Bigger isn't better

The silver lining of this crisis could be that we decide to think a little more broadly about the economic impacts of how we live. It's natural for the SRI community to embrace the idea that growth is not always good, and that it is necessary to 'value' the environmental and social impacts of our way of life, in both a philosophical and an economic sense.

The following OpEd piece is from today's Ottawa Citizen. It's by Peter Victor, who teaches at York University and has recently published a book on this subject, Managing without Growth: Slower by Design, not Disaster. It's a bit lengthy for a blog, so we have reprinted the first few paragraphs, and then provided the link.

There's nothing like a good crisis to make us rethink old ideas. The Depression of the 1930s led to the rejection of the prevailing idea that unemployment would right itself if only people would work for lower wages. Governments could do very little to help.

These ideas were overthrown by experience and by the invention of modern macro economics by British economist, John Maynard Keynes. By the end of the Second World War, most western governments had adopted Keynesian economic policies designed to ensure that total expenditures were sufficient to maintain full employment.

Keynesian economists soon discovered that full employment today meant a bigger economy tomorrow because some of the investment expenditures required to keep unemployment down -- on infrastructure, buildings and equipment -- also expanded the productive capacity of the economy. So does an expanding population and labour force. Initially, governments pursued economic growth to meet the more pressing concern of maintaining full employment, but this soon changed. In the 1950s, economic growth became the No. 1 economic policy objective of governments and all others, such as productivity, innovation, free trade, competitiveness, immigration, even education, became a means to that end.

Until a year or so ago all seemed to be going reasonably well. Then came the breakdown in the financial sector followed quickly by a recession that, through globalization, spread farther and faster than swine flu. Now governments are congratulating themselves for acting together to stimulate spending to get their economies back on course, much as Keynes might have recommended.

But times have changed since his day. World population has increased almost three times, world economic output has increased 10 times and with this massive expansion of the human presence on earth, we are confronting limits to the availability of cheap energy, to fresh water, and to the capacity of the atmosphere to absorb increasing emissions of greenhouse gases. At the same time we are destroying the habitat of numerous species of flora and fauna and the security of our own food supplies is threatened. Read the rest here.