Emissions And Growth — Does The Economy Need To Keep Growing?

Sometimes, it can feel like the only goal of governments is to pursue economic growth at all costs. Headlines about looming recessions leave us quivering with fear, while talk of growth is treated as the ultimate victory.

Yet this same growth is responsible for environmental destruction. Many activists have called for an end to pursuing endless growth and a complete restructuring of the economy. But is this a feasible goal — and what is growth, anyway?

What is Growth?

It would be harder to find a more straightforward yet more complex economic topic than that of growth. On the surface level, growth means producing goods and services increases over time. Or, in economic terms, that output rises. 

This can happen for various reasons — including higher productivity due to technological innovation or a growing workforce — and it’s most often measured using gross domestic product (GDP).

Historically, growth has brought many of the luxuries we now take for granted. More output means more tax revenue, more jobs, and higher wages, which can boost living standards and fuel social progress. Regardless of whether you believe the “trickle-down” effect is real, you’d be hard-pressed to deny that economic growth has had some level of impact in raising our living standards.

So, what’s so complex about growth? As mentioned, growth relies on factors like technological innovation and population growth. Can we rely on them to keep rising forevermore — and would we lose our modern luxuries if growth slowed down?

A Brief History of Growth

Given the omnipresent concept of growth in modern society, it would be easy to assume that growth is an inherent part of human society. In reality, it’s a relatively recent phenomenon.

Before the first industrial revolution (around 1770), there was practically no economic growth.

Fun fact: Since growth was minimal pre-1800, prices were relatively stable over time. Classic literature often mentions prices and wages since authors operated under the assumption that the numbers used on the date of publication would continue to make sense for future readers. Now, authors rarely mention prices, knowing they will instantly signal that the book needs to be updated.

Between 1770 and today, growth has been astronomical. The inventions made during this time, such as electricity and the internal combustion engine, allowed production to skyrocket. Increasing economic growth at a rapid rate. This growth continued throughout the 20th and 21st centuries with further inventions like the internet.

Between the 1960s and the present, GDP has grown by more than 5,000% — as reflected by the fact that houses bought for a few thousand dollars in the 60s can be worth millions today.

The Negatives of Growth

All this sounds great, but it may not be sustainable — for more reasons than one.

On one hand, many of the factors we relied on to bring growth until now may no longer be able to continue. Predictions suggest population growth will stabilize or decline soon, which could stifle growth.

And even if we could keep sustaining growth, would that be the right choice? The industrial revolutions that have produced the growth we’ve enjoyed so far have largely relied on fossil fuels. And maintaining the living standards we have now requires the consumption of goods to a level that might not be sustainable. It would be great for the environment if we all swapped clothes with our loved ones instead of buying new items, but not so great for the economy.

We’ve ended up in a situation where companies are incentivized to use sales and marketing tactics to encourage people to purchase items that we may not have the resources to keep producing, sustain growth, and keep the economic machine going.

Alternatives to Growth

It’s easy to identify a problem here. But is there a solution?

Uncoupling growth and carbon emissions

Suddenly stopping all economic production and growth may not be feasible, but an alternative could exist. Decoupling growth from carbon emissions. 

Some countries may be starting to do this already. For instance, the UK’s GDP has increased over the last 30 years while its emissions have reduced. The US is following the same trend.

However, it’s unclear if this decoupling can happen fast enough, especially as many countries are partly outsourcing their emissions to other countries, which produce their goods or the materials needed for “cleaner” energy sources.

Degrowth

A more radical potential solution is degrowth. As the name suggests, this means stopping from pursuing growth altogether. It could be restructuring the economy to a resource-based economy or moving away from measures like production altogether.

As mentioned, “growth” is typically measured using GDP, which is closely linked to production. However, some have proposed alternative measures, such as accounting for well-being or sustainability as a “growth” measure instead of just production.

However, nobody can decide precisely what this would look like — never mind convince the populace to vote for it.

Final Words

The relationship between economic growth and environmental sustainability has left us at a crossroads. Alternatives, such as moving away from GDP as a measure of growth or decoupling growth from emissions, may pose solutions. But the future is still being determined, with society divided over which path to take and the need for worldwide coordination.