1We mean to analyze here to what extent all the dimensions of global sustainability have truly been considered. The discourse – whether theoretical, political or ideological – seems to suggest they have. Yet it is extremely difficult to translate such rhetoric into global policies and strategies guaranteeing sustainability; that is, into a harmonious convergence of the economic, political, social and environmental dimensions of sustainable development.

2One of the most pressing problems is that of sustaining, in each geographical area, the continuity and a certain increase in the creation of annual flows of wealth, which in turn will provide income or rights to gain access to goods and services. As has been suggested in the analyses and empirical evidence provided so far, this is related to the urbanization dynamics and technological change embodied in the economy.

3On the other hand, it can hardly be conceived that current inequalities will be reasonably overcome without important distribution, institutional and productive changes, or if the creation of goods and services declines and also does employment or the capacity to provide jobs. The belief that the problem is only a question of distribution (as Piketty suggests) usually overlooks the basic link across several factors, such as the type of goods and services included in the wealth that is created, or the type of production function (technological and distribution) implied in the productive processes that generate those goods and services. Another neglected aspect is the fact that without the collective ownership of the means of production, what the public sector can generate as investment, employment and income (including subsidies and transfers) is, to some extent, limited by the possibility of political and institutional agreements (balance of power) and by the annual amount of wealth created in each nation and on a global scale. Finally, experiences of real Socialism in the twentieth and twenty-first centuries came across serious problems to comply with production plans when the ownership of the means of production was public, for, ultimately, they had the same problems that productive entrepreneurs had to coordinate tasks and to align incentives and results.

4I do not think it is necessary to pose the controversy again and quote the fluctuations of market reforms in socialist countries. However, in pointing this out, I do not mean to state that the market forces and mechanisms, or even that markets intervened by the State can solve the situation if what was stated above is not clear: that urbanization processes can create annual flows of growing wealth in their initial stages (activities embodied in GDP), and that such flows decline as a logical consequence of the nature of the process, thus making it impossible to sustain the dynamics of the economy. This creates a dual society, the more so when an important part of those flows of annual wealth previously created materialize as a scarcely productive stock of capital. But let us now concentrate on the question of global sustainability.

5One of the most often quoted definitions of sustainable development is the one proposed by the Brundtland Report for the United Nations (1987), which states that it is “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

6Thus conceived, sustainable development would derive from the former concept of development, which implied only economic and material progress. Now the trend is towards a more comprehensive notion that development must be balanced with social well-being and the responsible use of natural resources. In this way, it would reconcile the three main aspects of sustainability: economic, ecological and social. That is, it would imply reaching the economic, political and social alchemy so that society, the economy and the environment come to a balance. Its ultimate goal would be to reach a certain level of material progress without compromising the environment, natural resources or the quality of life of human beings and the other species on the planet in doing so.

7We will then review the approaches to this topic, for this will lead to a better understanding of that lack of balance between society, economy and environment. As will be seen, those approaches emphasize the question of the exhaustible nature of resources and of environmental degradation. Yet the question of the “right of future generations to have jobs and incomes”, certainly a crucial issue, is not clearly considered, for the underlying approach is confusing, to say the least, and is rife with contradictions and paradoxes. This is so particularly because, again, it is assumed that there is no limit to the new things to do, and that they depend on the creativity of each individual and on encounters of buyers and sellers on markets that, at the most, must only correct their failures or be intervened by the State. To put it mildly, this is an obsolete approach, based on a poor theoretical framework that seems to ignore the real dynamics of the process.

8Once this brief critical review is complete, a tentative proposal will be sketched of how global sustainability could be achieved in the long term. This will require global agreements taking into account how the economic world really works, that is, considering what things it is necessary to do, who could do them and how to afford them. In emphasizing this aspect, no doubt I will be questioned as to the central issue regarding the international financial system and its rules. But what I will try to sketch will be, precisely, that even if there were softer financing conditions, without a global strategy to build a sustainable future, more money on the markets would probably only perpetuate unsustainable forms of production and consumption. These, in turn, would not be able to achieve in themselves circuits of wealth creation that will absorb the unemployed labor force and comply with the requirement that the three aspects of sustainability tend to a progressive balance. This may seem irrelevant for countries such as the United States, which nowadays only mean to assert and increase their leadership by making the world go back to the nineteen eighties, but in the long run, this emerging world will imply, even for the United States, serious difficulties to restore stable world markets. Though, anyway, it is really not clear whether this is one of the objective goals of such country – as some sectors of its population seem to perceive.

9The analogy with the return to a long stagnation cycle with de-industrialization in the global south – as was the case in the nineteen-eighties – is explained by the main arguments in this book. The disruption of the balance of power previously existing within the developed world is, in my opinion, related to a fierce competition not to lose the markets. Underlying this phenomenon is the employment crisis in those countries, also related to the impact of China’s competitiveness in the last decades.

10Of course, then, the proposal also implies the need to reform the international financial system and create rules to permit an allocation of resources tending toward the expected sustainability.

Emphasis on the size of the world population

11Since the first works by the Club of Rome1, the approach to sustainability has been biased in favor of two main aspects: the exhaustion of the finite resources of the earth, and the impact on the environment. And it has always been thought that the main cause of these two phenomena is population growth. A little earlier, Paul R. Ehrlich had written his book The Population Bomb (1968), a true literary success at the time. Indeed, it is said that over two million copies were sold in only two years and twelve reprints were made in the following years (Orleans Reed, 2008). Ehrlich’s ecologist extremism led him to recommend cutting off food aid to countries such as India, for he considered those policies falsely humanitarian. He advocated that the uncontrolled growth of the number of people in the world would, in the long term, cause hundreds of millions of families to starve to death, destroy the planet and make life on it impossible.

12One of the publications by the Club of Rome (Meadows, Meadows & Randers, 1992)2 states:

Population growth stops the growth of industrial capital, for it creates a growing demand for schools, hospitals, resources and basic consumptions which divert industrial output from industrial investment […] Poverty would thus perpetuate population growth, keeping people under conditions of no access to education, health care or family planning, of no choice, no way out ahead except having many children, expecting that they will generate incomes or become the family’s labor force. (pp. 37-39)3

13Indeed the analysis carried out by these authors admits the basic fact remarked in our work: the importance of the real physical processes concealed by monetary indicators such as GDP, and the fact that one of the reasons why rich countries become richer is that past growth built in those countries a huge stock of physical, technological and human capital. Yet, no consideration is made regarding the irreproducible nature of most of what has been counted as investment and the effects of this on developing countries. That is, they do not reflect what we have repeated along these pages: that houses, railroads, streets and other capital goods are much more like durable consumer goods with a very long life cycle than an investment able to create new flows of wealth and employment. Thus, their argument casts shadow rather than light on this issue, for it assumes that each country could invest more in industries without explaining in which, how or with what resources in this global world.

14The authors do not admit either that urbanization processes in developing countries (recommended by international bodies such as the World Bank) constitute in themselves the essential markets to sustain industrial growth. A very simple example of this is the fact that poor countries cannot equip their hospitals without importing instruments produced in developed ones. To buy them, they usually need to resort to foreign loans that get incorporated to the public budget, loans that generally become the basis of debt that they will never be able to cancel, and this in turn is another reason, as they point out, for the gap between rich and poor countries. In fact, how could, for instance, a poor country substitute for a computed tomography scanner designed and produced by firms such as General Electric or any other for a world market reaching 3,500 million urban residents?

15Therefore, the real problem is what things these poor countries can produce in a world where the creation and production of high technology, physical and human capital concentrate in the rich north, whereas mass production concentrates both in developed countries and in countries such as China, India, Brazil and others representing economies of scale and of agglomeration, and with abundant, trained and low-cost labor force. No one ignores, in fact, that many developed countries are nowadays concerned about these issues, for they must face competition and create employment if they want to keep their economies and their political and institutional systems sustainable. The question of international competition has no doubt become topical again, which explains the pressure exerted on countries such as Brazil or China, France, or even Germany by the United States.

16In spite of all this, low population growth is also used as an argument to justify why rich nations can allocate more resources on industrial investment, for, as a consequence of their lower population growth rates, they supposedly need less investment in the service sector, such as education and health. When The Population Bomb was written (1992), China, India and Brazil had certainly not yet become such large industrial countries as they are today.

17An unsuspecting reader might obviously be trapped to believe in such a linear argument – and many people do believe for it is true that poor families usually have many children, and some wonder why. But what is not known is that countries such as Bulgaria, Croatia, Ukraine and some others have had population growth rates lower than Germany, and in countries such as Cuba, Uruguay, Greece or Spain this rate has been lower than in the United States. Australia, New Zealand and Canada, in turn, have had population growth rates close to the world average and higher than China or Argentina4. Then, would it not be too simple to keep using the so often repeated argument of high population growth to explain the causes of poverty and wealth? In fact, only 60% of the world population in 2015 was in countries which, between 1950 and 2015, grew by higher rates than the world average of around 1.6% per year. India, Indonesia, Brazil, Mexico belong in this group, in turn accounting for 30% of the population within it. The remaining 40% of the world population concentrates in countries with population growth rates lower than 1.6% per year and with very diverse amounts of wealth, such as the United States, Russia, China, El Salvador, Germany and many others.

18For those needing more empirical evidence, it is worth mentioning that the result of a correlation model between the current human development index (HDI) and population growth rates in each country as recorded between 1950 and 2015 is as displayed in Table 7 below. As can be seen, only in 16% of the cases – out of a set of 180 nations – there is a correlation in line with the arguments presented by Meadows et al. The result is still poorer when the variable to be explained is GDP per capita. In this case, there is no correlation (Table 8).

19The argument of the poverty trap as used by the Club of Rome, according to which more population has led to more food production and, in turn, to a larger number of hungry people, is still today – like in Paul R. Ehrlich’s time – an unacceptable reductionism. It could, in any case, refer to the African reality or to some extreme cases, but in none of them would it be a sufficient or even necessary condition. This does not mean to deny that, in general, poor families tend to have more children and that this pattern might come from a rationale that does not apply nowadays. Or that the present conditions to maintain a large family are such that having many children contributes to lower standards of living than those of smaller families. But hunger conditions may prevail even with strict birth controls. All in all, the Neo-Malthusian argument is too poor to really contribute to sustainability, to the creation of wealth or to solve today’s or any future crisis.

20From the point of view of the material availability of food, data by the Food and Agriculture Organization (FAO) point out that, between 1961 and 2010, the food production index grew more than threefold, for a population that, in the same period, grew around 2.3 times. However, it is also true that the number of undernourished people reached 963 million in 2009 (more than 14% of the world population). Out of those 963 million, 907 live in poor or developing countries: 58% in Asia and the Pacific, 24% in Sub-Saharan Africa, 6% in Latin America and the Caribbean, and 4% in the Near East and North of Africa. This alarming situation has led us further away from achieving the first millennium development goal, the eradication of extreme poverty and hunger.

21A recent analysis of the question of hunger in the world (Bisang & Campi, 2010) has established that the main problems do not come from insufficient food production but from the lack of policies and institutional frameworks meant to correct inequalities across regions, countries and social groups. But here again, the problem is the challenge to create employment opportunities and wealth in a sustainable manner and in all aspects: social, environmental, economic, political.

22The authors also emphasize the fact that if the current life style is extrapolated to a larger number of people, then we will go beyond the limits imposed by the finite nature of natural resources, environmental pollution, and the like. In this respect, the first works by the Club of Rome were strongly refuted, precisely regarding issues such as life styles and development styles, by research carried out in Latin America. Such is the case of the Latin American World Model developed by the Bariloche Foundation in the nineteen seventies (Herrera, 1976), and also research by Silva Michelena (1972) and Varsavsky (1968).

23This is why, in spite of the unacceptable Neo-Malthusian bias, of the wrong assumptions as to the cause of poverty and the underlying weakness of the arguments regarding the theory of economic growth, the questions posed by the authors under study are valid. They state that for a long time, economic and population growth have been considered something positive, but that this appraisal, given the ecological limits and the finite nature of resources, has led many people to see material consumption as something intrinsically negative. In order to escape this false dichotomy, they formulate – as I see it – some of the correct questions: growth of what, for whom, for how long, at what cost, paid by whom.

24The question then is how to turn into a fairer, more sustainable society with the necessary resources. But here again poor arguments suggest that more than growth, we should look at its limits (Meadows et at., 1992, pp. 40-41). True, these limits cannot be ignored. But neither can we overlook the fact that our greatest weakness is that we cannot find growth mechanisms that will permit a convergence based on a different pattern of investments and consumption, in turn compatible with guaranteeing employment or productive work necessary to eradicate extreme poverty and urban marginality. How can the right of future generations to a clean environment and the availability of resources be considered more important than the right of these same generations to have a job?

25Summing up, then, though less despairing than the first works by the Club of Rome, approaches of this kind bear an implicit message that will be repeated in other works produced on the basis of a naïve or malicious environmentalism. It is a message that goes like “the human race is an invasive and harmful species”; “the earth would do better without us”5. And all of this, of course, includes an implicit and definite ideological division between those we supposedly can do without and those who must continue living. No wonder, then, ideologies advocating racial superiority (as they are referred to in the United States) not only continue to exist nowadays but are growing stronger in different ways, together with the emergence of new walls built by the leading and developed nations, who justify themselves by saying they are defending against some kind of barbarism. In Spain, they are called the walls of shame, and they certainly are so, for they reproduce the same totalitarian attitudes of Nazism or Communism.

26The debates on immigration both in the United States and in Europe, as well as growing xenophobia, show the emergence of certain ideologies opposing multiculturalism and have, in turn, meant a change in the interpretation of what western democracies really are. The alleged moral supremacy of the West runs the risk of being reduced to the false identification of democracy and market, and of being discredited by the increase in crime. Besides, urban misery and the different types of addiction affecting large middle class and rich sectors have created formidable masses of financial resources, another one of the aspects generating an excess of savings over investment, together with the corruption of institutions both in rich and poor countries.

Emphasis on greenhouse gas emissions and global warming

27The history of the theories on the impact of human activity on climate is fascinating and in no way new. Towards the end of the Golden Age, there was the idea that the use of aerosol sprays “would produce global cooling” (Peterson, Connolley & Fleck, 2008). At the same time, the first works by the Club of Rome also pointed out that the emission of carbon dioxide (CO2) was associated to global thermal pollution, which was considered only the most immediate environmental threat but could be the most inexorable if we were lucky enough to avoid the rest (for instance, exhaustion of food and other resources as a consequence of overpopulation). In fact, authors such as Meadows et al (1992) mention the question of the world agreement to reduce the use of aerosol sprays and so avoid the ozone layer depletion as a paradigmatic case, for it implied the success of a suitable policy which requires world consensus among industrial leaders, consumers and politicians and that may be implemented by the market.

28As is well known, however, agreements to reduce greenhouse gas (GHG) emissions have not been as successful, for they precisely push countries with the highest emissions, such as the United States, to modify in such a way their power plants and thus reduce specific consumption that industries such as the automotive, coal, oil, among others would be affected and their productivity and competitiveness altered. In fact, it was only between the end of 2014 and August 2015 that the United States and China agreed to be proactive in this respect, setting ambitious reduction goals for 2025-2030 with respect to their 2005 records. Before examining this, however, it seems convenient to go through the history of these ideas.

29The debates on global warming gathered momentum only towards 1986. The first systematic report was, as has been said, the so called Brundtland Report (United Nations, 1987), whereas the first global initiative was the Rio World Summit in 19926. In the intervening years, 1988, to be precise, the Intergovernmental Panel on Climate Change (IPCC) was created7. The purpose of the Panel is to advise governments on climate problems and compile renowned scientific research in periodic assessment reports.

30The first IPCC assessment report was published in 1990, and it supposedly confirmed the scientific data causing concern about climate change. As a consequence of this, the General Assembly of the United Nations decided to create the Framework Convention on Climate Change. Then the IPCC produced four subsequent assessment reports in 1995, 2001, 2007 and 20148.

31The third assessment report (2001) claimed a better understanding of the causes and consequences of global warming and predicted that, by the end of the twenty-first century there would be a global warming of between 1.4 and 5.8 ^oC. That would influence meteorological patterns, water resources, the cycle of seasons, ecosystems, and produce extreme climate episodes.

32The last IPCC report (2014) contains some statements that are worth mentioning. Regarding the recorded climate changes, it states:

Human influence on the climate system is clear, and recent anthropogenic emissions of greenhouse gases are the highest in history. Recent climate changes have had widespread impacts on human and natural systems. (2014, p. 2).

33Then they present empirical evidence of this. They say that between 1850 and 2014, the average temperature of land and ocean surface likely changed by around 0.94 ^oC9.

34Now when recorded variations are inferred in an approximate manner, oscillating magnitudes like those displayed in Table 9 result.

35Thus between 1850 and 1878, the land and ocean surface likely warmed by 0.5 ^oC, but cooled by a similar amount between 1878 and 1915. Between 1915 and 1945, the earth purportedly warmed by about 0.6 ^oC, but cooled in the period 1945-1980, whereas between 1980 and 2014 it warmed again by around 0.8 ^oC. In turn, this global warming would go hand in hand with a huge increase in greenhouse gas emissions. By way of evidence, the IPCC displays visually forceful data in Figure SPM.1 (c) and (d) (Summary for Policy Makers, IPCC, 2014, p. 3). However, they admit that emission information presented for 1850-1970 is limited. Curiously enough, whereas the IPCC presents the highest increase in average temperature between 1980 and 2014, between 1996 and 2014 – a period with more economic activity and use of coal as a consequence of the phenomenon of China as the factory of the world – there seems to have been a “great pause”, which is apparently controversial10.

36The question of temperature measuring, information coming from the different satellites and meteorological stations, the way those data are processed, together with views on the links between human activity and climate change constitute an emblematic case of intertwined economic and political interests, uncertainty about the scientific results and massive spread of such results as a combination of recorded, inferred and modeled data. The emerging message is clear, and it refers to the need to modify our way of generating energy and to accept (or not) the converging global growth. In this respect, there is absolute consistency with the work by the Club of Rome quoted above.

37Another one of the IPCC’s strong statements is that “anthropogenic greenhouse gas emissions have increased since the pre-industrial era, driven largely by economic and population growth, and are now higher than ever” (2014, p. 4). Thus the accumulation of those gases is associated to other human activities as the dominant cause of the global warming recorded since the mid twentieth century.

38Whereas the first part of the statement is undeniable, the question of the dominant cause of climate change is actually half-way in a long continuum of scientific debate very difficult to bring to a close. A report by the United States Environmental Protection Agency (EPA) points out several causes why the average temperature of the land and ocean surface may change. It is stated there, just as in the IPCC report, that the changes recorded particularly along the second half of the twentieth century could not be attributed only to natural causes, such as changes in the Earth’s orbit, volcano eruptions, the amount of solar energy reaching the earth, its reflectiveness, etc.

39In June 2011, however, an American scientific organization11 held a meeting with the purpose of disputing “the claim that global warming is a crisis”. This group of scientists had published a very tough response to the IPCC’s fourth Report (2007), with a very challenging title: Nature, Not Human Activity, Rules the Climate (Singer, 2008). The purpose of this publication was, on the one hand, to refute the scientific weakness of the IPCC’s arguments, and on the other, to oppose the implementation of the so called carbon tax. The president of the organization held that “we’ve won the public opinion debate, and we’ve won the political debate as well, but the scientific debate is a source of enormous frustration” (Herath, 2011). According to this article, and contrary to what the EPA report states, natural forces produce variations in temperature, and these are, then the “dominant cause”.

40On the other hand, when referring to the possible mitigation pathways dependent on the technologies used, the IPCC considers it feasible to stabilize global warming to below 2 ^oC relative to pre-industrial levels. Average temperature prior to the industrial era was not systematically recorded, and it is, then, not easy to infer with some certainty or to establish objectively, which may certainly detract from the purported scientific rigor of statements of this kind.

41On the other hand, a prestigious researcher into this topic, with publications prior to this debate that began in the nineteen nineties, had stated that there were long periods of warmer temperatures than those recorded in 1980. The last such period would have finished some 800 years ago. Likewise, this author considered warmer periods more beneficial for humanity than colder ones (Lamb, 198212).

42Other authors have pointed out causes other than CO2 emissions to explain warmer temperatures in cities, such as the presence of asphalt, concrete, and other materials used in their construction, as well as the use of air conditioning, and the like. The critique relates basically to the difficulty to separate other factors from economic growth and urbanization which autocorrelate with the spatial data of temperature records used by the IPCC (e.g., McKitrick & Nierenberg, 2010).

43The central issue, however, is that population and economic growth appear in IPCC reports – as was the case in the first works by the Club of Rome – as the hard core of the question, and with a bias that has serious economic and technological implications for North-South trade and financial relations as well as for large economies such as the American and Chinese ones. It can be said that the productive paradigm emerging after the introduction of this new world problem was oriented from the beginning to the development of new renewable fuels, new industrial equipment and more efficient appliances, that is, the field of technological innovation led by European countries in general (and Germany in particular).

44In the intervening years, there was the transfer of mass industrial production to developing countries with larger markets comprising trained and low-cost labor force. Thus, as was explained in Chapter 3, the bulk of industrial production was transferred to other developing countries, particularly China, where the use of coal turned it into the country with the largest carbon emissions nowadays. But China is not responsible for the emissions historically recorded along the industrial era; yet, the dominating discourse usually conceals and distorts this fact.

45In this way, the global warming question and attempts to sign agreements for the mandatory reduction of greenhouse gas emissions supposed at first the implementation of mechanisms so that developing countries made the largest efforts to have equipment fueled with renewable sources. Consequently, countries with the largest emissions, such as the United States, had to modify radically their past and future installed capacity, which affected their competitiveness.

46Since renewable fuels were, and still are, more costly, mechanisms to have access to loans by developing countries were implemented so that they could buy such fuels. In general, these funds came to be handled by the Global Environment Facility (GEF). The mechanism implied an exchange market for bonds, so that countries which agreed to emission reduction goals were entitled to bonds from other countries that had started using renewable fuels. In this way, developed countries implementing GHG reduction measures would not be so pushed to do it if they managed to promote other developing countries to do so. In practice, this became a mechanism for the sale and financing of new technologies produced in the most developed countries, thus creating a market in the less developed ones. To better understand the logic behind this issue, it is necessary to refer to the well known Kyoto Protocol13.

47It is usually said that this Protocol was the consequence of the progressive implementation of the Rio Earth Summit. It was initially adopted in December 1997, but it was not enforced until February 2005. At the end of 2009, 187 countries had signed it, though not the United States. However, for it to be enforced it was necessary for developed countries – producing the largest emissions and historically responsible for their accumulation – to adopt mandatory reduction goals.

48The European Union was an especially active agent in its implementation, for at the time it led technological development of renewable fuels and of clean and efficient equipment. Thus it agreed to reduce its average total emissions by 8% along the period 2008-2012 with respect to its 1990 total. However, each country was allotted a different amount according to the different economic and environmental variables under the “load distribution” principle14. The largest reduction goal was for Germany. In North America, the United States wavered, and finally withdrew from the agreement, and so did Canada. Russia only accepted if the European Union took charge of the reconversion of its equipment.

49The eighteenth Conference of the Parties (COP 18) on climate change ratified the second commitment period of the Kyoto Protocol (2013-2020), during which goals were established to be reached by 2020. But this second ratification was not backed by many industrialized countries, such as the United States, Russia and Canada.

50For developing nations, this became an opportunity to have access to loans, but at the same time, its cost was hard to afford. Indeed, use of those technologies implies higher tariffs to be paid by users, industries need to renew their equipment, and consumers have to upgrade their appliances. A way of preventing users from paying higher tariffs is for governments to subsidize energy, thus increasing public debt or else reducing other current and investment costs. In any case, given the trans-nationalization of developing economies, new pressures were introduced for, along the lines of our arguments, the new things to do again became things that people would, mostly, not be able to do; this reduced resources for those things that they could actually do and that could thus improve their standards of living. In other words, the developing world, in need of international financial help to speed up development processes, or at least to manage to attract investment in some sectors in order to provide private employment, was trapped in a game of adherences to a biased discourse promoted by developed nations wishing to expand their own industry.

51At the end of 2014, and regardless of the Kyoto Protocol, the United States and China started dealing with this issue bilaterally. It was agreed that the former would set important reduction goals by 2025 and the latter, by 2030. This drastic change was obviously in the context of the new global geopolitical stage resulting from the leadership that the United States started to regain after the 2009 crisis, the fact that the crisis now affected Europe after the impact on the financial system, and the intention of limiting China, or rather, of redirecting the agreement between both countries, which started after 2001 with its accession to the WTO15. Besides, it guaranteed that neither country would lose the leadership in the creation and production of new output as a way of sustaining economic growth. With this new policy now consolidated, autonomy to generate employment in the other developing countries would probably be reduced, unless the world agenda could be permeated with the new needs of the developing world.

52Going back to the IPCC 2014 Report, the question of global sustainability with a focus on climate change becomes more critical in as much as mitigation costs increase in scenarios of limited availability of technologies (p. 25). The report ends up stating that climate change is a threat to sustainable development. In spite of this, there are many opportunities to face such threat with mitigation and adaptation actions and pursue other social objectives through integrated responses. Such statement deserves a level of high confidence as a consequence of the agreements reached within the IPCC. Successful implementation relies on the use of relevant tools, suitable governance and enhanced capacity to respond. These last issues (tools, governance and capacity to respond) deserve a medium level of confidence for the Panel.

53Thus “climate change exacerbates other threats to social and natural systems, placing additional burdens particularly on the poor”, who are the ones to suffer the worst consequences of any natural disaster, such as floods, landslides, collapse of precarious dwellings, complex situations in the case of heavy rainfall, etc. This is a consequence of inadequate infrastructure and the scarce means that the poor have to improve their habitat.

54On these bases, aligning mitigation and adaptation actions would require particular attention, whereas delaying global mitigation actions might eventually reduce adaptation options. It is said that opportunities to find synergies between mitigation and adaptation may be reduced in the future, particularly if the limits to adaptation are exceeded. Efforts to reach mitigation and adaptation goals would then imply complex interactions between human health, water, energy, land use and biodiversity. There is medium evidence of this, though a high level of agreement among the experts. Policy makers are recommended to consider priority strategies and actions moving towards climate-resilient pathways for sustainable development, while at the same time helping to improve livelihoods (employment income), social and economic well-being and effective environmental management.

55It is also said that, in some cases, economic diversification can be an important element of such strategies. The effectiveness of integrated responses can be enhanced by relevant tools, suitable governance structures and adequate institutional and human capacity. Likewise, integrated responses would be particularly relevant in the field of energy planning and implementation. Such would be the case of the interactions among water, food, energy and biological carbon sequestration (as in the case of reforestation, for instance); and urban planning, which provides substantial opportunities for enhanced resilience, reduced emissions and more sustainable development. About this set of aspects the IPCC states that there is medium confidence.

56Summing up, then, the IPCC’s fifth Report includes a wider range of actions within its recommendations, but its harsh statements are still biased in favor of the issue of global warming and the urgent need to reduce emissions. In this sense, the Report is closely related to the 1992 research by the Club of Rome, particularly because of its emphasis on “the environmental limits to growth”, and also because it is slightly more diverse in its approach to sustainable development. Yet, emphasis on the need to create employment income appears only as a desirable by-product, which would be the consequence of two other factors: in particular, the way of generating energy and reducing emissions, and actions for adaptation to climate change (IPCC, 2014, p. 31).

57Now the media and political discourse have adopted this message. True, some scientists still have some level of reasonable doubt about climate change being so much related to human activity and emissions. But the fact is that most of the global scientific community comprising different fields of knowledge has ended up by adhering to this current mainstream discourse with a high level of conviction.

58At this point, an interesting proposal integrating the different topics dealt with in this work should focus on ways of achieving a global strategy able to generate the necessary flows of wealth and its distribution in order to ensure the right of future generations to have employment and remunerated jobs. This implies, on the one hand, solving the question of who will pay for this, and on the other, preventing this global strategy from becoming just another stage in the creation of markets for products designed and developed by the large northern economies or large countries such as China. This would then be a global proposal stemming from the reality of many diverse economies comprising most of the nations with intermediate to low incomes per capita.

59In order to conclude this section, it is worth summarizing the proposals for managing the risks of climate change as presented in the IPCC’s last report. In the field of human development, the suggestions comprise improving access to education, nutrition, health, energy, safe housing and settlements, and social support structures; reducing gender inequality and other forms of marginalization. The rest of the items are closely related to this. Thus in the case of poverty alleviation, the following aspects should be improved: access to and control of local resources, land tenure, disaster risk reduction, social safety nets, social protection and insurance schemes.

60Regarding livelihood security, the proposals have to do with income, asset and livelihood diversification; improved infrastructure; access to technology and participatory decision-making; increased decision-making power; changed cropping, livestock and aquaculture practices; reliance on social networks.

61Disaster risk management should take into account aspects such as early warning systems; hazard and vulnerability mapping; diversification of water resources; improved drainage; flood and cyclone shelters; building codes and practices; storm and wastewater management; improved transport and road infrastructure.

62In the case of ecosystem management, aspects to be considered have to do with maintaining wetlands and urban green spaces; coastal afforestation; watershed and reservoir management; reduction of other stressors on ecosystems and of habitat fragmentation; maintenance of genetic diversity; manipulation of disturbance regimes; community-based natural resource management.

63The field of land-use planning should consider provisioning of adequate housing, infrastructure and services; managing development in flood prone and other high risk areas; urban planning and upgrading programs; land zoning laws; easements; protected areas.

64Next the Report considers issues related to the physical/structural aspect. Several proposals are put forward. To begin with, engineered and built environment options, which comprise sea walls and coastal protection structures; flood levees; water storage; improved drainage; flood and cyclone shelters; building codes and practices; storm and wastewater management; improved transport and road infrastructure; floating houses; power plant and electricity grid adjustments. Technical options have to do with new crop and animal varieties; indigenous, traditional and local knowledge, technologies and methods; efficient irrigation; water-saving technologies; desalinization; conservation agriculture; food storage and preservation facilities; hazard and vulnerability mapping and monitoring; early warning systems; building insulation; mechanical and passive cooling; technology development, transfer and diffusion. Among the ecosystem-based options are ecological restoration; soil conservation; afforestation and reforestation; mangrove conservation and replanting; green infrastructure (e.g., shade trees, green roofs); control of overfishing; fisheries co-management; assisted species migration and dispersal; ecological corridors; seed banks, gene banks and other ex situ conservation; community-based natural resource management. Finally, proposals related to services include social safety nets and social protection; food banks and distribution of food surplus; municipal services including water and sanitation; vaccination programs; essential public health services; enhanced emergency medical services.

65Next come proposals related to the institutional aspect. Three items are considered. In the first place, economic options, which comprise financial incentives; insurance; catastrophe bonds; payments for ecosystem services; pricing water to encourage universal provision and careful use; microfinance; disaster contingency funds; cash transfers; public-private partnerships. Next, laws and regulations related to land zoning laws; building standards and practices; easements; water regulations and agreements; laws to support disaster risk reduction; laws to encourage insurance purchasing; defined property rights and land tenure security; protected areas; fishing quotas; patent pools and technology transfer. Finally, national and government policies, which comprise national and regional adaptation plans including mainstreaming; sub-national and local adaptation plans; economic diversification; urban upgrading programs; municipal water management programs; disaster planning and preparedness; integrated water resource management; integrated coastal zone management; ecosystem-based management; community-based adaptation.

66Regarding the social aspect, again three main types of option are considered. Educational options include awareness raising and integrating into education; gender equity in education; extension services; sharing indigenous, traditional and local knowledge; participatory action research and social learning; knowledge-sharing and learning platforms. Informational options have to do with hazard and vulnerability mapping; early warning and response systems; systematic monitoring and remote sensing; climate services; use of indigenous climate observations; participatory scenario development; integrated assessments. And behavioral options comprise household preparation and evacuation planning; migration; soil and water conservation; storm drain clearance; livelihood diversification; changed cropping, livestock and aquaculture practices; reliance on social networks.

67The last set of proposals presented by the Report has to do with three spheres of change. On the one hand, the practical aspect, that is, social and technical innovations, behavioral shifts, or institutional and managerial changes that produce substantial shifts in outcomes. On the other, political, social, cultural and ecological decisions and actions which should be consistent with reducing vulnerability and risk, and supporting adaptation, mitigation and sustainable development. And finally, the personal sphere, related to individual and collective assumptions, beliefs, values and worldviews influencing climate-change responses.

68It should be noted that this set of integrated proposals taken from the IPCC Report (2014, p. 27), though still quite generic, is in itself a wide agenda of “new things to do”, along the lines of what we suggest in this work. Depending on how these actions are approached, from the technological point of view, many of them are even probably compatible with the things that unemployed people can actually do.

69Yet, without establishing priorities and defining ways of financing them and determining who will pay for them, it is just a list of new activities rather than a promotion of changes in production and consumption styles. Since it is related in an integrated way only to the central issue of climate change, the problem cannot be approached in a more comprehensive way.

70An important objection is that many of these actions and policies depend on the availability of public money, for they are not private goods that can be picked on the market. That technological production concentrates in the developed countries and that business people keep claiming for an increase in competitiveness by means of tax reductions do not appear as explicit problems. In this way, though integrated and reasonable, both discourse and proposals still require completion. We will then examine in the following section some approaches to the question of global conservation of resources, for they deserve an analysis before going into the sustainable re-urbanization proposal.

Sustainable development from the conservationist perspective

71Towards the end of the nineteen seventies, work started to emerge on the question of alternative development around the world. This new approach was no longer a response to the work by the Club of Rome, but the natural outcome of a debate stemming from the first observations that development promises – after the end of the Golden Age – belonged to a radically different world and were undergoing a crisis. I examined some of these proposals in the mid nineteen eighties (Kozulj, 1986) in a first essay aiming to analyze development promises and those from different economic approaches and schools of thought in the face of results that were already evident at the time.

72Some other work delved into highly relevant issues, suggesting, for instance, the design of products with longer life cycles as one of the key aspects of a society willing to preserve the finite resources of a finite planet (Valaskakis et al., 1979). The emphasis was on a type of design that, without stopping technological progress, could anyway be totally or partially recyclable, whose repair service could employ part of the labor force, and which was less energy and materials intensive. A good idea that never got implemented.

73On the other hand, the concept of environmental tax (Ecotax), or tax on environmental externalities, was introduced as a way of incorporating to the costs of the products both the cost of the progressive exhaustion of the stock of non-renewable natural resources, and the growing production of rubbish and waste. Regarding this latter aspect, the authors suggested creating the recycling industry. These general concepts materialized between two and four decades later, though in a context that was radically different from that in which it was conceived, now coexisting with the search for more growth (e.g., green growth). It thus became a response to unemployment, for it provided work, albeit informally, for scarcely qualified human resources living in the poorest urban areas, creating new value chains. Also the Ecotax gave rise to the discussion, still in progress, about the carbon tax and the payment for environmental services.

74Although Valaskakis’ work approaches the question of consumerism, of the need to reduce it as a central issue in any post-industrial society – a kind of ascetic approach, very much like Schumacher’s (2011 [1973])16 –, it will be seen that it was, ultimately, along the same lines as the works by the Club of Rome. It is, then, an explicit proposal which is suitable for countries in the developed north, particularly the United States and Canada, and it is also explicitly admitted that it would “regrettably not be accepted by Third World countries”, dazzled by the idea of reaching the material splendor of developed societies (Valaskakis et al., 1979, pp. 241-269).

75The idea is that, even if the important decisions related to the structure of supply and regulations are normally made by private or state-run corporations, consumption decisions made by the individuals are the ones that really matter. If people decided to live more simply in material terms, turn to creative leisure, value nature and the environment, they could enjoy technological advance, and at the same time stop the uncontrolled growth that could lead to the end of the planet. Product units should be smaller and use suitable technologies, and society should adopt a life style following a new rational philosophy. The authors envisage the large cities in developed countries as resembling large Buddhist temples, whereas Calcutta might follow the steps of an industrial city. The State should not intervene, for all of this would result from a strong change in the structure of values in a society. This would be a rational step towards being able to do more with less, for the industrial society would have already provided for – and would keep doing so – labor force-saving technologies. In turn, Third World countries would have the chance not to repeat the mistakes of industrialization, and could cater for their basic needs at a basic level using suitable technologies. Thus, many of the arguments and views in the book may be considered a continuity of the works by the Club of Rome. In fact, its introduction was written by Alexander King, one of the Club’s members and co-founders.

76The weakest – even cruel – point of the proposal is its explicit rejection of the goal related to the creation of employment, which also includes a fierce critique of Keynes’s approach. For the authors, emphasis on this aspect could be justified in the years of the Great Depression, but not in 1978, when policies aiming to create full employment would only cause inflation, waste, more consumerism and inefficiencies and distortions in the allocation of resources. The critique extends to the governments of underdeveloped countries using labor force-intensive techniques in the construction of infrastructure, thus reproducing irrationally the arguments of the Luddites17.

77The proposal is irrefutable when the authors briefly compare scenarios and account for the fact that this new way of life is for countries in the post-industrial stage, whereas if the rest of the world decided not to stop growth, the planet would be destroyed. Now concern for the growing production of waste as a consequence of marketing and packaging techniques used for mass consumption products, but lack of a similar concern for the amount of waste produced in terms of unemployed human capital18 is coherent with a kind of fundamentalism deriving from the ideology of racial supremacy. This, as has been said, considers that Planet Earth would be better off without us, human beings, and with a new superior race, who would implicitly be “the carers of the Earth”, well-nourished beings with access to the latest technologies, good education, health care and nature. The rest would be discarded or else frozen in time so as not to make the same mistakes they made, for the planet would not resist going through another industrial process. The explanation of how to extend those people’s life expectancy is neither implicit nor explicit: it is simply ignored. Heartless though it might sound, Valaskakis’ book really says this without raising any ethical objections.

78However, the most curious aspect is that this point of view was adopted by both progressive groups in developed countries and the new progressivism which emerged among the middle class in many developing nations. In some cases, this was a consequence of people’s anti-capitalist rage, in others, of the cultural contact with “environmentalism”, and in others of a sincere support of positive values which, de-contextualized, become naïve beliefs, based on a relatively shallow knowledge of the set of interrelated variables making up the real socio-economic, environmental, cultural and political system. A perfect trap, still highly influential.

79As has already been explained, economic growth changed regarding the product composition, with a different equilibrium between labor-intensive and technology- and capital-intensive activities. At the same time, no new activities were created to absorb the surplus of labor supply, or to alleviate structural unemployment and more uncertain conditions of access to regular and sufficient incomes to support growing standards of living. As a consequence, labor force surplus grew in many developing countries, as did structural marginality both in urban and rural areas. When this structural unemployment took place while new generations of rural-urban migrants grew up, those affected underwent two disadvantages: they were the children of a scarcely educated generation, and they suffered their parents’ labor and economic scarcity in their own homes. No doubt, this was a highly unfavorable context to grow to be successful, to incorporate habits, abilities, culture or labor discipline.

80Alongside all this, the perception of inequality in an urban context is totally different from that in a rural one, the more so when democracy supposes the idea of equal opportunities, of individual achievement (meritocracy). In turn, consumerism leads to the desire to have things in order to “be someone” and to belong. Without job opportunities, this is not feasible. And all of this reinforces a certain frustration regarding the value of democracies.

81This is why the conservationist critique regarding job creation as a political vice could never be considered “progressive” without assuming that the discarded human beings are also an undesirable waste of the industrial society, though they might not say it so ruthlessly. Particularly when, in order to justify such critique, they propose ridiculous examples such as comparing the building of the pyramids (typical of Pharaonic and proslavery power structures) to the building of Olympic stadiums as an opportunity to employ labor force, or they ridicule Keynes’s recommendations to generate unproductive employment so that the aggregate demand does not fall.

82But whereas the main concern has been how to recycle rubbish and residual waste in order to reach sustainability, the problem of how to recycle labor force that was formerly required and is now no longer so seems to be absent from all agendas. There is one curious exception, though: the recycling industry employs part of that discarded labor force, if for nothing else, in order to provide people with a minimum income, or at least with the right to eat the leftovers of the opulent society.

83Even at the risk of sounding repetitive, I insist that quite robust evidence has been presented that in developing countries, most of the gross fixed capital formation was devoted to building houses, shopping centers, streets, service infrastructure, industrial facilities, and the like, that is, cities and connectivity among them as the central aspects of modernization. Once the stage in which the growing demand for scarcely qualified labor related to those activities was over, the new trade and industrial activities required in those growing urban contexts had certain peculiar characteristics. For instance, many activities underwent (and still do) fast technological changes and labor-saving processes. Also, the most developed countries managed to set up transnational corporations, whose expansion normally displaced local or national companies born in the import substitution stages (particularly when the threat of recession and unemployment in the north became evident). And the search for political and social feasibility under unemployment and poverty conditions led developing countries to a clear dependence on getting into debt that turned out to be unpayable.

84Unlike the progressive individuals in developed countries – probably satisfied with a certain material standard of living and willing to a return to nature though with all the advantages of the twenty-first century –, people in the developing countries still want to emulate the consumerism of the first world, even if they cannot fulfill very basic needs, such as food, clothing, housing and health. Education may not be perceived as a pathway to social improvement by too large groups of children and youth who only see in it another source of frustration and an almost sure source of failure. And they cannot pretend a return to nature, for the land they possess is already undergoing exploitation-intensive methods and each bit of fertile land is too costly.

85Finally, how honest and sincere are these conservationist militants when, while advocating the need to generate a change from the individual, they normally use costly vehicles to drive to their farms, next-generation information and communications technologies, upmarket sports clothes and low-cost flights? These sons of opulence have managed to spread a political and ideological proposal, and at the same time enjoy a synthesis of the best of both worlds, supposing that this can be extended to the rest of the individuals in their own countries. What they do not take into account is that even in the United States, Canada or the large European nations, most people are still immersed in consumerism and spreading it globally.

86It should be understood that all this critique does not mean to deny the environmental problem, or the exhaustion of natural resources, or to praise the goodness of capitalism and consumerism. On the contrary, it means to show the inconsistency of those proposals and their link to the spread of NGOs, the weakening of the State, the decadence of ideas on general welfare and a growing individualism, strongly present both in explanatory models of the economy and in supposedly alternative proposals which never explain their institutional framework, the way of approaching certain issues regarding land tenure, the limits on certain dangerous initiatives, and other related issues.

87On the other hand, views minimizing the link between production and employment overlook the fact that precisely in order to maintain the employment rate, developed countries used two main mechanisms. One was meant to pre-finance consumption as a driver of growth once the natural expansion of the 1945-1975 stage (that of Fordism) became exhausted (that is, they gave loans for consumption rather than for investment). The other implied the constant introduction of new products with shorter life cycles that they now condemn (and whose likely consequences on the distribution of income between capital, labor and taxes would tend to limit redistribution policies).

88These seed ideas emerged only a few decades ago, but are already spoiled and too old. We will look at a more updated view of this issue in the next Section.

Sustainable development with an emphasis on industrialization and employment

89A very different approach, and practically the only one at the global level considering the importance of the creation of jobs, comes from other United Nations bodies, such as the International Labour Organization (ILO) and the United Nations Conference on Trade and Development (UNCTAD) (Salazar-Xirinachs, Nübler & Kozul-Wright, 2014). The approach is really interesting as it is one of the few recent studies into the theory, history and practice of industrial policies, productive transformation and employment from an integrated perspective. It is also very realistic regarding the fact that not all countries can converge so easily without designing and implementing active policies with strong state intervention. This also involves dealing with macroeconomic issues and promoting all the necessary discussions on the question.

90The authors start by revising the stages characterizing industrial development in many countries regarding several aspects: generalized policies of import substitution industrialization (ISI), and the reversion of such policies at the end of the nineteen-seventies; the emergence of de-industrialization policies in the nineteen-eighties and nineties, the neoclassical fervor of the nineteen-nineties. Also, the generalized implementation of policies based on the promotion of R&D, together with the search for the international division of labor only induced by stable macroeconomic policy schemes and competitive advantages to achieve growth based on imports of final goods. Other aspects have to do with the peculiar re-industrialization stage between 2003 and 2007, and the impact of the 2008-2009 crisis on such “short re-industrialization cycle” and on the trends in industrial policies.

91After that, the authors describe case-studies emphasizing aspects such as the failure of subsidies and protectionist policies as generic measures, and the challenge of the new industrial policies in a world dominated by large global value chains, vertically integrated but with territorially delocalized activities. They also focus on the growing importance of designing industrial policies suitably adapted to each case in particular, after typifying several of them.

92Thus, the authors say that no country has managed to reduce rural poverty and achieve the level of wealth of post-industrial societies without clear definitions and objectives as to how to modify their productive structure. Likewise they consider that most of the developing world is still searching for responses to achieve those structural transformations, a very topical issue after the 2008-2009 crisis. And this is particularly true of the emerging economies. In the Introduction, the authors state:

Their efforts to upgrade and diversify [productive activity] take place in an interdependent world economy where earlier industrializers have already accumulated both enabling capabilities (individual and enterprise level know-how and skills, along with collective knowledge and sources of creativity) and productive capacities (embodied in production factors and physical and technological infrastructure) that give their producers significant cost and productivity advantages and equip them to push out the technological frontier through research and innovation. (ILO, 2014, pp. 1-2)

93The authors consider that this in turn generates opportunities for developing countries, though the crucial question is how to speed up the “catching-up” processes as a consequence of both the need to strengthen capacities and the difficulties to maintain processes of uninterrupted investment. This, in turn, requires active policies providing targeted incentives and coordination in a context in which many of the chains with the highest value added and sectors characterizing successful structural transformations are today more capital-intensive than their equivalents were in the past.

94In turn, the document sees this context worsened by a more intense global competitiveness, only outstripped by increases in productivity. The conclusion is, thus, that “mobilizing the financial resources to undertake the investments in physical and human capital and in infrastructure […] continues to be a major policy challenge in many countries”. And it admits that the presence of surplus or underemployed labor in most developing economies poses the particular challenge of how to achieve productivity growth and net job creation simultaneously, so that the chosen growth path can be both inclusive and sustainable.

95Many countries are known to have found the solution to this problem by employing surplus labor in labor-intense activities meant to manufacture export products. But of course, this cannot be replicated by large or even intermediate-size economies. What some countries have done in this respect is attract foreign investment to use it in some specific activity for which they might have competitive advantages.

96According to the authors, the recent rapprochement comes from the ideological breach caused by the 2008-2009 crisis together with a less dominant influence of neoclassical thinking, which was so strong along the Golden Age. All the economic literature on growth, structural changes, institutional and innovation economics from an evolutionary perspective has produced a wealth of new research on productive transformation, catching-up and diversification of industrial strategies, which has used a variety of analytical approaches and methodologies meant to highlight different dimensions of the catching-up process and its challenges. And this, in turn, has widened the scope for the formulation of industrial policies.

97Developing countries have failed to translate economic growth into the creation of jobs, economic development, the reduction of poverty and the improvement of standards of living. This has contributed to the emergence of a sort of new thought influencing the formulation of industrial policies and strategies or the promotion of several proactive development goals. Again, research into this field comes from institutions belonging to the United Nations system and influenced by the OECD viewpoint19.

98In general, controversies on the different pathways to industrialization have focused on several approaches. One of them is that of the role of exports and of industrial promotion policies, which have been both successful and entirely ineffective along their implementation. This turned out to be the most controversial field as a consequence of the impact of subsidies and transfers to maintain those industries if they failed to achieve competitiveness.

99Almost all the approaches have emphasized the importance of tools such as the proper handling of the exchange rate and counter-cyclical policies (predominance of the macroeconomic context), all of which is related to what was said above. This approach was particularly present in Latin American countries, where, after the stage of import substitution industrialization (ISI), changes in world economy led to their going back to an economic dependence on raw materials, which seriously impacted on employment rates and quality. In these cases, as in many others in some developing countries, the possibility of extracting rent from natural resources has been sometimes beneficial and sometimes disadvantageous for industrialization processes. But they have not been able to establish an industrial basis free from the fluctuations of macroeconomic impacts coming from the changes in those rents and the variation in international prices of commodities. Somehow, though this has impacted differently across countries, it has not contributed to strengthening entrepreneurial and political forces consistent with industrializing projects.

100The new recipes coming from bodies more related to the World Bank standpoint, and no longer limited to structural adjustments and handling of macroeconomics, have used the contributions of the rich and diverse trends in evolutionary economics, in an attempt to understand the role of successful environments to speed up catching-up processes. Figures 42 and 43 below summarize these concepts.

Figure 42. The concept of “catching-up”

Figure 43. The concept of collective learning for productive transformation

101Here the emphasis is on the way to create virtuous circles of collective learning, which entails an improvement on the quality of institutions, culture, formal education and scientific knowledge. This would increase capabilities and promote their use on a certain amount of productive resources to achieve productive diversification and permanent improvements on employment rates and quality.

102It is undeniable that efforts are needed to improve learning processes and institutional quality in order to achieve a better insertion in the global productive system, even more so when starting points across nations – and across social groups within them – are so different. All of this certainly requires financial efforts that the states cannot afford by themselves.

103This leads to another aspect: that of the rules that financial institutions impose to grant loans. This may be a real means to strengthen capacities and capabilities, or else a customized training so that developing countries will buy technology and equipment produced in developed ones. What we have been emphasizing so far here about the change in the production functions of GDP components alongside the different urbanization stages, points to the fact that the different initial capabilities and the ever widening gap in this respect make it very difficult for present collective learning approaches to tend to greater equality. Indeed, scientific and technical education is more easily procurable by the more favored social groups in terms of previous processes of wealth accumulation. Besides, inequality tends to grow in the absence of policies focusing on short and relatively simple labor training. As has been said, technological change is faster than the formation and re-adaptation of human capital. Precisely, countries that have undergone de-industrialization, have also lost capabilities acquired along their own productive system.

104On the other hand, changes in world economy – as described in Chapter 3 – are directly related to the economic changes deriving from the expansion of global value chains, which some authors, such as Milberg, Xiao Jiang and Gereffi, call the era of vertically specialized industrialization (2014). This new international division of labor implies many aspects for industrialization in terms of job creation and destruction, the formation of human capital, creativity, use of productive resources, active institutions and policies. One such aspect has strong implications on macroeconomics, development and the feasibility of sustainable growth and proper employment levels, because under this new approach, industrial export products in turn comprise a large amount of imports.

105This again implies a delicate and crucial situation for foreign exchange policies and relations across governments and transnational companies, and imposes new challenges for developing nations to find insertion niches in the world system. Many of these nations that managed to re-industrialize after the 2003-2007 virtuous cycle did so because, in turn, prices of primary exports generated surpluses that financed the expansion of the aggregate demand, which comprises both industrial output and services. If the import content of this industrial output is high – and mainly devoted to the domestic markets in these countries – the limit to expansion will come from the amount of foreign exchange that each country manages to obtain from its international trade, basically through its primary exports, unless it exports a large amount of industrial output.

106It has been said that this industrialization model includes the so called BRICS bloc, that is, Brazil, Russia, India, China and South Africa. Within it, China and India, and to a lesser extent the rest, have in turn led to an industrialization process which has been a driver of growth of the world economy because of its impact on both the demand for capital goods produced in the richest countries and the demand for raw materials and food. But once this virtuous cycle becomes exhausted, the sustainability of industrial growth and employment again finds itself trapped within the import substitution industrialization model, though in a radically different context.

107The implementation of this new industrial model requires that processes of industrial expansion, sophistication and upgrading be produced in global and vertically integrated value chains, even when the search for a new model of import substitution industrialization might come across the same obstacles it did in the past: lack of economies of scale, difficulty to solve technological and productive questions, loss of productivity and, therefore, more difficulty to achieve better standards of living. This could be solved by deciding to implement closer economies, focusing only on the fulfillment of basic needs, but this is very complex in the era of global communications, the spread of new and sophisticated technologies and the fact that large masses of people want to have access to those goods and services.

108The new model supposes, then, according to the authors under analysis, the end of the era of growth based on final goods export-oriented industrialization, which was the pattern after the end of the Golden Age, and proposed as a universal recipe by the bodies belonging to the so called Washington Consensus. At the time, this was the consequence of the rise of some Asian south-eastern countries in the nineteen eighties, and continued after that with the rise of the BRICS bloc, somehow until the 2008 crisis. In the meantime, the model migrated progressively, as of 1990, towards one of specialization in global value chains.

109This change would imply moving towards the field of industrial organization rather than towards that of macroeconomic and foreign trade policies. Thus the quandary of developing countries would no longer center around protection or free trade, but around the relation between foreign firms and domestic value added chains as a way of achieving industrial progress through the creation of more specialized value added within global value chains. The role of the State is much more complex in this new order of things than it was along the import substitution industrialization stage, or along that of the growth model promoting exports by means of the creation of competitive contexts. Now the State must attract local investment flows by transnational firms so as to conquer and dispute the vast markets of consumer goods. The problem is how to dispute portions of global value chains in contexts in which, together with the G8 countries, also the BRICS bloc and a large number of developing nations want to complete the catching-up process.

110From this perspective, better industrial competitiveness – and consequently job creation – will not come from attempts to reach the vertical integration of activities in one particular industry, or in several of them, whether the country in question is developed or not. Furthermore, granting subsidies to achieve such vertical integration would be highly inefficient. And protectionist measures – typical of the initial stages of any industrial activity – would end up working as barriers, for they would hold back the imports necessary to achieve higher levels of industrial exports or even the products needed to fulfill the needs of the domestic market.

111Though there are no specific recipes, the new industrial policies should be progressively more specific and adapted to the context.

112The innovative side of this process of sectoral vertical integration would no longer be the role of transnational companies (TNCs). The new emphasis should be on how to boost local companies in developing countries so that they can prosper as suppliers of some parts in this large-scale production and intermediation process. According to the authors, this industrialization model would no longer be based on the need to attract TNCs, as was the case in previous final goods export-oriented stages, but rather on how to supply commodities with higher value added in those value chains. These conclusions have to do with what has happened over the last twenty years with global value chains, and also with the consumer goods markets, institutional and global governance changes.

113This approach, however, does not even mention the question of environmental sustainability, or the likely exhaustion of natural resources, or other issues dealt with in this book regarding changes in industrial policies alongside the different stages of the urbanization process. Therefore, fine-grained recommendations regarding industrial policies to create jobs might be incompletely understood. This entails the danger of an even greater confusion when it comes to policies suggested by those international institutions.

114Before passing on to the next section, it is important to provide some empirical evidence about the links between, on the one hand, the level of sophistication of exports and indicators such as the Human Development Index (HDI) and GDP per capita, and on the other, the level of sophistication that exports have achieved, and the relative efforts that the countries have made in terms of R&D spending with respect to their level of wealth. This analysis will show, at least to some extent, the diversity of the pathways followed by different nations and their success in terms of results, as well as the asymmetries between developed nations and the rest of the world, which imply greater difficulty to achieve reasonable convergence.

115Firstly, the correlation between the level of export sophistication (EXPY) and variables such as the HDI and GDP per capita is significant and it would account for between 58 and 53% of the cases with data for 153 countries (cf. Tables 10 and 11 respectively). The formulated model is very simple, and is expressed as follows:

hdi_2013 = @coef(1) * expy_index + @coef(2)
with values equaling:
@coef(1) = 0,0049930
and
@coef(2) = 0,4628219
with a standard error of 0.1002578 (points of HDI 2013).

116The statistical parameters of Table 10 below show that the role of export sophistication correlates positively with the HDI in 58% of cases. However, it is interesting to observe that there is a certain tautology here, rather than clear causality. In general, developed countries and those with long-standing industrialization reveal high indicators in both variables, whereas poorer less industrialized countries show inverse values in both variables. But this is not so in all cases, which leads to a better understanding of the diversity of existing situations.

117Something similar occurs if, instead of the HDI, the correlation between EXPY and GDP per capita is considered, where the model is:

gdp_per_cap_2013 = @coef(1) * expy_index + @coef(2)
with values equaling:
@coef(1) = 451.97403
and
@coef(2) = -5090.3279
where the standard deviation is 10012.7 (dollars per capita).

118The analysis of the residuals of both models, however, reveals what was stated above regarding the expected symmetries between the levels of export sophistication and of GDP. That is, the most developed countries reveal higher values in both indicators, and poorer countries reveal lower values. Yet there are interesting results when analyzing the deviations from the model with respect to their statistical predictions.

119In both models, the standard deviation is very high. The HDI is close to 0.10, with minimum and maximum values ranging between 0.34 and 0.94. GDP is 10,000 dollars per capita, with minimum and maximum values ranging between 700 dollars per capita and a little over 70,000 respectively.

120The question is, therefore, to what extent the search for a higher EXPY is a safe way to improve well-being and wealth indicators (such as the HDI and GDP per capita) based on empirical evidence and what such evidence reveals regarding the different cases. So as to try to answer this question, it is convenient to start by analyzing the data ordered by HDI, GDP per capita and their corresponding EXPY, as shown in the Figure 44 below.

Figure 44. HDI, GDP per capita and EXPY for 153 countries

121As has been said, developed countries show high levels of export sophistication, though there are important differences across cases such as Switzerland, Japan, Norway and the United States, to mention only some of them. But it is more interesting to note that countries such as Mozambique, the Philippines, Ukraine and others are not well positioned in terms of HDI and GPD per capita despite the fact that their EXPY level is close to that of developed countries. The role of the wealth achieved through exports of resources such as minerals or hydrocarbons, or through financial capital havens may place countries such as Norway, Saudi Arabia, Chile and Panama with low or very moderate EXPYs at better well-being and wealth levels than others such as Ireland, Hungary, Mexico, China, India and Jordan. This might sound patently obvious, but it is relevant to the discussion underway.

122Ordering the values of the residuals in both correlation models from lowest to highest regarding the influence of EXPY on well-being indicators shows that the range is very wide. And this may imply that the goal of achieving a higher level of export sophistication should be considered, at best, only another element of the recipes that developing countries may implement in order to improve access to goods in the post-industrial age (cf. Figures 45 and 46).

Figure 45. Value of the residuals of the correlation between HDI and EXPY

123The correlation between GDP per capita and HDI is not perfect, so that the residuals of the model regarding the former indicator are still wider than in the case of the latter (Figure 46).

Figure 46. Value of the residuals of the correlation between GDP per capita and the EXPY

124The question of innovation and R&D spending was dealt with in Chapter 4, but it is taken up again here in order to understand its link to the level of export sophistication. The correlation between these two indicators can only be carried out for a subset of 94 out of the 153 countries, because the UNDP and the ILO do not present data for some of the indicators under study.

125A look at the data used in the correlation – as shown in Table 12 – clarifies more than the results themselves, the great diversity of situations associated to the links between both variables (Figure 47). Ireland, for instance, is a leader in EXPY and a paradigm of a successful model of productive diversification meant to reach foreign markets, and has achieved this with R&D spending with respect to its GDP much lower than countries such as Finland, Korea, Germany, Japan and others, which are also at the head of the list of countries with the highest export sophistication indexes. Others such as Hungary, the Czech Republic, Poland, Bosnia and Herzegovina, the Philippines, Thailand, Romania, South Africa have even lower R&D spending than Australia, Israel, Iceland and Norway, with the position of these latter countries regarding EXPY being similar or sometimes lower than that of the former. No doubt the industrial diversification level of Eastern European countries is the result of their prior collective learning process, the capability of their labor force, certain levels of training achieved both before and after belonging to the Soviet Bloc, and also of their later integration to the European Union. This last process was part of an explicit policy meant to prevent any possible failure in the transition from their central planning to the market economy. Countries such as The Philippines, Thailand and many others have diversified as a consequence of their low-cost labor force, whereas South Africa has done so on the basis of technological knowledge related to conglomerates and industries already existing at the end of the Apartheid (Magubane, 1994) and also as part of its search for industrial employment.

Figure 47. EXPY values for 94 countries and R&D spending as a percentage of GDP (ordered from highest to lowest)

126In spite of this, it can hardly be argued that larger R&D spending rates should result in different strategies of productive diversification, and have done so. Yet the asymmetry in the absolute value of R&D spending between developed countries and the rest, together with evidence that the private portion of such spending corresponds to that incurred by TNCs, as was shown in Chapter 4, only reinforce the need to link employment strategies to what people can do and to the urge of re-training human capital. Indeed, along the evolutionary process described here, human capital has fallen behind in this respect and has not been able to adapt to the changes in the composition of GDP and the technological changes implied in the transformation of production functions related to the annual creation of flows of wealth. Considering that this lack of adaptation comes from the same stages of the urbanization process that take place along one, two or three generations is no minor issue at the time of choosing which sectoral and industrial activities the new policies must focus on. As has been mentioned, this question may be crucial even for cases such as China and, in that sense, a good way out of the crisis that the global economy has been undergoing since 2008.

127The data for the link between productive diversification (measured by the EXPY as a proxy) and relative R&D spending with respect to the level of GDP, then, can be formulated as follows:

expy_index = @coef(1) * r_d_gdp + @coef(2)
where
@coef(1) = 15,014217
and
@coef(2) = 38,909227
with a standard deviation of 15,866440.

128The results indicate that the EXPY would be, on average, 15 points above the average value of 39 points for each percentage point of R&D spending with respect to GDP. If these values are linked to those of the equation of average impact of the EXPY value over the value of GDP per capita, the result is an average increase of this indicator by some 1600 dollars for each percentage point of R&D spending/GDP. But this would only be a fictional exercise – even methodologically questionable –, the consequence of applying elementary and mechanical logic to the result of two correlation models between two pairs of variables each. Too little to explain real data or make predictions. The differences in the level of wealth per individual across nations has obviously always responded to a more complex set of historical, political, social, cultural, military and economic factors. These, in turn, have created a picture of the present that leads to the certainty that the most developed nations have, in general, higher R&D spending, export sophistication and HDI rates, whereas poorer countries reveal opposite results.

129This is why it is again interesting to analyze the residuals of the last correlation, for they permit, as an imperfect approximation, the identification of particular cases. For instance, countries such as Ireland, Mexico, the Philippines, Greece, Bosnia and Herzegovina, the Czech Republic, Slovenia, Spain, Thailand and even Switzerland and the United Kingdom reveal EXPY values much higher than what could be explained as a consequence of the percentage of R&D spending in relation to GDP. It is curious to note that very rich countries such as Norway, Iceland, the United States, Denmark and Australia show export sophistication indexes much lower than would be deduced from the positive correlation between relative levels of R&D efforts and improvements on EXPY. But next to these countries, there appear others with very different levels of wealth per capita, such as Israel, Panama, Ghana, Mali, Sri Lanka, Uganda and Burkina Faso, just to mention only a few examples of what is represented in Figure 46 below.

Figure 48. Values of the residuals of the correlation between the EXPY and the percentage of GDP devoted to Research and Development

130There is no doubt, then, that implementing universal recipes to link levels of R&D efforts to productive and export diversification as a means to improving material well-being, though not dispensable, is not specific enough to formulate industrial policies in turn capable of creating employment. On the other hand, the fall in industrial activity also affects other activities. For example, a lower demand for food also implies a lower demand for transport, retail and wholesale, loans for new investments, among other activities.

131As stated in the ILO Report (2014), solving the problem of the presence of a surplus in unemployed or sub-employed labor force in most developing nations implies finding the way to increase productivity and the simultaneous creation of jobs. Whereas strategies to link growth and human capital improvements are clear in countries leading in innovation, research into this issue reveals that it is uncertain whether they can be replicated in less developed nations. (Queirós & Teixeira, 2014).

132In the present interdependent world economy, the old industrialized countries have accumulated productive capabilities granting their producers significant advantages in terms of costs and productivity, and driving them to push back the technological frontiers through research and development. Such a context leaves the developing countries at a level of extreme vulnerability at the time of choosing a growth path that is both inclusive and sustainable. If this is not admitted by a world consensus, the perspectives are, as I see it, uncertain both for developed countries requiring a growing world demand to sustain their employment levels, and even more so for intermediate and poor nations.

133However, if the global approach could turn from the pure predominance of competition by and across markets (through technology, productivity and costs) towards a sustainable mass reconversion plan for cities, the flows of wealth could stabilize for they would require relatively less complex activities. And this could balance the need for labor-expulsive activities and others with a high demand for less qualified human capital. It might mean the possibility of maintaining the aggregate demand and the progressive improvement of the standard of living of the population as a whole.

134No doubt, this will imply new problems, but not considering that unemployable labor force (whom the neoclassical wrongly regard as such because of wage inflexibility) will be employed in unreported labor markets will also pose a problem, for it may lead to the growth of criminal activities. This, in turn, will make the democratic institutions increasingly repressive. For when urban life becomes more insecure as a consequence of an increase in crime often caused by the lack of job opportunities, certain social groups will surely complain about it. This is certainly a fact nowadays, and a context that will favor xenophobia and other sources of social, cultural and racial discrimination. Europe, and also other parts of the world, are nowadays immersed in contexts where this has become commonplace. Of course, repression is not a desirable solution. But these situations certainly question the very nature of democracy.

135Thus, only in this context does the Keynesian vs. Neoclassical debate become relevant again. Yet the Keynesian view would no longer imply the avoidance of short-term cycles but the stabilization of the long term, which supposes an important change in tax patterns and in the international financial system.

136The lack of records regarding the segmentation of the labor market in the post-industrial era – once the growth deriving from urbanization is over – is evident. The inadequate collective learning processes in a world of fast innovation, and economic analyses based on increasingly heterogeneous aggregates contribute to a poor theoretical and intellectual context, which cannot be accepted in view of all the challenges that have been described here.

137In this respect, over the last years some documents have directly linked sustainable development and job creation (cf. ILO and OECD, 2012, for instance), also focusing on the use of renewable fuels as a solution to the devastating consequences that global warming caused by CO2 emissions might have. The document analyzes the problem of the reconversion of labor force displaced from industries linked to the production of fossil fuels towards the production of renewable fuels, thus at least partially admitting that such a problem exists. The underlying idea is that this reconversion should be financed through carbon taxes, but this is dealt with only conceptually, with no quantitative approach, so that it is not possible to understand whether financing such policy will require important modifications of the total tax structure or not.

138Other more specific documents dealing with the links between global growth, energy uses and production and carbon emissions, however, suggest that lower emission scenarios are associated to lower global growth rates, but at the same time suppose a larger world population and larger costs to be financed through a more active state intervention. Though not explicitly stated, it is obvious that the technological changes implied in these scenarios take place in the richest nations and spread around the world, but it is not clear how this would impact on employment (WEC, 2013).

139However, one of the most important aspects on which the ILO & OECD work casts some light is the poor definition of the term “green employment” and the scarce impact it has on job creation. Thus, for instance, the definition of eco-industries by the OECD/Eurostat in 1999 related that type of employment to industries creating anti-pollution goods and services and to resource management, which meant a 2% share in total employment. Also in the United States that figure reached 1.5-2% of total employment. Though later definitions by the UNEP include potential employment in industries such as forestry, agriculture and eco-tourism, no quantification is provided regarding how many jobs such green activities and industries would create.

140Significantly, yet, the document clearly illustrates the fact that the most highly polluting industries, though not having an important share in industrial employment in developed nations, are the ones taking up most of the less qualified labor force. Additionally, it points out that countries producing fossil fuels are at a greater disadvantage. Estimates reveal that some 20 million jobs could be created around the world by green industries by the year 2030, which – in the context of an active population totaling 30% or the present urban world population – would mean only a little less than 2% of total employment, which coincides with the other estimates referred to above. The authors admit that powerful analytical tools, such as the OECD equilibrium model, suggest that the green economy would have only small net impacts on job creation (ILO & OECD, 2012, pp. 7- 8). Yet they suggest that such impact could be more important in developing nations. Though they do not explain clearly how or why that would be so, the emphasis seems to be on training and reconversion of the labor force. Simulated impacts on employment of ambitious climate change mitigation policies range between 0.2 and 1.2% (pp. 9-10).

141On the other hand, when revising part of the available literature on employment problems in the twenty-first century, one of the main lines of argument is not sustainability but the potential positive impact of free trade and globalization processes. Strikingly enough, research into the changes in the abilities required to improve the amount and quality of employment (OECD, 2013; OECD, WTO & World Bank Group, 2014) shows that more sophisticated abilities are gradually becoming more necessary – to the detriment of the demand for rudimentary abilities. And it assumes that this is the natural result of two key interrelated factors: changes in the organization of the service sector (and in others related to the use of information and telecommunications technologies), and the characteristics of global value chains and the advantages that the countries should have in order to incorporate in them successfully. This explicitly ignores that such structural transformations are related to the stages of the urbanization processes, which is crucial for almost all the less developed nations, even more so at this stage of the consolidation of globalization.

142Again the current discourse accounts for a scenario in which no fewer than some 200 million people are unemployed, and almost 1,400 million – almost half of the planet’s labor force – are workers living in poverty conditions. The definition of poverty, though, includes people living on less than two dollars a day, which is very different for rural residents leading traditional life styles and for urban residents requiring higher income levels so as to cater for their family needs. And it is very likely that the OECD and the World Bank include within the poor thus defined population living in rural as well as in urban and peri-urban areas, which actually means that, in order to cross that poverty line almost automatically, it is only necessary for rural-urban migration processes to continue.

143The ILO recommends making an intensive use of such labor force in periods of high growth in order to generate more decent and productive employment, but it does not suggest any recipe accounting for the specific dynamics leading more to the destruction of human capital than to its continued enrichment. Yet the discourse implicitly admits that the creation of formal jobs must grow faster than job supply, and that it is necessary to work on the informal sector of the economy in order to increase its productivity through vocational training and education, micro-credits, the creation of small-scale firms, access to loans to promote them, the creation of social protection networks and fiscal strategies, and regulatory changes.

144It is usually stated that economic growth within a global economy gradually becomes more dependent on services and knowledge. Yet this does not necessarily require important qualifications, but rather specific and creative abilities, which results in a fierce competition involving people and groups living in different cities so that they can get jobs all around the planet. In these cases, activities are usually related to the knowledge of potential clients for certain services, the systematic handling of information and databases, ability to hold interpersonal relations and the like. They are not, then, labor-force intensive activities able to absorb the workers displaced from construction and primary extraction tasks, or from the industry.

145What we want to emphasize, then, is that strategies for transitions towards better labor productivity cannot suppose that, in order to be successful, it is the same for them to suggest oblique or upward linear trajectories across different sectoral activities and labor qualifications. Figure 49 below sketches the quandary faced by workers dependent on their own abilities to face changes in output composition and technologies when such changes are not properly foreseen. This supposes very different paces of generational and intergenerational adaptation across social groups depending on their belonging to the first, second or third urban generation, precisely because the specific abilities required for each new technology are also different.

Figure 49. Pattern of sectoral transitions, abilities and labor qualifications associated to failure risks

146The central idea behind this reasoning is that the sustainability of employment has to do, at a structural level, with the proper handling of sectoral development policies together with educational policies focusing more on better qualifications within the same activity. This should minimize the predictable social impact on an economy whose sectoral and technological trajectories tend to render certain abilities and activities useless, while they could instead be recycled upwards within each productive activity. For instance, if the building of streets and roads declines, maintenance activities should occupy a larger proportion of the general volume of activity, and not only the minimum necessary to keep them in normal conditions. If already built houses do not require further construction work, according to what their owners have decided in view of their incomes and preferences, then there could be regulations mandating owners to enhance their curb appeal so as to generate positive instead of negative externalities. This would of course mean a certain interventionism that would affect consumers’ freedom, but the truth is that there already is some level of interventionism in topics such as product certifications regarding quality or environmental standards and regulations. If these regulations are regarded as ways of preventing the destruction of human capital, of making urban life more aesthetically pleasing, of creating the conditions for guaranteeing the right to work, the question acquires a more political and cultural nature, and not only economic.

147But this reasoning is today very far from what the literature suggests in order to improve the world of work. Indeed, current analyses focus on aspects such as different ways of enhancing the workers’ abilities, or the differences between the marginal cost of labor training programs and the expected marginal benefit in terms of productivity as perceived by the entrepreneur or by the firms. They also warn about the fact that, though continuing education is a way of improving the insertion of mature workers with low qualifications as part of the strategies to reduce unemployment, the cost of those programs must be carefully evaluated in view of their impact on public expenditure (OECD, 2004; OECD, 2003).

148Approaches of this type on the role of education and of labor training programs are understandable for they are an attempt to deal with the topic from the labor market reality, which changes as a consequence of several aspects: modifications in the structure of the economy, of the culture of firm organization, of the technological changes that may or may not be disruptive, or transversal across functions and sectors, and of other typical factors of the market economy. Even in this context, the importance of investment in human capital is highly appreciated, as is the need to see the topic as a portfolio of policies and interventions – as would be the case with labor training programs, policies based on schooling, educational reforms, adult education, and the like – and not as the mere sum of isolated actions. It is also important, in this context, to consider the learning process necessarily continuing and anticipated, for it affects current and future generations (Heckman, 2000, pp. 3-56).

149In spite of this, the question of a joint handling of transitions, including the sectoral aspect, is not part of the dominant discourse for there is an implicit agreement on the efficiency of allocating resources through market mechanisms (of their intrinsic mobility across activities, factors and territories) which, though imperfect, can always be improved. The heterogeneity, the technological rigidity and the rigidity of the learning possibilities are ignored, as if they occurred only naturally, and not also as a consequence of the implementation of active policies.

150The next chapter, then, will describe some elements that may contribute to bridging the numerous gaps that I consider it is necessary to deal with today – after seventy years of development and almost twenty five after the emergence of the sustainable development concept – in an integrated way. And this is so because if there is a question that has been ignored in the necessary equilibrium implied in the concept of sustainability, it is precisely that of employment, and the political and social aspects of such a problem.

151The main idea is, then, that the sustainable development policy formulations take into account feasible transitions in developing countries through strategies overcoming the technological asymmetries already described. The transformation of unsustainable urban contexts into sustainable ones may constitute a possibility for that, for it would permit a progressive upgrading of labor qualifications as from already existing or easy-to-create abilities. This could prevent thousands of human beings from being considered discardable or from objectively and subjectively living as such.