Cycles of Poverty and Consumption: The Sustainability Dilemma

By Farias, Christine; Farias, Gerard | Competition Forum, January 1, 2008 | Go to article overview

Cycles of Poverty and Consumption: The Sustainability Dilemma


Farias, Christine, Farias, Gerard, Competition Forum


EXECUTIVE SUMMARY

The current wave of attention to sustainability represents the challenges that the businesses in the future will need to address. The traditional notions of growth and development need to be reexamined in the light of these challenges. This paper focuses on the adequacy of enterprise based solutions to poverty and the potential for unintended consequences. It examines the dilemma of addressing economic growth and poverty alleviation on one side and the need to halt and possibly reverse the damage that has been done to our environment on the other side. We examine the resulting tensions between the poverty trap, consumption trap and resource limits.

Keywords: Sustainable Development, Poverty, Environment, Resource Constraints, Consumption, Economic Growth

INTRODUCTION

Imagine a "state of the world" speech to be delivered by an imaginary world leader seeking re-election. Would such a leader have much to say that would cause a majority of the global population to vote for him or her? We doubt it. More than half the world is poor and does not have access to clean water, energy, health services, education, employment and reasonable housing. They do have access to disease, malnutrition and poor sanitation.

The 2008 Copenhagen Consensus Report and the United Nations Millennium Development Goals (UNMDG) focus on several priorities for the future. These priorities appropriately focus on the causes and consequences of global poverty and global warming. These challenges are closely connected. For instance the rising sea levels caused by climate change could displace 200 million people, most of them poor (Stern, 2006). Taking a different perspective, economic development efforts focusing on poverty alleviation are likely to further exacerbate the problem of global warming. There is an urgent need to find new and integrated solutions. There is an urgent need to act.

In this paper we discuss the issues of global sustainable development and some of the enterprise based solutions that have been proposed in the recent past. In particular, we examine the relationships between sustainable development, poverty alleviation, environmental challenges, resource constraints, and consumption patterns and argue that we as a human race will need to make hard choices taking into consideration not only the benefits to ourselves, but also the costs to others.

KEY CHALLENGES

It is estimated that almost 4 billion of the world's 6.5 billion people live on a meager $2.00 per day (Prahalad and Hammond, 2002). While some of these 4 billion people have some hope, there are about a billion people who belong to the poorest countries that are failing-they see little hope of escaping poverty (Collier, 2007). Shepherd (2007) estimates that 420 million people are chronically poor and under current conditions are unlikely to ever break out of their poverty traps-they see no hope at all. Meanwhile, we see in the popular media an increasing number of examples of wealth accumulation by a few in amounts beyond comprehension. For example, the world's most expensive home sale (95 million US dollars) took place in the United States of America in June 2008 (Clough, 2008). 1 percent of the world's population owns 40 percent of the world's wealth according to a UN study (United Nations University-World Institute for Development Economic Research [UNU-WIDER], 2008). While the last five years have seen unprecedented levels of global wealth creation, the number of chronically poor people has increased (Chronic Poverty Research Center, 2008). This increase has taken place even while the United Nations Millennium Development Goals (UNMDG) called for a 50 percent reduction in global poverty by the year 2015. Our philosophical or ideological leanings not withstanding, we should all be outraged by this situation. Obviously, prior attempts to alleviate poverty have failed. We need new solutions and we need them now. …

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