Is sustainable economic growth possible?

What is economy?

Economy generally means the system of production, distribution, and consumption of goods and services in a society. We measure economic growth by calculating Gross Domestic Product (GDP), which is the total value of goods and services produced in the area within a period, usually a year. In addition to GDP, we also look at employment rate, consumer spending, investment, and international trade.

Economy also means “careful use and management of available resources”. A growing economy doesn’t mean we have a well-managed healthy economy.

Do we need economic growth?

Here’s a list of well-discussed reasons to grow the economy:

Improve living standards such as better access to education, healthcare, housing, and other goods and services
More job opportunities created by economic growth can improve people’s incomes
Increased tax revenue for governments can be used to improve public services and infrastructure
Drive technological progress, new innovations, and efficiency
Reduce poverty
Increase a country’s international competitiveness and boosts exports

Does our real experience reflect these statements? Economic growth has raised living standards in some places around the world, but not always everywhere. Economic growth measured by GDP is not equal to a happier life. How can we have a sustainable and healthy economy on a finite planet?

How to achieve a sustainable economy

Managing resources better

Let’s look at food. The expected world population is 10 billion by 2050, and scientists think it is too big to feed. Also, the number of people affected by hunger globally has increased to 828 million in 2021. It sounds like we cannot produce enough food for everyone on the planet and we are going to have food shortages. But at the same time, a third of the world’s food for human consumption is wasted. Food can be wasted because of many reasons such as inefficient transportation, storage, expiration in shops, and diseases. About 35% of the wasted food though is still perfectly fine to eat but is simply thrown out. So, the problem is not that we don’t have enough food, but how we manage it. Why don’t we ship unwanted food to countries with food shortages?

Well, when we talk about managing resources efficiently such as recycling or diverting, it is not that simple because economy is included in the discussion. This means the demand for a good or service should be greater than the availability, and the activity needs to result in financial growth. And don’t forget that scarcity is the key concept of economics. Scarce things are more valuable and priced higher. Scarcity can be balanced by distributing resources evenly, but it can be also created on purpose.

In the example of food, the cost to send food to other countries needs to be paid by someone. Will individuals and supermarkets pay to donate eatable food to be sent to other countries? Will food suppliers in receiving countries be happy to reduce the price of their products?

Reductionism vs holism

We love clear and simple answers based on scientific assumptions. Reductionism approach is good to solve a problem that doesn’t have a link to other areas. However, this approach causes unexpected consequences in almost all cases in the real world. An example of a reductionism approach is when we hear a high demand for palm oil is causing deforestation in tropical rainforest areas, many of us are attracted to palm oil-free products, not vegetable oil free. We want to believe boycotting palm oil will stop deforestation, but the reality is quite opposite. Oil palm plants are 20 times more efficient to produce oil per land area than other vegetables. Switching from palm oil to other plant oils requires 20 times more land to produce the same amount of oil. Unfortunately, most chemicals and food ingredients we consume need oils to start with. If you don’t want crude oil and palm oil, you must use other plant oil. There are also many other things to consider such as farmers’ earnings and water usage to grow other types of vegetables. So, the better solution currently available is to support sustainably sourced palm oil that didn’t cause deforestation.

In the real world, everything is connected to everything. Therefore, theory tested in a computer simulation or the result that came out from a laboratory environment often needs to be re-tested in a real environment. Including all elements of the real environment creates a great challenge. You will need to learn about things you’ve never thought about before. But a more holistic approach to investigating problems and solutions has become more important to use resources efficiently and sustainably.

Don’t compete, create new!

Scarcity, “there is not enough, and I need to secure my share”, puts you in competition. You are fighting in a game, I’m faster, stronger, bigger (or smaller), or better. Remember the food waste problem mentioned earlier? If you are selling bananas, for example, you compete with other sellers on a cheaper price, fast delivery, or better looking. You will always need to pressure the farmer to make more bananas at a cheaper cost, and this causes quality and productivity issues in a long term.

How about making other banana products from wasted bananas? Remember, about 35% is lost or wasted. There are bananas out of shape, too ripped, or broken that are usually dumped. You can make banana chips, flour, bread, and more from these bananas. All of us can create a new future by shifting our focus from what we have been doing to what could be possible. Of course, creating new things can be overwhelming and take time. But there are so many opportunities for all of us when we challenge what we accept as "normal" and be creative.

Idea

Conclusion

Any economic activity uses resources and is not sustainable without well-managed resource allocation. Blaming one thing such as economic growth or capitalism is easy, but switching one to another is not the solution for all sustainability and environmental problems. Since we know that much of what we have been doing in the past isn’t the best, we would need a more holistic approach to finding long-term solutions. This could be more complicated and take longer to see the results, but we need to remember that solving an isolated problem may cause unexpected consequences. In the real world, things don’t work as tested in a laboratory. Use your creativity, be curious about things you haven’t noticed before, and find opportunities. We are still wasting tons of good stuff that can be a treasure to create something new.