Economic Growth and the Environment - or the Extinction of the GDP-dinosaur

Abstract Market economies are fundamentally characterized by economic growth. Growth rates may be higher or lower, but the GDP seldom stagnates or diminishes - and when it does, this is considered a symptom of crisis. During the past few decades environmental problems have caused increasing concern, and as a consequence, it has been questioned whether an ever-increasing GDP is compatible with overall environmental improvement. The prevailing answer is clearly affirmative, and the adherents of this position can refer to very influential sources. First of all, the Brundtland report from 1987 states that economic growth in industrial countries is necessary both to combat environmental problems and to improve the conditions of life in developing countries. Since then, some of the main international economic organizations have dealt with the question. Examples are the OECD report "The State of the Environment" from 1991, the GATT report "International Trade 90-91" with a special section on trade and environment, and the World Bank's "World Development Report 1992" focusing on development and the environment. All these organizations defend the position that economic growth in industrial countries is compatible with environmental improvements and the reduction of global inequality. The present paper argues that this prevailing position is wrong. However, the contrasting position ? that economic growth is necessarily damaging ? is also wrong. Consequently, if we seriously want to address environmental problems, we will have to develop different terms and to manoeuvre in the direction of other goals than growth in the GDP. The argument will be set out on two levels. First, the arguments of especially the World Bank will be considered directly on their own terms. Second, the conventional use of concepts will be questioned on a theoretical level. In the present situation, with an urgent need for reorientation, some of the very old discussions about the foundations of economic theory regain actuality. This paper will thus re-examine questions such as: what have we got at our disposal by means of production, and what are the costs?