According to Robert M. Solow, “Sustainability as a moral obligation is a general obligation not a specific one. It is not an obligation to preserve this or to preserve that. It is an obligation, if you want to make sense out of it, to preserve the capacity to be well off, to be as well of as we.”
Whether we are in the pro growth or anti growth camp, we can’t deny the fact that we are living in a finite world where everything is scarce and we have to decide on how to optimize the use of the limited resources available in order for the output to be beneficial for as many people in the world. Whatever option that we choose, there will definitely be opportunity cost for us to put up with.
The main question often aroused is whether growth is the main cause of unsustainable world. If it is not then to what extent of growth is considered sustainable? What if we stop growth? Will we all die or will our life be better than how we are living today?
Before we go further, it will be better for us to understand the most universal definition of sustainable development. According to Brundtland Commission Report, “Sustainable development is the ability to make development sustainable – to ensure that it meets the needs of the present without compromising the ability of future generations to meet their own needs.” Although the brief definition does not explicitly mention the environment or development, the subsequent paragraphs in the report, while rarely quoted, are clear.
On development, the report states that human needs are basic and essential; the economic growth but also equity to share resources with the poor is required to sustain them; and that equity is encouraged by effective citizen participation. On the environment, it was stated that the concept of sustainable development does imply limits – not absolute limits but limitations imposed by the present state of technology and social organization on environmental resources and by the ability of the biosphere to absorb the effects of human activities.
Pro Growth
Ecological investment calls up a different ‘investment ecology’. Capital productivity will probably fall. Returns will be lower and delivered over longer timeframes. Though vital for ecological integrity, some investments may not generate returns in conventional monetary terms. Profitability – in traditional sense – will be diminished. In a growth-based economy, this is deeply problematic. For an economy concerned with flourishing it needn’t matter at all.
The above statement clearly demonstrated why mainstream economists find the idea of a slow growth, let alone no-growth capitalism, hard to take seriously. Growth imperative is virtually a law of nature built-into in any likely capitalism.
While many have argued that economic activity, affluence, and growth automatically lead to resource depletion, environmental deterioration, and ecological collapse, greater productivity and prosperity – which is what economists mean by growth – have become prerequisite for controlling urban pollution and protecting sensitive ecological systems such as rain forests.
In a vicious cycle of economic system based on capitalism, any disruption to the cycle will bring disaster. Unemployment, being the most discussed and dubbed as very effective of creating misery. No growth just means no job. Thus, the pro growth group often emphasize on the utilization and progress of technology to increase the efficiency and optimization of resources.
As opined by Peter Drucker and other management experts, “Our economy depends far more on the progress of technology than on the exploitation of nature. Although raw materials will always be necessary, knowledge has become essential factor in the production of goods and services. Where there is effective management, that is, application of knowledge to knowledge, we can always obtain to other resources.”
Slowing down the growth might be possible to work in developed countries but in developing countries, however, a no growth economy will deprive entire populations of access to better living conditions and lead to even more deforestation and land degradation.
Anti Growth
While the pro growth stated that growth is essential to ensure that human needs are satisfied; the anti growth countered that growth has delivered its benefits, at best, unequally. A fifth of the world’s population earns just 2% of global income. Inequality is higher in the OECD nations than it was 20 years ago. From the years of 1960s to date, the richest fifth of the world’s people have seen their share of the world’s income increase from 70 to 85 percent. Thus one fifth of the world’s population possesses much more than four fifths of the world wealth.
We think we could get out of this problem by making everything more efficient but it just didn’t work. For growth to deliver global equity by 2050 we need to increase our technological efficiency by 130 folds (10 times faster than current pace).
Look into these scenarios, (1) Global Food Price Index rise 33% in July 2011; (b) Producer Price Index rise 7% annually; (c) East Asia Currency Crisis/ Subprime Crisis/ Greece Recession. Not to mention the social problems (read: inequality, poverty, housing, healthcare etc.) and environmental issues we are facing now (read: climate change, carbon emission, natural disaster etc.). The BIG question is why it keeps on occurring if we are doing the right thing and more efficiently.
Peter Victor, a Canadian economist opined that end of growth will (a) bring economic stability; (b) cut both unemployment and poverty rate by half; (c) reduce ratio of debt to GDP by 75%. This is achievable through: (a) higher saving rate; (b) lower rate of private investment; (c) higher rate of public investment. In order to counter unemployment issue that might occur due to this, Victor suggest that instead of reducing the number of employees due to lower production, corporations are to cut total and average number of working hours.
In the law of capitalist, growth is an iron of law. Indeed, development means “expand” and “growth”. The question is whether we have enough resources. Often the case is that we consume more that we actually need. Many observers point out that as we work harder and consume more, we seem to enjoy our lives less.
“We can find a sustainable prosperity if we abandon the growth obsessed, resource intensive consumer economy, forget “keeping up with the Joneses,” and “live more meaningful lives” by “downshifting” to consume less, find “meaningful work” and “revitalize the notion of public goods.” “People can flourish without more stuff”.
Conclusion
Broad discussions across the whole of society and around the world are needed to figure out how to redesign the economy. We have to find sustainability within a “capitalist framework” and forget about alternatives. The steady-state capitalism is very loosely defined; thus making it not workable and impractical to implement as it is still based on capitalism structured economy. As stated earlier, instead of bringing sustainability, any disruption to the capitalist system will only bring unimaginable crisis. Ideally, a real new macro-economic model, which is practical and workable post capitalist ecological economy that is geared to production for need, not for profit will indeed solve this issue.
“The world has the wealth and the resources to provide everyone the opportunity to live a decent life.”
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