Stephen Keen, Professor of economics at the School of Social And Behavioural Sciences at the University of Kingston, UK, participates in this program.
It was the Nobel Prize winner, Simon Kuznets of Russian origins, who formulated the classical method of calculating GDP. But in 1934 he warned: “The welfare of a nation can scarcely be inferred from a measure of national income.” Professor King refers to GDP as being an accurate measure of an economy, but only in limited terms, because it does not take into account that the resources of the planet are being used up one and a half times more quickly than they are being regenerated, so any growth is taking place on borrowed time. The idea of capitalism itself has not produced the Shangri-La that perhaps we thought it was going to, and Professor Keen highlights the main problems with the ‘system’ as it exists now.
Professor Keen talks about the Achilles heel of this new model – that the ‘doughnut economy’ as envisaged by Kate Raworth will still need a ‘market’ to make it work, and it is not immediately clear how this will work. Professor Keen sees that the ‘market’ will still be able to function if caps are placed on the rewards gained by capitalists in recognition that many of the successes which they achieve are the results of hard work by others. Professor Keen is very clear that the circular economy does not aim to create a kind of Marxist economy. Rather a soft capitalist model. He describes Marxists as having made the mistake of thinking that wealth came from labor, and that this was based on the exploitation of labor. “That’s flat out wrong. Where the wealth has come from is the exploitation of energy; labor and machinery are two ways in which we harness this energy. But then we have a struggle over the distribution of the wealth from that, … and the appalling machinery that people had to use of course gave rise to evolutionary fervor…” Professor Keen says.
The ‘circular economy’ is well worth thinking seriously about.
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