Here’s an abstract to help get us started today—though economic growth could wreck the planet, it is not necessarily going to do so. But it is sometimes difficult to differentiate between “good” growth and “bad” growth, in part because most indexes that we measure economic change with are too blunt. I’m going to suggest some alternatives here, which might bring some clarity to our understanding of economic growth, and which could help us navigate a path toward genuine prosperity.
Making Sense of Economic Growth
It is very common to read arguments about how dangerous economic growth is—how it is destroying the planet, how exponential growth can’t continue, and how it must be stopped. In fact, some environmentalists have long advocated various forms of “de-growth”. And yet, it is very clear that not all economic growth is bad. Growth and economic development will be critically necessary to bring poor nations out of poverty, and there are plenty of other examples of growth that simultaneously help people and help to protect the environment. On the other hand, there are certainly many cases where growth is indeed quite damaging.
Why Current Measures are Inadequate
Unfortunately, it’s often difficult to judge good growth from bad growth, and this is partly because the ways in which we measure growth are somewhat flawed. Since the 1930’s, growth has been most commonly measured as growth in total production of goods and services, in the form of Gross Domestic Product, or GDP. While never intended to be a measure of the overall social progress of a nation, it has been used as a proxy for that virtually since its inception (a good New York Times article about this: “The Rise and Fall of the G.D.P.“). Over the years, plenty of criticism has been directed toward GDP, as much of what it measures as positive growth is actually detrimental to society. Noted thinkers Frijof Capra and Hazel Henderson give a short summary of this argument in a report about qualitative growth—
“Social costs, like those of accidents, wars, litigation, and health care, are added as positive contributions to the GDP, as are ‘defensive expenditures’ on mitigating pollution and similar externalities, and [yet] the undifferentiated growth of this crude quantitative index is considered to be the sign of a healthy economy…”
Another flaw of GDP is that it while it mostly ignores social costs, it completely ignores Continue reading