Economic sustainability: Market viability and the people’s well-being

When one tugs at a single thing in nature, he finds it attached to the rest of the world. – John Muir

Some say that the term sustainability has been tossed around so much that it’s become meaningless. I don’t think so. But what is it, anyway?

The United Nations defines sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” If we’re to live by that maxim, we must pay attention to how we’re impacting the Earth, the economy, and society. We can and should live our lives to our potential while ensuring our children and descendants can pursue their dreams of a full and good life.

Sustainability is usually divided into three sectors: the environment, society, and economy. Also known as the triple bottom line, or planet, people, and profit, the modern-day use of the term considers the three groups as the essential building blocks of maintaining and even improving them. I’ll be examining all three principles in future blog posts; for now, I’ll focus on the economy.

Economies worldwide

Major economies worldwide

It’s the economy, stupid.” Such was Bill Clinton’s reminder during his 1992 run for U.S. president. The country was in a recession born in the 1980s: many savings and loan organizations went bankrupt, putting a vast number of American homeowners at risk and prompting the government to bail out the failing mortgage firms. The stock market crashed worldwide. The U.S. Federal Reserve raised interest rates. And then Iraq invaded Kuwait, shooting the price of oil upward. The U.S. fell into recession and by the summer of ’92, unemployment rose to nearly 8%.

When unemployment is low and the majority of a nation’s people have more money than they can spend, their economy is said to be doing well. But just how is the health of an economy determined?

One of the most widely used measures of a nation’s economic health is the gross domestic product (GDP), or the market value of the total goods and services produced in a country in a given timeframe. How many goods and services are exported and how many are imported are considered. Employment rates and income levels are also important, and whether wages are keeping pace with inflation. Economists also look at the nation’s debt, the housing market, and levels of investment.

Some economists also consider a nation’s economic health to include the well-being of its citizenry measured in terms of life expectancy, happiness levels, and the state of the environment.

Also important in considering a nation’s economy is how it’s set up. Four major types of economy are found worldwide:

  • Traditional. These include developing nations that use hunting, fishing, gathering, and/or agriculture to meet their basic living requirements. There is little to no monetary exchange; rather, people practice bartering. Traditional economies are found worldwide: in some countries of the Middle East, Latin America, Africa, and Asia. A threat to the traditional way of life comes from developed countries that use the traditional nations’ natural resources and labor, often leaving a wasteland behind. Traditional economies often exist among indigenous people in modernized countries. For example, regions with a traditional economy can be found in Brazil, the U.S., Canada, Africa, Pacific Islands, Greenland, and Haiti.
  • Market-based. Products and services are produced, priced, and sold according to the principle of supply and demand. Citizens in market-based economies enjoy owning private property, limited government, and freedom of choice. However, individual incomes can vary widely and be inequitable. Also, companies in market-based economies often send their manufacturing to foreign, developing countries to take advantage of cheap labor and little to no environmental regulations. Countries with a market economy include the United States, Canada, the United Kingdom, Switzerland, Ireland, New Zealand, and Singapore.
  • Command-based. The government determines what should be produced, how much of a given product, and pricing. Command economies normally have low unemployment but their lack of competition can lead to inefficiency and a lack of innovation. Countries with command economies include China, Russia, Iran, North Korea, Cuba, and Libya.
  • Mixed. As it sounds, a mixed economic system combines aspects of market- and command-based types. The market might be free, that is, not government-based except for essential industries such as transportation and defense. Normally, the government regulates privately held businesses. Most developed nations exhibit some degree of a mixed economy.

Other terms you might hear thrown around in discussions of the economy:

  • global economy is based on trade and the ready availability of resources from all over the world. It emphasizes how all countries have come to depend on one another for products and resources and shows the economic activities between the different nations.
  • circular economy focuses on handling waste in an environmentally sustainable way. In this system, the penultimate fate of trash is to be taken to the beginning of the supply chain, or with its original manufacturer where it’s recycled or reused, rather than the now-common practice of leaving it at the supply chain’s end, stacking up in dumps or polluting the land or water where it ends up. The circular system emphasizes reusing resources over recycling them. It also seeks to increase energy efficiency and clean up the manufacturing process itself.
  • green economy uses limited carbon, carefully allocates its resources, and works to include all members of a society. It aims to cut back on environmental risks and reduce ecological shortages while ensuring the prosperity of all people.

Characteristics of a sustainable economy

A sustainable economy works to ensure that its growth meets people’s needs while leaving the environment in as good a condition as is possible. It’s inclusive and regenerative. In the Rockerfeller Foundation’s blog post “The Five Characteristics of an Inclusive Economy: Getting Beyond the Equity-Growth Dichotomy” Emily Garr Pacetti writes, “Quite simply, there are more opportunities for more people.” Garr Pacetti says the Rockefeller Foundation assigns five characteristics to an inclusive economy: “participation, equity, growth, sustainability, and stability.”

Sustainability separates into three intertwined arenas: planet, people, and profit. Profit, shorthand for the economy, is but one of those. Economic sustainability means encouraging long-term fiscal growth and maintaining high levels of equity in society while keeping the environment free from harm. In his book, “Let Us Dream: The Path to a Better Future, Pope Francis wrote,

“For me it’s clear: we must redesign the economy so that it can offer every person access to a dignified existence while protecting and regenerating the natural world.”

Sustainability is vital and urgent: we must take care of our environment, the economy, and society so that each of us today can find own well-being while ensuring that our descendants will have the means to achieve theirs.

Leave a Comment