By Mark Ciotola
First published on April 20, 2019
Economic sustainability is the extent to which an economic system can continue without the requirement of extraordinary corrective measures. Economic sustainability goes a level of abstraction beyond critical resource sustainability. Economics is the science of the allocation of scarce resources. In a sense, it concerns who gets what and how much.
Even if a society has sufficient physical resources to meet the basic needs of its population, its financial system may result in instabilities that can cause financial and economic crises. One example are economic bubbles. Another issue might be excessive borrowing that cannot be sustained. During the 1800s and 1900s (and as recently as 2007-2011), the USA has experienced several severe economic downturns that have been extremely disruptive.
Most economic systems based upon debt are inherently unstable, as shown in the MONAD simulator.
Another issue is that although total industry production increases, labor productivity has also greatly increased, so that less labor is required per unit of goods. Hence there is less need for industrial labor and thus a decrease in the quantity of manufacturing jobs. (The figure below shows this trend). Paradoxically, despite greater productivity, unemployed workers cannot afford such goods, as they typically do not own the means of production, and therefore cannot derive direct income from such production. Advances in robotics and artificial intelligence will only increase this trend. Extraordinary measures must be taken for there to be markets for such goods, such as welfare, a minimum income or increased taxes and public employment.