Using GDP to Estimate the Limits to Growth
by Brian Czech
The merits and proper uses of GDP—gross domestic product—have been debated with increasing frequency and intensity in recent years. Neoclassical economists continue to view a growing GDP as the sign of economic success and even social health. Conversely, ecologists who have studied the issue view a growing GDP as an alarming indicator of unsustainability at this point in history.
Meanwhile, a growing number of individuals and organizations in the post-growth community have proposed to eliminate GDP altogether, to just “get rid of it.” They argue, typically from a progressive political spirit, that a focus on GDP causes policy makers to think too much in economic terms rather than in terms of environmental, social, and general wellbeing. Some even claim that GDP is a “meaningless” indicator, with no utility for the measurement of anything important.
Cute image, but don’t mistake GDP with “transaction volume,” much less on credit. GDP is the macroeconomic flow of real production and real money. (Blue Diamond)
I and CASSE are firmly in the ecologist’s camp. We’ve elaborated for decades upon the fundamental conflict between economic growth—as measured with GDP—and biodiversity conservation. Then, with the trophic theory of money, we’ve provided a theoretical foundation for recognizing GDP as an excellent indicator of environmental impact at large.
Herein I will supplement the trophic theory of money with empirical evidence that GDP is not only “an indicator” of environmental impact, but even a measure that may be used to estimate how close we are to the limits to growth.