The Economic Growth Debate: What Some Economists Have Learned But Many Have Not
Author(s)
Daly, Herman E.
Abstract
It is important to differentiate between the terms growth and development. Growth is a “quantitative increase in the scale of the physical dimensions of the economy; i.e. the rate of flow of matter and energy through the economy.” Development is the “qualitative improvement in the structure, design, and composition of physical stocks and flows, that result from greater knowledge, both of technique and of purpose.” An economy can experience development without growth; just as the ecosystem has developed but not actually grown, so can an economy. On a finite earth there are biophysical and ethicosocial limits to the growth of aggregate output, but there may not be any limits to development. Neoclassical economics assumes, however, that it is biophysically possible and socioethically desirable for aggregate output to grow. This article discusses the biophysical and socioethical limits to growth and the associated welfare losses when these limits are reached.
