Sustainability: an economic perspective

The economic perspective of sustainability focuses on the trade off of current consumption for future consumption. This was the question that faced the economists of the late 19th century such as Malthus who noticed growth in the population outpaced that of food. Yet, Malthusian prediction of famine and disaster did not come to pass due to technological innovation. There was a substitution of created capital (machines) for natural capital (labor and land). Thus, whether created- and natural capital are substitute or complementary goods is key to sustainability. Many economists believe we can maintain current consumption and that technological innovation will take care of the needs of future generations. However other economists believe that created capital and natural capital are complementary goods; as we consume more created capital, we will also have to consume more natural capital. The relationship between natural and created capital has an impact on what policies and incentives we consider for the preservation of opportunities for future generations. If they are substitutes, current efforts need to focus on development of new technologies which will allow us to do more with less. If they are complements we need to consider efforts of preservation and conservation. We understand that we cannot have our cake and eat it too. The debate is whether we emphasize finding a new way to bake more cake, or carefully consume the cake we have.