only be achieved through growth. They apply the principle that environmental
protection measures are associated with costs. Industrialized countries, based on
their level of economic development, are better able than many of the developing
countries today to tackle the solutions to their environmental problems. The quote
below sums up the justification of positive economic growth: “In Germany and
Europe, [growth] is the only way to ensure social security and the standard of living
over the long term. Its policy goals have not only economic importance, but also
great moral significance” (Paqué 2010).The growth opponents often overlook the
point that in the neoclassical growth theory, environmental damage is also partially
included in the theoretical models. In the 1970s, against the backdrop of the first oil
crisis and a report titled “The Limits of Growth” that received widespread attention,
the neoclassical growth theory was extended to cover the resource problem: Still, for
a resource economy, the central question is how to sustain economic growth over the
long term when nonrenewable resources are essential to achieving growth (von
Hauff and Jörg 2017, p.63). In addition, some neoclassical growth models have
taken environmental pollution into account and shown that it actually leads to a
limitation of production possibilities (cf. et al. den Butter and Hofges 1995).
Logically, it follows that a stabilization or even an improvement in environmental
quality is associated with pollution avoidance costs, which either lead to a reduction
in consumption or a reduction in production capacity investment. The consequence
is that the social product in a state of growth equilibrium is lower when the
environment is considered than in the comparable case without consideration of
the environment. Nevertheless, in principle, it can be asserted that the uncertainties
and risks associated with a scarcity of resources (also with the environmental impact
resulting from the emissions associated with growth) are not sufficiently taken into
account in the neoclassical growth theory. The full extent of the challenge is not
acknowledged. In the neoclassical economy, growth is a prerequisite for positive
economic development and is viewed as progress.
Ecological Economics Ecological economics was initially established and developed as a counter to neoclassical economics in the USA in the 1980s and later spread
to Europe. There is broad consensus in the context of ecological economics that the
steady increase in the consumption of natural resources as well as the rising pollution
as a result of economic growth is not sustainable or future oriented. The proponents
of ecological economics support the classification of an economic system as a
subsystem of the ecosystem. This justifies the conclusion that the economy is to be
returned to the limits supported by ecology. Further quantitative growth is rejected
for the following two reasons:
• Some individual ecosystems are now at the limits of their sustainability, or these
have already been exceeded.
• Quantitative economic growth can hardly raise the standard of living in the
already highly developed countries.
In particular, Daly (1999), but also other representatives of ecological economics
over the past decades, has called for a steady-state economy, one that aims for a
1 Progress in Economic Thought: Neoclassical Economics Versus. . .
9
protection measures are associated with costs. Industrialized countries, based on
their level of economic development, are better able than many of the developing
countries today to tackle the solutions to their environmental problems. The quote
below sums up the justification of positive economic growth: “In Germany and
Europe, [growth] is the only way to ensure social security and the standard of living
over the long term. Its policy goals have not only economic importance, but also
great moral significance” (Paqué 2010).The growth opponents often overlook the
point that in the neoclassical growth theory, environmental damage is also partially
included in the theoretical models. In the 1970s, against the backdrop of the first oil
crisis and a report titled “The Limits of Growth” that received widespread attention,
the neoclassical growth theory was extended to cover the resource problem: Still, for
a resource economy, the central question is how to sustain economic growth over the
long term when nonrenewable resources are essential to achieving growth (von
Hauff and Jörg 2017, p.63). In addition, some neoclassical growth models have
taken environmental pollution into account and shown that it actually leads to a
limitation of production possibilities (cf. et al. den Butter and Hofges 1995).
Logically, it follows that a stabilization or even an improvement in environmental
quality is associated with pollution avoidance costs, which either lead to a reduction
in consumption or a reduction in production capacity investment. The consequence
is that the social product in a state of growth equilibrium is lower when the
environment is considered than in the comparable case without consideration of
the environment. Nevertheless, in principle, it can be asserted that the uncertainties
and risks associated with a scarcity of resources (also with the environmental impact
resulting from the emissions associated with growth) are not sufficiently taken into
account in the neoclassical growth theory. The full extent of the challenge is not
acknowledged. In the neoclassical economy, growth is a prerequisite for positive
economic development and is viewed as progress.
Ecological Economics Ecological economics was initially established and developed as a counter to neoclassical economics in the USA in the 1980s and later spread
to Europe. There is broad consensus in the context of ecological economics that the
steady increase in the consumption of natural resources as well as the rising pollution
as a result of economic growth is not sustainable or future oriented. The proponents
of ecological economics support the classification of an economic system as a
subsystem of the ecosystem. This justifies the conclusion that the economy is to be
returned to the limits supported by ecology. Further quantitative growth is rejected
for the following two reasons:
• Some individual ecosystems are now at the limits of their sustainability, or these
have already been exceeded.
• Quantitative economic growth can hardly raise the standard of living in the
already highly developed countries.
In particular, Daly (1999), but also other representatives of ecological economics
over the past decades, has called for a steady-state economy, one that aims for a
1 Progress in Economic Thought: Neoclassical Economics Versus. . .
9