(Part 2 of Excerpt from the book "Towards a green era" by Patali Champika Ranawaka)
- Read part 1 of the article
If we go back to the fundamentals we could visualize three concentric spheres as far as the economy is concerned. Money is the outer most sphere, representing the value of goods and services which are being exchanged.
The second sphere represents the man made goods and services, including the built environment and social structure. The core sphere is the ecological sphere which acts as the base for the process of production and consumption.
Financial crises arise from mismanagement in the monetary sphere. A financial crisis may not always spark an economic crisis. Economic crises arise when there are limitations on producing goods and services and maintaining the built environment and social structure. So if a financial crisis creates an economic crisis it could not be resolved merely by restoring proper financial management.
Earlier (in August 2008) it was predicted that the world was going to face a credit crunch and financial crisis. So, nation states which were expected to suffer due to this crisis put forward bailout packages to solve the problem. But later predictions (2009 Jan, IMF) clearly showed that this is not a mere financial crisis, but it had deep roots and the biggest economic crisis that the world ever faced may follow.
Goods and services are being produced using resources and energy extracted from environment. Following consumption, the generated waste is put out into the same environment. If there is a dearth or scarcity of goods and services, societies naturally tend to exploit environmental resources more and more. In that way they know they would be able to overcome the economic and financial crisis. So in such a situation what normally happens is an increased production of goods and services, printing of money, confidence building, and proper management of the businesses. But the problem is: Could the environment continue to supply more and more resources and energy while at the same time absorbing mounting quantities of generated waste. If not, there will be an environmental crisis as well. That crisis is very similar to that of a credit crunch. The environment would undergo an ecological credit crunch if its resource base is exploited at a rate faster than its replenishment.
The important thing that we should be mindful of is the fact of the irreversibility of the global scale environmental damage caused by an environmental crisis. For example, filling the hole in the Ozone Layer or reforestation of the Sahara desert could not be achieved. So ecological devastation at certain levels could not be restored like reversing the economic crisis.
Now the question that arises is: Will the global crisis lead to an ecological crisis? Are we at that turning point in our history?
If there is an environmental calamity of global proportions, it may definitely lead to a question of the survival of the whole of human civilization. In former times, a civilization in one location may collapse due to an environmental disaster, but civilizations would resurface in other locations. Now human civilization is highly integrated and globalized so that one Nation’s disruptive action would affect others whether or not they have contributed to the action. So, unless we change our development paradigm, an environmental calamity of global proportions would mean that humankind as a whole could only resurface in another planet! If we were to address the global recession in a serious manner if would help humanity to change their course of civilization towards a sustainable future.
Related posts
- Global recession - Blessing in disguise? - Part 1
References
- This article is part 2 of excerpt from chapter 1 of "Towards a green era" by Patali Champika Ranawaka
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