1. Prof. Dr. Malte Faber University of Heidelberg faber@uni-hd.de 1 The Environmental Aspect of Making People Rich as the Top Priority: a Marxian Perspective (Long Version) Prepared for the International Forum on China Reform Surmounting Middle Income trap – Policies and Institutions for China´s Equitable and sustainable Development Haikou, Hainan, China October 29-30, 2011 China Institute of Reform and Development (CIRD) In cooperation with the CICETE, UNDP and GIZ

2. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 2 Table of Contents 1.Introduction 2.The Development of Environmental Conditions in China 3.The Development of Environmental Conditions in Germany 4.The Complexity of the Environment 5.Marx View on the Environment 6.Marx View of the Dynamics of the Capitalistic System and its Implications for the Global Environmental Ressource problem

3. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 3 7.Changes in the Picture of Humankind and in the Comprehension of Nature 8.Ethos of Power and Style of Government 9.Summary 10.Conclusions

4. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 4 1. Introduction Income distribution of PRC Gini Coefficient (between 0 and1) 1970: 0.2 2010: ca. 0.46 Wealth distribution of PRC 2010: ca. 0.61 Gini Coefficient 0.4: dangerous for social stability Gini Coefficient 0.5: Danger of social uproar

5. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 5 1. Introduction The water which supports the ship also overbalances the ship (Tai Zong Tang-Dyansty 7th century)

6. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 6 1. Introduction Question: How does one accomplish making people rich? Common Answer: Economic Growth Problem of growth: Increasing income an wealth disparity Consequence: Not to abandon the market system to its own fate but government must strongly regulate market conditions

7. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 7 1. Introduction Regulations of market: reforming the fiscal and taxation system rationalizing the national income and wealth distributions equalizing the access to public services changing economic development models

8. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 8 1. Introduction Only in this way it will be possible to assume political responsibility and to overcome poorness and to surmount the middle income trap. To this end not only the market system but the government and administration has to be reformed

9. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 9 1. Introduction How should politics orientate in making people rich? Answers differ in different parts of the world. In the West, the Greek philosopher Aristotle (384 BC-322 BC) said: Most people misconceive what richness means. In contrast: Richness means that human beings find the right measure – the happy medium - for their own needs and wants.

10. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 10 1. Introduction Advantage of this concept of restrained richness: Reducing differences in income and wealth. No discrimation and no privileges! But main consequence of making people rich: Caring most for those human beings who are very poor!

11. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 11 1. Introduction Richness defined in an Aristotelian sense definitely implies acces to: Education Health care and Services of the environment such as clean air and water. Concern of this lecture: the environment.

12. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 12 2. The Development of Environmental Conditions in China Main Problems: Sufficient acces to clean water and clean air Regulating waste protecting soil and biodiversity. Comparing environmental conditions in 2007, when I first visited China with present Chinese environmental policy, one sees great dynamics:

13. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 13 2. The Development of Environmental Conditions in China Many laws and regulations have been enacted; among them is the influential circular (recycling) economy law. The spending for environmental protection has risen by (15 to) 20 % annually. This implies that a doubling has occurred within the last four years. Another impressive fact is the rapidly annual increase of wind energy: this year the planned investment is twice as much as in the USA and five times as much as in Germany. Nevertheless, a lot has to be done in the coming years.

14. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 14 2. The Development of Environmental Conditions in China Dynamics of environmental policy in China are similar to the ones in Germany between 1970 and 1990. From my experience as environmental consultant I am confident that China will suceed solving its main problems: supplying clean water clean the air and deal adequately with waste.

15. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 15 2. The Development of Environmental Conditions in China In this optimistic environmental perspective, the future of China looks bright.

16. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 16 3. The Development of Environmental Conditions in Germany Let us have a look at the environmental situation in Germany in 1990: Only few environmental problems could be observed on the surface in Germany. Before 1990 pollution was seen and smelled, tasted and felt or heard. By 1990 this wasnt the case anymore, since the air was clean and the water clear, the waste was avoided, recycled or cleanly disposed of and the noise of traffic was considerably reduced by provisions such as building sonic walls and the development of low noise machines.

17. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 17 3. The Development of Environmental Conditions in Germany Result: Environmental damaging effects could not anymore be experienced by the 5 human senses and were not anymore directly noticeable. Consequence: The environmental issue was not anymore present in the media and the public. It`s priority dropped drasticly. Therefore it became difficult to engage people for the environment.

18. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 18 4. The Complexity of the Environment But the environment is a very complex system: Many dangers cannot be immediately recognized: Long duration from the first causation until the first effect. Examples: destruction of the ozon layer CFCs (chlorofluorocarbon) mad-cow disease, bovine spongiform encephalopathy (abbreviated BSE).

19. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 19 4. The Complexity of the Environment SARS (Severe acute respiratory syndrome) SARS is a respiratory disease in humans and caused about1000 fatal causalities. During the spring of this year Germany was affected by the Ehec virus enterohemorrhagic E. coli). Result: Nature is a very fragile system.

20. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 20 4. The Complexity of the Environment In earlier times it was the Chinese emperor, who was held to be responsible for the functioning of the natural living conditions in whole China. Today it is the Communist Party of China. How should their leaders deal with this difficult task?

21. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 21 5. Marx View on the Economy and the Environment It may be helpful to see what Karl Marx (1818-1883) had to say on this issue. Why did Marx understand so well the dynamics the capitalistic system? Marx had the ability to see unintended consequences of our actions. Two areas in which these unintended organize themselves and become to determining factors. These areas are 1.the economy and 2.nature.

22. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 22 5. Marx View on the Economy and the Environment 5.1 Marx`s View on the Economy Marx recognized that the production of wealth always goes hand in hand with the creation of poorness and that this happens although the actors do not intend this production of pauperism. The poorness does not arise by the fact that people rob so others, but poorness is an unavoidable consequence of the capitalistic system and its dynamics.

23. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 23 5. Marx View on the Economy and the Environment This was already observed by the philosopher F.W. Hegel (1821/1970) in his Philosophy of Right. But Marx analyzed this connectivity more in detail than Hegel, for he developed this idea to a precision tool for the study of social change (Elster 1986: 38- 39). This Marxian analysis bears straight reference to a main theme of this conference Surmounting Middle Income Trap.

24. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 24 5. Marx View on the Economy and the Environment 5.2 Marx`s View on the Environment But on the other side this Marxian analytical instrument may also be employed to study the unintended consequences of the repercussions of the capitalistic market system on nature. Marx dealt extensively with environmental and resource problems.

25. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 25 Marx was the only classical economist who dealt extensively with the environmental and resource problem (Kurz 1986, Baumgärtner 1999: 104-107). He even conceived them as problems of joint production. What does this mean? To give an example: 5. Marx View on the Economy and the Environment

26. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 26 Example of Joint Production A two-person household needs yearly: 4000 kwh electrical energy to produce this amount with lignite (brown coal). 6000 l water steam, 21600 m 3 air emissions, 3200 l waste water, 288 kg ashes are generated as by-products. 5. Marx View on the Economy and the Environment

27. He even discussed recycling of waste and to regain resources from recycling processes. (Baumgärtner, Faber, Schiller 2006, 114-116) However, he thought that all environmental and resource problems would finally be solved because of human creativity to transform all waste products into valuable goods. It is noteworthy that Marx perspective was singular and unique at his time. His awareness of this issue demonstrates Marxs extraordinary ability to analyze the dynamics of the capitalistic system. But Marx didnt integrate his view into his economic theory and downplayed it. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 27

28. 5. Marx View on the Economy and the Environment As proved by Baumgärtner, Faber, Schiller (2006, Chapter 3) Marx view is not valid: From a thermodynamic point of view, every production yields joint products. Every industrial production is characterized by joint products in form of waste and emissions. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 28

29. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 29 Typical Industrial Production Process Example: Iron Manufacturing Production process: Entropy production low entropy fuel: coke high entropy raw material: iron ore product: low entropy iron joint products: high entropy slag, dust, CO 2 Thermodynamics every industrial production is joint production

30. 5. Marx View on the Economy and the Environment One may as well ask: why Marx believed so much in progress. This may as well be a consequence of his great admiration for the capitalistic bourgeoisie, which is documented in his Communist Manifesto (jointly published with Friedrich Engels in 1848: 62): It (the bourgeoisie, M.F.) has been the first to show what man's activity can bring about. It has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts, and Gothic cathedrals; it has conducted expeditions that put in the shade all former exoduses of nations and crusades. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 30

31. 5. Marx View on the Economy and the Environment The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. (Marx and Engels 1848: 63) Prof. Malte Faber University of Heidelberg faber@uni-hd.de 31

32. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 32 6. Marxs View of the Dynamics of the Capitalistic System and its Implications for the Global Environmental Resource problem It is generally acknowledged that no social scientist has studied the dynamics of the capitalist system so well as Karl Marx. I want to use one of his theses which gives a decisive insight into the dynamics of our present and future environmental and resource problems. The Marxian economist Meghnad Desai (2002: 44) has – in the tradition of Karl Marx´s praise of the capitalistic system – commented the development of capitalism after the fall of the Wall in Berlin in 1989 as follows:

33. 6. Marx View of the Dynamics of the Capitalistic System and its Implications for the Global Environmental Resource problem Capitalism had survived – not only survived, but become a dynamic worldwide phenomenon yet again, the first time since 1914. It showed a capacity for technological advance with promises of more to come. Across the world people abandoned socialism as a cure for their problems. Warts and all, it was capitalism they wanted. Capitalism had still a lot of potential; it was not yet ready to lie down and die. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 33

34. 6. Marx View of the Dynamics of the Capitalistic System and its Implications for the Global Environmental Resource problem Desai was inspired to his diagnosis by one of Marx`s (1959/04:21) theses: No social order ever disappears before all the productive forces for which there is room in it have been developed; and the new higher relations of production never appear before the material conditions of their existence have matured in the womb of the old society itself. Therefore, mankind always sets itself only such tasks as it can solve; since looking at the matter more closely, we will always find that the task itself arises only when the material conditions necessary for the solution already exist, or are at least in the process of formation. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 34

35. Marxs analysis is accurate if one confines his object of study merely to capitalism as a purely economic capitalistic system. His statement, however is not true if we enlarge the object of study such that the economic system encompasses in addition the environment. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 35 6. Marx View of the Dynamics of the Capitalistic System and its Implications for the Global Environmental Resource problem

36. Desai is correct in taking the development of the world after 1989 as an indication that Marx` assertion concerning the dynamics of the method of production is appropriate If this is true, then the capitalism would have a splendid future still to come: it has not yet reached its limits in the developed countries and more and more countries and economies are globally captured by capitalism. However, in the past, this dynamic has been linked with an ever growing demand of environmental services and resource capacities. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 36

37. 6. Marx View of the Dynamics of the Capitalistic System and its Implications for the Global Environmental Resource problem Empirical evidence for this hypothesis is the increase of consumption of energy and the corresponding increase of CO 2. Since the environmental conference in Rio in 1992 both quantities grew by 40 percent and this tendency is still unbowed until the recent present. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 37

38. 6. Marx View of the Dynamics of the Capitalistic System and its Implications for the Global Environmental Resource problem Consequence: perspective for the future safeguard of the natural environmental conditions looks somber; the reasons are: 1.at least 3 billion human beings of the world population have a backlog demand to satisfy basic need, such as food, clothing, housing, clean water, health services and education. Even in China many of its inhabitants are in need of these goods and services; 2.in addition, we have to recognize that the world population will grow by another 3 billion people until 2050. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 38

39. 6. Marx View of the Dynamics of the Capitalistic System and its Implications for the Global Environmental Resource problem Two consequences: it does not seem possible 1. to conserve globally the intake capacity of the environment for pollutants and 2.to make available sufficient amounts of resources for the production and consumption of 9 billion people by 2050. The resulting damages of nature and the shortages of natural resources would be disastrous not only to nature, but would also be a permanent source of conflicts. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 39

40. 6. Marx View of the Dynamics of the Capitalistic System and its Implications for the Global Environmental Resource problem Policy recommendations: Decoupling of economic growth and the use of exhaustible and nonrenewable resources as well as the depletion of the environmental capacity of disposing and cleaning up waste. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 40

41. 6. Marx View of the Dynamics of the Capitalistic System and its Implications for the Global Environmental Resource problem If the decoupling of economic growth and the environmental strain cannot be achieved, then it may well be that Karl Marx is right with his prediction that the capitalistic system will collapse, although in quite a different manner as he had thought (see also Desai 2002: 9f). Prof. Malte Faber University of Heidelberg faber@uni-hd.de 41

42. 9. Conclusion Marx`s key insight is the central role of unintended consequences of human actions It is characteristic for the individual freedom that the individual does not have responsibility for these unintended consequences. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 42

43. 9. Conclusion Politics and states have to take up responsibility for all consequences of all human actions. If the state takes over this encompassing responsibilty for the environment, then one implication may well be that individual freedom may be limited more than up to now. However, these restrictions of individual freedom should only be carried through in a legal form. And there should be no exception from this legal form. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 43

44. 9. Conclusion All people have in common that they do want that there exists just one law, a law which is valid for all human beings without respect to person. A contribution to the enforcement of such a law is a considerable contribution to the theme Making people rich. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 44

45. 9. Conclusion This legal perspective is actually not new, but was already formulated by a Chinese poet, Huan Kuan (90 to 40 B.C. Han Dynasty) in his disputation Salt and Iron more than 2000 years ago:. The worlds sorrow is not that there does not exist a law, but its sorrow is a law that does not need to be followed. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 45

46. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 46 7. Changes in the Picture of Humankind and in the Comprehension of Nature One of the influential intellectual figures in Germany in the 20th century was Romano Guardini (1885 -1968). He postulated that the `new human architect of the emerging world […] must know and agree that the import of the coming culture is not welfare but dominion [….]. The man we envision must unhesitatingly place security, utility, and welfare second; the greatness of the coming world image must be placed first´ [Guardini, 1965, translation: Elinor C. Briefs (Google Books)].

47. It is expedient to remember that the increasing security, utility, and welfare in the Western World during the last three centuries – of which Guardini speaks – is most of all a result of increasing individual freedom during the last three centuries. This freedom is guaranteed by the state. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 47 7. Changes in the Picture of Humankind and in the Comprehension of Nature

48. On the one side, this immense leeway of individual freedom has effected an immense growth of individual utilities and of general welfare. On the other side, Karl Marx spoke of the anarchy of commodity production and consumption and thereby he meant the culture of irresponsibility which is part of capitalism. While Marx focused his attention on social structures in the 19 th century, we focus - with hind sight - today also on environmental damages and the depletion of resources in the 21 st century. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 48 7. Changes in the Picture of Humankind and in the Comprehension of Nature

49. This thesis implies two important changes of the picture of human kind (see also Faber, Petersen, and Schiller 2002): 1.The first is that individual freedom will not have such dominance as it had in the 20th century, although – of course – it should adhere to certain limits. - These limits are given by responsibilities of the individual actors and of the politicians (see Baumgärtner, Faber Schiller in cooperation with Thomas Petersen, 2006, Part III) 2.The second is that our comprehension and our understanding of nature have to change. Nature is not anymore unshakably supporting us; hence, we cannot confide into as we have done in the past. Instead we experience nature in its fragility. We, therefore, cannot anymore depend on it, but instead we have to care for it. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 49

50. 8. Ethos of Power and Style of Government During the last two centuries, Western man has been wielding power against his environment – unknowingly or knowingly – with bad conscience because of his selfishness. To alleviate his conscience he has put forward as a pretext security, utility and welfare. For this reason Western man has neither developed a genuine ethos of governance nor a proper style of governance, but instead retreated into anonymity. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 50

51. 8. Ethos of Power and Style of Government The human being who is– presently and for the future– required will have decidedly to set security, utility and welfare at the second position in his list of values and the just order of the coming gestalt of the world at the first position. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 51

52. 8. Ethos of Power and Style of Government The ethos of governance persists in this Chinese classical tradition therein that one orientates oneself to the order of heaven. This is by no means something esoteric or mystic or something else, but it means very concretely the ability to engage with the nature of things and in particular with the nature of humans. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 52

53. What is meant by an ethos of governance and a style of governance? Answers to these questions exist in the Chinese classical tradition. According to Confucius and Laozi: The good ruler does seek nothing for himself; he does also not privilege his own family or other groups of interest. The rulers, therefore, have to free themselves from all their selfish needs and private interest, but also from their sorrows and anxieties. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 53 8. Ethos of Power and Style of Government

54. Chinese classical tradition: ethos of governance orientates to the order of heaven i.e. the ability to engage with the nature of things and nature of humans. The beginning of every true government is the listening to nature and to humans. A ruler understanding nature and humans acts in harmony with the forces of nature and with a fortitude of the human hearts. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 54 8. Ethos of Power and Style of Government

55. One of the great Chinese Cultural achievements is Chan- Buddhism. One of the great Chan- masters, Feng-hsüeh Yen-chao ( 896-973), gave an illustration how much the beauteousness of nature is esteemed in China. In koan 24 of the Wu-men-koan, Feng-hsüeh Yen-chao`s Speech and Silence) he quoted: I always remember the spring in Konan, Where the partridges sing; How fragrant the countless flowers. Konan is a district stretching south of the Yangtze River, between Nanking and Payang Lake, famed for the beautiful scenery. (Sekida 1977: 85-86) Prof. Malte Faber University of Heidelberg faber@uni-hd.de 55 8. Ethos of Power and Style of Government

56. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 56 8. Ethos of Power and Style of Government (ii) Listening to What Drives the Human Hearts The ruler has to listen to what drives the human hearts. Why is this task of listening so demanding? Men are not only very different, even an individual human being varies considerably in his/her interests and wishes in the course of time; sometimes they want this and sometimes, since he or she has often varying and yet contradictory interests; further we must have in mind that many a human being is good and many a is bad.

57. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 57 8. Ethos of Power and Style of Government In the West the concept of individual freedom was developed and politically implemented. Freedom allows individuals to have as many oppotunizties as possible to realize their varying interests. During the last centuries this freedom has accomplished a lot of good, since it has allowed for creativity and Responsibility. But it has set loose a lot of destructive forces as well as against nature and against human beings.

58. 8. Ethos of Power and Style of Government China hosts an ongoing debate on the possibilities and limits of individual freedom; for individual freedom is necessary in the wake of a market economy. Coming back to our point of departure: What does it mean to listen to what drives the human heart? It means to go deeper than just the individual freedom. It stands for going inside this human heart and finding that domain which is common to all human beings. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 58

59. 8. Ethos of Power and Style of Government The well-known English author Gilbert K. Chesterton (1874-1936), who was not only a famous author of detective stories, but also a philosopher, wrote: It [the democratic emotion] is a certain instinctive attitude which feels the things in which all men agree to be unspeakably important, and all the things in which they differ (such as mere brains) to be almost unspeakably unimportant. [Chesterton (1905/2004: 232), original text, Project Gutenberg] Prof. Malte Faber University of Heidelberg faber@uni-hd.de 59

60. Conclusion It is this perspective of common ground which enables the politicians to frame and organize the society effectively. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 60 8. Ethos of Power and Style of Government

61. (iii) Governance according to Law All human beings is common a desire for law; not only for a written law, but for a law which is really enacted. This is the third great challenge for the Chinese politics. This perspective is actually not new, but was already formulated by the Chinese poet, Huan Kuan (90 to 40 B.C. Han Dynasty) in his disputation Salt and Iron more than 2000 years ago: Prof. Malte Faber University of Heidelberg faber@uni-hd.de 61 8. Ethos of Power and Style of Government

62. The worlds sorrow is not that there does not exist a law, but its sorrow is a law that does not need to be followed. This statement implicitly recommends the guarantee of independence of law enforcement. All people have in common that they do want that there exists just one law, a law which is valid for all human beings without respect to person. A contribution to the enforcement of such a law is a considerable contribution to the theme Making people rich. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 62 8. Ethos of Power and Style of Government

63. 9. Summary The complexity of the capitalistic system is essentially caused by the individual freedom. Marx: the complexity is not controllable. Evidence: financial crisis in the USA and the European Union environmental pollution exhaustion of non-renewable and renewable resources. Consequence: Control of economy and the environment by the government. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 63

64. 9. Summary Solution: In general: Restrictions of individual freedom In particular: Regulations -for financial actors relatively easy, but -difficult for all consumers and producers. Control of economic actors by the state has limits. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 64

65. 9. Summary Hence further perspectives are necessary: New ethos of governance The human being who is required (Guardini, 1965) will have decidedly to set: security, utility and welfare at the second position in his list of values and the just order of the coming gestalt of the world at the first position Prof. Malte Faber University of Heidelberg faber@uni-hd.de 65

66. 9. Summary Such a change cannot be ordered by any measures it can only occur in freedom. However - if we see things rightly - such an alteration is already taking place right now: There exists in all parts of the world the development of an attitude of caring for nature. It seems to be important to observe carefully these signs of the time. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 66

67. 9. Limitations on Freedom At first sight the perspective of limitations on freedom looks somber. But this not really the case. For let me remind you that at the end of the 18th century the German state Prussia was the most prosperous and most powerful one. This was due to the fact that Prussia possessed the best functioning legal order in whole Europe. In particular Prussia was known for its exclusion of arbitrary actions of the state, instead its administration adhered strictly to laws.. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 67

68. 9. Limitations on Freedom Today, we are much more restricted in our freedom than in the Middle ages. For example, as soon as we leave our home we have to follow strictly all the traffic rules. Driving a car is an extreme restriction of our freedom, often for hours. These rules have been formulated by the state. Nevertheless, we are presently much freer than in the Middle Ages. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 68

69. 9. Limitations on Freedom This sounds paradoxically at first sight. Question: How is it possible that the state has so much more power to restrict our individual freedom and nevertheless, we enjoy so much freedom? Answer: It is the LAW which makes this possible. If the power of the state is regulated and restricted by the law, then the individual freedom is strengthened by the increase of power of the state; for freedom is a right which can only be realized if the state guarantees it according to rules. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 69

70. 9. Limitations on Freedom Result: The power of the state grows by an increasing legislation. The increase of power of the state yields an increase of lawully regulated individual freedom. Hence, the individual freedom increases also. Hence the law results in the fact that the relationship between the state and the individual is NOT a ZERO- SUM GAME but a POSITIVE SUM GAME. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 70

71. 10. Conclusions The analysis given in this paper is of general nature. So one may as well ask What follows from it? What conclusions can be drawn from it? Those of you who are interested in concrete policy proposals might be disappointed. But let me remind you of two great figures of the past, one is Sunsi or Master Sun (544-496 B.C.), the author of The Art of War, the other is Heracles, one of the great Greek mythic heroes. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 71

72. 10. Conclusions Master Sun (2007: 60) noted that the wise commander or general, in his deliberations, will take into account both the favourable and the unfavourable factors. By considering the favourable factors when faced with difficulties, he will be able to accomplish great tasks - by considering the unfavourable factors when everything proceeds smoothly, he will be able to avoid possible disasters. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 72

73. 10. Conclusions Prof. Malte Faber University of Heidelberg faber@uni-hd.de 73 China`s development has been relatively smoothly during the last three decades. But it is – according to Master Sun – wise to consider the unfavourable factors when everything proceeds smoothly in order to be able to avoid possible disasters. For this reason I have described the dangerous consequences of the dynamics of the global market system for the environment and for the supply of resources.

74. 10. Conclusions Prof. Malte Faber University of Heidelberg faber@uni-hd.de 74 Let me turn now to Heracles. This great hero had to pass 12 extremely dangerous adventures. At one occasion he had to fight with an oversized reptile with nine heads. The particular problem to fight with that animal was that cutting off one of its heads had the consequence that two others grew immediately at its place.

75. 10. Conclusions Prof. Malte Faber University of Heidelberg faber@uni-hd.de 75 This reminds me of my experiences as an environmental consultant during the last three decades. As soon as we had solved one environmental problem, such as waste water, two other immediately reared their heads, such as bad air and waste, and so on. These life experiences with the repercussions of concrete environmental policy issues taught me that it is expedient not only to deliberate over concrete policy problems but also to give some thought to general aspects of long run developments at large.

76. 10. Conclusions Prof. Malte Faber University of Heidelberg faber@uni-hd.de 76 The interest in general interdisciplinary and long run problems is characteristic for the Chinese culture and the education based of it. An example is the teaching and research programme of the Shanghai Party Institute (SPI) & Shanghai Administration Institute (SAI), which is perhaps the best known comprehensive base for cadre-training in China, an institution to train civil servants and their successors at the intermediate and senior levels.

77. 10. Conclusions Prof. Malte Faber University of Heidelberg faber@uni-hd.de 77 The program of the SPI is very broad and general: This is necessary for the higher education for policymakers and civil servants, although whose profession is definitely to make concrete policy decisions and to administer in reality.

78. Final remark : The complete paper of this lecture is available in printed form. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 78

79. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 79 XIE NIN DE ZHAO DAI I thank you for your invitation!

80. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 80 Literature Baumgärtner, Stefan (2000) Ambivalent Joint Production and the Natural Environment. Physica-Verlag, Heidelberg, New York. Baumgärtner, Stefan, Malte Faber, Johannes Schiller in cooperation with Thomas Petersen (2006) Joint Production and Responsibilty in Ecological Economics. On the Foundation of Environmental Policy, Edward Elgar. Chesterton, Gilbert Keith (1905/2004): Ketzer. Ein Plädoyer gegen die Gleichgültigkeit. Frankfurt am Main. Desai, Meghnad (2002) Marx`s Revenge. The Resurgence of Capitalism and the Death of Socialism, Verso, London, New York.

81. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 81 Literature Elster, Jon (1986) An Introduction to Karl Marx, Cambridge University Press, Cambridge. Faber, Malte, Thomas Petersen, J. Schiller, (2002) Homo oeconomicus and homo politicus. In Ecological Economics, Ecological Economics, 40: 323-333. Fetcher, Iring, (1966) Marx-Engels III Studienausgabe, Geschichte und Politik, Fischer, Frankfurt a.M. Band III Guardini, Romano (1965) Die Macht, 6. unveränderte auflage 1965 (Erstauflage 1952), Werkbundverlag Würzburg. Hegel, Georg Wilhelm Friedrich (1821/1970) Grundlinien der Philosophie des Rechts oder Naturrecht und Staatswissenschaft im Grundrisse. Frankfurt am Main.

82. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 82 Literature Jöst, Frank, Horst Niemes, Malte Faber und Kurt Roth (2006) Begrenzen Chinas Wassereserven sein langfristiges Wachstum? Heidelberger Discussion Papers, No 433 Kurz, Heinz-Dieter (1986), "Neoclassical economists on joint production, Metroeconomica, 38: 1-37. Marx, Karl (1859/1904) A Contribution to the Critique of Political Economy, originally published by Otto Meissner, Hamburg, translated by N. Stone, Charles Kerr, Chicago; edn trans S-W. Ryazanskaya, ed. Maurice Dobb, London 1971. [German original: Zur Kritik der Politischen Ökonomie. (Marx Engels Werke MEW 13, 5-160)].

83. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 83 Literature Marx, Karl (1867/1887) Capital Volume 1: Capitalist Production, originally published by Otto Meissner, Hamburg, translated from the third German edition by Samuel Moore and Edward Aveling in 1887, Swan Sonnenschein, Lowrey & Co, London; Lawrence& Wishart, London 1974. Marx, Karl (1885/1919) Capital Volume 2: The Process of circulation of Capital, ed. By F. Engels, originally published in German by Otto Meissner, Hamburg, translated by N. Stone, Charles Kerr, Chicago. Marx, Karl und Friedrich Engels ()1848/1888) Communist Manifesto, first translated by Helen Macfarlane, serialized in The Red Republican, November 1850. (translation is taken from: http://www.anu.edu.au/polsci/marx/classics/manifesto.html)

84. Prof. Malte Faber University of Heidelberg faber@uni-hd.de 84 Literature Sekida, Katsuki (1977) Two Zen Classics. Momonkan and Hekiganroku, Weatherhill, New York, Tokyo. Sen, Armatya (1999/2002) Development as Freedom Alfred Knopf, New York (Deutsche Übersetzung Ökonomie für den Menschen. Wege zur Gerechtigkeit und Solidarität in der Marktwirtschaft, Deutscher Taschenbuch Verlag, München). Sunzi (2007) The Art of War, Foreign Languages Press, Bejing.