His approach can help countries on the path to development, say the authors
The authors of a landmark global analysis on the future of humanity urge developing countries to consider China’s model of common prosperity to avoid regional societal collapse and dangerous levels of inequality.
In an exclusive interview with China Daily, Malaysian entrepreneur Chandran Nair and Norwegian academic Jorgen Randers warned that economic systems based on unbridled consumption are driving societies to the brink.
They collaborated with an international team of economists and scientists on a new analysis, described in the recently published book Earth for All: A Survival Guide for Humanity, which charts two scenarios for humanity. The two-year research project involved an analysis of social tension and well-being indices as well as data from a computer model of system dynamics.
In the darkest scenario, called “Too Little, Too Late”, the world goes on as usual, with the same economic policies of the past 40 years. As GDP continues to grow, the rich get richer and the poor fall further behind, creating extreme inequality and growing social tensions within and between countries.
In this scenario, global temperatures reach around 2.5°C above pre-industrial levels by 2100, well above the limits set in the Paris Agreement, with the poorest regions facing some of the most severe conditions. extremes.
The team proposed an alternative model for the future, which they call “The Giant Leap Scenario”, in which societies take unprecedented and immediate action through a series of “interconnected reversals”. According to this model, reforms of the international financial system could lift 3 to 4 billion people out of poverty.
The glaring inequalities could be addressed by increasing gender equality and ensuring that the richest 10% receive no more than 40% of national income, up from 50% currently. In addition, major improvements in nutrition security and the environment could be achieved through transformations in food systems and the transition to clean energy.
Randers, co-author of the 1972 book Limits to Growth, which remains one of the best-selling environmental economics titles of all time, said China’s system of governance is capable of solving poverty “much better than any other system in the world”. “.
“If anyone is going to save the world, it’s going to be the Chinese, and that’s by using a completely different economic model,” he said. “The Chinese have solved the problem of poverty, it is doable.”
Randers refers to a series of economic and social reforms in China that have lifted around 800 million people out of poverty over the past 40 years. He said the two essential ingredients for poverty reduction are a strong and active state and funds.
“How can you find the funds? The easiest way is to tax the rich. But the second, and much preferable, way is the Chinese model,” Randers said.
Randers said the Chinese model is not accepted by Western economists, who prefer “neoclassical macroeconomics that serves the interests of today’s financial elite and is very useless to the rest of the world.”
To escape the perils of the status quo scenario, Randers said nations should consider adopting a universal basic dividend, funded by nationalized resources.
“Take whatever resources you have — oil, fish, data, whatever — and sell them to companies, take the money and give it back to people,” Randers said. “It may sound like a crazy idea, but it has proven to be workable piecemeal at different national levels.”
He gave the examples of the state of Alaska in the United States, which has paid a dividend on oil revenues to all its residents since the 1980s, as well as Norway, which has paid excess fuel revenues fossil fuels to a state pension fund since the 1990s.
Nair, founder of the Global Institute for Tomorrow, a Hong Kong-based independent think tank, said developing countries should reject the modern Western economic model because “it is not sustainable”.
“This is where China can be a leader. When there are difficult times, we can learn from past mistakes and create different economic models and redefine prosperity. This is where the idea of prosperity comes in. Chinese commune,” Nair said.