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The international political economy of (un)sustainable consumption andthe global financial collapseMaurie J. Cohen aa Graduate Program in Environmental Policy Studies, New Jersey Institute of Technology, USA

Online publication date: 08 February 2010

To cite this Article Cohen, Maurie J.(2010) 'The international political economy of (un)sustainable consumption and theglobal financial collapse', Environmental Politics, 19: 1, 107 126To link to this Article: DOI: 10.1080/09644010903396135URL:http://dx.doi.org/10.1080/09644010903396135

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The international political economy of (un)sustainable consumptionand the global nancial collapse

Maurie J. Cohen*

Graduate Program in Environmental Policy Studies, New Jersey Institute of Technology,USA

Adopted at the 1992 Earth Summit and elaborated at the JohannesburgConference a decade later, sustainable consumption occupies an increas-ingly prominent political position. Numerous governmental ministries andsupranational organisations have produced sustainable consumption plans.However, actual programmatic initiatives have been limited to modestinformation and education campaigns as policy proposals are constrainedby political contexts. Researchers have documented ows of materials andenergy, but have disregarded the political and economic dynamics thatanimate throughput movements. Inattention to factors that propel the

global metabolism, scholarship largely failed to anticipate the ongoingglobal nancial collapse. Work on the household economics andmacroeconomics of consumption is reviewed and an international politicaleconomy of (un)sustainable consumption is developed. Realignment of theglobal economic order will require renegotiation of the tacit agreementsthat the USA strikes with its trading partners and the design of moreefficacious systems of production and consumption.

Keywords: international trade; debt; decits; American empire; degrowth

IntroductionWhile the prodigious throughput of materials and energy in affluent countrieshas featured in environmental debates since the early 1970s, governments neverimposed substantive responsibilities on consumers. Policy makers insteadcompelled industrial companies to abide by regulatory controls and subscribedto the presumption that overall consumption would continue to expand. As theinadequacy of this approach became apparent, the emphasis shifted towardsstrategies based on pollution prevention, clean technology and environmentaleconomics. The most recent wave of policy innovation, largely motivated by

*Email: mcohen@adm.njit.edu

Environmental PoliticsVol. 19, No. 1, February 2010, 107126

ISSN 0964-4016 print/ISSN 1743-8934 online 2010 Taylor & FrancisDOI: 10.1080/09644010903396135http://www.informaworld.com

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the urgent need to reduce greenhouse-gas emissions, centres on eco-efficiency,waste minimisation and product stewardship (von Weizsa cker et al . 1997,Hawken et al . 1999, cf. White 2002, Barry 2007).

Despite the continued centrality of production-led initiatives, sustainableconsumption has come to occupy an increasingly visible political position.First championed by a consortium of developing countries and nongovern-mental organisations (NGOs) prior to the United Nations Conference onEnvironment and Development (UNCED) in 1992, the concept has steadilyevolved into an institutionalised xture of policy discussions. In addition,various commercial efforts to reshape household consumption have prolifer-ated, and allied ideas pertaining to ethical shopping and green consumerismhave become infused into marketing practice and popular culture (Brower and

Leon 1999, cf. Hardner and Rice 2002, Pedersen and Neergaard 2006).This turn away from a resolute preoccupation with production, and the

subsequent forging of complementary demand-side strategies, has necessarilyentailed compromises. In particular, the cautious embrace of a weak con-ception of sustainable consumption has led to a withering of the novelty thatcharacterised early expressions of the concept. Pragmatic policy entrepreneurs,forced to work within political contexts that repudiate heterodox views of economic growth, have favoured straightforward initiatives to supplementconsumer information and education. Such neutralisation is palpable in the

cascade of sustainability plans that now pour forth from government bureausand international organisations (UNEP 2001, UK DEFRA 2003, 2005, EEA2005, Finnish Ministry of the Environment 2005, UK SCR 2006, GermanFederal Environment Agency 2007, CEC 2008).

The insipidness of contemporary policy making on sustainable consump-tion reects the hesitancy of affluent countries to forthrightly confront theirwasteful materials and energy usage patterns. Researchers must shoulder someresponsibility for the disarray. Current disorientation is at least partlyattributable to an intellectual posture that eschews the political economy of resource appropriation and instead privileges the enumeration of metabolicows. This xation has relegated consideration of the engine that propels theoverall metabolism the global nancial system to the periphery, asscholarship on the linkages between consumption and sustainability in themain failed to anticipate the ongoing global nancial collapse. The currentprocess of retrenchment, with much of the world desperately trying to revert tothe status quo ante, provides an auspicious moment for reassessment.

The premise of this article is that the notion of sustainable consumptionneeds to incorporate the global nancial system into its frame of analysis. Todevelop this perspective, the section The emergence of sustainable consump-tion traces the history of sustainable consumption as a policy issue andhighlights both its established and insurgent schools of thought. The sectionThe household economics of sustainable consumption approaches the issuefrom the standpoint of household economics and reviews relevant work of economists and sociologists. The section Macroeconomic decits and

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(un)sustainable consumption describes the macroeconomic dimensions of government budgeting and international trade, as policy decisions in thesespheres are ultimately responsible for driving consumption. The section Theinternational political economy of (un)sustainable consumption integrates andextends these perspectives by developing the contours of an internationalpolitical economy of (un)sustainable consumption that explains how Americanforeign policy has secured the acquiescence of other countries in exchange foraccess to US markets. The conclusion identies some directions for futureresearch on sustainable consumption in light of new economic circumstancesand a more expansive understanding of the factors that animate resource ows.

The emergence of sustainable consumptionThe role of consumers in policies for sustainable development is increasinglyappreciated. Much of this dialogue has taken place around the concept of sustainable consumption that rst emerged on the international agenda duringthe early 1990s. Early proponents sought to reframe the global environmental problematique , as well as the challenges of sustainability more generally, inaccordance with a more equitable distribution of obligations between thedeveloped and developing countries. A critical dimension of this undertakinginvolved recognition of the large disparity in per capita resource appropriation

between, for example, India and the USA. After contentious debate, an entirechapter of Agenda 21, the action plan produced by the UNCED process, wasdevoted to the issue, and stated that [a]ll countries should strive to promotesustainable consumption patterns. The document proceeds to encouragedeveloped nations to assume primary responsibility for forging appropriatestrategies (UNDESA 1992). The governments of most affluent countriesgreeted this initial call for the public regulation of consumption with acombination of anger and exasperation: the rst President Bush famouslyresponded with the declaration that the American way of life [was] not up fornegotiation (McKibben 2005).

Nonetheless, in the following years, the Organisation for EconomicCooperation and Development (OECD) and other secondary policy-makinginstitutions quietly worked to sharpen the focus of discussions (e.g. NordicCouncil of Ministers 1995, OECD 1997), and authoritative scientic societiesand independent researchers embarked on complementary investigations(Durning 1992, Redclift 1996, Royal Society and US NAS 1997, Stern et al .1997, Cohen and Murphy 2001, Princen et al . 2002).

At the 2002 Johannesburg Summit, sustainable consumption (and produc-tion) was again a major theme and a key pronouncement called upon UNEP, inconjunction with the United Nations Department of Economic and SocialAffairs (UNDESA), to formulate a 10-year international framework of programmes to support this objective. After consultation with governmentrepresentatives, academics and NGOs, UNEP convened an experts meeting in2003 to launch the Marrakech Process. The aim of these deliberations has been

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to develop a comprehensive plan for submission to the United NationsCommission for Sustainable Development (UNCSD) for the 2010/2011 cycleto guide initiatives to encourage sustainable consumption (and production) overthe next decade. Concomitantly, UNEP convened a series of stakeholderdialogues in Latin America and the Caribbean, Africa, Europe, North Americaand the Asia-Pacic area to develop regional perspectives.

Separate from the Marrakech Process, a number of national governmentsand supranational bodies have created new forums to consider the social andenvironmental implications of contemporary lifestyles. The European Com-missions action plan (CEC 2008) in particular generated considerableexpectancy in the months prior to its release. Early indications were that thereport would move the policy discussion in innovative new directions and

embrace several ambitious ideas. After numerous delays, the documentunveiled during summer 2008 proved to be more reactionary than revolu-tionary (ENDS Europe Report 2008). Commentary at the time suggested thatcompeting interests had overwhelmed the drafting process and realigned thedocument with established commitments favouring economic competitiveness.

The highly charged internal debates that characterised the European actionplan on sustainable consumption are indicative of extensive cleavages over howto organise the overall political agenda. Policy makers have tended to preferindividualised models of consumer behaviour predicated upon paradigms from

social psychology and behavioural economics (Thgerson and O

lander 2002,van den Bergh 2008) that privilege environmentally conscious consumerpurchasing, eco-labelling and long-term capital investments in household-energyefficiency. Other prevalent strategies merge with approaches from the realm of sustainable production and encourage complementary initiatives grounded inproduct policy, life-cycle engineering, waste and material minimisation and eco-efficiency (Thomas and Graedel 2003, Sinclair et al . 2005).

It has become common to challenge mainstream interventions based on thesecircumscribed models of consumer motivation because they ignore the socialdimensions of consumption and the likelihood of perverse rebound effects(Herring and Roy 2002, Hertwich 2005). Another basis for criticism has beenthat the modest anticipated gains are incompatible with the bold targetsendorsed by scientic experts (Seyfang 2004, Spangenberg 2004). This mismatchappears to be especially prominent with respect to global climate change, whereinuential analyses of the Intergovernmental Panel on Climate Change (IPCC)(2007) and the Stern Review (2007) assert a need to reduce greenhouse-gasemissions by 80%. Moreover, by emphasising only notionally rationalconsumers and narrow technological solutions, policy makers marginalise theessential politics of any meaningful programme to elicit changes in consumption.

Separate from the established discourse on sustainable consumption, adiverse community comprised of academics, think-tanks, policy advocates andsocial experimentalists has been assembling a more ambitious agenda. Yet tocohere into a single strategic vision, this array of alternative approaches focuseson fostering transformational changes in both the quantity and the quality of

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resource use. Instead of consumer rationality and engineering redesign, a broadconception of ethical responsibility is at the heart of this insurgent view of sustainable consumption (Paavola 2001, Hobson 2002, Schrader 2007, Cohen2006b, Hobson 2004). Some scholars situate household provisioning within theeveryday social practices of consumers (and citizens) (Spaargaren 2003,Hargreaves et al . 2008, Quitzau and Rpke 2008); others seek to developsustainable consumption as a means by which to encourage ecologicalcitizenship, democratic engagement, innovative governance and alternativesystems of economic organisation (Hobson 2004, Fuchs and Lorek 2005,Cohen 2006a, b, NEF 2008). There are also attempts to understand thecomplex dynamics of global supply chains and international trading regimeswith an eye to identifying strategic points where pressure for change can be

maximally applied (ORourke 2005) and where household provisioning caneffectively be relocalised (Seyfang 2006).

These treatments are motivated by implicit social critiques of consumption(and consumerism) and clearly distinguish themselves from more establishedmetabolic analyses that disregard the political dynamics behind material andenergy ows. Some of this scholarship and experimentation has drawn on theburgeoning body of literature on happiness and sought to uncover linkagesbetween material abundance and lifestyle satisfaction (Jackson 2005, 2008, NEF2006, Offer 2007, UK SDC 2009) suggesting that beyond a certain threshold level

of consumption (and income) consumers do not realise signicant improvementsin subjective wellbeing. Paradoxically, the proportion of people in developedcountries that claims to be very happy has not changed over recent decadesdespite manifold growth in material throughput. These ndings suggest thatcontentment is more a function of interpersonal comparison than a matter of absolute accumulation. If it is true that happiness is predicated upon relativestanding, consumers could conceivably reduce expenditures and cut backproportionately on the amount of time they devote to paid employment withoutexperiencing any diminution in perceived quality of life.

Some researchers have sought to subject these contentions to personal testsby, for example, modifying their lifestyles in accordance with the principles of voluntary simplicity (Elgin 1993, James 2007). Other social experimentalistshave been variously motivated to drastically reduce their individual environ-mental impacts (Levine 2007). Related efforts have picked up pace with theformation of carbon reduction action groups and the diffusion of thetransition towns movement (Hopkins and Heinberg 2008).

Despite its inchoate form, this alternative thinking about sustainableconsumption takes quite seriously the assertions of prominent environmentalscientists who call for multifactor improvements ranging from factors of 4 to20 in the efficiency of materials and energy use (von Weizsa cker et al . 1997,Hinterberger and Schmidt-Bleek 1999). These ambitious targets derive fromthe recognition that it will be necessary to accommodate a worldwidepopulation of 10 billion people by 2050 (along with concomitant growth inresource utilisation) and simultaneously control the most dangerous impacts of

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global climate change. Such circumstances call for large-scale reductions in thevolume of resources appropriated by developed countries and for endowingdeveloping countries with leap-frogging capacity (Ko hler 2006, Tukker et al .2008, cf. Perrels 2008). This awareness has led to consideration of so-calledtransition pathways and the radical transformation of entire socio-technicalsystems (Rohracher 2001, Elzen et al . 2004).

The household economics of sustainable consumption

Sustainable consumption has emerged politically as national governments andinternational organisations have begun to adopt elements of this policy agenda.For instance, sustainable consumption (and production) is one of the four

priority areas in the UK governments national sustainability strategy, and theMarrakech Process is an important component of UNEPs activities. Even so,these developments retain a certain quixotic quality, in part because of a sensethat proponents are furtively intent on undermining consumer sovereignty andweakening prevailing prerogatives favouring economic growth.

The point of departure for the current discussion, however, is the dominanttendency to conceptualise sustainable consumption in overly narrow terms asthe management of metabolic ows. Most scholarship in the eld disregardsthe fact that the movement of materials and energy is contingent upon

dynamics in the international economy. This section begins to widen the frameof customary analysis by highlighting how economists and sociologists haveapproached the nancial dimensions of (un)sustainable consumption from thestandpoint of household savings.

The amassing of savings by households provides both a source of domesticsecurity and a societal pool of investment capital. With respect to thesustainability of affluent countries, nancial accumulation also has theadvantage of diverting money from current consumption and redirecting ittowards capital assets and other activities with prospects for long-term benet.

The following overview uses OECD data and focuses on savings behaviourin 17 member countries over a 15-year timeframe. 1 More than half of thesenations (the so-called Anglo-Saxon group plus Denmark, Finland, Japan,Korea and the Netherlands) experienced declining household savings ratesduring the period 19902005 (Table 1). The savings rates for a number of thesecountries, turned negative in the latter part of this interval, suggesting thatconsumers were depleting previously accumulated funds to maintain currentconsumption. In contrast, the Germanophone and Francophone nationsmaintained comparatively stable savings rates while the Norwegians andSwedes evinced a generally increasing propensity to save.

Economists have advanced numerous reasons for this generally decliningpattern of household savings (Marquis 2002, de Serres and Pelgrin 2003,Guidolin and La Jeunesse 2007). 2 The explanations include a wealth effect(suggesting that as people raise their net worth they will increase theirconsumption propensity), a labour productivity effect (contending that

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improvements in workplace efficiency prompt people to revise upward theirexpectations of future income and to cut back their current savings rate), and anancial security effect (averring that government-transfer programmes havereduced dependency on familial resources to fund retirement, disability, andmajor medical expenses). 3

Others emphasise the role that demographics play in inuencing nationalsavings rates: countries with younger age proles will evince higherpropensities to save and this rate will decline as people reach retirement age.Some historically minded economists reach back to the nineteenth century andrevivify the notion of Ricardian equivalence that asserts people are indifferentto whether governments fund their activities through tax increases or debt.Declining government decits should encourage people to save less (because of expectations of lower taxes in the future) while increasing government decitsshould induce them to save more (because of expectations of higher taxes in thefuture). A nal noteworthy explanation draws attention to the shift away(largely in the USA) from stockholder dividends to stock repurchase plans,claiming that this trend has reduced savings rates because dividends areincluded in the calculation whereas share repurchases are not.

Though the reasons are varied, none of these explanations holds upespecially well to empirical analysis (Guidolin and La Jenunesse 2007). The

Table 1. Household net savings rates for selected OECD countries, 19902005(percentage of disposable household income).

1990 1995 2000 2005

Declining savings countriesAustralia 6.6 6.7 2.4 7 3.7 a

Canada 13.3 9.4 4.8 1.2Denmark 2.0 1.3 7 2.0 1.1 a

Finland 1.8 3.9 7 0.1 7 0.1Japan 8.5 3.2Korea 22.5 17.5 10.7 4.4The Netherlands 15.7 7.5 7.1UK 4.2 6.7 0.5 7 0.1USA 7.2 5.1 2.4 7 0.4

Stable savings countriesAustria 11.0 8.5 9.1 a

Belgium 14.2 15.7 9.7 10.4 b

France 9.3 12.7 11.8 11.5Germany 11.1 9.3 10.7Switzerland 10.8 12.9 13.2 9.1

Increasing savings countriesNorway 2.2 4.6 5.2 10.1 b

Sweden 9.1 3.2 8.7 a

Source : OECD (available at http://www.oecd.org/site/0,3407,en_21571361_34374092_1_1_1_1_1,

00.html ).a Data are for 2004.b Data are for 2003.

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standing of the presumed wealth effect is undermined by the nding thatduring the past decade the periods of greatest consumption growth did notcoincide with the most robust phases of asset appreciation. The labourproductivity interpretation fails because it accounts for only a very smallportion of the change in savings, and the nancial security effect is notespecially robust because of the paradox that countries with the most expansivesocial welfare systems also have the highest household savings rates.

A further economic explanation that withstands careful scrutiny centres onthe development and diffusion of nancial innovations. In particular, newcredit products made it easier (until mid-2008) for consumers to borrow moneyon convenient terms. The wide diffusion of credit cards, as well as thepopularisation of home-equity loans, has altered conceptions of debt. Indeed,

savings behaviour declined most sharply in the OECD countries that mostenthusiastically embraced bank deregulation and the liberalisation of personalcredit (Sullivan and Worden 1989, Leyshon and Thrift 1993). Assessment of why there was such relentless uptake of these new nancial products requiresmoving beyond econometric analyses and turning to sociological studiesgrounded in the lived experiences of actual consumers. Schor (1998) andWarren and Warren Tyagi (2003) have been most prominent in developing thisperspective with respect to the USA.

Schor analyses changes in the American labour market and highlights the

expanding participation of women in paid employment. This trend evolved in acontext of increasing workplace stratication that brought people with vastlydifferent earning capacities into close social proximity. In the earlier eras, whenthe assembly line was the paradigmatic mode of economic organisation, therewas little integration across income classes and workers took their consump-tion cues from colleagues earning roughly similar incomes (hence the famousaphorism about keeping up with the Joneses). By contrast, the heterogeneityof contemporary workplaces encourages individuals of relatively modestearning potential to emulate the purchasing practices of better-off colleagues,inducing a steady ratcheting up of consumption standards what Schor refersto as the new consumerism. This pressure has been exacerbated by thepervasive inuence of television and its tendency to showcase products thatexceed the budgets of most viewers, leading to the upward spiralling of expectations, continuous upgrading of what constitutes normal levels of comfort and convenience, and the accumulation of outsized debt.

Warren takes a different tack, grounded in the rising tide of personalbankruptcies in the USA and the budgetary challenges of maintaining a con-temporary household. She notes the curious irony that recruitment of womeninto paid labour tended to increase rather than decrease nancial strain. Theaddition of a second paycheck added to income, but the supplementaryresources stimulated new, largely unavoidable expenditures and reduced overallfamilial exibility. In contrast, during earlier eras, non-working wives andmothers would seek temporary employment in the event of nancialemergencies and thus inject a new source of income into their households.

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Warren identies ve tightly interlinked factors as responsible for puttingAmerican households into a nancial straightjacket and contributing to thedemise of savings and the rising tide of national indebtedness: the quest fordecent public schools, the necessity of maintaining a second car, the expensesincurred for childcare, the cost of medical treatment and the need to nancehigher education. Changes in this array of expenditures, she claims, tippedmiddle-class households into the two-income trap.

We have here two quite different sociological explanations for the decliningsavings rate in the USA. Schor contends that the failure to save is the result of novel consumer aspirations driven by an unyielding desire for status and arelentless quest for positional goods. Warren attributes the low savings rate toa barrage of competing pressures that make it difficult for families to break

even. How might we reconcile these two views? One approach begins byhighlighting the divergent life circumstances of the upper and lower tiers of thecontemporary American middle class. Schor, primarily concerned withmiddle-class and upper-middle-class consumers, writes that

[S]pending patterns are strongly differentiated by class, and the system of competitive spending I describe is driven by those with discretionary income . . . Ifocus on more affluent consumers not because I believe that inequalities of consuming power are unimportant. Far from it. They are the heart of theproblem. But I believe that achieving an equitable standard of living for all

Americans will require that those of us with comfortable material lives transformour relationship to spending. (Schor 1998:xivxv)

Warren does not qualify which facet of the American middle class heranalysis is capturing, but she does not appear to focus on the same consumersthat animate Schors discussion of lawyers, accountants and other profes-sionals with considerable discretionary income. The evocative personal prolesthat Warren intersperses throughout her account are instead based on theexperiences of police officers, schoolteachers and dental hygienists membersof a middle class who face a decidedly different set of nancial challenges.

It is not only American consumers and their counterparts in other countriesthat have had trouble setting aside savings from current income. Nationalgovernments have displayed similar tendencies, especially with respect to scalpolicy and international trade.

Macroeconomic decits and (un)sustainable consumption

Nobel laureate Paul Krugman (2003) observes that [t]he basic rule of scalresponsibility for a national government is pretty much the same as the rule fora family. Pay off your debts and build up nancial reserves when things aregood, so that you can draw on those reserves later. For most of the pastdecade, this advice seemed quaint and was in many circles regarded as undulycautious for failing to appreciate the benets of leverage. However, scalmoderation is a precondition for sustainable consumption. In the absence of

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nancial prudence, efforts to successfully shift consumer choices in moresustainable directions are likely to prove elusive. Two instructive macro-economic indicators of (un)sustainable consumption are the governmentbudget balance and the current account balance (essentially the trade balance).

To provide for public consumption as opposed to the private con-sumption paid for directly by households it is common for governments toborrow money on both a short- and long-term basis through the issuance of treasury bonds. Of the 27 OECD nations for which there are comparable data,15 (55%) reported budget decits in 2005 (Figure 1). 4 Hungary, Portugal,Japan, Greece and Italy (in declining order) were the most heavily indebtedcountries relative to their respective gross domestic products (GDP); all hadannual revenue shortfalls in excess of 4% of GDP. Aggregate borrowing to

compensate for these decits totalled more than $1 trillion, the USAaccounting for 45% of this amount and Japan a further 20%.

Government budget decits occur when the treasury expends more moneythan it collects in revenue. During periods when tax increases or spendingreductions are not politically viable, nancial markets provide a convenientway to raise additional funds, particularly if interest rates are relatively low.Countries have used this strategy throughout modern history to pay for warsand other exigencies, but it can become dangerous if borrowing fails to declineonce the emergency is over or if altered conditions make it difficult to renance

the debt.A second issue is the extensive degree of economic interconnectivity thathas become a feature of the present era of globalisation. We can usefully divide

Figure 1. Net government lending/borrowing for selected OECD countries, 2005.

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countries into two categories: net importers and net exporters. Of the sample of 27 OECD countries, 15 (55%) had current account decits (imports exceededexports) in 2005 (Figure 2). Iceland, Portugal and New Zealand had the largestshortfalls relative to their respective GDPs, but these amounts were dwarfed inabsolute terms by the massive decit ($793 billion or 71% of the total for thisgroup of counties) accrued by the USA.

Before proceeding, a few clarifying points. First, a negative current accountbalance is generally the result of weak export capacity relative to strong desirefor imports. Second, the prevailing market price and consumer demand forpetroleum are both important components of the trade picture (especially fornet oil-importing countries like the USA). When national petroleumexpenditures increase, the current account balance will decline in the absence

of offsetting changes in exports or non-oil imports. Finally, a protractedcurrent account decit will, ceterus paribus, tend to weaken the value of acountrys currency. The USA has encouraged such a situation for two decades,but the American current account balance has still been consistently negativesince 1982. The country has been able to buffer the adverse effects of its chronictrade decit because the dollar serves as the primary international reservecurrency.

A further measure of macroeconomic wellbeing is the twin decit (orsurplus) and it is calculated by summing the government budget balance and

the current account balance. As depicted in Table 2, 10 OECD countries fromthe sample of 27 nations (43%) have been experiencing twin decits. Italy, theUK and France have evinced modest twin decits (with combined governmentbudget and current account decits amounting to approximately 56% of their

Figure 2. Net current account balances for selected OECD countries, 2005.

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respective GDPs). This scale of imbalance puts these countries into somewhatprecarious positions, but most economists do not regard a twin decit of thismagnitude as inherently problematic. It is moreover essential to put theseamounts into perspective by comparing them to the USA, which had a twin

decit for 2005 of $1.4 trillion (10.1% of GDP).In the wake of the global nancial collapse, the American governmentbudget decit was expected to rise in 2009 to an unprecedented $1.75. In amore fortunate development, the current account decit shrank to $738 billionin 2007 and then to $677 billion in 2008 due to lower oil prices and contractionof consumer demand. Nonetheless, because of the general magnitude of itsgovernment budget and current account decits, the USA faces anunprecedented twin decit of nearly $2.5 trillion (approximately 18% of GDP) for at least several years. 5

The international political economy of (un)sustainable consumption

While household economics and the macroeconomics of government budgetingand international trade help to highlight the scale of recent patterns of (un)sustainable consumption, consideration of the motivations behind thissituation requires an approach grounded in international political economy. Itis the pivotal role of the USA as a debtor empire (Ferguson 2005, Bonner andWiggin 2006) that helps to explain why the contemporary global system hascome to rely on immense materials and energy ows.

While history provides no shortage of examples of countries that haveamassed large debts ( ancient re gime France is perhaps the most infamous case),this nancial strategy has typically been limited to the sale of bonds duringperiods when the survival of the state was under threat (as with Britain duringWorld War II) (Thompson 2007, Ferguson 2008). Stiglitz and Bilmes (2008)

Table 2. Twin decits for selected OECD countries, 2005.

Country Current account decit Budget decit Total twin decit

Low decitSlovak Republic 1.5 2.1 3.5Hungary 2.8 5.1 7.9Czech Republic 4.6 7.2 11.8Greece 5.3 14.1 19.4Portugal 11.1 19.1 30.2Poland 33.9 19.6 53.6

Medium decitItaly 141.4 51.0 192.4UK 124.7 100.9 225.6France 129.1 123.4 252.4

High decitUSA 1,140.6 743.9 1,884.5

All gures in billions of current dollars. Source : authors calculations based on data from OECD.

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estimate the cost of American military operations in Iraq and Afghanistan atmore than $3 trillion. Although it is a huge amount of money, a signicantportion comprises future expenses associated with caring for injured soldiersand needs to be compared with the vast size of the countrys economy(approximately $14 trillion in 2008). As strategically challenging as theseconicts have been, they have never constituted an existential threat to theUSA. The larger point is that there are few precedents of a great power relyingon debt to maintain current consumption to the extent that the Americangovernment (as well as its citizens) has been doing.

After a decade of amassing huge decits, the USA now nds itself borrowing still larger sums to stave off further bank failures and to fund a largeeconomic stimulus programme. The present situation is also only the tip of a

vast nancial iceberg. The American treasury has yet to feel the crashing waveof claims that will come as the generation of approximately 77 million babyboomers becomes eligible for public health insurance and other expensiveentitlements. According to credible estimates, these implicit liabilities amountto a staggering $45 trillion (Gokhale and Smetters 2002). As Ferguson(2005:262) observes,

[T]his overstretch has almost nothing to do with the United States overseasmilitary commitments. It is the result of Americas chronically unbalanceddomestic nances. And the magnitude of the problem is such that mostAmericans, including those who consider themselves well informed about thenations nances, nd it quite simply incredible. Indeed, the main reason whyAmericas scal crisis remains latent is precisely that people refuse to believe in itsexistence. (italics in original)

To maintain its generally high standard of living, the USA has come to relyon the steady infusion of borrowed money from China and other Asiancountries. While prominent economists have debated the relative vulnerabilityof the various participants (Krugman 2003, Mu hleisen and Towe 2004,Summers 2004, Bernanke 2005, Setser and Roubini 2005), historical experiencesuggests that the creditor tends in the end to hold the upper hand in thesenancial alliances (Ferguson 2008). Should China decide to diversify itsnancial portfolio (or even to reduce appreciably the rate at which it purchasesAmerican debt) the Peoples Bank of China would no doubt suffer signicantlosses as its remaining holdings fell in value. However, such action would beeconomically catastrophic for the USA as interest rates spiked upward toattract new money to replace the withdrawn Chinese funds. 6 A particularlyunsettling dimension of this situation, at least from the perspective of American foreign policy, is that the mere threat of altered Chinese investmentpreferences gives Beijing a unique degree of political advantage.

The scope of a crisis is, of course, not limited to the USA and China.Potential curtailment of American debt purchases by the Chinese means thatother countries probably Germany in the rst instance would be calledupon to prevent the global economy from spiralling into a parlous tailspin.

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However, the magnitude of the required amount raises questions aboutwhether sufficient liquidity exists to mount an effective rescue, even if nationaltreasuries could be convinced of the necessity of doing so.

The nancial circumstances surrounding recent patterns of immoderateconsumption in the USA could precipitate still more disconcerting futures if the country is unable to resolve its deep and expanding structural decits. Morethan two decades ago, Kennedy (1987) famously inquired whether Washingtonwas in danger of imperial overreach and this debate has assumed newrelevance as the USA once again is mired in protracted military conicts,contentious disputes with allies and accumulating debt (Bacevich 2002,Calhoun et al . 2006, Jackson 2007). While there are few historical examplesof debtor empires, there is growing agreement that the USA will be forced to

surrender in coming years some measure of its national sovereignty (Ferguson2005, Maier 2006, Morgan 2008, Zakaria 2008). This situation has inspiredsome observers to lapse into schadenfreude , but the countrys trading partnershave played accessory roles by allowing themselves to become subject to whatMead (2004) describes as American sticky power. This concept usefullycaptures a tacit objective of Washingtons foreign policy and approaches froma sideways direction the customary Manichaean distinction between hard andsoft power. For more than a generation, the USA has supplemented itsmilitary prowess and cultural appeal by enticing other nations into dependent

relationships predicated upon alluring access to the American consumermarket. In exchange for acquiescence on a wide range of political fronts, theUSA provides its closest allies with an expedient way to export surplusproduction. This situation is starkly apparent with respect to more than adozen countries, including those listed in Table 3. It is in fullment of this rolethat the USA has enlisted its consumers to function as the engine of the globaleconomy. While this strategy has been relatively successful in creating

Table 3. US merchandise trade decit by major partner country, 2008. a

CountryMerchandise trade decit

(in billions of current dollars)

China 270.3Canada 112.4Mexico 84.8Japan 77.6Germany 45.6Malaysia 19.1France 16.6Thailand 15.1Korea 13.6Taiwan 12.6Israel 12.0a Major oil-exporting countries are excluded. Source : US International Trade Commission ( http://dataweb.usitc.gov/scripts/cy_m3_run.asp ).

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enduring alliances, its perpetuation entails the movement and consumption of massive resource throughputs, the unprecedented degradation of environ-ments, and the maintenance of a huge marketing artice. Reversing thissituation will likely require a lengthy period of parsimony by Americanconsumers and discipline by those countries that have become reliant on theUSA as a safety valve to ensure their own political and economic stability.

Conclusion

Though the concept of sustainable consumption has begun to achieve politicalprominence, actual demand-side interventions have to date centred onrelatively modest measures like enhanced product information and consumer

education. Campaigns by advocacy organisations have focused on similarlystraightforward efforts to encourage various forms of ethical shopping andgreen consumerism. All of these initiatives deserve encouragement under thelarge tent of sustainable consumption, but such strategies are not scaled to thesize of the challenge. The ongoing contraction of the global economy starklyexposes the underlying structure of current modes of consumption andproduction, namely that American primacy rests in important ways onresolving the problem of how to dispose of surplus production. By impellingthe countrys populace to serve as a civilian army of consumers in exchange for

the obeisance of its trading partners, the USA has provided a practicable wayout of this dilemma. We are, however, now seeing that this strategy comes withexceptionally high social and environmental costs.

A more implicit proposition that emerges from this discussion is that theUSA (or any other country) is not immutably prone to consumerism. As deGrazia (2006) and other historians have convincingly demonstrated, consumersocieties are constructed manifestations of specic interests. This view leads tothe observation that policy initiatives to improve technical standards and toraise consumer consciousness are unlikely to yield much improvement in theabsence of parallel efforts to bring production capacities into line withlegitimate consumer needs. Recent calls for radical systems innovationrepresent a partial step in this direction, but attending largely to the socio-technical dimensions of provisioning underplays the more expansive politicaleconomy that frames the challenge. When the day arrives, as it surely must, torenegotiate the terms of the global economic order, it will be necessary todesign more efficacious systems of consumption that do not rely on rampantconsumerism to ameliorate the quandaries created by the ineffectualorganisation of production.

Notes1. Data on household savings for other OECD countries were not available in

comparable form.2. The following discussion draws heavily on the report by Guidolin and La Jeunesse

(2007).

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3. Some of this disparity may be attributable to variability in how governments reportsavings rates. Comparative analysis is also complicated because nations differ in theway pensions are funded and programmes are designed to provide insurance againstillness and unemployment.

4. The OECD data set does not include Belgium, Mexico and Turkey.5. The Obama administration has announced ambitious intentions to cut the

budget decit by 50% by 2013, but prevailing economic conditions and inevitablepolitical resistance to any tax increases will make this target very difficult to achieve.

6. Speculation currently abounds on the extent to which Chinas economicstimulus programme, announced in November 2008 and amounting to nearly$600 billion, will divert surplus funds otherwise earmarked to purchase Americantreasury bonds.

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