The Sustainable State

The Future of Government, Economy, and Society

Chandran Nair (Author)

Publication date: 10/09/2018

The Sustainable State
The free-market, limited government development model has been an ecological and social disaster for the developing world. Sustainable and equitable development is only possible with the active involvement of a strong central state that can guide the economy, protect the environment, and prioritize meeting their people's basic needs.

In this sure to be controversial book, Chandran Nair shows that the market-dominated model followed by the industrialized west is simply not scalable. The United States alone, with less than five percent of the world's population, consumes nearly a quarter of its resources. If countries in Asia, where 60% of the world's population lives, try to follow the Western lead, the results will be calamitous. .

Instead, Nair argues that development must be directed by a state that is willing and able to intervene in the economy . Corporations, which by design demand ever-expanding consumption, need to be directed towards meeting societal needs or otherwise restrained, not unleashed. Development has to be oriented towards the greatest good—clean drinking water for the many has to take precedence over swimming pools for the few. He provides three compelling case studies demonstrating the benefits of such strong state governance and the findings of weak state governance.

This will mean rethinking the meaning of concepts like “prosperity,” “freedom,” and “rights,” and whether democracy is always the best way to ensure responsive government—as Nair writes, “A democracy that cannot work to improve the life of its citizens is not better than a non-democracy that can actually improve quality of life.” Many people will find these to be challenging ideas, but what Nair offers is a model suited to the realities of the developing world, not the assumptions of the dominant culture.

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Overview

The free-market, limited government development model has been an ecological and social disaster for the developing world. Sustainable and equitable development is only possible with the active involvement of a strong central state that can guide the economy, protect the environment, and prioritize meeting their people's basic needs.

In this sure to be controversial book, Chandran Nair shows that the market-dominated model followed by the industrialized west is simply not scalable. The United States alone, with less than five percent of the world's population, consumes nearly a quarter of its resources. If countries in Asia, where 60% of the world's population lives, try to follow the Western lead, the results will be calamitous. .

Instead, Nair argues that development must be directed by a state that is willing and able to intervene in the economy . Corporations, which by design demand ever-expanding consumption, need to be directed towards meeting societal needs or otherwise restrained, not unleashed. Development has to be oriented towards the greatest good—clean drinking water for the many has to take precedence over swimming pools for the few. He provides three compelling case studies demonstrating the benefits of such strong state governance and the findings of weak state governance.

This will mean rethinking the meaning of concepts like “prosperity,” “freedom,” and “rights,” and whether democracy is always the best way to ensure responsive government—as Nair writes, “A democracy that cannot work to improve the life of its citizens is not better than a non-democracy that can actually improve quality of life.” Many people will find these to be challenging ideas, but what Nair offers is a model suited to the realities of the developing world, not the assumptions of the dominant culture.

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Meet the Author


Visit Author Page - Chandran Nair

Chandran Nair is the founder and CEO of the Global Institute For Tomorrow, an independent pan-Asian think tank providing content-rich and intellectually challenging executive education from an Asian worldview. Chandran was chairman of Environmental Resources Management in Asia Pacific until 2004, establishing the company as Asia s leading environmental consultancy. For more than a decade Chandran has strongly advocated a more sustainable approach to development in Asia, advising governments and multinational corporations to instill these principles into their policies and key decision making processes. In addition to his work with GIFT, Chandran continues to provide strategic management advice and coaching to business leaders. Chandran is a regular speaker at global forums including the World Economic Forum, where he is a member of the Global Agenda Council on Governance for Sustainability, APEC Summits and OECD events. His articles on topics ranging from economic policy to education frequently appear in leading publications such as The Financial Times, The Guardian and The New York Times. He has served as an adjunct professor at the Hong Kong University of Science and Technology and the Lee Kuan Yew School of Public Policy in Singapore. He lives in Hong Kong.

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Excerpt

The Sustainable State: The Future of Government, Economy, and Society

CHAPTER 1

DEBUNKING “SUSTAINABILITY”

Moving beyond “Feel-Good” Slogans

A few years ago, I was invited to sit on a panel for a major European forum on sustainability. Apart from myself, the panel was made up of Western corporate leaders, each there to talk about his company’s commitment to sustainability. One speaker stood out to me: the CEO of a global beer company. He talked about his company’s “sustainability” efforts: some water conservation, some energy management in factories, some recycling programs. But no one at the time—not he, not the other panelists, not the moderator, not the audience—seemed to grasp the irony of a CEO whose company’s express objective was to get as many people to drink his product as possible talking about resource sustainability. Nothing he spoke of tackled the core issue when it came to his company’s sustainability record: that to truly embrace the ethos of sustainability—less is more—his company would need to sell less beer.

That was a turning point for me. I began to notice that most conferences treated the sustainability question in a muddled way. Conferences were dominated, if not sponsored, by corporations and businesses. Real discussions were left at the door, replaced with public relations exercises. Non-Western business leaders were often unaware of what was happening right in their own countries: the business leader in Kuala Lumpur knew more about New York or London than the surrounding Malaysian countryside.

Sustainability should include an all-encompassing discussion of our long-term use of economic resources throughout the entire economic system. It needs an honest evaluation of our economic model and our destructive lifestyles, and of what must be changed so that resources can be both more equally shared for current populations and preserved for future generations. We need a candid discussion instead of one that papers over the real issues in favor of a misleading feel-good outcome.

Yet the conversation around sustainability often ends at the environmental impact of production lines and supply chains—an important concern, but a tiny bandage over a toxic wound. We talk about how to make our increasing production and consumption more resource efficient when we should actually talk about how a global population of ten billion by 2050 must produce and consume less.

Before this whole chapter is interpreted as anticorporate, I know plenty of business leaders who are concerned about climate change, diminishing resources, and global sustainability. But many know that their business models are still rooted in unsustainable practices, unless one wants to mask environmental improvement measures as sustainability initiatives. Even the beer company CEO, when I privately challenged him after our panel together, admitted that he also found his presence on the panel strange and that he found it difficult to say anything serious about sustainability.

Why did he turn up? The answer is simple: this is how sustainability is showcased at media events to promote corporations. A business leader expressing support for climate action or implementing a few risk and harm minimization initiatives is in keeping with the ethos of many sustainability conferences: that businesses and markets should take the lead on tackling sustainability, as opposed to the government and tough public policy.

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Why has the idea of sustainability—and sustainable development—strayed so far from what is needed?

The main culprit is our understanding of development, which is too tied to free markets, business-friendly policies, and the Western historical narrative. We do not understand that the developing world faces a different sustainability problem than the developed world. There are actually two different sustainability challenges: one for richer countries and one for poorer ones. Whereas richer countries can focus purely on resource efficiency, the developing world needs not only to protect its environment and preserve its resource base for future generations but also to improve the lives of its poor majority and offer a path to a prosperous yet still sustainable lifestyle. By understanding development along market-based, probusiness lines, we make it difficult to achieve sustainability and development at the same time. When the two are put into conflict, it is often development that wins out.

Sustainable development as an idea grew out of the environmental movement in the 1960s and 1970s. There was a growing concern that the world could not support an expanding (and increasingly wealthy) global population relying on a resource- and energy-intensive economic growth model. One of the earliest discussions of sustainability (before the term sustainable development was conceived) was The Limits to Growth, commissioned by the Club of Rome in 1972. The book modeled a world where world population, industrialization, pollution, food production, and resource depletion would grow exponentially, while technological development would progress linearly; previous models had held resource use constant. The book projected “overshoot and collapse” of the global system by the mid-to-late twenty-first century if then-current trends continued. The book gave a dire conclusion:

If the present growth trends in world population, industrialisation, pollution, food production, and resource depletion continue unchanged, the limits to growth on this planet will be reached sometime within the next one hundred years. The most probable result will be a rather sudden and uncontrollable decline in both population and industrial capacity.1

The book proved controversial, and was called neo-Malthusian by its often defensive, progrowth, profreedom critics. It has been lumped in with books like The Population Bomb, whose dire predictions have not yet come to pass in the short amount of time since they were made. Even US president Ronald Reagan made fun of The Limits to Growth, stating that the title offended his sensibilities, telling an audience at the University of South Carolina that “in this vast and wonderful world that God has given us, it’s not what’s inside the Earth that counts, but what’s inside your minds and hearts, because that’s the stuff that dreams are made of, and America’s future is in your dreams.”2

Commentary referred to the failed predictions of Thomas Malthus, the eighteenth-century economist who was concerned that a growing population, driven by increased living standards, would outpace the ability of a country’s agricultural sector to feed it. The country would eventually run out of farmland; this “limit” would have eventually led to mass starvation. Commentators argued that this prediction never came to pass due to new developments in agricultural productivity and that later pessimistic predictions about limits should therefore be treated just as skeptically.

Of course, Malthus was writing in a wholly different time and place. Malthus’s predictions were argued to have been proven wrong due to a technological transformation, the Industrial Revolution. It was argued that this got countries out of the Malthusian Trap; ironically, however, it laid the seeds for today’s current sustainability crisis. Our economy relies on far more inputs than it did in Malthus’s day, and now systems for food, fresh water, energy, and raw materials are all under threat. The world population is also seven times larger.

Some new transformative technology could be invented to get us out of today’s trap, but none seem to be forthcoming at the moment. Chapter 2 will tackle this almost religious faith in technology in more detail.

(It should be noted that a retrospective forty years after the publication of The Limits to Growth found that population, birth rates, food per capita, industrial output per capita, resources, and pollution were all following the general trends predicted by the Club of Rome’s model.3)

In 1983, the United Nations launched the World Commission on Environment and Development, commonly named the Brundtland Commission after its chairperson, Norwegian prime minister Gro Harlem Brundtland. The commission released Our Common Future—commonly known as the Brundtland Report—which offered one of the first definitions of sustainable development: “a process of change in which the exploitation of resources, the direction of investment, the orientation of technological development, and institutional change are all in harmony and enhance both current and future potential to meet human needs and aspirations.”4

Although the report was well intentioned, it did not address what the “process of change” would require, and was steeped in Western liberal ideas about the role of technology and institutional change. It was an important first step, but (perhaps understandably at this early stage) relied on platitudes and politically correct sentiments.

Sustainable development quickly became a central concept in development discussions, often led by Western experts who rarely confronted the unsustainable means by which their economies had grown. Several UN conferences enshrined certain principles of environmental protection and sustainability, such as the 1992 Rio Declaration and the 2000 Earth Charter. In 2000, “environmental sustainability” was one of the UN’s Millennium Development Goals. UN member states were asked to integrate sustainable development principles into their economic policies, reduce the loss of biodiversity, and halve the share of their population that lacked access to clean water and sanitation.

With the release of the Sustainable Development Goals (SDGs) in 2015, sustainable development moved to become the central priority of international development. The seventeen goals (see Figure 1.1), meant to be achieved by 2030, run the gamut of environmental, social, and economic issues, from “no poverty” and “zero hunger” (Goals 1 and 2), to “gender equality” and “peace, justice and strong institutions” (Goals 5 and 16). The process of developing the goals faced many criticisms: that it focused too much on high economic growth as the vehicle for development, that it set too many targets, and that some of its various goals strayed too far from sustainability or development. But the unanimous promulgation of the SDGs seemed to be a victory in itself, and today politicians and business leaders cite the SDGs at every opportunity.

However, the SDGs and similar efforts by other international institutions are merely guidelines and targets, rather than firm policy platforms. Although all UN member nations have agreed to commit to these goals, there are no enforcement mechanisms to ensure that they do so. (Chapter 4 will go into more detail as to why global governance may be ill-suited to solving the problem of sustainable development.)

It is not clear whether achieving the SDGs is correlated with reducing the environmental and resource footprint of national economies. Researchers from the Global Footprint Network found that countries that scored highly on Bertelsmann Stiftung’s SDG index also had large resource footprints. Countries that scored poorly had small footprints. They concluded that the SDGs were far more weighted toward development than sustainability, which would be “anti-poor because lowest-income people exposed to resource insecurity will lack the financial means to shield themselves from the consequences.”5

Sustainability and sustainable development have since been adopted by global business and corporations, though their adherence to sustainability principles can vary significantly. Business is often invited to attend conferences on sustainable development to ensure their cooperation and to help bring about a “broader consensus.” Some of the first business initiatives in sustainable development date to 1992, when Stephan Schmidheiny (a Swiss industrialist who produced asbestos and asbestos-replacement products) was appointed the chief advisor for business and industry. Schmidheiny founded the Business Council for Sustainable Development, later renamed the World Business Council for Sustainable Development, or the WBCSD.

Images

Figure 1.1 The United Nations Sustainable Development Goals. Although many of these are laudable in themselves, some have little to do with sustainability specifically.

The WBCSD today has two hundred members, 67 percent of which are from Europe and North America. It has been criticized for including companies with a heavy environmental impact. The current executive committee includes directors and executives from oil producers Sinopec Corp and Royal Dutch Shell, packaged food producer Nestlé, chemical companies Solvay and Yara International, and motor company Toyota. Each of these companies follows a business model with significant environmental costs, either through its production lines or through the consumption of its products (or both). Many of these companies are also guilty of diminishing the world’s stock of raw materials and common resources despite their more recent efforts on the environmental/pollution front.

In 2011, the environmental NGO Greenpeace, in a blistering report titled Who’s Holding Us Back?, blamed industry involvement in climate change and sustainability for the lack of effective climate legislation. In announcing the report, then executive director Kumi Naidoo stated, “Our research shows beyond a shadow of a doubt that there are a handful of powerful polluting corporations who are exerting undue influence on the political process to protect their vested interests,” and specifically highlighted the WBCSD’s executive committee as a “Who’s Who of the world’s largest carbon-intensive companies who continue to profit from continued inaction on climate change.”6

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There is definitional slippage among the terms corporate sustainability, corporate social responsibility (CSR), and greening a company; they may overlap in certain areas, but they are not the same thing. CSR is defined as a company’s “giving back” to the wider community; there is no requirement that a company’s CSR actions have anything to do with its business operations.

“Greening” a company is also used interchangeably with “corporate sustainability,” but refers to something different. Greening is harm amelioration and risk minimization: reducing the environmental impact of a company’s production. This may be reducing waste or pollution, or extracting resources more cleanly. But it is not the same as corporate sustainability, which entails reducing the level of resources a company uses or impacts when its goods are produced or consumed. “Greening” is still a worthwhile objective, and some policies can achieve that and sustainability at the same time. But a company can be green and environmentally friendly without affecting its overall (over)use of resources (See Table 1.1).

Why do we have this definitional confusion? One cynical answer is that it is convenient. Cutting deep with unambiguous definitions can expose festering wounds and create great discomfort. They can disrupt existing business models and devalue sunk costs overnight.

Table 1.1 Sustainable development is not environmental protection (greening).

Issues

Environmental Protection (Examples)

Sustainable Development (Examples)

Mobility

• Cleaner fuel

• Emissions standards

• Noise barriers

• Road pricing

• Taxes on car ownership

• Investment in public transportation

• Bans, reducing car parks

Energy

• Environmental standards for extraction

• Gas cleaning systems at power plants

• Use of renewables (to reduce emissions and carbon footprint)

• Demand-side management

• Caps on consumption

• Use of renewables (to reduce resource consumption)

Housing

• Green building standards

• Construction waste recycling

• Indoor air quality

• Smaller homes for all, lawn restriction in water-stressed areas

• Passive design to reduce energy needs (no AC)

• Compost toilet to reduce water needs

Water

• Cleaner production and process efficiency

• Higher discharge standards

• New water treatment technology

• Reduction of consumption through pricing

• Caps on per capita consumption

• Water catchment area protection and bans on access

• Bans on golf courses in arid areas

Food and Agriculture

• Reduction of chemical footprint

• Reduction of chemical run-off

• Ban on certain pesticides and herbicides

• Certification

• Reduction of industrial food production

• Investment in rural agriculture infrastructure

• Fair pricing for farmers and ecosystem services

• Promotion of circular farming

Biodiversity

• Targeted conservation areas

• Listing of endangered species

• Quotas on hunting

• Development no-go zones—

zero tolerance

• Conservation of native seeds

• Pricing ecosystem services

Fisheries

• Fishing quotas

• Total ban to prevent collapse of certain threatened species

• Strict licensing on fishing vessels

• Pricing consumption of certain threatened species

Note: Although sustainable development is not environmental protection, they are not mutually exclusive.

I also believe it’s because sustainable development is understood from the perspective of advanced economies rather than developing ones, which must confront the past, deal with current challenges, and in the process not bankrupt the future—sustainability in a nutshell.

The standard development narrative is straightforward: the West’s growth comes from the cultivation of markets, which in turn led to capitalism, industrialization, and consumerism. This was an economic and manufacturing engine that increased the wealth and power of Europe and North America versus the non-Western world, which only started to develop once these countries too embraced free markets, open trade, and modern capitalism. This led to the Washington Consensus on what is best for a country’s economic development and growth: market liberalization, deregulation, and free trade. There is no mention of why and how the division between the so-called developed and developing worlds was created over the last two to three centuries, nor how the seeds of unsustainable growth were sewn through the plunder and pillage of people and resources in distant lands. Many of these lands are today’s “developing countries.”

The free-market mainstream argues that markets best allocate resources to create the maximum level of benefit. Any attempt to interfere with the economy, whether through regulation, intervention, or direct support, would lead to a suboptimal, if not an objectively worse, outcome. This has been extended to a political argument: that markets are good from a moral standpoint as the best way to resolve social (not just economic) problems—and if the market does not or cannot solve them, then the cure of state intervention would be worse than the disease.

I admit this is an extreme characterization. Apart from those on the hard right of Western politics, many politicians will accept some level of state intervention in the economy. But it remains true that, all along the Western political spectrum, market-based solutions are seen as the first option for solving social problems. Sadly, most elites of the developing world, such as Pakistan’s Shaukat Aziz, Thailand’s Abhisit Vejjajiva, or India’s Rahul Gandhi, either educated in the West or who don’t know better, simply accepted this as natural law, never appreciating how it was at war with natural systems and their people.

But the fact is that most of the world’s economies had a very different experience than the advanced economies of Europe and North America. For one, many of the West’s largest economies never suffered the indignities of colonization and resource plunder. Colonial powers destroyed centuries-old cultural and governing institutions, replacing them with structures purely focused on extracting resources for the colonial center and with a local elite that followed Western ideologies. From Spanish Latin America through the British Raj in India7 to the Scramble for Africa,8 imperial powers tried to exploit the natural resources of the non-Western world to fuel their economies. Even non-Western powers—namely imperial Japan—tried to launch their own empires for the same reason.

Colonialism and imperialism were pervasive. Even countries that never formally became colonies, such as China, still suffered interference from foreign governments. At best, these countries were held back from developing at the same rate as their Western counterparts. At worst, newly independent colonies, often damaged by violent independence and post-independence struggles, had to build governing and economic institutions entirely from scratch. Many failed due to bitter internal struggles and a lack of competence.

The Indian environmentalist Claude Alvares explained the effect that Western-imposed systems had on postcolonial countries:

Scholars in several societies outside Europe, schooled in an educational system imposed on their societies through the colonial establishment, readily incorporated similar ideas about their own histories. The colonisation project succeeded in convincing many of our intellectuals and scholars that only the West was active. . . . The new global knowledge system therefore merely required competent, hired disciples to diffuse its truths to those ignorant of them. This has become the dreary function of our educational systems. Whether it is geography or economics or sociology or psychology, the expansion of the West’s intellectual discourse has been seen in terms of a diffusion of knowledge from the centre to the peripheries. The main issues and controversies are debated in the centre; they are then transferred to the peripheries through texts and authors and subject to onward diffusion. No creativity flows backward from the periphery since it is assumed none exists there at all.9

There have been attempts to challenge these mainstream arguments. Theorists in the 1970s—Fernando Cardoso, Walter Rodney, and others—started to argue that economies on the “periphery” (namely, in the developing world) were locked into an economic structure that made them dependent on the West. As weaker members of the world economy, these countries needed different policies, as opposed to copying the West’s. “Dependency theory” now has a poor reputation among mainstream economists: Latin America’s protectionist policies did not bring growth, and Cardoso himself (when he was president of Brazil) was forced to accept the Washington Consensus in exchange for debt relief from the International Monetary Fund (IMF). However, Cardoso and other dependency theorists’ fundamental point still stands: the experience of developing countries, growing in an already developed global economy with several powerful economic players, will be different than that of countries that came before.

The Washington Consensus remains orthodoxy even as several other countries succeeded by following a different path. China, in particular, has not fully embraced the free market, preserving state management throughout the economy, yet it now has the best record of poverty alleviation in human history. This is why China’s rise has been treated with such skepticism in the West, even though the developing world sees China’s path to development as an increasingly viable model.

Japan, South Korea, Taiwan, and Singapore also used state support, intervention, and protection to help grow their economies, which fostered the creation of a new concept: the developmental state. Economist Chalmers Johnson noticed the difference between the US and Japan as early as 1982, in noting that Japan had a much stronger industrial policy apportioning state support. The idea was soon applied to describe South Korea and China. The varied experiences within Asia led Joe Studwell to create an “Asian model” based on three elements: export-focused, stateled manufacturing; land reform that split large feudal farms into tightly packed smallholder farms; and a managed financial system that would subsidize manufacturing without causing a financial crisis.10 Despite often being hailed as a “free-market utopia” by conservative economists in the West, Singapore, economist Kalim Siddiqui notes, “regulates land, labour and capital resources . . . [and] sets prices on these very resources on which private investors largely rely [for] their future business calculations and investment decisions.”11 Singapore controls both the health and housing sectors of the economy, which has led to near universal health care and public housing.12

Most important, the current understanding of development is a poor fit for the challenges of the twenty-first century. The touchstones of free-market economics were written under very different political and economic conditions. Adam Smith, writing in the eighteenth century, wrote The Wealth of Nations to criticize the state-chartered monopoly in the Western world. Friedrich Hayek wrote The Road to Serfdom when he was worried about the rise of totalitarianism in Europe—an important concern, to be sure, but less relevant to today’s challenges, and especially in the developing world.

One new challenge is climate change. Climate change is here and yet the developing countries have an obligation to lift their majorities out of poverty and reduce the drudgery of life. This will not be achieved in a pristine, carbon-neutral or “green” way no matter how we try to fudge the definitions.

Another coming challenge is the increasing scarcity of global resources, driven both by overconsumption and increasing population. Increasing global incomes and an expanding population have led to greater consumption, production, and thus resource use, and resource stocks around the world have felt the strain. These are not just the resources directly involved in production; other “common” resources feel the strain too—from increased car use affecting our stocks of clean air and open road space to runoff from industrial farming creating massive algae blooms in water bodies.

The final challenge comes from global modernity: globalization, digitalization, mechanization, and the loss of local traditions, cultures, wisdom, and knowledge. Changing economic models and technological development have made certain development paths obsolete. Automation, digitalization, and open borders have led to “premature deindustrialization,” whereby developing countries lose their manufacturing sector to countries with even lower labor costs.

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When looking at sustainable development from the perspective of advanced economies, we assume that development has already been achieved. These economies largely provide universal access to basic needs and offer expansive social services. If continued poverty exists, it is due to a lack of political will to deal with vested interests and inequalities. These countries thus have more ability to smooth the economic and political transformations that come with sustainability, keeping living standards steady, or even reducing them, as they try to better manage resources.

However, developing countries still have sizable parts of their population living in poverty and near-poverty. Average living standards, even in success stories like China, remain largely low when compared to the Western world. China’s GDP per capita at PPP (a crude proxy for living standards) stands at US$15,399, just below the world average of US$16,318, and far below the OECD average of US$42,051 and that of the US at US$57,436. The irony is that China’s increasing GDP per capita comes at a high price for the planet.

Experts argue that extreme poverty levels have been reduced, but they seem to be unaware of the wide spectrum of poverty that affects the majority. A hotter, crowded, and resource-constrained world is a slap in the face for those at the bottom of the pyramid. Moving people out of extreme poverty is critically important, but using such data to argue that the world is better off is a form of arrogance. The world is also being compelled to embrace robots and AI to replace labor in the name of progress—a silly idea that still fits the orthodoxy of our current economic model and its narrow definition of productivity. Any development program for these countries must continue to provide an upward path for those who still live in poverty and drudgery. However, all the current models available to them are environmentally damaging and unsustainable.

Developing countries need to pursue sustainability and development at the same time. They need to aim for a standard of living that allows people to live well “within limits.” They must consume fewer resources than a Western lifestyle yet provide people the chance to live a “prosperous” life (defined in a twenty-first-century context). There is no recipe for this, and progress has been thwarted by the religious fervor for neoliberal development across the world.

Why have we been unable to resolve the dilemma between sustainability and development, and formulate a truly sustainable understanding of development?

The answer is that we are still too tied to a free-market understanding of economic development and the neoliberal idea that we can have it all. The truth is that the majority of the citizens of the developing world cannot have it all, and will have to settle with “just enough for all.” This is a moral dilemma for the “haves.” The focus on free markets as the best vehicle for social progress puts development and sustainability objectives at odds, and development usually wins out. The only way to resolve the conflict is to hope that either market allocation or technological development allows both to be achieved simultaneously. We need a different understanding of economic development that does not rely on free markets and that allows both the moderate improvement of living standards and the management of resources to ensure their preservation for future generations to meet the most basic human “rights of life.”

Despite the failures and missteps of a Western-derived, free-market model, and the insights that could be drawn from taking an alternate approach, the developing world has not created its own view of what sustainable development would look like. Even the “developmental states” noted earlier have a Western objective: an economy driven by high domestic consumption with a Western standard of living as the ultimate objective. These countries may use different economic means to get there, and they may not emulate the West’s liberal democratic political structures, but the end goal—the high level of resource consumption—is the same.

One reason we may not have seen many non-Western alternatives is the dominance of Western ideas in the literature and in global multilateral organizations. There are thousands upon thousands of books written on Western history, politics, and business practices. Western corporations dominate global media, and global academia is centered around a few premier Western universities. We live in a world shaped and dominated by the thoughts of the minority and its elites, which has stifled new thinking and made elites in the developing world subservient. We desperately need new narratives, and this book is an attempt to contribute.

Many developing countries have politicians or leaders, groomed by Western education and business, who strive to implement the most “efficient” set of economic policies for a country (regardless of popular opinion). They are generally probusiness and promarket, and come in to “fix” an economy by slashing benefits, privatizing social services, and lowering regulation to encourage domestic and foreign investment. They can be found in both democratic and nondemocratic states (though both can be equally dismissive of their policies’ effects on the population). They are also not universally successful—many technocrats have been dismissed as mediocre by both constituents and observers—yet are still invited to conferences and speaking engagements around the world.

These elites operate from the fundamental assumption that the status quo as defined by the West is largely acceptable, and that tweaks could fix whatever problems exist. When faced with a challenge that threatens the foundations of society, be it economic, political, or, in our case, environmental, they tend to be left floundering, and look to the West for “thought leadership.” The need for a sustainable economic model that is not at war with the planet is one such challenge.

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In 2016, the research firm Trucost estimated the scale of the external costs of major industries around the globe. They found that for the most polluting industries, the scale of their impact on the natural world was often as great as, if not several times greater than, the sector’s total revenue. None of these industries would be profitable if they were forced to consider external costs in their business models.13

The industry with the greatest impact overall was coal power generation, with an estimated impact of over a trillion US dollars across the entire world. For scale, that is the same size as Mexico’s entire economy. Just about half of that impact comes from coal power plants in East and South Asia.

Other industries have an impact that is several times higher than their total revenue. One example is the South American cattle ranching and farming industry. The total revenue for this sector is about US$16 billion. However, the total impact of the industry, expressed through land use and the release of greenhouse gases, totals US$350 billion (equal to the total amount the US spends on beer each year). If beef were priced properly, a hamburger made from Brazilian beef would be an extremely rare luxury, rather than a staple of the Western diet.

This data reveals the underlying issue at the heart of many of the world’s industries: that an honest accounting for their overuse of resources would almost certainly put most of them out of business. And, for us as consumers, that many things we treat as standard goods should instead be priced as if they were expensive extravagances. This immediate change to our current economic system is not going to happen overnight, but we can’t continue to reject the evidence. When confronted with the dilemma between sustainability and development, many who subscribe to a more market-based version of sustainable development tend to point to two possible escape mechanisms. These are the easy and safe options, bereft of intellectual honesty and diverse opinions.

The first is to double down on the free market as the best way to allocate the Earth’s resources. The second is to hope that some new technology will be invented that will render the dilemma between sustainability and development obsolete. Technological development would allow the world to consume on the level of Americans without using an American level of resources.

Neither of these options are viable alternatives to a true platform of sustainable development: one that tries to create an economic system that can sustainably manage resources for future generations. Chapter 2 will explain why.

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Endorsements

“Chandran Nair asks difficult questions and offers bold, provocative answers. One may disagree with his answers but has to admire his willingness to tackle thorny problems. These pages open our eyes to some of the most urgent problems facing humanity. A must-read.”
—Moisés Naím, Distinguished Fellow, Carnegie Endowment for International Peace, and author of The End of Power

“Nair shows that more than ever, state capacity matters for sustainable prosperity, and this is precisely the Achilles' heel of most of the developing world.”
—Gurcharan Das, author of India Unbound, The Difficulty of Being Good, and India Grows at Night

“Chandran Nair is an incisive and visionary thinker with a properly sober take on our ‘crowded and resource-constrained' future. He is totally right in
The Sustainable State that the emerging economies' adoption of the consumption-driven model of growth that has characterized the wealthy West would exhaust our planet's capacity. As he also rightly argues, what is needed is both a cultural shift from an aspiration of well-having to one of well-being and a shift from the free rein of the market's invisible hand to intelligent governance through the guiding hand of the state.”
—Nathan Gardels, cofounder of the Berggruen Institute and Editor-in-Chief, The WorldPost

“Most development models, including those concerning sustainability, are based on Western experiences and ideology. Problems have arisen therefrom and they have proven inadequate or inappropriate for current challenges and socioeconomic realities of the developing world. In
The Sustainable State, Chandran Nair draws upon the Asian experience—including China and its successes—to suggest a more fitting approach for the ‘global majority.' His arguments are persuasive but extremely ‘disruptive.'”
—Ronnie C. Chan, Chairman, Hang Lung Properties, and Chairman Emeritus, Asia Society

“Much of our current understanding of the nature of the state and its role comes from Western experience, e.g., Westphalia, the Industrial Revolution, the Cold War, the internet. But this is not what government and good governance means to most people outside of the West. Chandran Nair's groundbreaking book tries to explain from a non-Western perspective what governments can and must do for the global majority in an era of resource constraints.”
—Professor Kiyoshi Kurokawa, Chairman, Fukushima Nuclear Accident Investigation Commission, and Science Advisor to the Cabinet of Japan

“In this brilliant new book, Chandran Nair takes on the elephant in the room: how could a genetically and culturally small-group animal reorganize itself to live in groups of millions and billions without finishing the job of destroying its life-support systems? Can huge poor nations create governance systems that will allow all their people to enjoy decent lives, and how can huge rich states modify theirs to make this possible? Everyone with an interest in the human predicament will want to read
The Sustainable State.”
—Paul R. Ehrlich, author of The Population Bomb and coauthor of The Annihilation of Nature

“First with
Consumptionomics, now with The Sustainable State, Chandran Nair describes an alternative path and meaning of progress: governance, when good, is an essential antidote to irresponsible, injurious capitalism and individual license. This is a book for our times.”
—Zoher Abdoolcarim, former Asia Editor, Time

“The role of the state has withered. Chandran Nair is one of the few people to understand that the pendulum has swung too far and that more and better government will be needed to address our global challenges successfully. His arguments are persuasive and powerful.”
—Graeme Maxton, Secretary-General, Club of Rome, and coauthor of Reinventing Prosperity

“Nair is saying it when others are shying away. Liberal democracies and capitalist markets have not helped mankind achieve sustainable development. These are the rich countries of the world—the biggest of which don't believe in too much regulation. In developing economies, competing thoughts have emerged that argue for the necessity of comprehensive state intervention. Nair gives us a fulsome narrative to consider this crucial debate that has finally dawned.”
—Christine Loh, Chief Development Strategist, Institute for the Environment, Hong Kong University of Science and Technology, and former Undersecretary for the Environment, Hong Kong

“Chandran Nair's commendable new book,
The Sustainable State, provides an inspirational new way of thinking about developing the type of state that can do the most good for the largest number of people. His propositions are especially useful for the governance of crowded, resource-constrained countries such as mine, Nigeria. He offers great insights on how developing a strong pro-people state can steer people and resources along the path of genuine sustainable development that serves the interest of the masses.”
—Jibrin Ibrahim, Professor of Political Science and Senior Fellow, Centre for Democracy and Development

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