Uneconomic growth

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Uneconomic growth, in human development theory, welfare economics (the economics of social welfare), and some forms of ecological economics, is economic growth that reflects or creates a decline in the quality of life. The concept is attributed to the economist Herman Daly, though other theorists can also be credited for the incipient idea.[1][2] Note Uneconomic growth (or uneconomic degrowth) should not be confused with economic degrowth, the reduction of the size of the economy to increase well-being and sustainability.[3]

The cost, or decline in well-being, associated with extended economic growth is argued to arise as a result of "the social and environmental sacrifices made necessary by that growing encroachment on the eco-system."[4][5] In other words, "[u]neconomic growth occurs when increases in production come at an expense in resources and well-being that is worth more than the items made."[6]

Good vs. bad growth

Abandoned boats in Moynaq, Uzbekistan. This former beach is now 150 km away from the Aral Sea. From the 1930s the Soviet authorities diverted the rivers for cotton irrigation. Already in 1968, the desiccation of the sea was seen as "inevitable".[1] The Uzbekistani authorities still prefer exportable cotton and oil prospecting over restoring the South Aral Sea.[2]

Uneconomic growth often reflects poorly developed or poorly planned growth, rather than growth that is inherently bad. For example, if one assumes that Atlantic hurricanes and Pacific typhoons have intensified in recent years due to human-caused global warming, then a rapid surge in automobile ownership in China, Brazil, and India could be seen as uneconomic growth. This is based on the assumption that significantly increasing the number of internal combustion engines worldwide would increase global warming, and that the economic damage from global warming would more than offset any economic growth brought about from the increase in automobiles; however, if the new automobiles were ethanol[citation needed]-fuelled or battery powered from non-greenhouse-gas-producing energy sources such as solar, wind, or nuclear instead of petroleum-fuelled, the effect on global warming might be very minor and not uneconomic at all (of course, this is contingent on a massive change in energy production in China, where most power is produced by burning coal at the moment). Note that the hypothetical surge in automobiles might be 'uneconomic growth' from a global perspective, but 'good economic growth' from those countries' perspective (an example of an externality). This means from the perspective of a growing economy like China, or other smaller nations, it would be far more fair for already-developed nations like the United States to reduce the number of vehicles or limit their own CO2 production rather than injuring or limiting the developing nations ability to grow (which the US and other nations were free to do in the days before carbon emissions were considered a major concern).

The limits to growth

The "limits to growth" debate has some roots in Malthusianism. Much of the debate in recent times was prompted by the 1972 Club of Rome study Limits to Growth, which considers the ecological impact of growth and wealth creation. Many of the activities required for economic growth use non-renewable resources. Many researchers feel these sustained environmental effects can have an effect on the whole ecosystem. They argue that the accumulated effects on the ecosystem put a theoretical limit on growth. Some draw on archaeology to cite examples of cultures they say have disappeared because they grew beyond the ability of their ecosystems to support them.[7] The argument is that the limits to growth will eventually make growth in resource consumption impossible.

Others are more optimistic and believe that, although localized environmental effects may occur, large-scale ecological effects are minor. The optimists suggest that if these global-scale ecological effects exist, human ingenuity will find ways of adapting to them.

The rate or type of economic growth may have important consequences for the environment (the climate and natural capital of ecologies). Concerns about possible negative effects of growth on the environment and society led some to advocate lower levels of growth, from which comes the idea of uneconomic growth, and Green parties which argue that economies are part of a global society and a global ecology and cannot outstrip their natural growth without damaging them.

Canadian scientist David Suzuki argued in the 1990s that ecologies can only sustain typically about 1.5–3% new growth per year, and thus any requirement for greater returns from agriculture or forestry will necessarily cannibalize the natural capital of soil or forest. Some think this argument can be applied even to more developed economies.

The role of technology, and Jevon's paradox

Mainstream economists would argue that economies are driven by new technology—for instance, we have faster computers today than a year ago, but not necessarily physically more computers. Growth that relies entirely on exploiting increased knowledge rather than exploiting increased resource consumption may thus not qualify as uneconomic growth. In some cases, this may be true where technology enables lower amounts of input to be used in producing the same unit of product (and/or it reduces the amount or hazardousness of the waste generated per unit product produced) (e.g., the increased availability of movies through the Internet or cable television electronically may reduce the demand for physical video tapes or DVDs for films). Nonetheless, it is crucial to also recognise that innovation- or knowledge-driven growth still may not entirely resolve the problem of scale, or increasing resource consumption. For instance, there might likely be more computers due to greater demand and replacements for slower computers.

The Jevons Paradox is the proposition that technological progress that increases the efficiency with which a resource is used, tends to increase (rather than decrease) the rate of consumption of that resource.[8][9] For example, given that expenditure on necessities and taxes remain the same, (i) the availability of energy-saving lightbulbs may mean lower electricity usage and fees for a household but this frees up more discretionary, disposable income for additional consumption elsewhere (an example of the "rebound effect")[10][11] and (ii) technology (or globalisation) that leads to the availability of cheaper goods for consumers also frees up discretionary income for increased consumptive spending.

On the other hand, new renewable energy and climate change mitigation technology (such as artificial photosynthesis) has been argued to promote a prolonged era of human stewardship over ecosystems known as the Sustainocene. In the Sustainocene, "instead of the cargo-cult ideology of perpetual economic growth through corporate pillage of nature, globalised artificial photosynthesis will facilitate a steady state economy and further technological revolutions such as domestic nano-factories and e-democratic input to local communal and global governance structures. In such a world, humans will no longer feel economically threatened, but rather proud, that their moral growth has allowed them to uphold Rights of Nature."[12]

See also

Further reading

References

  1. ↑ Daly, H. 2007. Ecological economics: the concept of scale and its relation to allocation, distribution, and uneconomic growth. Pp. 82-103 in H. Daly. Ecological Economics and Sustainable Development: Selected Essays of Herman Daly. Cheltenham, UK: Edward Elgar.
  2. ↑ Daly, H. 1999. Uneconomic growth and the built environment: in theory and in fact. In C.J. Kibert (ed.). Reshaping the Built Environment: Ecology, Ethics, and Economics. Washington DC: Island Press.
  3. ↑ http://events.it-sudparis.eu/degrowthconference/en/
  4. ↑ Daly, H. 1999. Uneconomic growth in theory and in fact. The First Annual Feasta Lecture, Trinity College, Dublin, 26th April. Available from: http://www.feasta.org/documents/feastareview/daly.htm. Accessed 28 March 2008.
  5. ↑ Daly, H. and Farley, J. 2004. Ecological Economics: Principles and Applications. Washington: Island Press.
  6. ↑ Daly, H. 2005. Economics in a full world. Scientific American 293(3): 100-107.
  7. ↑ Brander, James A.; Taylor, M. Scott (March 1998). "The Simple Economics of Easter Island: A Ricardo-Malthus Model for Renewable Resource Use". The American Economic Review 88 (1). Retrieved 2006-03-12. 
  8. ↑ Jevons, W.S. 1865. The Coal Question: An Inquiry Concerning the Progress of the Nation, and the Probable Exhaustion of Our Coal-Mines. London: Macmillan and Co.
  9. ↑ Czech, B. 2006. If Rome is burning, why are we fiddling? Conservation Biology 20 (6): 1563-1565.
  10. ↑ Binswanger, M. 2001. Technological progress and sustainable development: what about the rebound effect? Ecological Economics 36(1): 119-132.
  11. ↑ Herring, H. 2000. Is energy efficiency environmentally friendly? Energy & Environment 11(3): 313-325.
  12. ↑ Thomas Faunce. 'Artificial Photosynthesis Could Extend Rights to Nature. The Conversation 2 July 2013. https://theconversation.com/artificial-photosynthesis-could-extend-rights-to-nature-15380 (accessed 2 July 2013).

Related reading

  • Baker, Linda (May–June 1999). "Real Wealth: The Genuine Progress Indicator Could Provide an Environmental Measure of the Planet's Health". E Magazine: 37–41. 
  • Cobb, Clifford; Ted Halstead, Jonathan Rowe (October 1995). "If the GDP Is Up, Why Is America Down?". Atlantic Monthly: 59–78. 
  • Takis Fotopoulos: "The Multidimensional Crisis and Inclusive Democracy", Athens 2005. English online version:
  • Rowe, Jonathan; Judith Silverstein (March 1999). "The GDP Myth: Why 'Growth' Isn't Always a Good Thing". Washington Monthly: 17–21. 
  • Rowe, Jonathan (July–August 1999). "The Growth Consensus Unravels". Dollars & Sense: 15–18, 33. 

External links

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