Uneconomic
Growth Deepens Depression by Herman Daly
From:
http://steadystate.org/uneconomic-growth-deepens-depression/
The US and Western Europe are in a recession threatening to become a depression as bad as
that of the 1930s. Therefore we look to
Keynesian policies as the cure, namely stimulate consumption and
investment—that is, stimulate growth of the economy. It seemed to work in the past, so why not now?
Certainly
not! Why? Because we no longer live in
the empty world of the 1930s — we live in a full world. Furthermore, in the 1930s the goal was full employment and
growth was the means to it. Nowadays growth itself has become the goal and the
means to it are off-shoring of jobs, automation, mergers, union busting,
importing cheap labor, and other employment-cutting policies. The former goal
of full employment has been sacrificed to the modern ideology of “growth in
share holder value.”
Growth
has filled the world with us and our products. I was born in 1938, and in my
lifetime world population has tripled. That is unprecedented. But even more
unprecedented is the growth in populations of artifacts — “our stuff” — cars,
houses, livestock, refrigerators, TVs, cell phones, ships, airplanes, etc.
These populations of things have vastly more than tripled. The matter-energy
embodied in these living and nonliving populations was extracted from the
ecosystem. The matter-energy required to maintain and replace these stocks also
comes from the ecosystem.
The
populations or stocks of all these things have in common that they are what
physicists call “dissipative structures” — i.e., their natural tendency, thanks
to the entropy law, is to fall apart, to die, to dissipate. The dissipated
matter-energy returns to the ecosystem as waste, to be reabsorbed by natural
cycles or accumulated as pollution. All these dissipative structures exist in
the midst of an entropic throughput of matter-energy that both depletes and
pollutes the finite ecosphere of which the economy is a wholly contained
subsystem. When the subsystem outgrows the regenerative capacity of the parent
system then further growth becomes biophysically impossible.
But long before growth becomes impossible it
becomes uneconomic — it begins to cost more than it is worth at the margin. We
refer to growth in the economy as “economic growth,” — even after such growth
has become uneconomic in the more basic sense of increasing
illth faster than wealth. That is where we are now, but we are unable
to recognize it.
Why
this inability? Partly because our national accounting system, GDP, only measures “economic activity,”
not true income, much less welfare. Rather than separate costs from
benefits and compare them at the margin we just add up all final goods and
services, including anti-bads (without subtracting the bads that made the
anti-bad necessary). Also depletion of natural capital and natural services are
counted as income, as are financial transactions that are nothing but bets on
debts, and then further bets on those bets.
Also
since no one wants to buy illth, it has no market price and is often ignored.
But illth is a joint product with wealth
and is everywhere: nuclear wastes, the dead zone in the Gulf of Mexico, gyres of plastic trash in the
oceans, the ozone hole, biodiversity loss, climate change from excess carbon in
the atmosphere, depleted mines, eroded topsoil, dry wells, exhausting and
dangerous labor, exploding debt, etc. Standard economists claim that the
solution to poverty is more growth — without ever asking if growth still makes
us richer, as it did back when the world was empty and the goal was full
employment, rather than growth itself. Or has growth begun to make us poorer in
a world that is now too full of us, and all our products, counted or not in
GDP?
Does growth now increase illth faster than
wealth? This is a threatening
question, because if growth has become uneconomic then the solution to poverty
becomes sharing now, not growth in the future. Sharing is frequently referred
to as “class warfare.” But it is really the alternative to the class warfare
that will result from the current
uneconomic growth in which the dwindling benefits are privatized to the elite,
while the exploding costs are socialized to the poor, the future, and to other
species.
Finally,
I eagerly submit that even if we limit quantitative physical throughput (growth)
it should still be possible to experience qualitative improvement (development)
thanks to technological advance and to ethical improvement of our priorities. I
think therefore we should urge policies
to limit the quantitative growth of throughput, thereby raising resource
prices, in order to increase resource efficiency, to force the path of progress
from growth to development, from bigger to better, and to stop the present
folly of continuing uneconomic growth.
A
policy of quantitative limits on throughput (cap-auction-trade) will also block
the erosion of initial resource savings resulting from efficiency improvements
(the rebound effect or Jevons paradox). In addition the auction will raise much
revenue and make it possible to tax value added (labor and capital) less
because in effect we will have shifted the tax base to resource throughput. Value
added is a good, so stop taxing it. Depletion and pollution, the two ends of
the throughput, are bads, so tax them.
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