Dematerialising Growth is Humanity’s Greatest Challenge

The most harrowing challenge confronting the humanity today is whether the growth we have been used to since the second world war is sustainable. Is Thomas Malthus going to have the last laugh? Will the 21st century be a century of peace, prosperity and promise or of doom, desperation and despair? Charles Dumas of London-based Lombard Street Research notes that, at purchasing power parity, China now generates a little over a quarter of world economic growth in a normal year, while emerging and developing countries together generate 70 per cent. Even at market exchange rates, the growth of China’s gross domestic product is as big as that of the US in normal years for both countries.
Today, almost two-thirds of humanity lives in high-income or high-growth countries. That proportion is up from less than a fifth 30 years ago. Unfortunately, the remaining 2 billion live in countries with stagnant, or even declining, incomes. Even within countries and within regions there are stark disparities that have sharpened since globalisation. What makes this really worrying is the accentuation of inequity with the rise in population. World population would rise by 30% and the income 4 ½ times by 2050. Some twothirds of the 3 billion increase in global population expected will live in countries today enjoying little or no growth.
The first question aptly asked by Jeffrey Sachs of the Earth Institute is whether the planet will have room enough for 7-10 billion people by 2050. The power of technology has helped the developing countries like India and China to grow phenomenally during the past decade and rightly so. The question is what is the cost of this growth? Our fundamental problem is that we have not been able to price the natural capital and account for the impact of human activity on it. Our economists and accountants simply write off the loss of natural resources from the base line growth analyses as externalities. Our economic system has price for everything we can do without but not for priceless things like air, greens, glaciers, rivers, forests and oceans. Despite all our talk of productivity we have not succeeded in getting more for less from nature but
destroyed the planet wantonly counting as income what in fact is blatant destruction of natural capital.
The result is massive glacier melt, ground water depletion, habitat destruction and more toxic chemical and pollutants.
The failure of the financial system after the sub prime crisis shows that the market forces are unable to solve the problem. The main problem is that the ideology of the market economics denies the very existence of these catastrophic problems. Hence we are short of even the practical tools to help solution. Market forces have never been the best guide as technological pathways often overlook the needs of the poorest of the poor.
The overriding challenge is to bring the billions living in developing countries to industrialized countries’ income levels as rapidly as possible and empower poor countries to earn their standing among the highgrowth category. This issue is addressed by the recently published Growth Report, product of a commission consisting mainly