Sustainability Critics I: Confidence, Credibility - the alpha-terms*

-- an SWMTHiNKTANK article
 

*alpha-terms: a series of attributes describing the fundamental characteristics of sustainability.

edited: 2012-05-22 (ws),2012-05-23 (ws)

Sustainability today is overquantified, institutionalised (suffering from inflexible conditions), technified, etc. [1]. There exists (unfortunately) a popular unidimensional belief that almost exclusively technical solutions (entities, vehicles, etc.), i.e. entities that somehow can be 'engineered' (in the broadest sense) can provide for sustainable development.

Two major characteristics of sustainability are: credibility and confidence. Looking exemplary at the finance sector it is rather evident that both attributes have seriously suffered in the course of the recent social and economic developments.

Reflecting on the information available to the public about the economic development, specifically the finance sector, from the more recent three to four years the following major processes/measures, among others, stick out: 

• financial restructuring
• emergency
• injection
• infection
• rescue, etc. 

On a national/governmental level immense and inconceivable amounts of money have been pumped into swaying companies (primarily bank institutes) and countries (Ireland, Spain, Greece, etc.). International rescue facilities (Euro bailout fund) and other vehicles have been constructed. Only a few months ago they were still reported to be of temporary nature, nowadays they are attributed a permanent nature. Does this implies that crisis will be a permanent situation? Crisis equals business as usual? How does this relates to sustainability?
On a private/industrial level the IPO of facebook last Friday can serve as a sound example for the frailty in the banking sector. The first trading day was characterized by supporting purchases, rather recent information report an unequal information policy by the banks and presume class-action lawsuits in the near future [2].

The case of Greece may serve as prominent and dramatic example of a situation that appears more and more - and that is elsewhere more drastically reported - to be of failed nature [4], [5]. What appear to be some of the reasons for this situation? One major aspect (not only limited to Greece) is certainly the widespread and fundamental mistrust, primarily attributable to missing, i.e. non-published but deemed information (an ideal medium for rumours), no information and information slowly seeping through to the public. Increasingly journalists report about incompetent elites [6] and first indications point toward the situation that uncertainty paired with some kind of angst (still expressed in terms of 'fears') of farther-reaching consequences (e.g. regarding the situation in Greece) take place [7]. This climate, distinguished by short-termed maximum-decisions can't be the basis for truly sustainable decision-making. In consequence: credibility and confidence, two of the major sustainability characteristics can't be simply bought (e.g. by means of pumping hugest amounts of money into 'firewalls'). Both attributes themselves posses an immense and highly fragile, but rarely quantifiable (because of its inherent subjectivity) value. This value needs to be created, it needs to be provided, it needs to be lived. Once successfully established the balanced conditions of credibility and confidence can easily be damaged by exceeding a dynamic threshold-range (typically rather close-by the equilibrium). The loss of credibility and confidence is rather rapid and almost irreversible (in this behavior both subjective aspects appear to follow simple conventional financial market situations). The recovery, if possible, requires true long-term approaches, i.e. indeed sustainable measures that can provide for a continuous and stable recreation of confidence and credibility. A recovery also needs to consider a parity between quantitative/technical measures and qualitative ones.

Further readings: [1], [2], [3], [4], [5], [6], [7]