Two Views of the World

Lester Brown / Amicus Journal Winter 1991

Anyone who regularly reads the financial papers or business weeklies would conclude that the world is in reasonably good shape and that long-term economic trends are promising. Obviously there are still problems-the U.S. budget deficit, Third World debt, and the unsettling effect of rising oil prices -but to an economist, things appear manageable. Even those predicting a severe global recession in 1991 are bullish about the longer term economic prospects for the nineties.

Yet on the environmental front, the situation could hardly be worse. Anyone who regularly reads scientific journals has to be concerned with the earth's changing physical condition. Every major indicator shows a deterioration in natural systems: forests are shrinking, deserts are expanding, croplands are losing topsoil, the stratospheric ozone layer continues to thin, greenhouse gases are accumulating, the number of plant and animal species is diminishing, air pollution has reached health-threatening levels in hundreds of cities, and damage from acid rain can be seen on every continent.

These contrasting views of the state of the world have their roots in economics and ecology -- two disciplines with intellectual frameworks so different that their practitioners often have difficulty talking to each other. Economists interpret and analyze trends in terms of savings, investment, and growth. They are guided largely by economic theory and indicators, seeing the future more or less as an extrapolation of the recent past. From their vantage point, there is little reason to worry about natural constraints on human economic activity; rare is the economic text that mentions the carrying capacity principle that is so fundamental to ecology. Advancing technology, economists believe, can push back any limits. Their view prevails in the worlds of industry and finance, and in national governments and international development agencies.

In contrast, ecologists study the relationship of living things with each other and their environments. They see growth in terms of S-shaped curves, a concept commonly illustrated in high school biology classes by introducing a few algae into a petri dish. Carefully cultured at optimum temperature and with unlimited supplies of food, the algae multiply slowly at first, and then more rapidly, until growth eventually slows and then stops, usually because of waste accumulation. Charting this process over time yields the familiar S-shaped curve to which all biological growth processes in a finite environment conform.

Ecologists thus think in terms of closed cycles-the hydrological cycle, the carbon cycle, and the nitrogen cycle, to name a few. For them, all growth processes are limited, confined within the natural parameters of the earth's ecosystem. They see more clearly than others the damage to natural systems and resources from expanding economic activity. Without a wholesale transformation of the economic system to conform to the principles of environmental sustainability, many ecologists believe that eventual economic decline is inevitable.

Although the intellectual foundations of this view originate in biology, other scientific fields such as meteorology, geology, and hydrology also contribute. The ecological perspective prevails in most national academies of science, in international scientific bodies, and in environmental organizations. Indeed, it is environmentalists who are actively voicing this view, urging the use of principles of ecology to restructure national economies and to shape the emerging world order.

These divergent views of the world are producing a certain global schizophrenia, a loss of contact with reality. The events of 1990 typify this unhealthy condition. The celebration of Earth Day 1990 symbolized the growing concern for the environmental health of the planet. Estimates indicate that at least 100 million people in 141 countries participated in events on Sunday April 22. Soon after, at the Group of Seven economic summit in Houston, national leaders from Europe, reflecting the mounting concern with global warming, urged the United States to adopt a climate-sensitive energy policy.

A few weeks later, Iraq invaded Kuwait, unsettling oil markets. Almost overnight, concerns about energy shifted from the long-term climactic consequences of burning oil and other fossil fuels to a short-term preoccupation with prices at the local gasoline pump. More traditional views of energy security resurfaced, eclipsing, at least temporarily, the concern with fossil fuel use and rising global temperatures.

This schizophrenic perspective is translating into intense political conflict in economic policy making. To the extent that constraints on economic expansion are discussed on the business pages, it is usually in terms of inadequate demand growth rather than supply-side constraints imposed by the earth's natural systems and resources. In contrast, the ecological view, represented by the environmental public interest community, hold that continuing the single-minded pursuit of growth will eventually lead to economic collapse. Ecologists see the need to restructure economic systems so that progress can be sustained.

Both visions are competing for the attention of policymakers and, as more environmentally minded candidates run for office, for the support of voters. The different views are strikingly evident in the indicators used to measure progress and assess future prospects. The basic evidence cited by economists shows a remarkable performance over the last decade. The value of all goods produced and services rendered grew steadily during the eighties, expanding some 3 percent a year and adding $4.7 trillion to the gross world product by 1990, an amount that exceeded the entire world product in 1950. In other words, growth in global economic output during the eighties was greater than that during the several thousand years from the beginning of civilization until 1950.

International trade, another widely used measure of global economic progress, grew even more rapidly, expanding by nearly half during the eighties. This record was dominated by the expanding commerce in industrial products, while growth in the trade of agricultural commodities and minerals lagged. Although the exports of some countries, such as those in East Asia, increased much more than others, all but a relatively small number of nations contributed to the rising tide of commerce.

On the employment front, the international Labour Organization reports that the economically active population increased from 1.96 billion to 2.36 billion during the decade. Although impressive gains in employment were made in some regions, the growth in new jobs in the Third World did not keep pace with the number of new entrants, making this one of the least satisfying of the leading economic indicators.

Using stock prices as a gauge, the eighties was a remarkable decade. Investors on the New York Stock Exchange saw the value of their portfolios growing by leaps and bounds, a pattern only occasionally interrupted, as in October 1987. The Standard and Poor Index of 500 widely held stocks showed stock values nearly tripling during the decade. Pension funds, mutual funds, and individual investors all benefited. The value of stocks traded on the Tokyo Exchange climbed even more rapidly.

Lester Brown is president o f the Worldwatch Institute in Washington, D.C. His essay is excerpted with permission from State of the World: 1991 just published by Norton.