Better is Better than More: Investigations into Qualitative Growth
This paper attempts to offer new insights into the concept of qualitative growth. We argue that quality is more than an outlying variable addressed by adding a term (or two) to the utility function and question whether quality is adequately addressed by specialized studies in product differentiation, point-of-sale information asymmetries, consumer preference, and technological innovation. Our core hypothesis is that a general increase in the quality of goods and services produced by a country is not only more sustainable than, but can in large measure substitute for, a general increase in the quantity of goods produced—which is a popular understanding of “economic growth”. In the work of Herman Daly and other ecological economists, qualitative growth, is defined only generally as an increase in the value of the economic goods and services produced by a given, and government controlled, amount of throughput. But we get little specific idea about what qualitative growth would actually look like, be like, or feel like—little insight about quality per se. We propose alternative ways to promote an economy-wide shift from quantitative to qualitative growth, but also to limn what “quality” consists in at a usefully abstract level. We suggest, finally, a strategy that looks to modest regulatory interventions together with early education in quality discrimination, improved information about quality in the marketplace, and more effective persuasion as to the economic—indeed quantitative economic—benefits of quality growth (“quantitative” inasmuch as ordinary wealth, profits, and wages would grow in a qualitative growth regime). To achieve a turn to qualitative growth with a lighter regulatory hand, we look to insights from the new behavioral economics that suggest that substantial changes in economic behavior can be effected by changes in the “architecture of choice” rather than by limiting or excluding choices.
In this very interesting paper the authors recognize the importance of Herman Daly’s pioneering work that, among other contributions, emphasizes the need to account for reduction of resources plus the damage to ecosystems caused by waste/throughput when evaluating the effects of economic growth. The authors seek to articulate Daly’s efforts concerning shifting emphasis towards a more optimal scale of production and consumption, with quality of g/s receiving more emphasis rather than quantity, the authors have an important contribution to make.
The particular contribution this interesting paper makes is a call for “a more fundamental recasting of how we conceptualize, understand and organize economic activities” is vital. Widespread acceptance of the need to recast would provide a strong impetus to dismiss the quantity-oriented orthodox economic approach to evaluating economic activity. They offer a broad range of measures that would be combined to provide a quality measure. One suggestion would be, in the interest of building upon Daly’s work, that “optimal scale” of production be included when a measure of quality was made.
Concerning consumer education and determining what is a higher quality versus a lower quality good, using the ecological economist’s understanding of quality, the author’s could add the Life Cycle Assessment measure proposed by Daniel Goleman in his Ecological Intelligence book. Such a measure could help to achieve the “realignment of prices over time” the authors advocate
in the interest of encouraging more production and consumption of “high-quality, natural-resource-efficient ones that use (and thus elicit) more substantial human capital.”
The suggestions for influencing consumer decision-making do offer a means to shift spending towards the purchase of higher-quality goods. This section would have more convincing qualities if the authors added that some form of government or independent agency analysis should accompany such an effort to counteract what, in the USA, is the overwhelming number of messages aggressively financed by private interests seeking to convince potential consumers that thinking of the quantity of consumption will bring them greater satisfaction than any alternative.
Thank you, Jim, for your assessment of our paper’s contribution.
You make two observations: First, that life cycle assessment be a component of Q, quality; and of course you are correct. We do not refer to Goleman’s book (and will in future editions of this paper). But we do address the matter briefly under the component of quality we call Ethicality.
Your other observation, that “government or independent agency analysis” of a range of goods’ quality is necessary, given the maelstrom of deceptive information swirling about in most developed markets, is a good one. In a longer version of this paper (see http://soa.utexas.edu/files/csd/wps201101.pdf) we do indeed discuss the role of the agencies such as the BLS in tracking qualitative contributions to price increases. Certainly, there are many other government certification agencies that maintain quality standards for many commodities, professional services, and so on. But these standards are usually restricted to health and safety issues, and they are posed as quality minima. The kind of quality (or qualitative) economic growth we are looking for only begins after such minimum standards are met, i.e., with rising norms of functionality, reliability, attention to detail, beauty, generosity, simplicity, and ethicality in all goods and services. Our hope was to outline how this might go, how understanding what “quality” consists in could work in the cause of sustainable prosperity using the energy of the market, deftly regulated and educated.