The OECD as the cradle of the Club of Rome | reblogged from OECD Insights Blog

By guest author Matthias Schmelzer, University of Jena, based on a newly published article on the origins of the Club of Rome within the OECD.

The Club of Rome’s first report, The limits to growth, appeared in 1972 and was ultimately published in thirty languages and sold over thirty million copies worldwide. It made many people aware for the first time that with continuing growth the world would eventually run out of resources. Today, 45 years later, its electrifying conclusions, which modelled the ‘overshoot and collapse’ of the global system by the mid twenty-first century, still provoke intense debates.

The report also brought international fame to the newly founded Club of Rome, which has since become a key reference point in the public memory of the 1970s and environmental discourses more generally. It boasts considerable authority as a private, non-state, and global group of experts concerned about the fate of humanity, and a wise warden for the ecological survival of planet Earth. However, this extraordinary public and academic attention has largely overlooked the constitutive entanglements with the OECD that characterise the Club’s foundation and early history.

This OECD–Club of Rome nexus needs explaining. The OECD, founded in 1961 as the successor of the Organisation for European Economic Co-operation (OEEC) that had overseen the Marshall Plan aid, soon became, in the words of one of its Directors, “a kind of temple of growth for industrialised countries; growth for growth’s sake was what mattered”. By the late 1960s, however, faced by increasing popular anxiety about unsustainable growth in Western societies, scientists and bureaucrats within the OECD launched a debate on “the problems of modern society”. The driving forces of this growth-critical and ecologically oriented debate were two of the most powerful men within the Organisation: the head of the OECD since its foundation in 1961, Secretary-General Thorkil Kristensen, and the Organisation’s long-time science director and unofficial intellectual leader, Alexander King. The topic assumed such importance that it was central to discussions at the OECD’s ministerial meetings in 1969 and 1970.

However, Kristensen, King, and their associates around the science directorate and the Committee for Science Policy were frustrated by governments’ inability to deal with long-term and interrelated ecological problems and thus looked for allies outside the OECD. They got together with Italian industrialist and global visionary Aurelio Peccei, at that time an executive of Fiat and the managing director of both Olivetti and Italconsult, and in 1968 this elite group of engineers, scientists, and businessmen, founded the Club of Rome. They were fundamentally sceptical about the potential of existing political institutions to catalyse the controversial global debate they deemed necessary, because they regarded these institutions as the “guardians of the status quo and hence the enemies of change”. They saw themselves “faced with the extraordinary arrogance of the economist, the naivety of the natural scientist, the ignorance of the politician, and the bloody-mindedness of the bureaucrat”, all unable to tackle the ensemble of problems they had identified.

Thus, they built a transnational network to advance their view of planetary crisis both through the OECD (thus targeting key economists and ministers from member countries) and through the Club of Rome, whose reports forcefully shaped public debates. This network blurred the lines between the “official” OECD and the “private” Club, not only in terms of overlapping membership but also in terms of discourses. While the Club functioned as a “detonator”, its core members used international organisations “as transmission belts”, as Peccei explicitly put it, and thus acquired a strong leverage.

The personal overlap between the OECD and the Club of Rome in its initial phase is remarkable. Not only were three of the four persons that founded the Club working in or with the OECD (King, the Austrian systems analyst, astrophysicist, and OECD expert; Erich Jantsch; and the Swiss director of the Geneva branch of the Battelle Memorial Institute and Vice-Chairman of the OECD’s science committee Hugo Thiemann). Besides the Italian industrialist Peccei and the German industrial designer Eduard Pestel, who secured the funding from the Volkswagen Foundation for the first report, all the crucial personalities in the formative period of the Club of Rome were closely connected to the OECD. Almost the entire core group of the Club of Rome, its “executive committee” – which has been characterised as the true “motor” of the Club of Rome, and who signed Limits to growth – also had positions within the OECD.

This transnational group of experts at the interface of national governments, international organisations, and the Club of Rome formed a unique circle of elite environmentally conscious planners. Even though claiming to speak for the entire globe, they represented a very narrow fraction of the global population, in part because of their organisational base in the OECD, often dubbed the “Club of the Rich”. They were all highly-educated and largely white men and thus reproduced the tradition of upper-class gentlemen’s clubs, and all came from countries in the global North (mostly European, some US and Japan). With close ties to elite universities, transnational business, and international organisations, they acted from economic positions of privilege and power. Furthermore, the entire network had academic backgrounds in the natural sciences (in particular chemistry and physics) or engineering, with only a few trained in economics, and none in the social sciences or humanities. Finally, almost all had spent at least part of their career as national government experts or administrators.

All these factors influenced the perspective and politics of the network at the heart of the OECD–Club of Rome nexus. A more profound appreciation of the gestation, midwifery, entanglements, transfers, and tensions that characterise this nexus opens up a more complex understanding of both organisations and the actors driving them. It puts in perspective the public perception of the Club of Rome as a private, non-governmental, and global think tank by analysing its origins within an all-male elite group of engineers, scientists, and businessmen, and its intimate interrelationships and personal overlaps with the OECD, an intergovernmental organisation representing the industrialised capitalist countries. This social positioning fundamentally shaped the network’s outlook, most importantly with regard to its systemic analysis of interrelated global problems in a computer-engineering perspective, the technocratic outlook from the perspective of the global North, and top-down management approach.

How did the cradle of the Club of Rome react when its offshoot published its first report in 1972? After all, Limits to growth was consciously set up as a “detonator” to give a jolt to established governments and international organisations. At first, it did indeed impress and unsettle the OECD. But once the public debate took off, the views expressed in Limits deepened the internal fractures within the OECD and provoked hostile reactions, leading to a revitalisation of the strong pro-growth position.

The strongest force behind the backlash against the critiques of growth came with the onset of economic turmoil, soaring energy prices, and stagflation from 1973-74 onwards. While the energy shortages and their effects on industrialised countries were largely interpreted by the public as proof of the Club of Rome’s predictions, within the OECD these developments did not strengthen the faction critical of growth. On the contrary, the debate on the “problems of modern society” was choked by a combination of changing member-state interests, an attempt by the top level of the Secretariat to better position the OECD, and a shift of influence within the Organisation.

The growth critique sparked a bitter controversy between the macro-economic branch of the Organisation and the science experts and environmental scientists around King, which the latter lost when the OECD refocused on trade, energy, and growth. In particular, the publication of the Club of Rome’s first report polarised the debate to such a degree that not only the OECD but Western policy-making circles more generally returned to the promotion of quantitative growth. While the Club of Rome was born in the corridors of the OECD, its first report effectively ended these intimate relationships.

Useful links

Matthias Schmelzer (2016), The Hegemony of Growth. The OECD and the Making of the Economic Growth Paradigm, Cambridge University Press

The OECD Interfutures project (1979)

Source: The OECD as the cradle of the Club of Rome | OECD Insights Blog

The Culture of a World Without Oil —by Barry Lord. on Medium

Margaret Atwood’s brilliant contribution to this discussion analyzes the salient features of the climate change that we can now recognize as the inevitable outcome of the culture of consumption that oil and gas made possible. An Encyclical from Pope Francis was the most recent mainstream identification of this linkage, specifically focused on its cultural implications. As Atwood observes, my 2014 book Art& Energy: How Culture Changes (The AAM Press) demonstrates how all of our external energy sources have been accompanied by cultural transitions, from the mastery of fire and the culture of community around the hearth that it made possible to the culture of stewardship of the earth and the body that we are adopting as we switch to renewable energy.

Now we have daily news of the struggle between that incoming culture and the still dominant oil-based culture of consumption on which we are so dependent. By the culture of consumption I mean a culture that values buying things, experiences and brands in and for itself; we were shopping long before oil and gas, but their plenitude stimulated an entire way of life, especially associated with the automobile, that initially became visible after the First World War in the ‘Roaring Twenties’ (cf. F. Scott Fitzgerald’s Great Gatsby), but really took over after World War II as oil replaced coal as the dominant global energy source beginning in the early 1960s. Supplanting the coal-based culture that depended on a disciplined work force, oil and gas made possible a widespread culture that has certainly benefited many, but which rested on ultimately unsustainable assumptions. Whereas people in the coal culture were defined in relation to the production process (as workers or capitalists, for instance), in a world powered by oil and gas we were all encouraged to see ourselves simply as consumers.

The challenge today is to define and describe the emerging culture of stewardship of the earth and the body that is so closely associated with renewable energy. A world without oil will have to be a world with fully developed renewable energy sources and the culture of stewardship that goes with them. Solar panels, wind turbines and geothermal wells provide energy by means of technology only. No fuel is needed. Once the apparatus is installed, there is nothing more to buy. The culture of consumption will no longer be rooted in our energy supply.

Even more important, by fully utilizing a global two-way power grid every building can become a producer as well as a consumer of energy. This depends on a means of storage so that we or others can access power when we need it, not just when the sun is shining or the wind is blowing. Storage of energy and of data (which can be seen as a kind of congealed energy) becomes a significant value in itself, resulting in stern penalties for hackers and a global grass-roots struggle to retain access to data banks in people’s hands and minds, rather than in the exclusive domain of governments.

Access for use and capacity to store and share the goods of this world is what matters for stewardship. Acquisition, consumption and ownership are secondary. Mutual stocks collectively owned by all concerned may accordingly become the preferred model, rather than the private investment fortunes of today. A circular economy can be conceived, whereby the real cost of all products is redeemed through multiple uses of everything: there would be no such thing as a ‘waste product’. Already we see a fledgling ‘sharing economy’ — Airbnb, Uber and much more — growing stronger daily.

In a world without oil, shopping will no longer focus our culture as it does today. Fashion will be transformed into trading, swapping and adapting our clothes to function effectively in every season. Currently millions of garments are discarded annually in every industrial country, and sending them to third world countries destroys the indigenous clothing industries there. Binge shopping and the annual Xmas celebration of consumerism will increasingly be questioned or rejected by a growing number of people committed to a culture that abhors waste.

via The Culture of a World Without Oil — Medium.

China does not support rogue African states, it creates them —new study says | Mail & Guardian Africa (Mobile edition)

WITH China’s flagship event showcasing how its influence has grown in Africa set for the continent this year, the focus will inevitably be on the amount of new aid and loans Beijing dangles at the continent.

The last summit of the triennial Forum on China-Africa Cooperation (FOCAC) saw president Hu Jintao put on the table $20 billion in loans to African countries, doubling its previous offer.

As bilateral trade volumes have grown, Beijing will be expected to offer billions more at this year’s forum in South Africa, despite its domestic economy having cooled in recent months.

However, Africa can also expect to witness notably more incidences of state-sponsored domestic violence, both against civilians and competitors such as rebel groups, as Chinese aid increases, a new study shows.

Authors Roudabeh Kishi and Clionadh Raleigh, of the University of Sussex’s Department of Geography, say this effect is largely because aid from China is fungible, with its use determined by recipient countries.

Their working paper, titled Chinese Aid and Africa’s Pariah States, finds that political violence by the state increases with receipt of Chinese aid.

The same is not observed with aid from ‘traditional’ or Western donors, which comes tagged with conditions.

via China does not support rogue African states, it creates them —new study says | Mail & Guardian Africa (Mobile edition).

Diálogo Chino | Brazil blocks State Grid plans to employ 11,000 Chinese on mega dam project

The Brazilian government is refusing to sanction a proposal by Chinese state-owned power company State Grid to send 11,000 of its employees to Brazil to work on the construction of a 2,100-kilometer power transmission line beginning at the Belo Monte hydroelectric plant. Local labor laws forbid companies from hiring foreign workers as long as qualified Brazilians are available.

The dispute is the latest episode in the ongoing drama of the controversial megaproject that has been implicated in an unprecedented corruption scandal and is expected to force the displacement of over 20,000 indigenous people.

Belo Monte‘s so-called linhão or “big line”, one of the longest in the country, will require the installation of 4,500 towers and 25,000 kilometers of cabling, requiring investment of around US$1.6 billion. But work cannot begin until the Brazilian Institute of the Environment and Renewable Natural Resources (IBAMA) has issued an environmental permit.

With Brazil in the throes of a record-breaking drought, stagnant growth and potential energy crisis, job creation and energy capacity are sensitive issues but this chapter is expected to be a short one for State Grid as the first step in the process for beginning work is already underway – IBAMA has authorized public consultations on the additional line.

“This industrial policy was designed to create jobs in Brazil,” Professor Nivalde de Castro, coordinator of the Electric Sector Study Group at the Federal University of Rio de Janeiro told Diálogo Chino. But China’s entry into Brazil’s energy sector  is not necessarily a threat.

According to Castro there is still a lot of room for new companies – especially Chinese ones – to participate in Brazil’s energy market, as long as they do so indirectly: “Chinese companies are strongly encouraged to open subsidiaries” Castro added, explaining that by doing so, China can provide finance for the sector without harming local industry and Brazil can keep imports down.

The new transmission line tenders scheduled for this year alone will offer opportunities for almost US$7 billion in investments.

But according to Castro, the question is whether China will remain interested in investing if it has to comply with Brazil’s industrial and financial policy and operate through subsidiaries.

Brazil’s Minister of Mines and Energy, Eduardo Braga, has discussed plans to speed up overdue energy infrastructure projects – including power plants and transmission lines. While the specific projects under consideration are still unknown, it is likely that the linhão will be a priority given the centrality of Belo Monte to Brazil’s energy expansion plans.

At 11,233 MW of installed capacity, Belo Monte will be the second largest hydropower plant in Brazil, and a considerable part of its output will be transmitted to Brazil’s industrial Southeast, which accounts for almost 70% of the country’s energy consumption.

Ultra High Voltage technology will deliver 800 kilovolts (kV) of direct current to a system that interconnects almost the entire country and extends for almost 117,000 kilometers, according to data from the National Electric System Operator (ONS).

State Grid paid US$1bn to purchase seven transmission lines from Plena Transmissoras (a joint venture of Spanish and Brazilian companies), and also bid successfully for the main transmission system through a partnership with Eletrobras, the largest energy company in Brazil – which, like its Chinese peer, is controlled by the federal government.

The IE Belo Monte consortium is composed of State Grid (51%) and two Eletrobras subsidiaries: Furnas (24.5%) and Eletronorte (24.5%). At the bidding, the consortium asked for annual revenues of around US$140 million. Under the rules of transmission line bids in Brazil, bids compete against each other to offer the lowest cost to the national grid.

State Grid’s chairman of the board, Liu Zhenya, had stated that Brazil and China have some similarities in their interconnected energy systems with power supply sometimes extending more than 2,000 kilometers away from the country’s load centers. This, he said at the bidding event, can generate demand for the construction of long-distance distribution channels with high capacity and low levels of energy loss.

State Grid has already faced problems in Brazil with the construction of the transmission line that will connect to Teles Pires, a 1,820 MW hydroelectric plant whose construction is nearing completion. The plant, located in the Amazon rainforest, will not be operational until a 1,005-kilometer transmission line connecting it to the national grid is finished. But the line has been delayed because of problems acquiring an environmental permit as it would interfere with important indigenous and archaeological sites, according to the daily newspaper O Estado de São Paulo.

via Diálogo Chino | Brazil blocks State Grid plans to employ 11,000 Chinese on mega dam project.