Yoshinori Hiroi

Kyoto University, Japan

hiroi.yoshinori.5u@kyoto-u.ac.jp

Outline Introduction: Conceptual Backgrounds for

Sustainable Welfare Society

１. Different Dimensions of Sustainability

２. Sustainable Welfare Society: International Comparisons

３. Evolution of the Idea of “Steady-state Economy” and Capitalism

４. Policies for Sustainable Welfare Society

５. Agenda for Realizing Sustainable Welfare Societies in Asia

“Sustainable Welfare Society”

a society where quality of life of individuals and distributional justice are realized in a sustainable manner over a long period of time under the finite natural resources and environments

Integration of ・Issues of Environment: regarding the total amount of wealth ・・・Sustainability ・Issues of Welfare: regarding the distribution of wealth ・・・Equality, Justice

Closely related with the concept of “Steady-state Economy”

Background

Welfare state models in the latter half of the 20th Century presupposed the continuous economic growth, and have been constructed on the assumption that economic growth and increasing income equality are mutually reinforcing.

But currently,

1) as most of the industrialized countries are experiencing chronical economic stagnations owing to the maturation of consumptions

2) more fundamentally, the finite nature of natural resources and environments at the global level are being recognized,

welfare state models combined with the continuous economic growth are put into question.

→necessity of introducing the concept of sustainability and environmental concerns in the discussions of welfare state and social policy

Particularly important in the Asian Context, where economic development, increase of energy consumption, institutionalization of social protection systems and demographic change take place very rapidly in a relatively short period of time.

Rapid Increase of World Population

billion

（source） Donella Meadows et al, Limits to Growth: The 30-Year Update, 2004

Energy Consumption in Asia (1965-2015)

Welfare, Environment and Economy

Issues or Function

Objective

Welfare Distribution of Wealth

Equality, Justice

Environment Total Volume of Wealth

Sustainability

Economy Production of Wealth

Efficiency

Sustainability as a Key Concept

Central concepts in the discourse of Environmental policies since 1980s.

Ex. Proposal of the concept of “Sustainable Development” in “Brundtland report” Our Common Future (1987) by UN Commission

But this concept has broad and different dimensions and should be extended to a broader context including the social policy arena.

Various Dimensions of Sustainability(1) 1) Environmental sustainability under the

conditions of finite natural resources

2) Financial or institutional sustainability of social protection systems

3) Demographic and Inter-Generational Sustainability in the times of aging population and population decrease

Various Dimensions of Sustainability(2)

4) Sustainability of Work or Employment in the age of innovation (ex. human work replaced by AI etc)

5) Sustainability of Local community and Economy (or geographical sustainability)

Current Situations of Japan from the Perspective of Sustainability

Decrease of Food-Sufficiency Ratio in Japan and International Comparison

0

20

40

60

80

100

120

140

160

1961 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

（Source） adapted from Ministry of Agriculture, Forestry and Fishery, Japan

USA

Germany

France

Netherland

UK

Japan

Government Debts in Accumulation (as against GDP): International Comparison

Japan

Italy

USA

France

Germany

UK

Long-term trends of the Japanese population

(Unit: 10,000 )

(Year)

Peaked in December

2004

127,840,000

Aging rate: 19.6%

2030

115,220,000

Aging rate: 31.8%

2050

95,150,000

Aging rate: 39.6%

2100 (Mid-end

forecast)

47,710,000

Aging rate: 40.6%

2100 (High-end

forecast)

64,070,000

2100 (Low-end

forecast)

37,700,000

Meiji

Restoration

(1868)

33,300,000

Kyoho

Reforms

(1716-1745)

31,280,000

Establishment

of Tokugawa

Shogunate

(1603)

12,270,000

Establishment

of Kamakura

Shogunate

(1192)

7,570,000

Establishment

of Muromachi

Shogunate

(1338)

8,180,000

End of

Second

World War

(1945)

71,990,000

(2000)

126,930,000

Sources: Graph prepared by the National and Regional Planning Bureau, Ministry of Land, Infrastructure, Transport and Tourism, based on Population Census Report, Ministry of Internal Affairs and

Communications; Annual Report of Population Estimates, Ministry of Internal Affairs and Communications; Interpolation Estimated Population on Population Census Results in 2000 and 2005, Ministry of

Internal Affairs and Communications; Population Projections for Japan (Estimated in December 2006), National Institute of Population and Social Security Research; and Long-term Chronological

Population Distribution in Japan in 1974, National Land Agency

Trends of the Ratio of People receiving Public Assistance in Japan (%)

(Source) Ministry of Health, Labor and Welfare

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2014

Typical Local Cities in Japan ・・・Hollowing Out of Central Areas

Current Situations of Japan from the Perspective of Sustainability(1)

Critical conditions in all the five dimensions of sustainability

1)Environmental sustainability

2)Financial or institutional sustainability

3)Demographic and Inter-Generational Sustainability

4)Sustainability of Work or Employment

5)Sustainability of Local community and Economy

Current Situations of Japan from the Perspective of Sustainability(2)

Current administration →Strong “Pro-growth” policy orientations

background ・・・lingering memories of “success story” in the high economic growth period, and the cling to the growth model in the times of industrialization

These orientations are likely to lead to disastrous situations, and shifts of policy paradigms from “growth” to “sustainability” are necessary.

Sustainable Welfare Society Index

Australia

Austria

Belgium

Canada

Denmark

Finland

France

Germany

Greece

Ireland

Italy

Japan

Korea

Mexico

Holland

New Zealand

Norway

Spain

Sweden

Switzerland

Turkey

UK

USA

0.2

0.21

0.22

0.23

0.24

0.25

0.26

0.27

0.28

0.29

0.3

0.31

0.32

0.33

0.34

0.35

0.36

0.37

0.38

0.39

0.4

0.41

0.42

0.43

0.44

0.45

0.46

0.47

0.48

0.49

0.5

53 63 73 83

Gin

i Co

effic

ien

t

EPI (Environmental Performance Index)

Small Income Gaps with

High Environmental

Performance (Germany,

Scandinavia, etc.)

Source: Prepared by Hiroi Note: Gini coefficient is for 2011 (OECD data). EPI stands for Environmental

Performance Index, which was established by the Yale Center for Environmental

Law and Policy, to quantify and numerically mark environmental performance of

state policies.

Large Income Gaps with Low

Environmental Performance

(USA, Japan, etc.)

Why Welfare performance and Environmental performance are correlated to some extent?

In a society where the consensus for equality or income redistribution is low, the only policy measure for poverty reductions is economic growth, and thus environmental concerns are left behind and “pro-growth” policy orientations become strong.

Public value or consciousness of solidarity or cooperation, in other words, elements regarding social capital may serve as a basis both for welfare and environment.

Sustainable Welfare Society Index

in Asian Countries: Unclear Relationships

between Welfare and Environment?

0.2

0.25

0.3

0.35

0.4

0.45

0.5

40 45 50 55 60 65 70 75 80 85

Gin

i C

oe

ffic

ien

t

ＥＰＩ

Mongolia

Nepal

Cambodia

（source）Gini coefficient: Human Development Report 2016

EPI: 2016 data

Japan

Malaysia

Philippines

Thailand

China

Indonesia

Bhutan

Vietnam Laos

India

Economic Development and Income Inequality : Inverted U-shaped Curve?

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

0.5

0 10000 20000 30000 40000

Gin

i C

oe

ffic

ien

t

GNI per capita

グラフ タイトル

Malaysia

Thailand

China

Mongolia

Philippines

Cambodia

Nepal

（source）adapted from Human Development Report 2016. GNI per capita=2011PPP$

Japan

Economic Development and EPI(Environmental performance Index)

0

10

20

30

40

50

60

70

80

90

0 10000 20000 30000 40000

Korea

Malaysia Thailand

China

Philippines

Myanmar

Nepal

Bhutan

GNI per capita

EP

I

（source）GNI per capita: Human Development Report 2016, EPI 2016 data

Japan

Sustainable Welfare Society from a broader perspective

Is economy without GDP growth possible? Is it compatible with capitalism?

Historical evolution of the idea of “steady-state economy”

1st Stage: JS Mill’s “Stationary State”(1948)

Economy will reach “Stationary State” because of the finite nature of land

Positive evaluation of the “Stationary State”

Mill’s concept was forgotten as the economy entered into the age of industrialization and UK and other capitalist nations embarked on the colonial management, utilizing the natural resources of the colonies

2nd Stage: “Limits to Growth” by the Club of Rome (1972) ・・・Environmental limitations of Industrialization

3rd stage: Recent discussion of post-growth (or decroissant) , alternative measurement of GDP, and GNH etc.

Three Stages of “Steady-state Economy” Discussions １st stage: JS Mill’s “Stationary State”(1948) ・・・maturation of merchant economy, and the transition to the industrialization

２nd stage: “Limits to Growth” by the Club of Rome (1972) ・・・maturation of industrialization, and the transition to the information／monetary economy and globalization

３rd stage: recent discussion of post-growth (or

decroissant) , alternative measurement of GDP, and GNH etc.

・・・maturation of information／monetary economy and globalization

Evolution of Capitalism and Steady-state Economy

Scale of Economy

Merchant

Economy

Industrialization

Information/Monetary

economy

Steady-state Economy

or Sustainable Welfare

Society?

1st Stage

2nd Stage

3rd and Ultimate

Stage

“Long-term Recession” after the Recovery from the Leeman Shock average growth rate of the industrialized countries:1.6%(2011-15）

先進国

Relations between Life Satisfaction and

GDP per capita

Source: Frey (2005)

Well-

bein

g

Number of samples:

80,556 persons

Per capita real average income based on purchasing power parity (Referenced to US

dollar in 1995) Sources: World Values Survey 1990-1993/1995-1997 (ICPSR 2790) and World

Development. Report 1997

Relations between life satisfaction and income (1990s) Figure

1-4

GNH, GAH, GKH・・・ many local governments in Japan are coming up with their own well-being measurements and local social policy developments

Two Policy Directions for Sustainable Welfare Societies

（１） from Redistribution to “Pre-distribution”

・・・Earlier Intervention at each stage of the lifecourse

(J.Robertson,”EcoTaxation in a Green Society”,

Fitzpatrick and Cahill(2002)）)

（２） Socio-economic system building up from the local community

Evolution of Capitalism and its Revision: redistribution to earlier interventions

Poor Law 1601 Social Insurance 1880s

Keynesian Policy

for Employment

Merchant

Economy

Industrial

Revolution World Economic

Crisis

？

Leeman

Shock etc

Examples of “Pre-distribution”

1) Emphasis on the social policy at the early stage of the lifecourse

2) basic income as an ultimate policy

3) redistribution or socialization of assets or “stock” (housing, land, financial assets)

Social Protection Spending for the Early Stage of the Lifecourse （as against GDP, 2011): International Comparison

（Source） adapted from OECD, Social Expenditure Database

0

2

4

6

8

10

12

Other

Housing

Unemployment

Active Labor Policy

Family

Disability

Trends of Gini Coefficient of Income, Financial Assets and Land in Japan

(Source）Ministry of Internal Affairs and Communications：National Survey of

Consumptions 2014

Income

Financial

Assets

Land

and

Housing

Socio-economic system building up from the local community/economy

Increase of the self-sufficiency of food, renewable energy and social care and the realization of the autonomous local economies

→contributing to the sustainable employment at the local level and social inclusion

Renewable Energy and “Sustainable Zone”

Energy Sufficiency Ratio of Japan is only 4% at the national level, but at local level there are ２１prefectures (among total 47 prefectures ) whose Energy Sufficiency Ratio are over 10% and these figures are increasing (“Sustainable Zone” study by Hidefumi Kurasaka, Chiba University, 2015 version)

１）Oita Prefecture（30.1％）

2) Akita Prefecture（21.8％）

3) Toyama Prefecture（18.8％）

4) Nagano Prefecture（18.2％）

5) Kagoshima Prefecture（17.8％）

Significance of Re-connecting Market Economy to Community and Environment

Environment

（Nature）

Community

Market Economy

Departure

（Capitalism）

Re-connecting

Market

Economy to

Community

and

Environment

Corresponding to the Concept of “Sustainable Welfare Society”

Sustainable Welfare Society as a social model and its relationship with Public Philosophy

Convergence of Capitalism, Socialism and Ecology

Integrations of Liberalism and Communitarianism in the discourse of public philosophy

Perspectives for Sustainable

Welfare Societies in Asia (1)

Rapid economic growth and Increase of Energy consumptions and environmental burdens, together with rapid social transformations in Asian countries

→endangering Environmental and Financial sustainability

On the other hand, Lower fertility rate in many of the east Asian countries are eroding Demographic and Intergenerational sustainability

Trends of Fertility Rates in some East-Asian Countries

Thailand

Korea

Taiwan

Hong Kong

Singapore

Japan

“Global Aging” and Asia as its one of the

Centers

中国,

29%

他のアジ

ア, 29%

他の発

展途上

国, 28%

ＯＥＣＤ

加盟国

（日本を

含む）,

14%

The regional ratio of the increase of the aged citizens (aged

60 years or over) in the world towadrs 2030

(source) World Bank, Averting the Old Age Crisis, 1994

China

29%

Other Asian

countries

29%

OECD countries

(including

Japan)

14%

Other developing

countries

28%

Perspectives for Sustainable Welfare Societies in Asia (2) Common in the very rapid shift from the growth-

oriented economy to lower economic growth and population decrease as well as aging

A lot of difficult agenda, as in the case of Japan, but (hopefully) Asian countries may have traditional value orientations towards “sustainability.”

Transformation of the policy paradigms from Growth-oriented social model to Sustainable Welfare Society model is most significant and fundamental.

Towards Sustainable Asia

When we look at the environmental sustainability, “Our Common Futures” for Asia seem to become more visible than social policies at the national level.

Visions of “Sustainable Welfare Society” and policy integrations from local to national, regional to global

levers are to be explored and pursued, and research collaborations integrating social and environmental policies should be promoted.