Global growth is (weakly) sustainable

An interesting piece in The Economist (http://www.economist.com/blogs/freeexchange/2012/07/national-balance-sheets) last week about research into global wealth:  ihdp.unu.edu/article/iwr

This looked at all types of wealth (or capital) in different countries: environmental/natural capital; human capital; man-made capital; and social capital and estimated that the stock of capital had increased in all countries except Russia.

Environmental economists define sustainable growth using a 'constant capital rule'. This states that if the total stock of capital is non-declining then growth is sustainable. What this latest research tells us is that the current growth models around the world are indeed sustainable (except in Russia) according to this definition. We are not therefore destroying our kids' inheritance and we can sleep easily at night.

This approach is, needless to say, not without its controversy. My hazy memory of studying this subject is that 'ecological economists' offer an alternative definition whereby the stock of natural capital must be non-declining as well as that of total capital for growth to be sustainable. They call this strong sustainability, as opposed to weak sustainability, and argue that natural capital is non-substitutable with other types of capital.

There are criticisms of both approaches and it seems inherently difficult if not impossible to measure the exact nature of substitutability between different forms of capital. I instinctively come down on the side of weak sustainability as a theoretical approach to sustainable development. Converting natural capital into man-made capital seems to me to be a fundamental pillar for development of any kind, particularly at lower income levels.