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Back to Subjects - Economics

Small is Beautiful

Small is Beautiful Mainstream economic thought of the 20th century has been dominated by the principle of ‘more is better'. This thinking is dangerously misguided. Concentrating on maximizing real gross national product has been brought about by economists who are working on the assumption that growth is always justified, because of the infinite wants of the population. These economists also see growth as a solution to the problems of the world today. Even those who propose ‘sustainable growth' are false in that they assume that it is possible to continue with the growth of the last two centuries. Some of the fallacies being put forth are growth as a solution to pollution, "trickle down" effect of growth needed to help the poor, and technological salvation. They feel the exponential growth of the present can continue as long as technology can keep up, and that resource efficiency can grow indefinitely so as to stabilize resource flow. By prioritizing ‘growth' alone, the global economy and its participants will be worse off. Common sense tells us that there is reasonable level at which everything must grow, beyond which it is considered detrimental to itself and its surroundings. Our economy is a subset of the ecosystem we live in, and must grow to proportions that are reasonable to it. It definitely cannot continue to grow outside of it, nor should it grow to a point where it is harmful to the ecosystem. The economy being dependent upon the ecosystem must adhere itself to achieving a state of compatibility with environment. More and more there are stress-induced feedback's from the ecosystem to the economy. The greenhouse effect, ozone depletion, acid rain, etc., that say even our present rate is unsustainable. So sustainable growth is contradictory in a finite, non-growing ecosystem. Yet there is never a mention of limits on economic growth. The sustainable economy must limit itself to a scale to which would allow the ecosystem to renew itself. By limiting itself, the economy will be non-growing but that does not mean recessionary. There are those who claim that growth is necessary to help the poor. It can be argued that growth helps the poor more recognizably than the elite, but it the wealth of the elite that is growing, not the poor. We have experienced growth in the last two centuries unlike any in the history of the world, yet we still have poverty. The poor are given employment and share in the burdens of the system yet do not equitably share in the benefits. Since growth is being led by technology, there is potential for further inequalities. Technical progress is changing the face of the labour force. Labour now requires more educated workers and less and less uneducated workers, yet opportunities to obtain these qualifications are not becoming more available to the poor, so it seems what eventually comes of this is even more disparity between rich and poor. If development would be good for the poor then it would have to be made up of things the poor need, such as clothing, food, shelter and basic goods. The growth of our times is mostly services, financial products, and not tangibles the poor benefit from. E.F. Schumacher has been an advocate of development without growth. This is almost heresy to so-called progressives with their growth mania tendencies. Instead what has been put forth is a steady-state model for economic and ecological compatibility. We would have to obtain a constant level of stock resources by minimizing the amount of throughput flows (the energy and material we incorporate, use, and change through production and consumption). This would take the form of zero growth, but not zero development. Although this would bring about unemployment and suffering, it is in order to avoid larger scale suffering and unemployment that we must do this. This steady-state model calls for recognizing an optimal level of 'development'. That would be a level of consumption. We should not use nonrenewable resources faster than substitutes are created. Champions of the poor countries are correct that limiting growth as proposed by the steady-state model would hurt underdeveloped countries. The steady-state models answer for those countries is simply to control population rather than to promote growth. Since it is impossible to attain a level of living like the industrialized countries, that goal is impossible regardless. Also, there should be a redistribution of wealth among the underprivileged. By strict economic standards alone we see that the marginal utility of developed countries is extremely low. Poorer countries would get much more use of development. If we try to maximize utility among the poor we would actually increase total world utility with a minimal of growth. We need to reduce consumption and production. The growth of today is only a reflection of the unlimited wants of the people. Human beings are predisposed to be irrational in their wants. Growing beyond the limits of the environment is irrational to say the least and at its worst certain depletion of resources and the life force of this ecosystem. Bibliography:

Word Count: 837