FEBRUARY 2006

Sustainable Growth:Irreconcilable Visions?

In the reconciliation of a more Integral Economics,

sustainable growth

is not an oxymoron, but a doubleentendre, denoting the very real possibility of sustainableeconomic growth that satisfies the very real necessity of economic growth that is sustainable.

O’Connor:

Sustainable Growth February 2006

Page 1

Sustainable Growth: Irreconcilable Visions?

Daniel J. O'Connor

In the opening chapter of his signature book,

Beyond Growth: The Economics of SustainableDevelopment

, Herman Daly shares an unforgettablestory from his days as an economist at the World Bank.Having just listened to Lawrence Summers, then Chief Economist at the World Bank, make a presentationcritical of the Limits to Growth thesis, Daly referredSummers to a picture of the economy as an open sub-system of the world's ecosystem, consistent with what I present below as Figure 1. He then asked Summers if,given this picture, it might make sense to start thinkingabout the growth of the economy in relation to thenatural limits of the ecosystem. Dodging the question,Summers responded dismissively, "that's not the right way to look at it."

End of discussion.What is the right way to look at it, according toSummers? Daly says it is something like Figure 2,where the ecological context has been removed and,therefore, the circular flow of economic growthappears to be free from any natural limits beyond theeconomic system. This is not just Summers' radicalvision of the economy. It represents the orthodox viewof the great majority of economists who, if not outwardly hostile to the ecological view, generally set it aside as irrelevant to the analysis at hand.Recalling Joseph Schumpeter's notion of a

pre-analytic vision

, Daly summed up this fundamentaleconomic dilemma that divides so many economists,politicians, and citizens:"Unless one has the preanalytic vision of theeconomy as subsystem, the whole idea of sustainable development

—

of a sub-systembeing sustained by a larger system whoselimits and capacities it must respect

—

makesno sense whatsoever. On the other hand, apreanalytic vision of the economy as a boxfloating in infinite space allows people tospeak of "sustainable

growth

—

a clearoxymoron to those who see the economy as asubsystem. The difference between these twovisions could not be more fundamental, moreelementary, or more irreconcilable."

The compelling thing about this particular ideo-logical debate is that the objects of the debate, Earth'snatural systems, don't much care whether or not theyprevail in some intellectual discussion among thevarious schools of economic thought. Natural systemshave a unique way of asserting their perspectives onhuman economic activity without regard for humanpriorities and convictions and without need for humanunderstanding and consensus. Still, we are fools if we

O’Connor:

Sustainable Growth February 2006

Page 2

choose to wait for the world ecosystem to break theideological impass between ecological and non-ecological economists. The stakes are too high.

Toward an Integral Reconciliation

I agree that these competing visions arefundamentally antithetical as they have beenpresented, by Daly, Summers, and countless othereconomists over the years. They are so antithetical that even a veritable encyclopedia of economic thought likeMark Blaug's breathtaking 700-page

Economic Theory in Retrospect

completely ignores the ideologicalchallenge presented by the ecological vision of theeconomy

—

a challenge which, in partial defense of Blaug, has been largely ignored by most of theeconomists of the past 250 years.

But just because thisecological view of the economy has been marginalizedby the more dominant schools of thought does not mean that it is wrong, nor that it has necessarily failedin the overrated "efficient market in economic ideas."Where I disagree with Daly's assessment of theeconomic dilemma is in his claim that these pre-analytic visions are irreconcilable. I think they can bereconciled within a more integral vision that honorsthe partial truth in each, while providing somepractical guidelines for post-visionary analysis of sustainable economic growth.As I see it (Figure 3), the

physical

dimension of theeconomy, which can be measured in terms of the

scale

of material, energy, chemical, and biologicalthroughput, does indeed comprise an economic sub-system of the world's physical

biosphere

, whichincludes the sources and sinks for the economicthroughput. This is the

partial

truth in the ecologicalvision of the economy and it affirms the existence of certain physical limits to the scale of economicgrowth

—

but, strictly speaking, these limits only applyto

physical

economic growth.In my view, the economy also has a non-physical,or

mental

dimension

—

e.g., the value we place onpsychological development or intellectual learning

—

that contributes to the overall

depth

of economicgrowth. The

mental

economy is inextricably linked to,and entirely dependent upon, the

physical

economy,which is, in turn, governed by the natural logic andlimits of the Earth's

physical

systems. However, themental economy is not a sub-system of the Earth'sphysical biosphere and it is not governed directly bythe rules of the natural world. The mental economy, forbetter and for worse, is where we make all oureconomic decisions and direct the economic growth intwo-dimensions

—

mental depth

and

physical scale

. But this mental economy is a sub-system/culture within amore encompassing mental super-system/culture that we might define as the non-physical, depth dimensionof human civilization. Following the philosopher KenWilber and before him Teilhard de Chardin, we maycall this the

noosphere

in relation to the biosphere.Wilber has been particularly articulate about thecontrast between the depth of the noosphere and thescale (though he calls it

span

) of the biosphere, and Ithink these distinctions apply equally well to theeconomy.

This reframing reveals the

partial

truth inthe orthodox view of economic growth beyond thescale of ecological limits

—

but this truth is only valid tothe extent that we are speaking of non-physical or

mental

economic growth.

I think these pre-analyticvisions can be reconciled withina more integral vision thathonors the partial truth in each,while providing some practicalguidelines for post-visionaryanalysis of sustainableeconomic growth.