Let us assume you found a gold coin that doubles every 25 years, you will only have eight coins in 75 years, but a thousand years later, you will have over a trillion coins, and in 4600 years, the weight of your gold coin will outweigh the observable universe. This periodic doubling is known as exponential growth. While there is a significantly less chance of us finding a real-life golden goose coin, this is precisely what is happening to the world economy. It has been growing exponentially for the past 200 or so years. Traditionally, people saw this as a good thing; economists believe that an enormous pile of money leads to a better life for individuals and continues to improve their lives.
However, the 'tide that lifts all boats' theory seems less convincing with every new economic change. As we come to the brink of global recession, as natural resources dwindle closer to their reasonable limits, and as the inequality widens around different parts of the world with a new billionaire minted every 26 hours during the pandemic, the question that we need to address is: can we have infinite growth on a finite planet?
The first thought that comes to mind after this would be, 'What is economic growth, and how do you define it?
We measure economic growth by tracking the total value of goods and services a country or the world produces and sells on the market. These goods and services help meet our basic needs and help improve our individual or collective standard of living. Therefore economic growth can be calculated through numbers, but we can also look at it qualitatively by evaluating citizens' standard of living.
In order to invent, build and create value, it is crucial to have resources. For instance, let us take a smartphone; it is valuable because it contains aluminum, gallium, and silicon, all of which took energy and resources to mine, purify and turn into a smartphone. Its value can also be measured through all the time and effort spent making the hardware and writing the software. It is also valuable because a guy in a black turtleneck went up to the stage and said it was valuable.
Conducive to growth, the economy needs to increase the total financial value of things constantly, which can be done in two ways. The first would produce more goods and services, and the second would be to invent more; either way, we would require resources and energy. Eventually, aren't we going to run out of resources?
To answer this question, we need to think about what goes into an economy and what comes out of it: the inputs in an economy consist of labor, capital, and natural resources like water. Moreover, its output is value. Over the last two centuries, economies have gotten rampantly efficient at producing value. If we as a species keep on upgrading our economies to make them even more efficient, we could theoretically pump out more and more value using the same amount of resources or, if you are a little ambitious, fewer resources. The most convenient way of doing this would be introducing new technology.
New technology has a domino effect; in addition to making the economy more efficient, it also creates surplus demand, which can only be met by using extra resources. Running out of resources is a long-term problem; we have a much imminent and immediate problem: the global economy, especially that of fast-growing countries and developed nations, is driving climate change and destroying natural environments. Humans depend heavily on resources such as soil, forest, fisheries, and countless other resources that help keep our civilization running.
Here is where the conflict steps in; some economists disagree that this should be the reason to stunt economic growth. They believe that new ideas can fix most of these problems. In the same way that resource use has driven economic growth, human ingenuity has also increased in response and will continue to do so in order to solve these problems . For instance, from 2000 to 2014, Germany grew their GDP by 16% while cutting its CO2 emissions by 12%. It is impressive; however, it is not cutting emissions fast enough in order for us to reach our target of limiting warming to 1.5 degrees Celsius.
Some scholars resort to the idea of 'Sustainable economic growth’. However, sustainable economic growth is a theoretical idea and challenging to implement, considering the economy is an open subsystem of the Earth's ecosystem, which is finite, on-growing and materially closed. Let us assume the economic subsystem keeps growing and engulfs more and more of the Earth's ecosystem; it is bound to reach a limit. Hence, sustainable economic growth is an oxymoron.
Recently, the focus has shifted from sustainable growth to post-growth economies. A post-growth economy does not insist on producing more value; instead, it would require us to focus on improving what we need - renewable energy, public transport, and healthcare. Post-growth economic model would require the developed countries to reduce income inequality by guaranteeing living wages and universal access to services like healthcare. Hence, people would be less dependent on their jobs to earn their living or get healthcare, so it might be more convenient to scale down production of the things deemed less necessary. However, who decides what is necessary and what is not? Moreover, will we be reducing production through this approach?
The 'we will come up with new ideas to solve these problems’ approach is as realistic as the magical gold coin, and fundamentally, the 'we have to change our economies' approach can have ardent socio-political consequences. One way or another, we need to find a solution that aids in social well-being (or development) but also helps save our planet.