Trends Interview with Nicholas Ashford

The text below provides an English translation of the recent Trends interview with Nicholas Ashford.

A few weeks ago, American scholar Nicholas Ashford was a participant at the annual ideas congress in Brussels organized by the Centre for European Policy Studies. He spoke mainly about how companies and by extension society can promote social sustainability. He put forward a number of ideas and concrete measures for this.

What is the core of your new book Technology, Globalization, and Sustainable Development?

The subtitle says it all: transforming the industrial state. We urgently need to change the industrial model, both for the climate and the environment, and for social and working conditions. The unprecedented economic growth we are so keen on continuing has taken place in a relatively short period of the last 200 years. Thousands of years before, there was no growth. That boom we knew was due to the cheap supply of energy. But that is over. We are at the end of the industrial boom as we have known it. A future annual growth rate of 2 to 3 percent worldwide would seem exceptional, let alone 8 to 9 percent.

Does that in itself have to be a problem?

Yes, if we do not start thinking about how best to distribute the fruits of economic and industrial output between labor and capital, between the West and the emerging countries, and between the rich and poor. Some of the developing countries are at risk of lagging behind. Some countries will not be able to contribute to global productive output and others will not even be able to feed themselves.

What sustainable developments do you think are needed to counteract this?

I believe that sustainability must be achieved within three dimensions: the earning capacity and purchasing power of ordinary people, the environment, and universal access to essential goods. No one should choose between food and medicine.

Which environmental measures promote sustainable outcomes?

Simple, discourage the production and consumption of energy-guzzling and often unnecessary products and services. There is no reason why people should buy a large SUV’s. With a small car you can get to your destination just as fast. Our growth model is based on more, bigger, faster, more powerful and more expensive products, but that has reached its expiry date. The planet cannot cope if everyone consumes at the level of the West.

What measures can we use to go in that direction?

Tax pollution and tax unnecessary consumption, in addition to favoring less energy and material embodied in products and services. If you want more people to work and less pollution, why do we put such a heavy tax burden on labor and not enough on pollution. Our tax laws must change. The tax treatment of investments, corporate profits, technology and labor must change. It may seems an anathema to restrict big cars, large living spaces, and unsustainable production, but it is a necessity for the plant and all its populations.

You speak of making people’s purchasing power more sustainable, how?

The income of employees can be increased in two ways: by increasing wages or by redesigning the ownership of the economy. If the economy continues to increase in value, employees must be able to take a share of it by means of a larger share of ownership. Ownership of capital must be spread more widely throughout society or there will not be sufficient demand to purchase the products of the industrial state. The Mondragon model from the Basque country is a good example of this. In addition, workers and citizens must be able to invest collectively by adopting the tenets of binary economics.

Why and how can you achieve that?

We need structures to invest collectively in technology that is valuable for the future. This can be done, for example, by setting up a trust where employees or citizens can pool resources. For technology investments that are deemed necessary and sustainable, one can then extract money from that trust that will later be repaid by the future cash flows of those investments.

Should these investments not be made by companies and the private sector?

The solutions no longer lie in giving money to the wealthy in the hope that they will use it to build new factories and create jobs. That was true in the days of Henry Ford and Andrew Carnegie. Now the wealthy shareholders buy back their own shares and increase their paper wealth, but they do not invest in research and development. We have seen that happen increasingly in recent years with increases in inequality of both wealth and income.

What other employment measures are you putting forward?

The shortening of the work week should be seriously considered while maintaining wage parity. If this creates more demand for workers, this also may increase purchasing power for new workers. There is simply not enough work under the present system for all the people who want to work. Certain types of work are unpaid, but that doesn’t mean the homemakers and carers of children and elderly aren’t working.

Why is work part of the key to greater sustainability?

Work is still the main way of involving people in society. It is about more than the exchange of money for labor. It is about maintaining self-esteem and has wider social consequences. Unemployment is accompanied by disruption to families, higher crime rates, and illegal drug use.

Employers will laugh: less working time for the same pay.

Some experiments with a reduced working week have shown that the output of production even increased. Moreover, in recent decades corporate profits have exploded while wages have stagnated. My MIT colleague David Autor has clearly demonstrated this. We therefore need a more equitable and fair distribution of the pie.

Does the lack of equitable distribution explain the ubiquitous social unrest?

I used to tell my students that a new French revolution will not happen again. Now I’m not so sure about that anymore. Our economic and financial system is hijacked and favors the current dominant economic actors. Therefore, the redistribution of wealth and income is no longer fair, and a new social contract is needed.

What can an individual company, for example a medium-sized production company, do to implement this sustainability change?

First of all, business leaders should involve employees in how they want to make the company more sustainable. Imposing new practices from above does not work. A mechanism of shared decision-making is needed. The exclusive right of company managers to make technological changes, for example, is not a sustainable model; employees must also have a say in it.

What if it affects profitability?

As I said, profits will no longer be what they used to be because they largely depended on things that are now different and will not return. That is why companies should not only strive for profit, but also look at the social value of their production.

Should you get carte blanche, what measures would you take?

The most important single change that is needed is the emancipation of women. Women must be much more and more closely involved in the existing decision-making structures, within the family, within the government, and within companies. It is not for nothing that in the world of microcredit in developing countries money is lent out mainly to women. Men tend to spend it on the wrong things.

Nicholas Ashford is Professor of Technology and Policy, and Director of the Law and Technology Program, at the Massachsuetts Institue of Technology

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s