Many of the growth strategies tried around the world have turned out to have built-in limitations or decelerators – what one might call elements of unsustainability.”

Absolute must-read article in Project Syndicate by 2001 Economics Nobel laureate Michael Spence. He seems to be one of the few economists able to think beyond the unfruitful austerity versus growth debate and link the crisis of the economy and economics with the sustainability crisis.

Two interesting quotes from this brilliant analysis:

Perhaps the largest long-run sustainability issue concerns the adequacy of the global economy’s natural-resource base: output will more than triple over the coming two or three decades, as high-growth developing economies’ four billion people converge toward advanced-country income levels and consumption patterns. Existing economic-development strategies will require significant adaption to accommodate this kind of growth.”

“Contrary to the prevailing wisdom nowadays, some degree of Keynesian demand management in the transition to a more sustainable growth pattern is not in conflict with restoring fiscal balance over a sensible time period. On the contrary, applied both individually and together, fiscal stimulus and consolidation are necessary parts of the adjustment process.

But they are not sufficient. The crucial missing pieces are a shift in the structure of accessible aggregate demand and restoration of those parts of the economy’s asset base that have been run down, implying the need for structural change and investment.”