Complexity

Why Economists Don’t Know How to Think About Growth

An interview with Fritjof Capra

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Eric Michael Johnson and Fritjof Capra

The role of systems thinking in economics has grown in prominence throughout the late 20th Century—much of it due to the pioneering work of Fritjof Capra, whose writings and movies have inspired a generation of young scholars and practitioners to view economics and politics through the lens of ecological (living) systems.

We are delighted to share this exclusive interview, conducted by science journalist and Evonomics advisor Eric Michael Johnson (EJ), with Dr. Capra (FC) about the implications this approach has for the new paradigm of complexity and evolutionary economics. He is offering a new course on this topic that begins in April 2016, which we highly recommend.

EJ: In your latest book, The Systems View of Life, you emphasize the need to shift from the concept of “quantitative growth,” as economists use it, to that of “qualitative growth” that you say is more akin to evaluating the health of ecological systems. How do ecologists measure this qualitative growth and how would it be translated to economics?

FC: Growth in nature always balanced and multi-faceted. While certain parts of organisms, or ecosystems, grow, others decline, releasing and recycling their components which become resources for new growth. I have called this kind of growth, well known to biologists and ecologists, “qualitative growth” to contrast it with the concept of quantitative growth, measured in terms of the undifferentiated index of the GDP, used by today’s economists. Ecologists use multiple indicators to map the interplay of growth and decay, of expansion and maturation. Typically, an ecological community goes through an early phase of rapid growth, known as a pioneer ecosystem and characterized by rapid expansion and colonization of the territory. This rapid growth is followed by slower growth and development of increasing complexity, until the community becomes stable and self-perpetuating as a so-called climax community. In economics the indicators will be different. They will include indicators of poverty, health, equity, education, and so on.

EJ: You identify qualitative indicators like poverty, health, equity, education, social inclusion, and the state of the natural environment as ways to properly assess the health of an economy. Choosing just two of these–equity and the state of the natural environment–how would these indicators be useful in addressing economic issues?

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FC: Equity is one of the most important economic indicators. As economist Joseph Stiglitz documents in great detail in his book The Price of Inequality, the United States has seen a systematic transfer of wealth from the poor to the rich. Besides being a serious moral issue, the rising inequality has led to a slow-down of the economy, as the poor have less and less money to spend, while the rich do not spend their wealth in the real economy but rather use it to increase their financial power. This has been accompanied by a spectacular break-down of democracy, as the super-rich have increasingly taken over the American political system. The state of the natural environment is critical because our personal as well as our economic well-being depend on it in terms of our quality of life and the availability of natural resources.

EJ: You highlight the United Nations Human Development Index and Calvert-Henderson Quality of Life Indicators as valuable approaches towards mapping qualitative growth. Why are these useful when thinking about economic issues?

FC: These are examples of qualitative economic indicators. Readers can find more information on the website of the European organization “Beyond GDP”.

EJ: You take issue with the concept of “sustainable development.” Why is that and how does a systems approach address the problems you identify?

FC: Like “growth,” “development” is used today in two quite different senses, one qualitative and the other quantitative. For biologists, development is a fundamental property of life. All living systems develop; life continually reaches out to create novelty. The biological concept of development implies a sense of multi-faceted unfolding, of living organisms, ecosystems, or human communities reaching their potential.  Most economists, by contrast, restrict the use of “development” to a single economic dimension, usually measured in terms of per capita GDP. Economists recognize only money and cash flows, ignoring all other forms of fundamental wealth — all ecological, social, and cultural assets. Now, when we speak about “sustainable development,“ we need to specify which kind of development we have in mind. If “development” is used in the current narrow economic sense, such economic development can never be sustainable, and the term “sustainable development” would be an oxymoron. If, however, the process of development is understood as more than a purely economic process, including social, ecological, and spiritual dimensions, and if it is associated with qualitative economic growth, then  such a multidimensional systemic process can indeed be sustainable.

EJ: Economists, especially those of the neoliberal mold, argue that the most important criteria to pay attention to are financial: quarterly profits, return on investments, number of jobs created, Gross Domestic Product, etc. In many cases, peoples’ salaries are based on these criteria. Non-financial criteria, such as impacts to the environment, are considered to be what are called “externalities” and not included in their assessments. What reason would people have to include non-financial criteria in their assessments and how could such a change in economic culture be achieved?

FC: This is really a variation on the basic theme we are discussing. The criteria used by neoliberal economists are criteria of quantitative growth, which is manifestly unsustainable. We urgently need to shift to criteria of qualitative growth and development, most of which are non-financial, to overcome our multi-faceted global crisis. The only way this change will come, in my view, is through pressure by grassroots movements.

EJ: Much of the modern economic order is generated from the top-down. International agreements such as the Trans Pacific Partnership and North American Free Trade Agreement or institutions such as the World Trade Organization and International Monetary Fund often set the rules for domestic economic policy. Ecology, on the other hand, is driven from the bottom up. How can such an inversion as you are suggesting be implemented without a fundamental restructuring of the economic system?

FC: To create an economic system that is in harmony with nature’s principles of ecology, we need to fundamentally restructure our global financial institutions. Several economists in academia and in the global civil society have been working on this issue; see, for example, the book The Case Against the Global Economy, edited by Jerry Mander and Edward Goldsmith.

The first edition of Capra Course will launch in April 2016. For more information please go to www.capracourse.net

2016 February 8


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  • Paul Eckerson

    The world’s oceans are being exploited for financial gain. If not managed as a resource it will.be destroyed. The world’s oceans are responsible for the removal of 70% of CO2 from the atmosphere. Many species are in serious decline and are threatened with extinction. There is no accountability or responsibility for them. If mankind does not come together and manage the oceans our extinction is a possibility too

  • X-7

    I interviewed Dr. Capra in 1984-5?
    Greets Good Dr.
    Loved “The Tao of Physics”.
    You were talking holism then.
    Econ icons still ain’t picked up; still attached to the archaic, dull dollar descent; dastardly dolt-ification?

    Larry Chang has a new econ app, the Planetary Index, that uses a Kurzweilian digital neocortex via a fractal model that is congruent with a dominant, repeating pattern across evo history: the ability to process complex network relationship information with GRASP: greater reach accuracy speed power.
    Incomplete, young, theoretical, but a promising start.
    http://ow.ly/Y7qLu
    Part of the philosophic foundation for such an orientation:
    Exponentially accelerating complexity has blown up the efficacy of our current cultural genome.
    Ain’t rocket science: If our culture has deadly relationships with the sky and ocean, our cultural genome sucks; in this case, it’s complexity inadequate.
    http://ow.ly/Y7aXj

  • Don Chisholm

    Surely it is time for a group of thinkers such as Capra to get together in a post-normal exercise and sketch a relatively detailed working model of future governance structures and systemic interactions with ‘the people’, wherein all of today’s good, but isolated, suggestions about what the
    future should include, are blended together into an interactive dynamic harmony where human nature is a key consideration. This would be a guided dynamic governance system a goal of long term sustainability for humanity within nature. This would give many of today’s important initiatives a common goal adding synergy to the overall change movements.
    Don Chisholm

    • Had something similar of not already been developped by ancient Chinese philosophers of Taoist, Confucian and Mencian denomination mirroring later, younger efforts by western philosophers of traditional-conservative, fascist-authotarian, and progressive-liberal denominations?

  • Pingback: 1649. More on growth. | Carmichael conversations re GardenWorld Politics()

  • roger_erickson

    This is NOT a question that can be solved by economists. Simply put, economic policy is far too important to be left to the economists (the least qualified of all!).

    My question? Since economics has never been a science, why on earth do we let economists have so much impact on public policy? Complacency. Once they fail badly enough, adult electorates will step in again, like they did in 1933.

    Why is this even happening? To be blunt, because Innocent Frauds – orthodox economists – are taught to sell out, and give wealthy crooks whatever justification they want, whenever they want it. That’s how the discipline was formed, and that’s how it remains … apologists for oligarchs.

    It’s that simple.

    https://plus.google.com/104140272098689841413/posts/YZr1PEfFuFY

    • Depends on which economists you ask. Not all economists are orthodox, where orthodox is an amalgamation of of number of ideas from various historical traditions, often with a strong utilitarian streak, which is an issue. Lot’s of discussion here: https://econjwatch.org

  • The economists are simply the clerks for those who would control — the politicians, particularly the ones who want to destroy the constitutional republic and replace it with a democracy which is easier to control. If you want qualitative goals then you have to start with an audit of the Federald Reserve and resign from the One World Government.

  • noergler

    Depressing, that a magazine which heralds ‘The Next Evolution of Economics’ and a supposedly intelligent philosopher merely deliver paragraphs and paragraphs of platitudes obviously w/o any understanding of economic growth.

    • The website, most articles and comments are an exercise in popularization and opinion formation, touching on important topics, however not an exercise in sophisticated analysis and balanced argumentation. As such the exercise seems well-intentioned, but ultimately self-defeating.

      It seems that the general population, but maybe only the cultural elite in classical periods in antiquity, renaissance and the 19th century where better at that. As mentioned below, our culture seems to be outgrown by the complexity of our societies.

  • Melissa Ellen Penn

    Yes, Yes – a testimony to The Real Wealth of Nations! Here’s to a Caring Economy.

  • Is the premise of the article that economists do not know how to think about growth true?

    Capra claims “Growth in nature always balanced and multi-faceted. While certain parts of organisms, or ecosystems, grow, others decline, releasing and recycling their components which become resources for new growth. I have called this kind of growth, well known to biologists and ecologists, “qualitative growth”…”

    Now that is what e.g. Joseph Schumpeter, and Friedrich Hayek or even the evonomics main bad guys, the Chicago school economists have been talking, arguing and writing about a lot: the necessity of an economy to be able to adapt in the face of change – be it technical, economic, social.

    Unfortunately, that means that firms, non-profit organizations, and bureaucracies and economic actors have to have the flexibility to change (i.e. rearrange their configuration) and also be able to fail (to free up resources to enable their owners or others to use them more productively).