Failure to recognise that economic growth is mostly better rather than more is why the sages who have repeatedly predicted that growth must end because we will run out of â first it was wood, then it was coal, then nitrates and then oil â have always been wrong. We havenât run out of arable land and our progress will not be halted by a shortage of lithium. All physical resources have finite limits, but human ingenuity does not.
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To paraphrase the Nobel acceptance speech of Austrian economist Friedrich Hayek:
If managers are to do more good than harm in improving organizational performance, they must learn that in a complex environment, they canât acquire sufficient knowledge to orchestrate the desired outcomes. Instead, they must use whatever knowledge they have not to shape results as a craftsman shapes a piece of handiwork, but to cultivate growth by providing a proper environment, much as a gardener does for plants.
Sahlins concluded that in many hunter-gatherer societies, and potentially for most of human history, scarcity was not the organizing feature of human economic life and hence that âthe fundamental economic problem,â at least as it was described by classical economics, was not the eternal struggle of our species.
The results of this ambitious exercise were first presented to the Club of Rome in private and then published, in 1972, in a book, The Limits to Growth. The conclusions Meadows and his team reached were very different from Keynesâs utopian dream. They were also not what the Club of Rome, nor anyone else for that matter, wanted to hear.
Aggregating the outcomes of the various scenarios they fed into their mainframes showed unequivocally that if there were no significant changes to historical economic and population growth trendsâif business continued as usualâthen the world would witness a âsudden and uncontrollable decline in both population and industrial capacityâ within a century. In other words, their data showed that our continued preoccupation with solving the economic problem was the starkest problem facing humankind and that the likeliest outcome if things continued was catastrophe.
The principal purpose, however, has been to loosen the claw-like grasp that scarcity economics has held over our working lives, and to diminish our corresponding and unsustainable preoccupation with economic growth. For by recognizing that many of the core assumptions that underwrite our economic institutions are an artifact of the agricultural revolution, amplified by our migration into cities, frees us to imagine a whole range of new, more sustainable possible futures for ourselves, and rise to the challenge of harnessing our restless energy, purposefulness, and creativity to shaping our destiny.
My critique of GDP measurement in practice relates to its inability to report sufficiently accurately what it is intended to measure: the value of economic output. And pronouncements based on such data about long-run trends in income or the rate of increase of productivity should be taken with a grain of salt â or several. When pundits fret over whether the latest figure for GDP growth is an annual rate of 1.8 per cent or 1.9 per cent, they are fussing over differences that are insignificant in relation to the fundamental and inescapable uncertainties in the data they are citing.