Growth is good. Growth is natural. Growth can be green. Updated 11. April 2022
Considering the global warming, environmental issues, social imbalances, and 50 years of Limits to Growth discussion, here my view.
First there are many theories and definitions of growth. Two may be mentioned: “increase of national income [1]per person in a national economy” and“ increase of production capacity per person in an economy”. More references of these facts and figures economic theory-based definitions[2] can be found with Keynes, Harrod-Domar, Solow-Kaldor, Kuznet, Goldsmith W.G. Hoffmann, Cassell.
However, for Callahan[3] growth is defined as a process. Everything grows and goes in cycles he writes. Trees, babies, little kittens, cells, mountains, trees, flowers. No central power is in control. It is a natural type of growth. Genetics, rest, breaks, pauses, nutrition, temperature, disasters like a volcano outbreak or storms, exercises and time make this growth regular and repetitive and sometimes eruptive, erratic and sometimes something ceases to grow. This growth is natural, and essential for sustainable life.
I usually make a reference to Indigenous Peoples and their ways of thinking and views. Growth is also a concept of native peoples all over the world. « Grow with the Horse » is one saying of the Cheyenne Indians, which means deal with live and its adversities and do the best you can. They think in a different, more interconnected, pluralistic way about anything, which would exceed the two pages. So may be for another paper sometime.
Scientific progress is also growth. It can translate in growing new technologies and techniques of smaller farmers in Africa or Brazil. and these can be more efficient, lower costing, and more sustainable. And if something is cheaper, demand grows. Example is the whale oil, that lead to close extinction of whales, but was replace by oil of plants, which was cheaper. Michael Shellenberger has written a book called Apocalypse Never. Worth reading.
Another type of growth is micro economic business-related growth: orders, sales, profit (sometimes), supply, prices, stocks, unemployment, investments, GDP, defence, and war expenses (changed within a couple of days), State Quota (which is the economic expenditure of the STATE compared to the national income, which is tax and to a bigger portion credit funded) and so forth. I call it man made because organisations and institutions are the cause for this type of growth. When humans are the cause, then we deal with typically control, power, issues of justice and good will[4]. Is this type of growth natural?
Economist de Soto gives us his view and response: “the theory of economic growth and underdevelopment, which rests on equilibrium and macro-economic aggregates, has been formulated without taking account of the only true protagonists of the process: human beings and their alertness and creative entrepreneurial capacity. Therefore, we must reconstruct the entire theory of growth and under development and eliminate the elements which justify institutional coercion and which until now have rendered the theory harmful and futile. We should centre the theory on the theoretical study of the processes by which to discover the developmental opportunities that remain unexploited due to a lack of essential entrepreneurial element, which is undoubtedly the key to living under development behind[5].” I also refer to Joseph Schumpeter on this topic.
What is the general problematic perception about growth? As said economic, financial growth is man-made, and more precisely it is STATE made. So why is this an issue? Because of its monopolistic nature. The State funds expenditure through tax income and moreover through central and commercial banks financed debt. See details of this quota. In addition, every country STATE does it. Moreover the state subsidizes all sorts of products. 1.8 trillion of USD are spent on subsidies, 500 Bln on fossil fuel alone. In most cases it is not an entrepreneur’s decision but a political decision. [6]Ludwig van Mises[7] describes economic related state interventions in one of his books as follows: interference by taxation, restriction of production, interference with the structure of prices, currency and credit manipulation, confiscation and redistribution, syndicalism and corporatism, economics of war, the welfare principle versus the market principal, harmful subsidies[i], money supply and interest rate intervention, Market intervention. Mieses died in 1973, so he could not know about health and safety interventions (Covid), energy related interventions. All these interventions are political and therefore not market and need based so not natural.
Conclusion: Growth is not the problem it is a solution. Economic growth is not a goal per se. It is a by-product of Entrepreneurs, who voluntary, or altruistic or profit oriented initiate developments of ideas, build a product or a service, which each and every one of them believes “ might make a sale” thus creating growth (and sometimes not) that generates excess capital (profit) for other entrepreneurs who do not have money to develop new solutions either themselves or made available through the financial systems. Entrepreneurs respond to true needs of the land, the earth, and the people. This growth is qualitative, because it reduces excess, and other forms of waste, increases productivity and efficiency of the processes to produce, distribute and use natural resources. Look what Musk with his Tesla provoked all over the world. Musk, whether you like him or not, is an entrepreneur. And no don’t be jealous, he took risks. A bad example is Chinese funded and built highway in Serbia, that nobody needs, and the population (and the STATE) cannot fund. This wasted capital tied to this project could have been used elsewhere true value add. The heart of growth lies in fulfilling changing needs of a rapidly increasing population coordinated via free prices, that change supply and demand through its informational character available to all players interested in a particular market.
I am not disputing the issues we have: On average people eat 10kg of fish compared to 6kg of meat, resulting in overfishing, only 5% of wild animals left compared to domestic mammals, 80% of land is used to grow crops for animal food (which is state subsidized to protect local agriculture products), impact on water, deforestation, plastic, growth of population, excessive use of sand [8]. Politicians are environmentally, socially and geopolitically blind and focus on export export-based growth model with China, which has now an impact on our safety and well-being. Who as an individual would do all these things?
There is already progress due to sustainable natural growth: 75% more sea conservation areas since 1916, former scarce resources[9] are not scarce anymore, because demand for resources is changing in favour of clean air, clean travel, a better environment. Growth.
The real issue is emissions Carbon dioxide and methane avoidance. We are not fixing this problem fast enough. External effects are polluting air, water, global warming, etc. Why is it not working? Because there’s no price, it is free for companies to pollute the environment globally. A market needs to produce a global price for these external effects. Only then all those who commit external effects must pay for it, are encouraged to develop other ways to produce fossil fuel free energy. If the price for emissions is higher than the costs to produce green energy, businessmen and consumers will decide to go for it.
All major Governments must join to coordinate, creating a new framework for a global emissions paper market (Europe and China have already one). Now with the world divided into two or Three blocks. US, Europe and Russia-China a real challenge.
In the meantime humans can do more to protect themselves: The Dutch built dams, the Mayans created already ponds for water supply, New Orleans reacted to the storms building dams as well, Morocco build a photovoltaic installation, wind, solar power, new nuclear technologies, hydrogen, and alternative fuels. I suggest for example a joint venture with the Maghreb States to build production and distribution of renewal energy for Europe AND the sub-Saharan[10] population close by.
We cannot have a left wing or green wing or a governmental “Please Wait” or “Stop” sign for growth just because growth and profit is perceived as morally bad. And no voter will like a government telling them to stop doing or buying something they like. That would be the end of Freedom in a free world too.
Conclusion: Growth is not damaging, nor bad. Give human entrepreneurs more freedom to continue developing and growing solutions (social, technology, soft, small, local) that use less resources, increase productivity with less waste. Convert the State role from being a monopolistic economic market player, the biggest polluter on the planet, to a facilitator, setting rules player, to collect and see the “truth of costs” of everything for a sustainable quality growth. For that we need growth to fund natural growth, like nature does.
[1] https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWORLD
[2] Arthur Woll. Allgemeine Volkswirtschaftslehre.
[3] Gene Callahan. Economics for real people. An Introduction to the Austrian School.
[4] Adam Smith. The Theory of Moral Sentiments.
[5] Jesus Huerta de Soto. The Austrian School. Market Order and Entrepreneurial Creativity. Page 104.
[6] https://vimeo.com/689679841 Video from Halla Tomasdottir
[7] Ludwig van Mises. Human Action Volume 4. Pages 716 – 861.
[8] See all these examples under www.gapminder.org
[9] See also the book “More for Less” from Andrew McAfee.
[10] https://www.iea.org/reports/sdg7-data-and-projections/access-to-electricity