human happiness and welfare? Can we maximize it, while minimizing the impact on the environment?
• Can we measure the health and stability of our communities?
• What would a carbon-neutral economic measure look like?
• What would a zero-impact on habitat destruction look like?
• What would a sustainability measure, or set of measures, look like?
• What are the contributions of mental health, optimism, joyfulness, and spirituality to these other measures? How would we factor them in?
• What would business look like in such a world? What would marketing become?

We need thoughtful answers. And we need them soon.

Posted in Green Ecological Economics, Economy and General Business Management, Technology, Green marketing | Print | 3 Comments »

April 1, 2009 by Robert Kozinets.

In the last few posts, I’ve laid out what I speculate may be three big differences between this recession and prior ones.

• 1. Globalization. Although globalization has been going on since well before David Ricardo was potty-trained, we have had some pretty dramatic shifts in production and wealth over the last decade.

• 2. Digitalization. Although technology has been allowing us to abstract concepts and ideas from the real world and share them in an immaterial way for millennia (the alphabet? the scroll?), information and communications technology advances of the last decade are changing the way that we relate to the physical world in unprecedented ways.

• 3. Green Consumerism. Although Rachel Carson was already preaching to an eco-conscious choir in the 1960s, we’ve seen a mass diffusion of awareness in the last few years that is just beginning to manifest in a questioning of consumption habits, alongside some small changes, alongside a few bold government initiatives. Those changes could get a lot bigger fast.

As well, these changes all work together. Each one has the potential to accelerate the others.

So what do we have with these three trends in terms of their effect on “growth”–which is what the recession and depression terms are supposed to be capturing?

First, we have a world where the capital flows, the currency prices, and the employment rates are still in flux, still reflecting massive changes that have taken place at the level of vital services and things being produced and moved around, controlled and available.

If we have less production in high wage countries like the USA, Canada, and France, and more in low wage countries like China and India, it makes sense that, on the global stage, support services would, as a total number, be lower. The guy who is working in the plant in China, making less, is going to be spending less on his food, clothes, entertainment, escargot, cologne, and so on than the guy working in the plant in France. And all those support services are going to suffer. In Windsor Ontario, where the auto plants used to pump out cars, the people who used to work on the assembly lines can no longer afford to eat in restaurants, shop in the malls, or go to the movies the way they once did. Job losses aren’t isolated. It all trickles down.

That bespeaks continuing trouble and challenge for North America and Western Europe.

Next, we have the shift towards information technology increasing consumer power, reducing prices, and changing different types of consumption from physical to lower-cost virtual. That means lower prices at the cash register (which may be increasingly a disintermediating virtual cash register), and subsequent lower revenues. It means more opportunities for peer-to-peer “sharing,” of films, music, TV shows, books, and magazines too. It means less material needed to produce things. And all the service jobs associated with those material things start to disappear. All of this can lead (particularly if the industry required to support these immaterial forms of consumption is lower cost than the one required to support the former more matter-based form, and also if it, too is being globalized, see point #1 above) to reduced financial growth.

Finally, we have consumers questioning and potentially reducing consumption because of environmental concerns. Less stuff bought, smaller cars, more bikes on the road, more efficient light bulbs, less energy consumed–these have their economic ramification, and those ramification ramify (sorry) the more this green “movement” gathers momentum. Green means leaner living. And leaner living means lower revenues as well. In the aggregate, it means reduced financial growth.

Does anyone remember the book “Green Is Gold/Business Talking to Business About The Environmental Revolution“? For particular companies and individuals, maybe, but in aggregate? I really don’t think so. Not real green. Real green means less. Less consumption, less production, less for everyone. Sorry.

Doom and gloom? I don’t think so. I think we need to question the entire enterprise of measuring recession and depression and think in more subtle terms about what we’re doing and where we need to go and, in particular, what we define and gloss to ourselves as a civilization as “progress.”

No, I’m not done with this yet. Is anybody out there? Halloooo?

Posted in Economy and General Business Management, Technology, Marketing News & Insights, Green marketing | Print | 1 Comment »

March 30, 2009 by Robert Kozinets.

The third element in my little cogitative experiment that makes the current recession qualitatively different from past recessions is Green Consumerism.

By Green Consumerism I mean to point out that we’re living through a time where, finally, the average global consumer is fully aware of experts’ predictions of impending environmental catastrophe unless we make radical changes soon in our patterns of consumption (i.e., large parts of how we live). This awareness is currently almost unavoidable in North America, Oceania, Western Europe, Japan, and elsewhere. Not only that, but this awareness is starting to have impacts on the real world of consumption in these places.

Now, I’m not talking only about the “shift” to “green products and services.” The move from Hummers to Hybrids. The rise of organic food and homeopathic medicine. The dramatic substitution of recycled toilet paper for softer-than-soft Charmins (hey, if you’re a tree, that’s pretty dramatic). Yes, there are shifts, but can be to higher cost products. So, if I shift all of my food consumption to organic, although that technically would be a shift over to the greener side, it would also move up GDP–organic food is costlier to product and it costs more at the till. That’s not true of all green consumption. But when that happens, it can look like Green Marketing is just another scammy way to shake out a few more shekels from Mrs. Jane Consumer.

I’m focusing more on the kind of awareness that events like Earth Day, and maybe more specifically the Earth Hour event which was huge here in Toronto (we played Scrabble by candlelight in my house, cool…). It’s about an awareness of waste. A careful contemplation of what’s unnecessary. At Burning Man, we encourage each other to think about what we can do without. Earth Hour, and Green Consumerism in its wider sense, does something very similar.

On the ground level, because of changes like this, consumers–i.e., people– are becoming more cautious about conspicuous, mindless, and endlessly-increasing consumption. The average person, the average consumer, is beginning to wake up to the fact that their children are going to inherit a huge pile of garbage and problems rather than the planet full of possibilities that all of our ancestors up to this point were granted.

It’s a sobering thought. And we’re beginning to think it.

And I think it’s beginning, just beginning, to be reflected in shopping malls, and boutiques, and stores. Not only should we buy green, we should make do with less. Much less. Reusable shopping bags and hybrids are just the beginning. Think biking, walking, growing your own food, making your own clothes and music, repairing instead of replacing. Can anyone say ‘Permaculture lite?’ Multiplied across the global economy, what kind of impact would that have?

In the face of recession, some of us are saying “less is good.”

So what impact on the economy we have with these three trends: Globalization, Digitalization, and Green Consumerism? You can probably see where I’m going with this….

Posted in Economy and General Business Management, Technology, Marketing News & Insights, Green marketing | Print | No Comments »