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A Developing Ideas series

DEVELOPMENT AT THE CROSSROADS

Part 2 of 4:

Limits to Growth Revisited

Among the new challengers to conventional economics as the pre-eminent intellectual discipline of the international development community, the greatest impact to date comes from a new field called ecological economics. Born of the environmental movement, ecological economics tries to put national economies into the wider context of natural ecosystems.

Ecologists like Robert Goodland at the World Bank are taking on economists, explaining that economic production affects something called 'ecological throughput' - the total flow of resources from nature's larder to society's wastebasket. Traditional economics says throughput should grow. Ecologists on the other hand say it must remain below critical levels called 'carrying capacities', above which the planet's capacity to absorb or 'carry' disturbances like pollution and deforestation is reduced. "We've managed to damage our ecosystems and decrease their assimilative capacities," he says. "We don't have to live in caves - just waste less."

In the nineties, new groups devoted to ecological economics have sprung up like the US-based International Society for Ecological Economics (ISEE) and the Sweden-based Beijer Institute. The words may be new but the message has a familiar ring. In 1972, the Club of Rome's Limits to Growth predicted dire consequences from unbridled economic growth. When the world survived, their message was discredited. In 1987, the UN's Brundtland report Our Common Future drew world attention to the possibility of 'sustainable' development, rejecting an either-or scenario. Momentum has since been building to integrate the environment and economy.

The Club of Rome's Donella Meadows - having weathered the Limits to Growth storm - recently reported that membership in the ISEE increased from 400 in 1990, the Society's founding year, to 1400 at the group's last meeting in Costa Rica. "The economics they are inventing values nature, people, communities and the future. It is very different from the short-term, money-centred economics that devalues and devours all of these things," she says. Economists seem to be searching for new ideas to carry them into the next century. There is a growing realization among development professionals that, as Meadows puts it, "Growth is not an automatic good - it depends on what is growing, for whom, at what cost."

Paul Ekins, an ecological economist at the University of London, laments that the language economists use to discuss the environment is "perverse". Negative environmental impacts of economic activities are euphemistically labelled 'externalities'. The term carries a very unfortunate mental image of something of only secondary importance compared with true economic fundamentals. Using the same logic, he says, one would have to say Faust's famous deal with the devil carried the unfortunate 'externality' of the sacrifice of his soul.

For too long, Ekins charges, development economists spearheading projects like India's Narmada Dam - which ignored externalities like local inhabitants and the environment - have occupied the "intellectual sewers" of their discipline. But he sees hope in a perspective he calls 'sustainability', which involves "setting clear constraints and boundaries within which economists can then tackle the allocation (or efficiency) problem."

"There's no concept of an optimal scale of the total economic system relative to the larger ecosystem," adds ISEE founding member Herman Daly, explaining that conventional economics does not adequately accept the natural limits set by the environment. "That has to be built into the very foundation of economics, Chapter One. Not tacked on," as an afterthought when things go wrong, "like 'Oh gee, we never expected this to happen but it did so now we have to say something about it'," he says.

Goodland and Daly advocate a new 'steady-state' economics, based on zero - not rising - economic growth, to better suit nature's limits. The official line of development agencies like the World Bank is less radical but still recognizes the need for restraint. "It's an article of faith", says Andrew Steer, head of the Bank's environment department, that "the world has reached its limits". The Bank, he says, prefers to keep economics 'pure', but just learn the limits of its applicability. "We economists need to know our own limitations," Steer says.

Whatever the precise position adopted, the international development community seems to be embracing new limits to growth - whether applied to production in general or just to the influence of traditional economics. The planet may not have died, but old patterns of development thinking have taken another step into the grave.