Uneconomic growth
Encyclopedia
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. Note that economic degrowth is different from uneconomic growth (or uneconomic degrowth), it is meant as a reduction of the size of the economy that would bring well-being and sustainability http://events.it-sudparis.eu/degrowthconference/en/.
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." 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."
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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 engine
s 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
-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. Note that the hypothetical surge in automobile
s might be 'uneconomic growth' from a global perspective, but 'good economic growth' from those countries' perspective (an example of an externality
).
. 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 resource
s. 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. 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 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. 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"
) and (ii) technology (or globalisation) that leads to the availability of cheaper goods for consumers also frees up discretionary income for increased consumptive spending.
Human development theory
Human development theory is a theory that merges older ideas from ecological economics, sustainable development, welfare economics, and feminist economics. It seeks to avoid the overt normative politics of most so-called "green economics" by justifying its theses strictly in ecology, economics and...
, welfare economics
Welfare economics
Welfare economics is a branch of economics that uses microeconomic techniques to evaluate economic well-being, especially relative to competitive general equilibrium within an economy as to economic efficiency and the resulting income distribution associated with it...
(the economics of social welfare), and some forms of ecological economics
Ecological economics
Image:Sustainable development.svg|right|The three pillars of sustainability. Clickable.|275px|thumbpoly 138 194 148 219 164 240 182 257 219 277 263 291 261 311 264 331 272 351 283 366 300 383 316 394 287 408 261 417 224 424 182 426 154 423 119 415 87 403 58 385 40 368 24 347 17 328 13 309 16 286 26...
, is economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
that reflects or creates a decline in the quality of life
Quality of life
The term quality of life is used to evaluate the general well-being of individuals and societies. The term is used in a wide range of contexts, including the fields of international development, healthcare, and politics. Quality of life should not be confused with the concept of standard of...
. The concept is attributed to the economist Herman Daly
Herman Daly
Herman Daly is an American ecological economist and professor at the School of Public Policy of University of Maryland, College Park in the United States....
, though other theorists can also be credited for the incipient idea. Note that economic degrowth is different from uneconomic growth (or uneconomic degrowth), it is meant as a reduction of the size of the economy that would bring well-being and sustainability http://events.it-sudparis.eu/degrowthconference/en/.
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." 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."
Good vs. bad growth
Global warming
Global warming refers to the rising average temperature of Earth's atmosphere and oceans and its projected continuation. In the last 100 years, Earth's average surface temperature increased by about with about two thirds of the increase occurring over just the last three decades...
, then a rapid surge in automobile
Automobile
An automobile, autocar, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...
ownership in China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
, Brazil
Brazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
, and India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
could be seen as uneconomic growth. This is based on the assumption that significantly increasing the number of internal combustion engine
Internal combustion engine
The internal combustion engine is an engine in which the combustion of a fuel occurs with an oxidizer in a combustion chamber. In an internal combustion engine, the expansion of the high-temperature and high -pressure gases produced by combustion apply direct force to some component of the engine...
s 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
Ethanol
Ethanol, also called ethyl alcohol, pure alcohol, grain alcohol, or drinking alcohol, is a volatile, flammable, colorless liquid. It is a psychoactive drug and one of the oldest recreational drugs. Best known as the type of alcohol found in alcoholic beverages, it is also used in thermometers, as a...
-fuelled or battery powered from non-greenhouse-gas-producing energy sources such as solar, wind, or nuclear instead of petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
-fuelled, the effect on global warming might be very minor and not uneconomic at all. Note that the hypothetical surge in automobile
Automobile
An automobile, autocar, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...
s might be 'uneconomic growth' from a global perspective, but 'good economic growth' from those countries' perspective (an example of an externality
Externality
In economics, an externality is a cost or benefit, not transmitted through prices, incurred by a party who did not agree to the action causing the cost or benefit...
).
The limits to growth
The "limits to growth" debate has some roots in MalthusianismMalthusianism
Malthusianism refers primarily to ideas derived from the political/economic thought of Reverend Thomas Robert Malthus, as laid out initially in his 1798 writings, An Essay on the Principle of Population, which describes how unchecked population growth is exponential while the growth of the food...
. Much of the debate in recent times was prompted by the 1972 Club of Rome
Club of Rome
The Club of Rome is a global think tank that deals with a variety of international political issues. Founded in 1968 at Accademia dei Lincei in Rome, Italy, the CoR describes itself as "a group of world citizens, sharing a common concern for the future of humanity." It consists of current and...
study Limits to Growth
Limits to Growth
The Limits to Growth is a 1972 book modeling the consequences of a rapidly growing world population and finite resource supplies, commissioned by the Club of Rome. Its authors were Donella H. Meadows, Dennis L. Meadows, Jørgen Randers, and William W. Behrens III. The book used the World3 model to...
, which considers the ecological
Ecology
Ecology is the scientific study of the relations that living organisms have with respect to each other and their natural environment. Variables of interest to ecologists include the composition, distribution, amount , number, and changing states of organisms within and among ecosystems...
impact of growth and wealth creation. Many of the activities required for economic growth use non-renewable resource
Non-renewable resource
A non-renewable resource is a natural resource which cannot be produced, grown, generated, or used on a scale which can sustain its consumption rate, once depleted there is no more available for future needs. Also considered non-renewable are resources that are consumed much faster than nature...
s. Many researchers feel these sustained environmental effects can have an effect on the whole ecosystem
Ecosystem
An ecosystem is a biological environment consisting of all the organisms living in a particular area, as well as all the nonliving , physical components of the environment with which the organisms interact, such as air, soil, water and sunlight....
. They argue that the accumulated effects on the ecosystem put a theoretical limit on growth. Some draw on archaeology
Archaeology
Archaeology, or archeology , is the study of human society, primarily through the recovery and analysis of the material culture and environmental data that they have left behind, which includes artifacts, architecture, biofacts and cultural landscapes...
to cite examples of cultures they say have disappeared because they grew beyond the ability of their ecosystems to support them. 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
Climate
Climate encompasses the statistics of temperature, humidity, atmospheric pressure, wind, rainfall, atmospheric particle count and other meteorological elemental measurements in a given region over long periods...
and natural capital
Natural capital
Natural capital is the extension of the economic notion of capital to goods and services relating to the natural environment. Natural capital is thus the stock of natural ecosystems that yields a flow of valuable ecosystem goods or services into the future...
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
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
scientist
Scientist
A scientist in a broad sense is one engaging in a systematic activity to acquire knowledge. In a more restricted sense, a scientist is an individual who uses the scientific method. The person may be an expert in one or more areas of science. This article focuses on the more restricted use of the word...
David Suzuki
David Suzuki
David Suzuki, CC, OBC is a Canadian academic, science broadcaster and environmental activist. Suzuki earned a Ph.D in zoology from the University of Chicago in 1961, and was a professor in the genetics department of the University of British Columbia from 1963 until his retirement in 2001...
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
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
or forestry
Forestry
Forestry is the interdisciplinary profession embracing the science, art, and craft of creating, managing, using, and conserving forests and associated resources in a sustainable manner to meet desired goals, needs, and values for human benefit. Forestry is practiced in plantations and natural stands...
will necessarily cannibalize the natural capital
Natural capital
Natural capital is the extension of the economic notion of capital to goods and services relating to the natural environment. Natural capital is thus the stock of natural ecosystems that yields a flow of valuable ecosystem goods or services into the future...
of soil
Soil
Soil is a natural body consisting of layers of mineral constituents of variable thicknesses, which differ from the parent materials in their morphological, physical, chemical, and mineralogical characteristics...
or forest
Forest
A forest, also referred to as a wood or the woods, is an area with a high density of trees. As with cities, depending where you are in the world, what is considered a forest may vary significantly in size and have various classification according to how and what of the forest is composed...
. 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
Jevons paradox
In economics, the Jevons paradox is the proposition that technological progress that increases the efficiency with which a resource is used, tends to increase the rate of consumption of that resource...
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. 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"
Rebound effect (conservation)
In conservation and energy economics, the rebound effect refers to the behavioral or other systemic responses to the introduction of new technologies that increase the efficiency of resource use. These responses tend to offset the beneficial effects of the new technology or other measures taken...
) and (ii) technology (or globalisation) that leads to the availability of cheaper goods for consumers also frees up discretionary income for increased consumptive spending.
See also
- De-growthDe-growthDegrowth is a political, economic, and social movement based on environmentalist, anti-consumerist and anti-capitalist ideas...
- Zero growthZero growthZero growth is a theory that all economic activities and policies should be oriented towards achieving a state of equilibrium, a steady state economy....
- Economic growthEconomic growthIn economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
- Measuring well-being
- Genuine Progress IndicatorGenuine Progress IndicatorThe genuine progress indicator is an alternative metric system which is an addition to the national system of accounts that has been suggested to replace, or supplement, gross domestic product as a metric of economic growth...
- Moral purchasing
- Human development theoryHuman development theoryHuman development theory is a theory that merges older ideas from ecological economics, sustainable development, welfare economics, and feminist economics. It seeks to avoid the overt normative politics of most so-called "green economics" by justifying its theses strictly in ecology, economics and...
- Ecological economicsEcological economicsImage:Sustainable development.svg|right|The three pillars of sustainability. Clickable.|275px|thumbpoly 138 194 148 219 164 240 182 257 219 277 263 291 261 311 264 331 272 351 283 366 300 383 316 394 287 408 261 417 224 424 182 426 154 423 119 415 87 403 58 385 40 368 24 347 17 328 13 309 16 286 26...
- Regenerative Economic TheoryRegenerative Economic TheoryRegenerative economics is an economic system that works to regenerate capital assets. A capital asset is an asset that provides goods and/or services that are required for, or contribute to, our well being. In standard economic theory, one can either “regenerate” one's capital assets or consume...
- Parable of the broken windowParable of the broken windowThe parable of the broken window was introduced by Frédéric Bastiat in his 1850 essay to illustrate why destruction, and the money spent to recover from destruction, is actually not a net-benefit to society...
Further reading
- The End of Economic Growth (download) by Charles Siegel 2006 ISBN 978-0-9788728-0-9
Related reading
- Takis FotopoulosTakis FotopoulosTakis Fotopoulos , born , is a political philosopher and economist who founded the inclusive democracy movement. He is noted for his synthesis of the classical democracy with the libertarian socialism and the radical currents in the new social movements...
: "The Multidimensional Crisis and Inclusive DemocracyInclusive DemocracyInclusive Democracy is a political theory and political project that aims for direct democracy, economic democracy in a stateless, moneyless and marketless economy, self-management and ecological democracy...
", Athens 2005. English online version:http://www.inclusivedemocracy.org/journal/ss/ss.htm
External links
- Center for the Advancement of the Steady State Economy
- R&D : Research & Degrowth
- Declaration on Degrowth at the Center for a World in Balance