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It's Time for a Tough Conversation About Economic Growth

09/30/2015 08:13 EDT | Updated 09/30/2016 05:12 EDT
David Cooper via Getty Images
Humber Bay Park East looking east towards the City Core with a Beaver lodgein the foreground and Canada geese swimming off shore. Haze and smog obscure the skyline. (Photo by David Cooper/Toronto Star via Getty Images)

As an economist who has focused on environmental challenges, I've long recognized that in my field it often takes a major crisis before cherished but unsatisfactory theories finally give way to new thinking. So it is with how economists think about growth and the environment.

The impact of government spending during World War II overthrew flawed economic theories that implied governments had no power to reduce unemployment. As factories hired workers to fulfill armament orders ,and the construction industry built infrastructure and houses, the Great Depression's long lines of unemployed workers disappeared. Theories implying that unemployment would fall only if workers accepted lower wages lost credibility. Economists came to accept that governments could tackle unemployment.

Ironically, this experience helped cement growth on its pedestal. At first, governments prioritized full employment and growth was the means to achieve it. However, governments soon shifted their focus to growth as the primary objective of economic policy.

By the 1960s, it became clear that growth had negative environmental impacts. Books like Silent Spring and The Limits to Growth presented unresolved challenges to standard economics, and spoke to me deeply. I embarked on an approach to economics that recognized the dependency of the economy on the environment and drew from both natural and social sciences. Eventually, we came to call this ecological economics and in 1995, I helped found the Canadian Society for Ecological Economics (CANSEE).

In what ways are mainstream and ecological economics different? Ecological economists understand economies as subsystems of the earth ecosystem, sustained by flows of materials and energy from and back to the larger system. When these flows were small relative to the earth they could be overlooked. Such was the case back when the foundations of standard economics were laid. But now, the warning signs that growth is driving accelerating environmental change are ever harder to ignore. Even so, models used in standard economics continue to neglect these flows, so the downsides to growth are overlooked. Ecological economists look for solutions that do not involve incessant growth.

So why has economics failed to come to terms with our global environmental crisis?

The economic profession's collective blindness is somewhat understandable. Modern economies are structurally reliant on economic growth for stability. When growth falters, businesses drown in red ink, people lose their jobs, and government revenues fall. It seems that more growth is the only way to create jobs and to pay for government spending.

One might also look to psychology for an explanation. The trauma of the Great Depression and the role of post WWII growth in reducing unemployment and poverty were deeply engrained in economic thinking.

Furthermore, at first, the environmental crisis unfolded in slow motion. However, now the impacts are accelerating and increasingly, they impact the economy. Insurance companies are raising premiums as they factor in how storms worsened by climate change are saddling them with rising payouts. Ecosystem services on which agriculture, fishing and forestry depend are in steep decline. The tragic irony is that all this growth in the past few decades has done little to improve happiness in the 'developed' world. Meanwhile, their growing economies consume the ecological space desperately needed by poorer countries where growth still promises real gains in well-being.

Fortunately, many younger economists are starting to recognize the need to shift focus from growth to development and wellbeing. They are looking for alternative ways to meet humanity's needs while sustaining the biosphere's capacity to support civilization. In ecological economics, we see that taking an interdisciplinary perspective leads to better solutions. Since environmental problems have ethical, engineering, ecological and economic dimensions, we value insights from diverse professions. People of disparate views and experience must come together to find a better way forward than continual economic growth.

That's why I'm excited to be on a panel with one of the towering figures of Canada's environmental movement, David Suzuki, to hash out these views on October 1. Miles Richardson, an economist who is from the Haida Nation, will address how indigenous perspectives can contribute to moving beyond the obsession with growth. And we will be joined with three leading practitioners on greening cities, finance and our power grids. Since we will not have the easy but hollow answer that growth will solve all problems to fall back on, our search for solutions will involve wrestling with some tough issues. In looking for solutions, we will grapple with some tough issues. However, by tackling these deeper issues, we can show the outlines of an equitable economy capable of supporting human well-being for many generations.

Tickets to Rethinking Economics on October 1 at the Vogue Theatre in Vancouver can be found here. The event will be livestreamed through Periscope through CANSEE.

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