Growth vs Development
Leading American economist Herman Daly illustrates the fundamental difference between growth and development by these definitions:
- Growth – the quantitative increase in size or throughput of biophysical matter. Daly has argued economic growth is based on the “limitless transformation of natural capital into man-made capital”.
- Development – the qualitative improvement in economic welfare from increased quality of goods and services as defined by their ability to increase human well-being. This infers promoting increased economic activity only insofar as it does not exceed the capacity of the ecosystem to sustain it.
This sustainable form of development is defined in terms of throughput – the metabolic flow through the economy from sources of useful, low entropy matter-energy to sinks for wastes which are high entropy matter-energy. Sustainability requires that the throughput be within the regenerative capacities of renewable natural resources, and within the assimilative capacities of natural sinks.
And it’s not just archbishops and tree-huggers who are questioning growth. Since the 50s eminent writers and economists like Galbraith, Mishan, Boulding and Schumacher have done so. Herman Daly was once the Senior Economist at the World Bank. Adair Turner, former head of the CBI, said in the 2008 book Do Good Lives Have to Cost the Earth that we need to “dethrone growth”.
As we have shown, GDP is a bad measure of true progress. Currently GDP conflates qualitative improvement (development) with quantitative increase (growth). The sustainable economy must at some point stop growing, but it need not stop developing. There is no reason to limit the qualitative improvement in design of products, which can deliver to real human needs without increasing the amount of resources used. The main idea behind sustainability is to shift the path of progress from growth, which is not sustainable, toward development, which can be.
