Economic growth in a finite world – not as daft as it sounds
One line which is often trotted out by green activists, most recently by the rather wonderful Greta Thunberg, is “you can’t have economic growth in a finite world.” This sounds like a truism, but…
- Despite decades of theorising, nobody has yet developed a practical steady-state economic model. As soon as growth stalls, people, particularly the poor, start to suffer. What’s the point in destroying society to try to protect it?*
- The phrase assumes a linear ‘take, make, waste’ economy where growth always runs hand in hand with environmental stress. Yes, this is the dominant model right now, but we are shifting towards a circular/net zero economy, which brings us to…
- The natural world manages massive flows of material sustainably – the earth emits/absorbs more than 23 times as much atmospheric carbon as total anthropogenic emissions (including land use etc). The difference is that the natural system consists of balanced cycles whereas the economy is upsetting that balance.
- If you can balance the physical economic cycles in the same way as natural cycles, economic growth will be decoupled from environmental destruction, but we need to find the mechanisms to accelerate the process.
- We have made little progress in ‘internalising externalities’ – ensuring environmental damage is costed into economics – but what we have done on cap-and-trade, carbon taxes, plastic bag taxes etc does appear to have a very positive effect.
- Bringing the power of capitalism to greening the economy has given us some very positive examples, most notably the cost of a watt of solar power has fallen by a factor of 100 over my lifetime as supply and demand (and the resulting cycle of innovation) does its stuff.
I’m not ideologically wedded to economic growth, but it has brought immense societal benefits and no-one has developed a tolerable alternative. In other words I’m in ‘the economy is a great servant but a terrible master’ camp.
In that Greta Thunberg article, she adroitly dodged a loaded question on growth from David Lammy MP which attempted to split the climate emergency along left/right lines. Personally I was inspired to devote my life to sustainability after witnessing Soviet-era environmental devastation in Russia, a reminder that capitalism isn’t alone in destructive capability, socialism can do as much damage.
I do worry the anti-growth line is a rabbit hole down which we could waste a lot of time, effort and public goodwill. My gut instinct is that our best hope is to make capitalism green by rebuilding it to be in harmony with natural systems – in other words net zero, circular, regenerative economies. It might be our only option.
* To me, sustainability is about society. We talk about ‘save the planet’, but the natural world will be fine in the long run, i.e. over geological timeframes. The planet has undergone mass extinction events and climatic extremes several times in the past – the burning question is whether we will survive/thrive in the future we are creating for ourselves.