The Economic Growth Controversy

Andrew Weintraub,Eli Schwartz,J. Richard Aronson

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351623360
• Edition: 1
• Topic: Commerce
• Subtopic: Commerce Général

Is economic growth desirable? Possible? Necessary? The distinguished social scientists represented in this collection give conflicting answers, resulting in a lively debate on the costs and benefits of growth in the developed and developing countries. This volume, first published in 1973, contains proceedings of a Conference on the Limits to Growth, held at the Center for Social Research, Lehigh University, October 1972. This book will be of interest to students of economics.

1 Growth and antigrowth: what are the issues?

E. J. MISHAN

THE DEBATE on the growth-antigrowth theme has become a fashionable pastime over the last five years. And since its continued enjoyment must depend to a large extent on its inconclusiveness, it would be boorish as well as presumptuous to propose that we try to reach a settled conclusion. Not that I think there is much danger of that happening, however. The reverse is rather to be feared: that the present enjoyment in witnessing the continual conflicts of opinion will become marred by a growing sense of frustration—not so much a frustration at being unable to reach a firm conclusion as a frustration arising from repeated failure to organize our thoughts on the subject and to acquire perspective.

If I interpret the public mood rightly, the time has come to steer the debate away from rhetorical appeals and toward more direct confrontation—less bark and more bite is in order. I propose, therefore, that we define the issues more carefully than hitherto and, in the light of these defined issues, lay down the ground rules for a more searching investigation.

The physical possibility of sustained growth

There are two aspects to the debate that may be treated separately, though they will become linked in any policy conclusion: first, whether continued economic growth is physically possible and, second, whether it is desirable.

Consider the physical possibility first. Obviously, we cannot begin without agreeing on some standard of measurement for economic growth. Are we to include population growth? Should GNP, or some variant of GNP, be used? What other indicators are there? Are we to include leisure?

There is another set of questions: Are we concerned with the economic growth of the world as a whole, or are we to confine ourselves to particular areas? And if the latter, are we to make any special assumptions about developments in the rest of the world?

Having agreed, let us suppose, to answers to these two sets of questions, we must then recognize that there exists a virtually unlimited number of possible paths of growth. If we were to consider the world as a whole, one in which human population was stabilized at, say, six billion people, we might discover—if we could foresee all major technological developments—that an average rate of growth of, say, 4 percent per annum would entail a collapse of civilization in 50 years' time, whereas an overall rate of growth of 2 percent per annum could be maintained for 200 years. Alternatively, we could generate a growth path that begins climbing steeply, only to taper off in a generation or so, after which it could continue at a low rate for centuries. Or we might discover that a 3 percent growth rate could be maintained almost indefinitely provided that it was concentrated in certain geographical areas, or provided that only certain types of technology were utilized, or provided a number of consumer services and gadgetry were scrapped.

I range over these hypothetical possibilities partly in order to uncover our woeful ignorance. We cannot, of course, foresee all major scientific and technological developments over the next few decades, much less over the next century, and therefore we cannot hope to project the range of alternative growth profiles over the future for any group of countries or for the world at large. Perforce, we must for a long time remain content to speculate about less fanciful questions such as whether the world as a whole—assuming its population growth tends to decline so as to stabilize after a given number of years—can continue to maintain a rate of economic growth of, say, 2 to 3 percent over the foreseeable future.

The question of method

The question of method would seem at first to be a fairly straightforward one around which we might profitably reflect, but there are already two questions to be settled before we can give rein to our imagination. Both refer to institutional and political developments.

First, to put the question in terms of whether the world can continue to maintain a 2 to 3 percent growth rate is to transform it into a question about technological possibilities. It might well be that GNP, as conventionally measured, would be perceived to grow at this rate of 2 to 8 percent per annum provided that all resources were properly allocated, which means that all productive services would be, in some sense, correctly priced. Uneconomic pollution of air, water, etc., would therefore be prevented. Indeed, an ideal allocation might require—in a broader context, and in the absence of all institutions devoted to persuading us to consume more— that all, or nearly all, productivity gains be used to increase leisure. This would imply that "real" goods per capita (other than leisure) would not grow, or would grow very little, over time. This resultant "constantphysical-product" economic growth is obviously very much easier to maintain over time than the conventional increasing-physical-product growth, especially where the allocation is so imperfect that pollutants continue to mount.

But are we entitled to make this assumption if there is not, in fact, much likelihood that allocative wisdom will prevail under existing economic and political institutions? True, the question of what can be done, of what is technically and economically feasible, is of academic importance. It is useful for informing policy. But if we are interested in the actual prospects for the continuation of, say, a 2 to 3 percent rate of growth into the future, we have to speculate also about what changes, if any, in political and economic institutions are likely to be brought about by changes in public attitudes. We have to ask that hard-nosed question: Is it realistic to expect this or that development in the foreseeable future?

Second, asking the question whether the world can, in a technical sense, maintain this 2 to 3 percent growth rate for a longish period is to abstract also from present dangers that appear increasingly to threaten human survival. To list some of them:

1) the threat of ecological catastrophe resulting from larger-scale and more ruthless interference in the biosphere;

2) the threat of genetic calamity arising from increased radiation, and from thousands of new chemicals coming onto the market each year, about whose longrun effects, singly or in combination, we know practically nothing;¹

3) the increased danger of epidemics, or "pandemics," owing to increased travel opportunities;

4) the threat to human survival arising from the growth of more resistant pests and viruses in response to more powerful drugs;

5) the danger of a nuclear Armageddon, or of annihilation by more horrible means, as an increasing number of the smaller countries, often headed by fanatics, come to possess the secrets of thermonuclear destruction and biological warfare;

6) the danger that the postwar trend toward increasing blackmail, violence, crime, and corruption—a product also of the erosion, in the West, of notions of patriotism, civic virtue, and standards of right and wrong—will plunge society into anarchy (from which it might be saved only by the most repressive tyranny);

7) the threat of internecine warfare, especially in poorer areas, because of continued frustration of expectations—expectations aggravated by growth in travel, communications, and mass media;

8) the conflicts that may soon arise from the growth in illegal immigration from poor to rich countries.

Again, we are constrained to ask whether we should abstract from these very real threats to our civilization, or to our survival, in appraising the prospects for sustained future economic growth. It is hardly to be doubted that each of these threats has arisen from economic and technological growth, and that each will be further aggravated by economic and technological growth in the future. Though what has happened in the past can be regarded as irrelevant to the question of whether we can, or will, continue to grow in the future, the question of the physical possibility of continued growth is couched in terms of whether in fact we shall be able to grow. If so, we can hardly exclude from a consideration of this eventuality the risk of those events which, should they occur, would cripple human society or blot it out completely.

Let me add in passing that these dire possibilities are not to be exorcised by jeers of "doomsdayism." True, history is littered with false prophecies, but not only pessimistic ones. "Prosperity" Robinson, the British statesman who in 1827 assured his countrymen that they were entering an era of unprecedented prosperity, lived on to witness an unprecedented depression that did not lift until about 1844. And no economist is likely to forget President Hoover's cheerful news in 1929 that prosperity was "just around the corner." But the fact that there have been and still are millennial prophecies allows us to infer nothing about the future. Calling "Wolf!" frequently and mistakenly does not mean that wolves do not exist. The dangers that exist today, some of which I listed above, are not imaginary. Scholars may differ about their magnitudes, and about the risks or likelihoods of their occurring, but there is general agreement among them that nothing comparable to such dangers existed at the beginning of the century and, as far as I know, none has argued that the dangers are receding.

Nonetheless, having taken due note of them, I am prepared, for the sake of argument, to turn away from these very real dangers and to consider the possibility of sustained economic growth in their assumed absence.

Technology, the crucial variable

Suppose, then, that we can reasonably anticipate a stable world population in the foreseeable future and that the question we have to face is whether, irrespective of the distribution of future world product, an average rate of growth per capita of physical product, comparable to that "enjoyed" in the postwar period, can be maintained for the next few centuries in the absence of the dangers listed above. What should we have to know in order to tackle such a question?

Knowledge of existing reserves of materials chiefly used in modern industry is clearly not enough. We already have rough estimates of the remaining reserves of coal, oil (for varying degrees of accessibility), and a large number of metals. And even if they turn out to be underestimates by as much as a factor of two or three or more, it will make little difference to the number of years required to exhaust them at current rates of depletion. If, for example, world oil consumption continues to increase at a rate of about 10 percent per annum, known reserves (including projected future discoveries) should be exhausted in about two decades. Even if reserves turn out to be as much as four times as large as currently estimated, we could keep going only for another fourteen years. And if they were eight times as large, which is hardly possible, we could keep going for another two decades.

I think there is general agreement that we cannot continue to mine a wide range of primary materials at current rates for much longer than the end of the century.

Knowledge of economics is not enough either. Economists continue to remind us, unnecessarily perhaps, that as a resource becomes more scarce, its price rises, and, as a result, it is used less intensively. If there is a famine in some part of Asia, grain prices will rise accordingly—though I doubt whether this classical example of the proper functioning of the price mechanism will afford the starving natives much consolation. More generally, and in the absence of other events, a rise in the prices of depleting resources acts to reduce living standards through a rise in the cost of living at some rate that depends on physical factors and on economic institutions. True, the rise in the price of a depleting resource is also expected to induce enterprises to switch to substitutes, thus cushioning the rise in prices of those products that depend heavily on such resources. And it must be admitted that in the textbook constructs these substitutes are unfailingly on tap. Yet in the world in which we live, we cannot be so sure that our luck in the past will continue to hold. Indeed, it may be unreasonable to expect our luck in discovering close substitutes in the past to continue when all but a few of today's "essential" metals will, if trends continue, be exhausted within fifty years. At current rates of usage, all known reserves of silver, gold, copper, lead, platinum, tin, and zinc will be used up within twenty years. There is no historical experience of man being able to find substitutes simultaneously for so large a group of important materials.

We may reasonably conclude that, were there to be no technological innovation in the future, then we simply would not be able to continue to grow indefinitely. The earth and its resources are finite, all too finite, and our continued consumption of them on an ever larger scale must eventually exhaust them. The only question would be when. And the answers (in the absence of technology) would all seem to fall within the next half century.

The crucial variable in all optimistic forecasts and in all declarations of faith is technological innovation. We read of existing technical possibilities that are likely to be translated into commercial processes or products. We read also of current technological advances, of being close to a number of "exciting" developments or "breakthroughs," particularly in the field of energy, and we are prone to take heart. For do we not have behind us a couple of hundred years of remarkable scientific success and technological achievement? Surely this trend must continue as the base of our knowledge expands.

Fact or fantasy?

To a layman like myself, it is hard to distinguish in these reports—and not all are optimistic—between the elements of fact and fantasy, of reasonable expectation and wild hope. Living in a world that is today being transformed before our eyes by new applications of science, we find it hard to remain skeptical about scientific claims that it will soon be possible to release unlimited supplies of energy from granite or water. For there is today an almost irresistible presumption in favor of scientific capability. If it merely sounds possible, the layman is ready to believe it will happen. Thus we are ready to accept the idea of a vast proliferation of nuclear power plants over the earth, with problems of space solved and with radiation and heat hazards all kept well under control.

If we are not to run out of materials, however, we shall have to recycle them, so we are ready to imagine also that technology will discover increasingly more efficient (low loss) and inexpensive ways of doing this. And though finite amounts of materials must ultimately limit the period of continued expansion, by switching over time from the consumption of products to the consumption of services, we may find it possible to prolong the period of continued economic growth for hundreds of years.

As for food supplies, the optimistic view is that the problem can be solved by intensive monoculture utilizing large tracts of land and large amounts of chemical fertilizers and pesticides—the methods of the so-called Green Revolution. We are to suppose also that technology will respond promptly and successfully to adverse shortand long-term ecological repercussions associated with modern "engineering" methods of agriculture, and we are to ignore the social consequences of such agrotechnology on the economy of the hundreds of thousands of Asian villages, and the urban problems that follow the disruption of traditional ways of life.

I do not want to sound too cynical. It may all be wonderfully possible, or we may all be wonderfully lucky. I would simply affirm that there is room for legitimate doubt.

The advance of technology in the West over the past 200 years might well be attributable to especially favorable circumstances. Certainly there was no problem up to the present of limits to the assimilative capacity of the biosphere. Nor was there a problem of the availability of cheap fossil fuels. As for scientific progress, we may be running into diminishing returns to scale of research —partly because of an incipient breakdown in communication among an expanding array of narrowly focused specialists. Moreover, it might well be the case that there are no solu...

Table of contents

• Cover
• Title
• Copyright
• Original Title
• Original Copyright
• Preface
• Contributors
• Contents
• Introduction
• 1. Growth and Antigrowth: What Are the Issues?
• 2. Is the End of the World at Hand?
• 3. Can Technological Progress Continue to Provide for the Future?
• 4. Energy Supply as a Factor in Economic Growth
• 5. Growth and Environmental Problems of Noncapitalist Nations
• 6. Social Consequences of Zero Economic Growth
• 7. Zero Economic Growth and the Distribution of Income
• 8. Is There an Optimum Level of Population?
• 9. Discussion of the Papers
• 10. A Dialogue on the Issues
• 11. The Club of Rome Model