For centuries economic growth has been valued as an essential and desirable characteristic of any aspiring nation. It has long been associated with significant reductions in extreme poverty, advancements in technological innovation, and large increases in human capital (Roser, 2013). However, continued economic growth in a finite world sounds like an impossible task and has been neglecting both the environment and social structures in which we live. In many cases, a continued push for sustained and increased economic growth has led to more profound social inequality and vast levels of environmental damage (Stiglitz, 2016). The past few years have also seen the UN argue for the need to promote sustainable and inclusive economic growth (UN, 2018). However, again scholars disagree on the juxtapositions between forms of ‘sustainable growth’–can anything grow forever? This short text will discuss two main themes; economic growth approaches in a world striving to become more sustainable, shifts towards economic development, and differing opinions on economic growth.
Concern for sustainability within economic systems dated to 1826 when it was made clear that there would be an inevitable limit to coal supply, preventing rapid economic growth (Bassett, 1967). Thought surrounding this idea led to two approaches for sustainable economic growth. Firstly, weak sustainability, which takes a more passive approach allowing for the degradation of natural recourses only if human forms of capital offset such degradation (Gut, 1996). Scholars, therefore, argue that human capital and natural capital are equally weighted and allow one to be substituted by another. A weak approach has been the primary way that policy and society have been operating since concern for sustainability began, with an example is ozone depletion in the atmosphere, where degradation is allowed as long as it is accompanied by some sort of financial gain. This approach, therefore, relies on technological innovation to generate solutions to the environmental problems we create. However, problems arise as we look at forms of natural capital that cannot be so readily replaced by human capital. This is when a strong sustainability approach is used, directly opposing weak sustainability. Here, scholars argue that only limited forms of natural capital can be substituted by human-made capital and that natural capital supports all other forms of capital (Ott, 1967). This approach is much more cautious and becomes increasingly popular when looking at specific things that cannot just be replaced by human capital. Examples include nutrient-rich soils and clean air; these things cannot just be readily replaced, and both are extremely important for supporting and maintaining life on Earth (Pelenc and Ballet, 2015). Due to weak sustainability approaches, many possible consequences of environmental damage may also be completely irreversible, such as changes to thermohaline circulation within oceans, which has massive global and regional climatic implications (Li et al., 2020).
Economic growth has been a desirable pathway for centuries due to massive increases in the quality of life, education rates, and poverty reduction for people across the world (Roser, 2013). Therefore, it is the nature of many to argue that economic growth is the best way for a country to develop. Usually, scholars will cite the success of China’s rapid economic growth, which lifted millions out of poverty, as evidence for economic growth being the best way (Wu, 2000). However, when looking at differing social classes more accurately, we find deep inequalities throughout. Take the USA, which has the highest income inequality compared to other post-industrialised countries, where the top 10% own about 70% of the total domestic wealth (Buchholz, 2021). This is due to a neoliberal ideology where the free, deregulated market allows for inequitable economic growth across the social classes (Navarro, 2007). We find that a lack of sustainability within economic structures enhances social inequality. This is when we shift the focus from economic growth towards economic development. Economic development is a multi-dimensional approach that aims to grow the economy at a rate that enhances economic prosperity and enhances social prosperity(Pearce, Barbier and Markandya, 2013), through a gradual process.
We will now present a few opinions of both the optimists and pessimists of economic growth in a world fighting to develop more sustainably. A key characteristic of nation-states is that as a nation’s economy grows along with the population, so too does the amount of CO2 emissions released by the country, further increasing the amount of environmental degradation (Raupach et al., 2007). Therefore, many optimists will argue that through the technique effect, we can begin to separate economic growth and environmental degradation as we develop cleaner and more efficient technologies (Grossman and Krueger, 1995). However, although the technique effect could work domestically, it fails to account for the embedded emissions created by offshoring manufacturing and processing of products (Bjørn et al., 2018). Furthermore, it assumes that such technologies will be readily created –which they might not. Optimists of economic growth will also argue that developing countries have no choice but to run down their natural resources, and it is only as a country becomes rich it can have that choice (Barbier, 1987). While this is true historically, it does not have to be true in the present. Developing countries should be given grants to develop sustainably, unlike the post-industrialised countries of the present.
The current status quo of economic growth is not currently a sustainable approach to propel us into a more sustainable future. Clearly, we cannot just replace our finite natural capital with human-made capital, finding that some forms of damage to natural capital may be irreversible. We also saw that although economic growth has had many global successes, it has neglected the lower social classes and increased inequality across the globe. Finally, we saw that growth optimists assume it will all work out; relying on technology to create solutions to the problems we created and allowing for the initial degradation of the environment for the short-term economic benefits. Even though such degradation has had unimaginable impacts on the environment.
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