Tuesday, October 4, 2011

Angelic GDP

In the aforementioned threat on Crooked Timer I've been reading, piglet reveals the fallacy that GDP can keep on growing even if the economy switches more and more to services.

This assertion is very dubious. Services do have a somewhat lower environmental impact but not that much lower once all inputs are properly accounted for (Sangwon Suh, Are Services Better for Climate Change? Environ. Sci. Technol., 2006, 40 (21), 6555-6560• DOI: 10.1021/es0609351). But even assuming we manage to reduce the environmental impact per unit of GDP (which to some extent we are), that won’t be enough to make continued growth sustainable. The 3% or so exponential growth that mainstream economists posit as “necessary” for maintaining our level of prosperity (watch the Red Queen principle here: we “need to grow” just to “maintain prosperity”), equivalent to a doubling time of 20-30 years, will swamp any efficiency increase that can realistically be expected. Daly used the term “angelic GDP” to mock this fallacy: unless we manage to convert economic growth into purely angelic GDP, i. e. economic activity without any physical effects, it won’t be sustainable.

I've been wondering about this sort of thing.  There is a lot of activity that could be considered angelic, but much of it is done for free and could hardly be otherwise.  Case in point: blogging.

Such angelic activity is great in my opinion, but it doesn't pay the bills.  In the future there *should* be more and more such angelic activity, but it should also best (or only) continue to be free, that's a major part of how and can and should continue to work.

The heavenly world is not the one where we pay a negotiated price for each and every little pin, but where more and more, and ultimately everything, becomes free.  But then the bills have to go away too.

A big part of that must be reclaiming the commons for everyone.

In such a world, GDP doesn't merely decrease, it vaporizes.

Some recommended readings on the thread:

Well, the very recent book PROSPERITY WITHOUT GROWTH may be just the thing to read for a quandary like that.
One can always recall John Stuart Mill on the Stationary State.
Or the writings of Herman Daly.

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