Rio+20 Must Rethink 'Economic Growth Is Always Good' Paradigm

Mario Biondi/Public Domain

Even as classical economists and every politician, local and national alike, continue to hold onto the idea that the solution to every social problem under the sun is more economic growth, there's thankfully an increasing amount of pushback, on environmental grounds.

EU Climate Commissioner Connie Hedegaard says in The Guardian that at the Rio+20 UN environment summit, happening this June in Brazil, nations must come together to question classic economic dogma on growth.

Hedegaard advocates "a more intelligent growth model, or else it's really difficult to see how we feed 7 billion people now and 9 billion people by 2050... This is an opportunity to rethink [how we measure growth]. The knowledge is out there, the analysis has been done. We can take this decision at Rio."

Which is all certainly true. A plentiful body of research has clearly shown the shortcomings of using GDP as a measurement of economic or social wellbeing.

It's only useful for doing what it was original designed to do: Measure the aggregate production and consumption of a nation — which also happens to be a useful measurement of ecological throughput, the relative amount of resources used, given that despite hopeful claims that economic growth can be decoupled from growth in resource consumption and energy usage, this has historically and currently not been the case, and is unlikely to ever fully or even largely be the case.

TreeHugger has written about these alternatives and supplements to GDP a number of times—The Genuine Progress Indicator, Gross National Happiness, and others—so I won't rehash them.

To those I'll add just one very basic principle that we seem loathe to ever consider. That is asking the apparently tough question (though it seems simple enough on the face of it) of when have we had 'enough', when has the economy grown 'enough'.

This has been a question that's been bouncing around in my head for a while, and fortunately ecological economist extraordinaire Herman Daly has just penned an answer. From the Center for the Advancement of the Steady State Economy (emphasis is mine):

Growth in all micro-economic units (firms and households) is subject to the “when to stop rule” of optimization, namely stop when rising marginal cost equals declining marginal benefit. Why does this not also apply to growth of the matter-energy throughput that sustains the macro-economy, the aggregate of all firms and households? And since real GDP is the best statistical index we have of aggregate throughput, why does it not roughly hold for growth in GDP? It must be because economists see the economy as the whole system, growing into the void — not as a subsystem of the finite and non-growing ecosphere from which the economy draws resources (depletion) and to which it returns wastes (pollution). When the economy grows in terms of throughput, or real GDP, it gets bigger relative to the ecosystem and displaces ever more vital ecosystem functions. Why do economists assume that it can never be too big, that such aggregate growth can never at the margin result in more illth than wealth? Perhaps illth is invisible because it has no market price. Yet, as a joint product of wealth, illth is everywhere: nuclear wastes, the dead zone in the Gulf of Mexico, gyres of plastic trash in the oceans, the ozone hole, biodiversity loss, climate change from excess carbon in the atmosphere, depleted mines, eroded topsoil, dry wells, exhausting and dangerous labor, exploding debt, etc. Economists claim that the solution to poverty is more growth — without ever asking if growth still makes us richer, as it did back when the world was empty, or if it has begun to make us poorer in a world that is now too full of us and our stuff. This is a threatening question, because if growth has become uneconomic then the solution to poverty becomes sharing now, not growth in the future. Sharing is now called “class warfare.”

The big answer in that long quote, the one that stands at the source of pretty much every environmental problem we now face, is right in the middle in italics.

Our economic and political philosophy fails to recognize that all of human activity takes place within ecological boundaries. Boundaries which through much of human history seemed remote if they were thought of at all now are being felt acutely in some places and increasingly will be felt acutely more broadly, as both human population and resource consumption grows.

If we don't ourselves say enough, then the planet itself will say enough for us.

Tags: Ecological Economics | Economics | Rio+20

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