Rasigan Maharajh
―Innovation Policies and Structural Change in a Context of Growth and Crisis‖
14th September 2011
Rio de Janeiro, Brazil
Development and Sustainability:
a new productive paradigm?
Outline of Presentation
Introduction
Waves, Techno-Economic Paradigms and (Hegemony)
Dynamics of the Contemporary Global Political
Economy
Conclusions
Introduction
“the issue is not what
will magically solve the
immediate dilemmas of
our world-system but
the basis on which we
shall create the
successor world-system”
Wallerstein (2005)
Concurrent crisis's all emanate
from the current mode of
production and consumption,
waste, and environmental
degradation
Accelerated distribution through
neo-liberal globalisation
Hegemonic World System,
Unilateralism & State violence
Longer history
Long geological
timescales
Evolutionary change
punctuated by
revolutionary
transformations:
Palaeolithic – Neolithic –
Urban- Industrial –
GREEN …
Long history
Waves, TEPs & Hegemony
The extension of the markets cannot keep pace with the extension of production. The collision becomes inevitable, and as this cannot produce any real solution so long as it does not break in pieces the capitalist mode of production, the collisions become periodic. Capitalist production has begotten another ‗vicious circle‘
Engels (1877)
Kondratieff waves
Techn
o-Eco
nom
ic
Pa
rad
igm
s
Global Circuit of Social Capital
Contemporary Global Dynamics
Expected growth estimates of world MVA at
constant 2000 US$
GDP per Capita: Annual Growth Rates (%)
Source: Bourguignon (2011)
Numbers, Share‘s and Spending of the Global
Middle Class (millions of 2005 PPP dollars)
Source: Kharas (2011)
Ecological Footprints and Human DevelopmentSource: UNEP (2011)
Conclusions (in 6 Parts)
Conclusions I
What are the main obstacles to the consolidation of a
sustainable techno-productive paradigm?
Persistence of Inequality, Combined and Uneven Development
Hegemon Treats
Neo-liberalism, Corruption and the ‗hollow‘ state
Monopolies, Oligopolies and Cartels
Ecological Catastrophe [2008]
US$ 6.6 trillion
US$ 2.15 trillion
>50%
The estimated annual environmental costs from global human activity equating to 11% of global GDP
The cost of environmental damage caused by the world‘s 3,000 largest publicly-listed companies (7% of Revenue)
The proportion of company earnings that could be at risk from environmental costs in an equity portfolio weighted according to the MSCI All Country World Index
Source: Trucost, PRI & UNEP (2011)
Global Equity [2008]
0.1
1.0
10.0
100.0
1,000.0
10,000.0
32
64
128
256
512
1,0
24
2,0
48
4,0
96
8,1
92
16,3
84
32,7
68
65,5
36
131,0
72
262,1
44
524,2
88
1,0
48,5
76
per capita annual income (PPP$ 2000)
people
(m
llio
ns)
Japan
Western Europe
Eastern Europe
South America
Eastern Asia
Middle East
Asia Pacific
Southern Asia
Northern Africa
Southeastern Africa
Central Africa
Source: Dorling (2009)
Conclusions II
Are the social and environmental sustainability opening’s new
windows of opportunity?
YES
Accelerate consolidation of Strengths
Enabling legislative environment to redress Weaknesses
Mitigate Threats through socio-economic consensus and
participation
Integrate local, national, regional and global Opportunities
New Global Keynesianism
Anti‐crisis policies should include the funding of public research infrastructures
In the first place the funding does not involve a nationalization of the firm or the use of taxpayers‘ money without any counterpart. By contrast, while the IPR is paid at its private value, it is transferred in the public arena where it has a greater public good value and decreases costs for many producers.
Secondly, financial support is granted to firms who have proved to be innovative. A powerful stimulus for new investments is given to the most efficient firms. On the one hand, these firms receive fresh funds but, on the hand, having sold the old intellectual property rights, they face tough competition. Therefore, they have an urgency to invest in the production of new intellectual assets, which boosts aggregate demand.
Thirdly a monopoly price for the asset is replaced by the lower competitive price, which has again a positive effect on aggregate demand.
Finally, the ―anti‐commons‖ problem is eased; everyone can now invest in new knowledge with the awareness that complementary pre‐existing knowledge is less likely to be owned by other firms. The policy decreases the costs of future risky transactions necessary to use the fruits of innovation. While the immediate funding goes to incumbent innovative firms, which may often belong to the richer countries, the increase of the knowledge freely available to everyone has widespread beneficial effects and contributes to the overall development of the world economy.
Pagano (2008)
Conclusions III
What are the technological trends that have been
consolidating?
Nano-scale Engineering, and new Physics
ICT Power, Artificial Intelligence & Media
Energy, Production and Transport (sic)
Genomics and Biotechnology
Green Economy
Geo-engineering
Energy in Flux
Conclusions IV
What opportunities for the productive sector there are?
Reskilling and Retooling
Employment
Localisation
Innovation-facilitated Development
Brookings-Battelle Clean Economy Industry Categories and Segments (USA)
Alternative futures
Source: RMI (2011)
China and the ‗Green Economy‘
China has the highest public market financing in the clean energy sector
The United States ranks 3rd in total clean energy investment in 2010, behind China and Germany. In 2008, the United States ranked first
China has secured $47.3 billion of asset financing in 2010 for clean energy projects. The U.S. attracted $21 billion in 2010
60% of all clean energy technology IPOs in the world in 2010 were from Chinese companies
According to Ernst and Young, for the first time, China beat the U.S. in terms of its attractiveness for renewable energy investment
China received 20% of total global clean energy investment in 2010, while the U.S. saw 19%. In 2004, China only had 3% of the total, while the U.S. received 20% of investment.7
China attracted $54.4 billion clean energy financing in 2010, a 39% increase over 2009 and equal to the entire amount of clean energy investment worldwide in 2004. Similar financing in the U.S. stagnated last year at $34.4 billion, approximately equal to 2007 levels
China is expected to lead the world in overall number of patents filed in 2011, surpassing the United States and Japan for the first time
China ranks 2nd in estimated number of people engaged in scientific and engineering research and development
China has seen the largest increase of any nation in its innovation score over the last decade, up 19.5 points (compared to a 2.7 point increase in U.S. score)
China is creating 16 national energy research and development centers intended specifically to drive innovation in the clean energy sector
By the end of 2011, national Chinese R&D expenditures are targeted to rise 11% over levels earlier in the year
Eight of ten companies with the largest R&D budgets have established R&D facilities in China, India, or both
There has been a 600% increase in the number of college graduates in science fields in China between 1995 and 2005
Third Way (2011)
Conclusions V
What types of innovation policies are required to strengthen
the low-carbon technological trajectory?
Socio-economic and Political Consensus
Expanding local productive competences
Building local resilience and adaptive capabilities
Enabling Global Frameworks
Global Citizenship
Global Governance
Global Foresight …
Conclusions VI
What types of innovation policies are required to
promote a socially inclusive technological trajectory?
Planning, Regulation, Monitoring, Evaluating and Learning
Facilitate Equality, Redress and Sustainable Development
Outcomes
Support and consolidate public goods in Science and
Technology
Advance anti-Hegemonic Geo-political coalitions and
alliances
Lest we forget to remember …
Illustration: Carlos Latuff (2011)
References Bourguignon, François (2011) A Turning Point in Global Inequality … and Beyond, OECD, Paris.
Dorling, Danny (2009) World Inequality and Resources: Thinking outside the Goldfish Bowl, University of Sheffield.
Engels, Friedrich (1877) Anti-Dühring: Herr Eugen Dühring's Revolution in Science, Progress Publishers, Moscow.
Kharas, Homi (2011) The Emerging Middle Class In Developing Countries, Working Paper No. 285, OECD, Paris.
Kleinknecht, Alfred, Ernest Mandel, and Immanual Wallerstein (1992) New Findings in Long Wave Research, St. Martin‘s Press, New York.
Maharajh, Rasigan (2011) The Green Economy, Poverty and the Global Inequality, Working Paper of the International Workshop on
Biocivilization for the Sustainability of Life and the Planet, FNWG & iBase, Rio de Janeiro.
Mandel, Ernest (1980) The Long Waves of Capitalist Development, University Press, Cambridge.
O‘Hara, Phillip Anthony (2006) Growth and Development in the Global Political Economy: Social structures of accumulation and modes of
regulation, Routledge, Oxon.
Pagano, Ugo (2008) Anticrisis Policies in Knowledge Intensive Economies.
Perez, Carlota (2002) Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages, Edward Elgar, Cheltenham.
Prys, Miriam and Stefan Robel (2011) Hegemony, not Empire, Journal of International Relations and Development 14, pp. 247-279 (April).
RMI (2011) Reinventing Fire: Blueprint for a new Energy Future, Rocky Mountain Institute, Boulder.
Third Way (2011) By the Numbers: China, the U.S. And Clean Energy
UNIDO (2011) Report on world manufacturing production, Quarter II, 2011and expected annual growth rates of MVA for 2011, Geneva.
Wallerstein, Immanuel (2005) After Developmentalism and Globalization, What? In Social Forces 83:3, (March).
Conditions and Basis of Hegemony
Liberal approaches World System Theory Neo-Gramscianism
The basis of hegemony is
material preponderance in at
least one issue-area (military,
economics, culture). Hegemony
also has to be based on a
motivation to lead and an
acknowledgement of this
motivation by others. More
importantly, hegemony is
conceived of as a choice for
specific design of power
relations, not as an automatic
outflow of material prevalence.
Hegemony is understood as a
situation in which one state is
preponderant primarily within
the economic sector, but also in
terms of military capabilities as
it has to win a global war in
order to reach its position in the
first place. The hegemon is
hence seen as primus inter pares
and ‗the material base of such
power lies in the ability of
domestic enterprises to operate
more efficiently than others‘.
Hegemony is based on
‗structural power‘, which implies
the existence of a ‗framework
of thought‘ that universalises the
interests of the hegemon's
dominant class. This structural
power is based on the relative
economic predominance of a
domestic class, and the
emulation of its institutions and
norms by secondary states in the
system, as they perceive them as
legitimate.
Hegemonic Exercise of Power
Liberal approaches World System Theory Neo-Gramscianism
Hegemony implies a specific
way of exercising power that is
closely associated with the
notion of authority. Power
relations are designed
deliberately, and generally
characterised by the ‗strategic
restraint‘ of the powerful state.
Instead of coercion, power is
exercised primarily in an
indirect way through, for
example, international finance,
trade, or socialisation processes.
In this structural approach, the
behaviour and character of the
hegemon remain underspecified.
However, certain typical
behaviours can be deduced
from the theory's normative
focus on the exploitation of the
periphery. There is a high
probability of coercive
behaviour; the potential for
‗frustration‘ among other states
is equally potent.
As the hegemon controls the
institutional and normative
international structure, it is able
to substitute coercion with
indirect uses of power, in
particular among core states, as
these states and their elites to
perceive the current order as
legitimate. Benevolence or
malignity are however not a
question of character but of
calculation, as, in contrast, the
periphery is often the target of
exploitative, coercive sanctions.
Outcomes of Hegemony
Liberal approaches World System Theory Neo-Gramscianism
Liberalism assumes that all
states pursue foreign policy
goals that reflect their diverse
domestic preferences at a given
point in time. Asking for specific,
deterministic constitutive
outcomes of a hegemonic
constellation is hence misguided.
Nevertheless, the preconceived
liberal character of the
hegemon creates the
expectation that it generally
acts in favour of the ‗collective
interest‘.
Hegemony means that a
preponderant state is able to
impose a stable social
distribution of power, which
implies a ‗period of peace‘,
understood as the absence of
war. This is not equivalent to a
status quo from which secondary
states benefit, as exploitative
relations are perpetuated.
Despite temporary stability, this
ultimately leads to war in the
long run.
The presence of a hegemon is
associated with stability and
order. The hegemon creates
institutions and options for
secondary states to participate.
These institutions are reflections
of hegemonic power, and help
to legitimise its norms and rules.
The benefits of this order are
distributed unequally, hence
claims of legitimacy cover up
the factual private good
production to the sole benefit of
the hegemon.
Normative Connotations
Liberal approaches World System Theory Neo-Gramscianism
Liberal assumptions imply a
rather positive connotation of
hegemony, as the hegemon has
to satisfy collective needs in
order to consolidate its primacy.
This conceptualisation of
hegemony favours the USA as
the most ‗competent‘ hegemon
as it is assumed to project its
domestic liberal political system
onto others for the benefit of
all.
The ability of the hegemon to
exercise power mainly depends
on the exploitation of the
periphery. This is both
embedded in its specific
conceptualisation of hegemony
but can also be deduced from
the ontology and normative
framework that identifies world-
system theories as part of a
body of theories that declare
themselves as ‗critical‘.
The empirical consequences of
hegemony — order and
stabilisation — are endowed
with negative connotations as
they are considered unjust. The
study of hegemony is
understood as a means to better
understand the prevailing
exploitative international
structures and to find a strategy
of undermining them in favour
of a more just alternative.
