ABSTRACT
When discussing the sustainability of economic activity, it is important to distinguish between growth of material throughput-a physical phenomenon-and the expansion of wealth and income-a social phenomenon. While increased material throughput is now a controversial national objective, economic growth as measured by income flows can still be a feasible social goal. Herman Daly (1996: 192) contends that “sustainable growth is impossible.” Yet, the arguments against growth often confuse the measurement of the financial value of economic transactions with the level of material transformation. When general economic growth is distinguished from development or progress, it is possible to envision a social system of production and distribution that is physically sustainable and still able to generate higher levels of income and wealth. But the focus should not be on growth alone; we will have to become more accepting of moderate growth rates as we begin to target the things that matter in the furtherance of the life process. With improved environmental stewardship, economic growth as measured by GDP may slow or even contract in the short run, but that need not diminish human welfare. Since much of the prolific rise in output over the last two centuries has been related to mining the earth on one side and
filling it with waste on the other, curtailment of these activities may reduce material throughput. Widespread implementation of renewable energy may alone contract the monetary value of output as we will cease paying for the mining and burning of fossil fuels. On the other hand, if significant value is added by green technologies, the monetary value of output need not fall. In place of extractive industries, for example, society could choose to develop an “eco-industry” that competed for government contracts to reduce and recycle industrial and household waste and to innovate and implement green technologies. Such activity could maintain rather constant levels of GDP while greatly enhancing human welfare. Indeed, many of the “greenest” European countries, such as Holland, Denmark, Sweden and Norway, have seen their economies grow more slowly than average while quality of life measures have improved. When we measure the things that are most important-such as the integrity of the environment, free time to build relationships, democratic participation, volunteerism, lower crime and inequality, job and health security, and overall well-being-maximizing the output of material goods is revealed as a rather pedestrian pursuit. The question of the environmental sustainability of unfettered economic
growth is twofold: the continuing availability of natural resources and the capacity of the ecosystem to absorb a growing level of material transformation. The evolutionary approach of Institutionalist economics again proves useful in conceptualizing a social structure of production that is in closer harmony with the natural world. For Institutionalists, technological change is central to the economy and the institutional adjustments that govern it. With technological change, productive capital is not a stock of natural resources fixed by natural law. Resources do not “exist” for Institutionalists, but rather they “become.” Institutions-be they markets, governments or otherwise-define resources and capital by promoting certain production processes over others. The environmental implication of this approach is that technological advance can ensure the availability of productive inputs and relieve disposal pressure on the ecosystem. The Institutionalist method offers a rather optimistic view of technological
development, suggesting that productive practices tend to follow abundant resources, which at one time included fossil fuels. Particularly if the institutional conditions are favorable, technological adaptation will militate toward abundant resources. Today, for example, bio-fuels are in greater abundance than ever before due to the meteoric rise of agricultural productivity, and, accordingly, technology has adapted in the form of alternative fuels and engines for automobiles and composting operations for energy production. As is usually the case, the technology has been available long before social institutions have been willing to adapt to its use. Recognizing the adaptability of technology is important to the ecological debate because as Sachs et al. (1998: 29) argue “ecological sustainability is at present endangered more by the damage human activities cause to eco-systems than by shortage of raw materials.” This suggests that it is not necessarily the scale of activity
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that has been problematic, but rather the methods and processes used in the transformation of nature-especially the burning of fossil fuels. As the Institutionalist approach emphasizes economic “development” or
“progress” over traditional economic “growth,” it represents a departure from the “growth model of environmental stewardship” without sacrificing the furtherance of the life process. The last 50 years of industrial economic growth have clearly manifest the conflict between unselective growth and ecological degradation, diminishing faith that the environment would eventually benefit from long-run growth. During the halcyon days of economic expansion, many held the belief that growth would eventually provide the means to repair the environment and protect it from further damage. Walter Heller, former Chairman of the US President’s Council of Economic Advisor’s (1961-64), espoused the view thusly:
We need expansion to fulfill our nation’s aspirations. In a fully employed, high-growth economy you have a better chance to free public and private resources to fight the battle of land, air, water, and noise pollution than in a low-growth economy. I cannot conceive of a successful economy without growth.
