It’s not just growth that matters
Herman Daly was one of the first economists to truly grapple with the consequences of industrial expansion — eventually coming to see a steady state as the inevitable end-point of human population and economic growth. The limited nature of the earth’s resources require that we eventually get to zero population growth and zero growth in industrial output.
In a 1971 article, Toward a Stationary-State Economy, Daly wrote:
For several reasons the important issue of the stationary state will be distribution, not production. The problem of relative shares can no longer be avoided by appeals to growth. The argument that everyone should be happier so long as his absolute share of wealth increases, regardless of his relative share, will no longer be available …. The stationary state would make fewer demands on our environmental resources, but much greater demands on our moral resources.
We’re a long way from the stationary state for which Daly continues to advocate, but the theoretical point is unassailable: if we make it to the stationary state, distribution will be key.
One of the prime hurdles in our path to sustainability is distribution in the here-and-now. The latest example comes from no less than the World Bank itself:
… the study found that growth has rarely been sustained, exposing the most vulnerable people — the rural poor — to volatile shifts in their economic fortunes. Per capita income rose continuously from 2000 to 2005 in only two in five of the countries that borrowed from the World Bank, the study reported, and it increased for the full decade, from 1995 to 2005, in only one in five.
The study emphasized that economic growth is, by itself, no fix: How the gains are distributed is just as important. In China, Romania, Sri Lanka and many Latin American countries, swiftly expanding economies have improved incomes for many, but the benefits have been limited by a simultaneous increase in economic inequality, putting most of the spoils into the hands of the rich and not enough into poor households, the study concluded.
It is frequently said that developing countries will never accept sustainable development if it means prolonging their poverty. What this independent audit of the World Bank’s policies show, however, is that growth itself is not a panacea for poverty. Similarly, academic research now suggests most of China’s anti-poverty progress occurred not in the 1990s but in the early 1980s, well before the rapid growth in China’s recent past.
International development policies have fetishized growth while ignoring inequality and sold it to the developing world largely on the promise that growth would lead to less poverty. This promise has turned out to be a lie. If you don’t deal directly with inequality, it doesn’t get better. Indeed, multiple examples (China, Russia, even the U.S. today) show it gets worse.
In a world where renewables are rapidly becoming competitive with fossil fuels, it may become possible to sell the global poor on sustainable development. But if we want to build a solid consensus, we also need to directly and meaningfully address the poverty of individuals, not just the poverty of nations.