Distinguishing Between Development and Growth: Germany’s Role in The Sustainability Quest

Distinguishing Between Development and Growth:

Germany’s Role in the Sustainability Quest

In the discourse on sustainability, it is absolutely vital to distinguish between development and growth and to align ourselves with the former rather than the latter if we truly desire sustainability. After all, the other term for sustainability—sustainable development—explicitly asserts “development” rather than “growth”.

Certainly, the economy of nature embodied by the ecosystem teaches us this: In its immature stages, an ecosystem maximizes, as the eminent ecologist, E. P. Odum, taught us, growth as reflected in the maximization of the ratio of production per unit of biomass in the ecosystem (i.e. the P/B ratio). In its mature stages, the ecosystem maximizes the reciprocal of this ratio. That is, a mature ecosystem maximizes the scale of biomass maintained in the ecosystem per unit of production in the ecosystem (i.e. the B/P ratio).

This transition from P/B maximization to B/P maximization follows from the operation of the Second Law of Thermodynamics governing qualitative transformations of matter and energy which, in the context of this discussion, in effect says that 100 percent recycling is impossible. Accordingly, there comes a point where further expansion of growth (i.e. increase of the P/B ratio) becomes impossible and a switch to maintenance efficiency (maximization of the B/P ratio) transpires.

The switch from P/B maximization to B/P maximization is the switch from growth (i.e. quantitative increase) to development (i.e. qualitative elaboration, inclusive of improvement). If the economy of man absorbed this lesson from ecosystems, then we would have taken important steps towards achieving sustainability. More precisely, if the distinction between growth and development were appreciated (i.e. through the appropriate macroeconomic interventions, such us Daly’s institutions for a steady-state economy [SSE]), then the rich northern countries could opt for development, thus releasing resources for the growth of the poor southern countries until such time as they too could opt for development.

That time of transition in the southern countries from growth to development could be hastened by transfer payments from the rich to poor countries, not just as a matter of environmental pragmatism but of justice and entitlement as well, due to injustices inflicted by historical contingency. In this regard, it is fortunate that Daly’s SSE institutions can be applied, with immediacy and minimal disruptive effects, on an international and national scale to effect those transfer payments between and within countries, respectively. As evidence for this assertion, there is the cap-and-trade system for carbon dioxide emissions in the European Union (EU) which was implemented with minimal disruption to the EU economy. That cap-and-trade system qualifies as one of  Daly’s SSE institutions.

In this distinction between growth and development so crucial if sustainability is to be eventually attained, Germany, I think, has a special role to play: Germany has built one of the largest economies among the northern countries on the backbone of up to 90 percent of its corporations being small- to medium-sized. That implies that those corporations are able to defend their limited market share through the sheer quality of their products and services. That also implies that the Germans are culturally conditioned to favor quality over quantity. Accordingly, with the appropriate macroeconomic interventions (such as Daly’s SSE institutions), this German pre-occupation with quality over quantity could perhaps be transferred from the sphere of private goods and services to the sphere of public goods and services (a state of affairs already well-advanced in the smaller Scandinavian economies). Already, because of social pressure, many rich people in Germany are inhibited from maintaining multiple homes within the border of their own country. They opt to maintain homes in other countries in the EU.