Home ›› 24 Mar 2023 ›› Editorial
From late 1950s through the end of 1960s, no economic issue received more attention than the economic growth rate of a country. The relatively slow growth rate in the 1950s was not infrequently described as a period of disaster. During the 1960s the goal was to get the world moving. Economic growth rate at that time had been a success in that direction.
However, this success cast doubt as to whether this was indeed a success in a more complete sense of the word. By late 1960s there was a serious questioning of a proposition that had long been practically taken for granted that the national well- being is enhanced by an increase in the rate of output of the goods and services designed to satisfy the needs of the ultimate consumers currently and in the future.
By then economists were asking whether or not there is a ‘tradeoff’ between the rate of economic growth at which the quantities of output expanded and the rate at which the quality of the environment deteriorates. A more rapid rate of growth means more goods and services, but it also means more air, water, land and noise pollution and environmental damage. With the awakening of the seriousness of the pollution problem in the late 1960s, economic growth had long been viewed by more extreme environmentalists to be an unmixed evil.
In order to evaluate the cost of economic growth in terms of environmental damages, it is necessary to somehow define each of the concepts in quantitative dimension that permit an analysis of their relationship. Defining economic growth is relatively easy compared to defining environmental deterioration. First, the latter concept is in itself much more elusive than that of the economic growth and second, the problem of evaluating those changes in the ecosystem involve environmental deterioration in way that can be related quantitatively, if possible, to the process of economic growth is extremely difficult.
Pollution did not suddenly appear in the late 1960s. Pollution problems were reported in London in 1285 as a result of the burning of soft coal. What did appear for the first time in the late 1960s was the widespread awareness of the fact that pollution had reached such proportion, that, if allowed to grow completely unchecked, it could destroy civilization within a few more generation.
Gross National Product (GNP) is a measure of economic growth. It is being enhanced by an increase in the economic growth rate. GNP stood at double the level of 1950 with a 3 per cent economic growth by 1968. Economists estimated that with 3 per cent economic growth, GNP would be 3 times higher than 1968 level. However, since the world had clearly crossed the tolerable level for certain kinds of pollution, any further increase in pollution would tantamount to suicide for mankind. It is easy to understand the opposition to growth voiced by those who believe there is inevitably a close relation between the rate of growth of GNP and the rate of decay of the environment.
Whether or not growth is indeed at the heart of the problem is an issue to be examined. Even if it is, it should be seen that a cessation of economic growth would not provide a solution to the problem (Pollution due the growth). To drop all the way down to a zero rate of economic growth would not stop the deterioration of the environment rather it would only slow the rate at which it deteriorates. A zero rate of growth means an unchanged total of goods and services produced in a year. To the degree that the amount of pollution depends on the amount of output of pollutants dumped into the system would be too large next year than this year. However, preventing an even larger amount of damage from being inflicted on the environment year after year is obviously not the same as protecting from all damages. The problem remains. If a positive rate would lead to doom, a zero rate would do the same but on a slower timetable.
Moreover, even if a cessation of economic growth would mean a cessation of the environmental deterioration, it is unlikely that a problem would be solved in this way. This is because, it is a world problem it would do little good to stop growth in the affluent countries. If it continued unrestrained in the less affluent countries it would give a different signal. This is because the people of some poor countries see in the economic growth their only possibility of coming out of poverty. It is fanciful to believe that their governments would voluntarily adopt a no growth policy.
The very suggestion of such a policy could be interpreted by them as a conspiracy by the affluent countries to lock them into perpetual poverty. To try to meet this problem through a redistribution of wealth is another unworkable solution. Redistribution on the scale required both within and between countries, could not accrue without forces, which would mean revolution or wars.
If the redistribution policy is correct, then a zero growth policy in itself will not stop the deterioration of the environment but only put it on a slower time table and that, in any event, a zero growth world-wide policy could not be implemented in a world of nations that differ so widely in wealth, the answer to the problem of the deterioration of the environment is not to be found in stopping economic growth. However, if continuing growth means continuing environmental decay, there would seem to be no escape from disaster. This , at least, would be the inevitable result of the economic growth over the years ahead were of the same kind as that over the years since the World War II.
On the other hand if it is possible to change the composition of the growing output and the technology employed to produce that output, growth in the future do more to slow the deterioration in the environment than a situation of no growth could assuming that the latter could be realized in practice, it may even be possible that within limits, the more rapid the rate of growth, the better the job that can be done to slow the deterioration of the environment.
If pushed to this extreme, the argument stands to the argument of the zero growth proponents on its head. It is generally conceded that the know-how exists to provide procedures and produce systems capable of greatly reducing most kinds of pollution. In the case of pollutants emitted into the air, the ones of central concerns are carbon monoxide, hydrocarbons, sulfa dioxide, and nitrogen oxides. In this context it is important to decide the quantum of allocation of resources for pollution control facilities.
Assuming for the moment that society can effect a shift in the composition of output such that a substantially a larger portion of total output is made up investment in anti-pollution devices and facilities of various kinds. Systems would be required for recycling, which reduces pollution by channeling waste of the production and consumption processes back into these processes. Also systems would be acquired to augment the natural environment’s assimilative capacity through such means as steams aeration and chemical waste treatment.
An idea of the magnitude of the required investment in facilities and the costs of operating them is provided by the Council of Environmental Quality. Allocation of more of a nation’s resources to producing output whose sole purpose is to control the amount of pollution generated by the production and use of other output could be affected more easily under conditions of the positive growth rate. Although there will be virtually universal agreement that there must be greater investment in output devoted to the control of pollution, there will be far less agreement on how the real cost of this control shall be appropriated among various sectors of the society.
This is why some economists argue that a growth rate above zero preferable to one closed to zero. With a higher growth rate the amount of other goods that must be given up is less and therefore, it will be considered to smoothly effect the necessary shift in the composition of output. A sizeable shift of this kind in the composition of output is essential to meet the problem of environmental deterioration.
Among the various subject areas of macroeconomics, economic growth is probably be set with more unanswered questions than any other. Some highly respected world famous economists conclude that a positive rate of growth necessitates a sacrifice of well- being for the nation’s people. On the other hand many reputed economists devote their energies to devising ways to achieve a more rapid rate of growth.
Beyond the differing views of the anti -growth and pro -growth camps, another view emerges based on technological development to decide the growth and environmental deterioration. Recently it has been reported that the issue would be an agenda of COP 28 meeting. Till then a middle path would remain to be the best option.
The writer is former Director General, Export Promotion Bureau. He can be contacted at hassan.youngconsultants@gmail.com
