Pro Argument

Con Argument

Growth Spurs Society’s Moral Values

"The chief lesson from the globalization that began half a century ago is that the countries losing out are the ones that haven’t participated."

Benjamin M. Friedman^{[footnotes 1]}

Growth not only spurs a society’s material living standards, it also boosts moral values such as democracy, fairness, generosity and tolerance, explains Harvard Professor Benjamin M. Friedman. However, from an environmental viewpoint, he believes global warming is an issue which needs to be addressed with global agreements and a better use of existing technology.

The West Has Grown Enough

"We need to stop growth in the rich countries, while poor countries should have economic growth to escape from poverty and at the same time complete their demographic transitions."

Joan Martinez Alier^{[footnotes 2]}

Rich countries don’t need to grow further, as it implies an increased use of energy and raw materials, both resulting in environmental damage, says Professor of Economics Joan Martinez Alier from Universitat Autònoma de Barcelona. He believes the world economy is growing at a faster pace than nature can handle.

Bulletin: How would you define economic growth?

Benjamin M. Friedman: I prefer to define economic growth as a sustained increase in material living standards, broadly distributed throughout the population.

Bulletin: How would you define economic growth?

Joan Martinez Alier: Economic growth is defined as increasing per capita income, as usually measured in national income accounting. It’s worth noting that such accounting doesn’t include unpaid domestic work, unpaid services from nature or negative externalities such as air pollution.

What are the pros of economic growth?

BMF: When the broad bulk of the population experiences a sustained increase in its living standard, society is more likely also to move forward in dimensions that Western thinking has regarded as positive ever since the Enlightenment, including moral values such as commitment to democracy, fairness, generosity and tolerance with respect to diversity across racial, ethnic or religious lines.

Are there exceptions, when growth doesn’t achieve positive moral consequences?

BMF: Yes, countries where wealth creation primarily comes from extracting minerals from the ground do seem to be an exception to the positive moral consequences that growth generally triggers.

Does this mean an equal distribution of growth boosts a society’s moral values?

BMF: Not necessarily. Look at China today. Incomes are becoming sharply more unequal, but the economy is expanding so rapidly that even with this increased inequality, the great majority of Chinese enjoy a higher standard of living. What matters here, is whether the majority of the population is experiencing an improvement in its living standard.

What are the pros of economic growth?

JMA: One obvious advantage is that people have more money to spend. One immediately notices this when going to India or China today. I was born in Barcelona after the Spanish Civil War and have since the ’60s profited from the many good things economic growth brought to Spain. I am glad when other countries join in this growth. However, we should not describe this process only in economic and social terms, but also in physical terms. We know that the use of energy and flows of materials grow more or less parallel to economic growth. There is some reduction in the amount of energy and materials used per unit of production, but the total amount goes up because of economic growth. Even in economies based on services, the use of energy and materials increases because of increased consumption. This is why economic growth should not last forever.

What are the dangers of economic growth?

BMF: Growth, especially in a development context, implies that society undergoes all sorts of transitions – be it large-scale population movements from farms to industrial employment, from rural areas into cities, urbanization, increased literacy rates. Many of these transitions can bring political unrest in the short term.

What are the cons of economic growth?

JMA: From a social point of view, there is the Easterlin paradox, which states that above a certain level of income the returns of economic growth in terms of human happiness are low, if not negative. So, growth becomes pointless. From an ecological point of view, the negative aspects are the depletion of resources, and also many of the changes in land use like the loss of landscapes and less space for other species.

Are there any other dangers?

JMA: There are other negative effects of growth that we call externalities. Economic accounting doesn’t incorporate these correctly. We for instance, talk about oil production, when we, in fact, are extracting oil. Also, the world economy grows at a faster pace than nature can cope with. We are putting greater quantities of carbon dioxide in the atmosphere than can be absorbed by oceans and new vegetation, so that the concentration of greenhouse gases in the atmosphere rises. We’ve known this since 1895 when the Swedish chemist, Svante Arrhenius, explained the increased greenhouse effect. It has taken very long for the penny to drop.

Is the current level of global growth sustainable in the long term?

BMF: From an economic and even a political point of view, I would say yes. The chief lesson from the globalization that began half a century ago is that the countries losing out are the ones who haven’t participated like North Korea, Burma and sub-Saharan countries. Look at India and China, which have participated in global economic growth. They are doing extremely well, with the number of poor falling quite rapidly.

Is it sustainable from an environmental point of view ?

BMF: Environmental damage in the traditional sense, like air pollution, or running out of vital non-renewable resources is not problematic. Air and water pollution is the worst in low-income countries. When such countries reach an income between 2,000 to 8,000 dollars per capita, the country normally starts to address the matter. China with a per capita income of about 6,000 dollars is for instance starting to address air pollution in cities, through emission controls on automobiles.

How about running out of oil or other essential non-renewable resources?

BMF: When it comes to running out of vital non-renewable resources, we aren’t likely to run out of something that matters in the short term. However, looking over a 250-year horizon, we will. But then it is implausible to assume that technology will remain unchanged during such a long time period. Even some 150 years ago, people were already concerned about running out of oil. In 1857, they worried about oil because it was getting harder to find whales to catch. At that time, no one had started to extract petroleum from the ground.

Is the current global economic growth sustainable in the long term from a political and environmental point of view ?

JMA: I think the rich economies should no longer have any economic growth, as we know that this growth implies more use of materials and energy, and therefore results in greater environmental damage with today’s technology. This environmental damage is often outsourced. We import oil from the Amazon rainforests of Peru and Ecuador, or from the Niger Delta. We need to stop growth in rich countries, while poor countries should have economic growth to escape from poverty and at the same time complete their demographic transitions.

But isn’t a decreased birth rate associated with economic growth?

JMA: This is generally true, but fortunately population growth can stop at still low levels of income, just as we see in the Indian states of Kerala or Tamil Nadu today or in Europe around 1900. Europe then had an active neo-Malthusian movement that challenged that epoch’s state and church doctrines, calling for population control through contraception.

Are you as optimistic when it comes to tackling global warming?

BMF: No, precisely because the problem is global. There is today very little incentive for any individual political entity to address the problem on its own although there have been attempts to address the issue, such as the Kyoto Protocol, voluntary efforts in California, in some European Union (EU) states and by some corporate businesses. But over time and with some efforts in negotiating international agreements, the ordinary workings of technological progress should be able to address the problem.

Can you provide examples of the types of technological progress that can address the problem?

BMF: Much of the carbon dioxide (CO2) released comes from power generation, and we know today how to prevent this from happening either by using nuclear power or by capturing the CO2 before it leaves the power plants and gets into the atmosphere. We already have the technology, and it would today add 30 percent to 50 percent to people’s electricity bill to recapture the CO2.

This may sound like a lot, but when you know a typical family spends a mere 4 percent of its income on electricity, and so it would spend just 5.5 percent if it paid for carbon recapture. No one would like to do that gladly, but it is not a large amount compared to what people pay for many other public purposes. It’s a matter of having a public policy mechanism in place. Moreover, the price of carbon recapture is likely to come down in the future thanks to technological progress.

Wouldn’t economic stagnation or a drop in economic growth lead to social problems?

JMA: Lack of growth will increase unemployment, so that we must invent policies which should be socially sustainable, separating remuneration from employment even to a greater extent than today.

Aren’t richer countries more likely to implement "ecological" measures such as catalytic cars...?

JMA: This is partly true, as richer people demand a cleaner environment and can pay for it. Sulphur dioxide emissions in urban areas increase with income and then decrease because it is easy to change technologies. London’s air is today much cleaner than it was in 1952. The urban pollution in Delhi has improved when buses switched to compressed natural gas. On the other hand, carbon dioxide emissions go up with income. Moreover international trade hides the real price of a cleaner environment in the developed world, as we export the environmental damage to the developing countries. We in Europe import oil, gas, soybeans, aluminium... There is for instance damage from mining of bauxite in Orissa (India) carried out by foreign companies or Indian companies, which use large amounts of electricity for the conversion of bauxite into aluminium. The electricity comes from coal or from dams and produces further damage. This process also produces red mud. These negative outcomes don’t appear in the importing country’s environmental accounts.

So poor people don’t demand a cleaner environment?

JMA: That is incorrect. Poor people often defend the environment against dams, mining or oil extraction companies, because they need it directly for their livelihood. The Amazon rainforests were, for instance, defended by the Brazilian Chico Mendes movement in the ’80s. There are many other similar movements of an "environmentalism of the poor" that could potentially become a great worldwide movement for sustainability.