Rhodes Forum - World Public Forum "Dialogue of Civilizations"

Andrej Zwitter
Assistant Professor, University of Groningen, PhD

The current economic crisis, as many before, has taught as an important lesson. It has shown that the economic behaviour of a few institutions in the private sector years ago (collapse of the subprime mortgage market in late 2006) can threaten the economic survival of individuals and even states today. Other crises also closely related to the impact of economy on future events, such as climate change and extreme poverty, may be less imminent but much more concerning.

Nowadays, economic behaviour is shaped by demand and supply or by planning for a short time in ahead or a combination of both. These approaches focus on profit maximization of individuals or a group that are involved. They might take even social responsibility regarding the poor. However, one group is least thought of in any of the above mentioned economic considerations – future generations. For example, recent high level discussions on climate change stalled because states do not want to risk economic development in the next years
Sustainable economic behaviour is different. It aims to generate security not only now but also in future – not only for oneself but also for the others concerned. In this regard, the biggest economic profit does not necessarily lead to the best outcome. On the contrary, most often the biggest profit leads to unstable and unbalanced outcomes (resource depletion, environmental degradation, displacement of people and an increased broadening of the gap between rich and poor).

However, if the economy is to be sustainable it needs a conceptual change. This change should take responsibility not only for the current economic behaviour and its results but also take into account the wellbeing of future generations. A possible way forward to accomplish might be the moral and international legal principle of intergenerational equity.
What is intergenerational equity?

The concept of intergenerational equity was originally developed as an economic concept. James Tobin wrote in 1974: "The trustees of endowed institutions are the guardians of the future against the claims of the present. Their task in managing the endowment is to preserve equity among generations."
This gave rise to a bigger discussion on intergenerational justice and eventually the concept was further developed and found entrance in: transition economics, social policy, government budget-making, environmental concerns, sustainable development, global warming and climate change.
It also manifested in international law. In modern International Law the temporal dimension is a constant concern. Legally speaking we can derive the principle of intergenerational equity from three core areas:
-    International Peace and Security: The United Nations Charter determines the purpose of the UN in its opening paragraph: "We the peoples of the United Nations, determined to save succeeding generations from the scourge of war...".
-    Environment: Similarly, does the Stockholm Declaration on the Human Environment (1972) make explicit reference to the objective to protecting the well-being of future generations; also important in this regard are: 1982 World Charter for Nature and the Group of 7 Ministerial Declaration in July 1990 (in relation to climate change).

-    Human Rights: Declaration of the 29th General Conference of UNESCO on the Rights of Future Generations, October and November 1997.
The Article 10 reads: “The present generations should ensure the conditions of equitable, sustainable and universal socio-economic development of future generations, both in its individual and collective dimensions [...].”
How does the concept of intergenerational equity relate to sustainable economy?

The causal relationship between poverty and conflicts is nowadays uncontested. There is also no doubt about the relationship between environment and economics. In addition, research has shown that the dynamics of the current economic system, as imposed on the whole world by a few economic superpowers, enforce inequalities among nations and people and exploitation of the poor. This causality leads to moral responsibility of the first world in regard to the developing countries. Additionally, it is known that many conflicts are fuelled by economic interests of states and private actors.

Actors in international relations are no longer only states. International corporations have taken over the lead in the international economic sector. Rarely, they are bound by international regulations and it is up to states and international organizations to regulate their behaviour.
Therefore, it is not exaggerated to say that the international economic system is predominantly responsible for underdevelopment and extreme poverty, for environmental scarcities and degradation, and even for international and intra-national conflicts. Nonetheless, international norms are not yet properly shaped to tackle this interconnection and to respond to the new reality of private actors acting internationally.
Intergenerational equity is legally enshrined in norms regarding international peace and security, environmental security, and human rights as mentioned before. One can therefore argue: as all these aspects are directly, causally connected with economy, the principle should be also applicable to international economic law. Human rights law broadened international law to include the rights of individuals, which live now and in future. If their rights are threatened by private actors, states and the international community are obliged to intervene holding international corporations responsible for their actions.

What should States and International Organizations do?

Strengthen the international awareness of the role of private actors regarding conflicts, poverty, human rights violations and environmental degradation. More strongly ingrain the concept of intergenerational equity in international economic regulations to bind private actors directly.
Regarding equity, economic behaviour of an actor shall be regarded as permissible to the extent that equal rights of all actors directly or indirectly concerned are protected. Intergenerational equity adds the temporal dimension. It shall demand an actor to base whatever decision he makes on the condition that future generations will benefit or at least not suffer from the decision made.

Conclusion

If it is our aim to protect future generations from the scourge of war, if it is about taking human rights seriously, if the environment shall be preserved for our children, then the economy should yield sustainable and equitable results not only for now but also for future generations. To this end, states and international organizations need to enforce the principle of intergenerational equity in the conduct of international economy of states and private actors.