Published version attached as Zaman67.pdf below. CITE AS:

Asad Zaman, "Evaluating the Costs of Growth", Real World Economics Review, issue 67, 9 May 2014, p41-51.

Acknowledgement: A version of this article was originally written for Vision 2025, a planning document for Planning & Development in Pakistan. The original ttile was: Values and Ethics in Development.

ABSTRACT: The twentieth century has been extremely unusual in that economic growth rates have been extraordinarily high. At the same time, costs of this growth have also been extremely high. These have been in the form of environmental degradation, depletion of planetary resources and species, climate change, and adverse social change. Since many of the effects of growth go outside the marketplace, evaluating costs and benefits involves value judgments of types which economists are not well-equipped to make. This article sketches some issues which have not received sufficient attention in the discourse about current policy options which bear importantly on our future.

JEL CODES: O44,

Introduction

Many dimensions of economic growth are qualitative and create changes in social, institutional as well as environmental and geographic structures. Evaluating the costs and benefits of these changes necessarily involves subjective value judgments. Because these changes are not marketed and priced, many economists have under-estimated their importance. Resistance by economists is also due to the idea that science is concerned purely with the objective and the positive. Even though it was widely believed throughout the twentieth century, the idea that the positive and the normative can be clearly and sharply separated has been decisively rejected. For instance, Hilary Putnam (2002) has shown that facts and values can be inextricably entangled; see also, Zaman (2012), who shows the normative assumptions embedded in the fundamental economic concept of “scarcity”. Thus, economic theories which consider only observable marketed quantities and prices, and ignore intangibles and non-market assets are seriously deficient. The first section below shows how a single minded focus on economic growth has led to our ignoring many other vital dimensions of development. Subsequently we argue that evaluating costs and benefits of growth requires the introduction of values into the development discourse. An explicit consideration of values leads to many types of policies not currently within the ambit of development planners. This creates out-of-the-box solutions, which are desperately needed in current times.