Class News
Gus Speth '64: "New Vision of Economic Growth
Gus Speth, our classmate and former dean of Yale's School of Forestry and Environmental Studies, wrote the following opinion article published on May 31, 2011 by Yale Environment 360, a publication of F&ES.
Off the Pedestal: Creating a New Vision of Economic Growth
The idea of economic growth as an unquestioned force for good is ingrained in the American psyche. But a longtime environmental leader argues it's time for the U.S. to reinvent its economy into one that focuses on sustaining communities, family life, and the natural world.
Is anything in America more faithfully followed than economic growth?
Its movements are constantly watched, measured to the decimal place,
deplored or praised, diagnosed as weak or judged healthy and vigorous.
Newspapers, magazines, and cable channels report endlessly on it.
Promoting growth may be the most widely shared and robust cause in the
United States today.
If the growth imperative dominates U.S. political and economic life,
what happens when growth hits some serious stumbling blocks?
When I was in school in England, the dean of my college told us when we
first arrived that we could walk on the grass in the courtyard — but not
across it. That helped me love the English and their language. Here is
another creative use of prepositions: there are limits to growth, and
there are limits of growth.
Let's first take up the limits of growth. Despite the constant claims
that we need more growth, there are limits on what growth can do for us.
The ecological economist Herman Daly has reminded us that if
neo-classical economists were true to their trade, they would recognize
that there are diminishing returns to growth. Most obviously, the value
of income growth declines as one gets richer and richer. Similarly,
growth at some point has increasing marginal costs. For example, workers
have to put in too many hours, or the climate goes haywire. It follows
that for the economy as a whole, we can reach a point where the extra
costs of more growth exceed the extra benefits. One should stop growing
at that point. Otherwise the country enters the realm of "uneconomic
growth," to use Daly's delightful phrase, where the costs of growth
exceed the benefits it produces.
There are some, myself included, who believe that the U.S. is now
experiencing uneconomic growth. If one could measure and add up all the
environmental, security, social, and psychological costs that U.S.
economic growth generates at this point in our history, they would
exceed the benefits of further ramping up what is already the highest
GDP per capita of any major economy.
Though not widely accepted, the case is strong that growth in the
affluent U.S. is now doing more harm than good. Today, the reigning
policy orientation holds that the path to greater well-being is to grow
and expand the economy. GDP, productivity, profits, the stock market,
and consumption must all go up. This growth imperative trumps all else.
It can undermine families, jobs, communities, the climate and
environment, and a sense of place and continuity because it is
confidently asserted and widely believed that growth is worth the price
that must be paid for it.
But an expanding body of evidence is now telling us to think again. The
never-ending drive to grow the overall U.S. economy is ruining the
environment; it fuels a ruthless international search for energy and
other resources; it fails at generating the needed jobs; it hollows out
communities; and it rests on a manufactured consumerism that is not
meeting the deepest human needs. Americans are substituting growth and
consumption for dealing with the real issues — for doing things that
would truly make us and the country better off.
It is time for America to move to post-growth society where the natural
environment, working life, our communities and families, and the public
sector are no longer sacrificed for the sake of mere GDP growth; where
the illusory promises of ever-more growth no longer provide an excuse
for neglecting to deal generously with our country's compelling social
needs; and where true citizen democracy is no longer held hostage to the
growth imperative.
Another way of pointing out the limits of growth is to consider the long
list of public policies that would slow GDP growth, thus sparing the
environment, while simultaneously improving social and individual
well-being. Such policies include: shorter workweeks and longer
vacations, with more time for children and families; greater labor
protections, job security and benefits, including generous parental
leaves; guarantees to part-time workers and combining unemployment
insurance with part-time work during recessions; restrictions on
advertising; a new design for the twenty-first-century corporation, one
that embraces re-chartering, new ownership patterns, and stakeholder
primacy rather than shareholder primacy; incentives for local and
locally-owned production and consumption; strong social and
environmental provisions in trade agreements; rigorous environmental,
health and consumer protection, including full incorporation of
environmental and social costs in prices; greater economic and social
equality, with genuinely progressive taxation of the rich (including a
progressive consumption tax) and greater income support for the poor;
heavy spending on neglected public services; and initiatives to address
population growth at home and abroad. Taken together, these policies
would undoubtedly slow GDP growth, but well-being and quality of life
would improve, and that's what matters.
Of course, it is clear that even in a post-growth America, many things
do indeed need to grow: growth in good jobs and in the incomes of the
poor and working Americans; growth in availability of health care and
the efficiency of its delivery; growth in education, research and
training; growth in security against the risks of illness, job loss, old
age and disability; growth in investment in public infrastructure and in
environmental protection and amenity; growth in the deployment of
climate-friendly and other green technologies; growth in the restoration
of both ecosystems and local communities; growth in non-military
government spending at the expense of military; and growth in
international assistance for sustainable, people-centered development
for the half of humanity that live in poverty. These are all areas where
public policy needs to ensure that growth occurs.
That's one case against growth — the argument that we should no longer
prioritize growth, much less fetishize it as we do now. I believe this
case will be pressed with increasing urgency in the years ahead, and I
doubt we'll miss our growth fetish after we say good-bye to it. We've
had tons of growth — growth while wages stagnated, jobs fled our
borders, life satisfaction flatlined, social capital eroded, poverty
mounted, and the environment declined.
The case that there are limits to growth — not that we shouldn't grow
but that we can't grow — is based on the reality that we are entering a
new age of scarcity and rising prices that will constrain growth. The
world economy, having doubled in size three times since 1950, is now
phenomenally large — large even in comparison with the planetary base
that is the setting for economic activity. Today's huge world economy is
consuming the planet's available resources on a scale that rivals their
supply, and it is releasing almost all of those resources, often
transformed and toxic, back to the environment on a scale that is beyond
the environment's assimilation capacities, thus greatly affecting the
major biogeophysical cycles of the planet. Natural resources are
becoming increasingly scarce, and the planet's sinks for absorbing waste
products are already exhausted in many contexts. According to the
Ecological Footprint analysis, Earth would have to be 50 percent larger
than it is for today's economy to be environmentally sustainable.
In effect, humans have entered a new geological epoch — the anthropocene.
As Paul Crutzen and Christian Schwägerl explained in an article on Yale
Environment 360: "It's a pity we're still officially living in an age
called the Holocene. The Anthropocene — human dominance of biological,
chemical and geological processes on Earth — is already an undeniable
reality."
If we now live in a world where the natural resources and environmental
sinks needed for economic activity are becoming more scarce across a
wide front, we should see prices rising. And indeed we do. Prices of
many things are rising rather rapidly: oil, coal, food, and numerous
non-fuel minerals. Lithium and rare earths are probably not far behind.
If these patterns hold, as seems likely, and one factors in the economic
losses due to climate disruption and the higher energy prices due to
climate protection policies, it's hard to imagine that economic growth
won't be slowed. Moreover, as noted earlier, the increasing scarcity of
the atmospheric sink for greenhouse gas emissions is going to challenge
growth among the affluent countries. Reducing carbon emissions at
required rates may not be possible in national economies that are
stressing growth maximization.
Author Richard Heinberg and many others have been calling attention to
the looming challenge of peak oil. After much controversy, the reality
of peak oil is now widely accepted. Oil production did actually reach
its all-time high in 2005 and has plateaued since. Peak oil, the point
of maximum production after which production begins to decline, may thus
have already happened, but, if not, a widely held view today is that oil
will have peaked and begun to decline before 2030, perhaps a decade or
so hence.
In 2005, the U.S. Department of Energy released the now-famous "Hirsch
Report," Peaking of World Oil Production, which warned that "the
problems associated with world oil production peaking will not be
temporary, and past ‘energy crisis' experience will provide relatively
little guidance." But the report recommended accelerating development of
oil sands and coal liquefaction and other steps that would send the
world rushing down a path that would exacerbate the already grave
challenges of global warming. Clearly, it makes no sense to separate the
two challenges: energy supply and climate change must be dealt with
together — and soon. Clearly, today we are not prepared or preparing for
either.
Many who have looked at the combined challenge of energy and climate
change have concluded that our civilization, having completed its
exuberant, flamboyant phase, is headed toward a dramatic simplification
and re-localization of life and the end of economic growth as we have
known it. Some even see the collapse of modern civilization as just a
matter of time.
In The Transition Handbook, the bible of the fast-growing
Transition Town movement, Rob Hopkins identifies three scenarios:
adaptation, which assumes "we can somehow invent our way out of
trouble"; evolution, which requires a collective change of mindset, but
assumes that "society, albeit in a low-energy, more localized form, will
retain its coherence"; or collapse, which assumes that "the inevitable
outcome of peak oil and climate change will be the fracturing and
disintegration, either sudden or gradual, of society as we know it."
The eventual outcome will likely involve elements of all three of these
scenarios, occurring at different times and different places. Hopefully,
the "evolution" scenario will predominate.
"Within this century, environmental and resource constraints will likely
bring global economic growth to a halt…," Canadian political scientist
Thomas Homer-Dixon wrote in Foreign Policy earlier this year. "We
can't live with growth, and we can't live without it. This contradiction
is humankind's biggest challenge this century, but as long as
conventional wisdom holds that growth can continue forever, it's a
challenge we can't possibly address."
So there we have it: the traditional solution that America has invoked
for nearly every problem — more growth — is in big trouble. If we are
going to move beyond growth, we will need to build a different kind of
economy. We Americans need to reinvent our economy, not merely restore
it. We will have to shift to a new economy, a sustaining economy based
on new economic thinking and driven forward by a new politics.
Sustaining people, communities and nature must henceforth be seen as the
core goals of economic activity, not hoped for by-products of market
success, growth for its own sake, and modest regulation. That is the
paradigm shift we must now begin to pursue and promote.
ABOUT THE AUTHOR
James Gustave Speth is a professor at Vermont Law School and a Distinguished Senior Fellow at Demos, a nonpartisan public policy research and advocacy organization. A former dean of the Yale School of Forestry & Environmental Studies, he also co-founded the Natural Resources Defense Council, was founder and president of the World Resources Institute, and served as administrator of the United Nations Development Programme. He is the author of six books, including the award-winning The Bridge at the Edge of the World: Capitalism, the Environment, and Crossing from Crisis to Sustainability and Red Sky at Morning: America and the Crisis of the Global Environment.