Growth in the Developed Countries: Do we need it and can we sustain it?
The Ecofiscal Commission believes that our economies can continue to grow, even as we improve the environment by polluting less and using our natural resources more efficiently. We recognize that this position rubs up against a live and interesting debate often characterized as “growth vs no growth”. While the Ecofiscal Commission’s work does not address this debate explicitly, the conversation is certainly relevant to the issues we tackle. Commissioner Dick Lipsey is a renowned expert in the field of economics and innovation. This short blog series captures his thoughtful insights on the question: is economic growth sustainable on a finite planet?
Why should already high developed countries want more growth, and since the world’s resources are finite, will we not in any case, reach limits to our growth in the foreseeable future?*
Recently an anti-growth commentator had this to say about projections of future growth potential: “Can you imagine having and using five times as much of everything? Surely not. What would you do with six motor cars, five refrigerators, four computers, three mobile phones and two daily breakfasts, lunches and dinners? ”
Those who, like this commentator, think only of today’s commodities and today’s technologies, do not see the possibilities of raising living standards, while also dealing with pollution, through technological advance. Indeed, growth is not more and more of the same but different goods produced in different ways, all brought about by new technologies.
Like this commentator, our Victorian ancestors could not have imagined what to do with ten times as much of all of the goods that they knew about. Although we do not have ten times as many horse carriages, penny farthing bicycles and gas lamps, we do have ten times as much market value of consumption as they had (measured in constant dollars). But we consume this great increase in purchasing power by buying new goods made in new ways.
The way technology has improved our lives
People living in the first decade of the 20th century did not know modern dental and medical equipment, antibiotics, bypass operations, safe births, control of genetically transmitted diseases, personal computers, compact discs, television sets, automobiles, opportunities for fast and cheap world-wide travel, air conditioning, and food of great variety free from ptomaine and botulism, much less the elimination of endless kitchen drudgery through the use of detergents, washing machines, electric stoves, vacuum cleaners, refrigerators, dish washers, and a host of other labour-saving household products that their great grandchildren take for granted. Nor could our ancestors of one hundred years ago have imagined the robot-operated, computer-controlled, modern factories that have largely replaced their noisy, dangerous, factories that spewed coal smoke over the surrounding countryside.
Technological change has transformed the quality of our lives. It has removed terrible diseases that maimed, crippled, and killed — plague, tuberculosis, cholera, dysentery, smallpox, and leprosy, to mention only the most common. In 1900, death from botulism and ptomaine poisoning from contaminated food was common. Chemical additives virtually eliminated these killers and allow us to live long enough to worry about the long run cancer causing effects of some of these additives. Now they are being replaced by safer preservatives.
Technological change has also transformed how we make both existing and new commodities. Most new technologies use less of all inputs per unit of output than do the older technologies that they replace thus moving us towards an increasingly economical use of the world’s resources. Furthermore, many newer technologies are much less polluting than many older technologies.
In summary, economic growth driven by new technologies not only increases our incomes; it transforms our lives through the invention of new, hitherto undreamed of products that are made in new, hitherto undreamed of and more economical ways. We can indeed be thankful that no anti-growth advocate persuaded governments in 1950, let alone in 1900, to stop all growth on the grounds that resources were limited and that we did not need more of what we already had too much of, thereby denying us of all the products and processes just mentioned and the new resource saving and less polluting production methods ̶ and others too many to list here.
* Much of the material in this blog is drawn from Economic Transformations: General Purpose Technologies and Long Term Economic Growth by Richard Lipsey, Kenneth Carlaw and Clifford Bekar (Oxford University Press 2005) – winner of the Schumpeter prize for the best writings on evolutionary economics over the two years succeeding publication.