Toward a greener economy
Scientists seek a more sustainable model for growth
Market bubbles occur when goods are traded at prices that greatly exceed real value. They burst when they grow so bloated that they become unstable. The current economic turmoil, widely viewed as the worst since 1929, is one example of what can happen when the difference between market value and actual value becomes too great.Skip to next paragraph
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Environmentally minded economists have long warned that equally burstable ecological bubbles can occur if humanity lives beyond earth’s capacity to regenerate. The problem, they say, is that we’re addicted to economic growth. Mainstream economics assumes that the economy, the engine of modern civilization, can grow perpetually.
But if growth means ever-increasing consumption of natural resources (and it has, since the start of the Industrial Revolution 250 years ago), then it can’t continue indefinitely. Earth and its resources are finite.
Herman Daly, an economist at the University of Maryland’s School of Public Policy in College Park, says that humanity is already at or beyond the point where economic growth is counterproductive, where the environmental and social costs more than cancel the gains.
“So-called ‘economic’ growth already has become uneconomic,” Professor Daly stated in a talk last spring. “The growth economy is failing.”
For some time, Daly and others have called for a rethinking and restructuring of our economy before nature restructures it for us. The notion of perpetual economic growth warrants scrutiny before it drives us over a cliff, they argue. The science of economics must be overhauled to better account for earth’s physical realities. Civilization won’t have to stop in its tracks, just shift emphasis, says Daly. The “steady state economy” he foresees emphasizes qualitative development over quantitative growth. “Growth is more of the same stuff,” he says. “Development is the same amount of better stuff.”
In his 2000 book, “Something New Under the Sun,” John McNeill, professor of environmental history at Georgetown University in Washington, D.C., tells how unprecedented the past two centuries of human history have been.
“Most economists are under the impression that 2 to 6 percent annual growth is a normal condition for human society,” says Professor McNeill. “A longer historical view would tell you such growth is a peculiar period in human society.”
Growth unprecedented in history
For the vast majority of human history, stasis was the norm. After AD 1, it took the human population 1,500 years to double in size to between 400 million and 500 million. But since 1820, population has increased more than sixfold, to 6.6 billion. That’s an incredible achievement for a species that, at the beginning of the agricultural revolution 10,000 years ago, was outnumbered by baboons, writes McNeill.
In the past 200 fossil-fueled years, the per capita growth of the gross world product (the total market value of goods and services) has far outstripped population increase. People are richer and live longer. But no one should overlook the cost, says McNeill. In that period – and especially during the 20th century – humankind has transformed the earth.
At the dawn of the Industrial Revolution in the late 1700s, English demographer Thomas Malthus foresaw problems with growth. If populations grew while resources remained constant – the tendency, he thought – there would be less for each person. Most people would end up poorer and more miserable.
That generally hasn’t occurred. On average, people are much richer. (In absolute terms, about the same number of people are poor today – 800 million – as in Malthus’s time.) Malthus failed to account for innovation and technology, which have let humanity squeeze more and more from the same quantity.
Or is it just ‘the new Malthusianism’?
For this reason, Pat Michaels, senior fellow in environmental studies at the Cato Institute in Washington, D.C., a libertarian think tank, dismisses any talk of the need for sustainable development as “the new Malthusianism.” The market will self-correct, he says. When materials become scarce, prices will go up. Consumption will drop. That will spur innovators to develop alternatives. It is this very dynamism that makes modern societies sustainable. “In reality, the development that we have is, ipso facto, sustainable,” he says.