How Countries Can Achieve Sustainable Economic Growth Without Harming Future Generations

Two major reports have renewed the debate over whether countries should continue prioritizing economic growth—or adopt a broader definition of economic progress based on sustainability, equity and long-term prosperity.

The Global Justice Report, published in June by the World Inequality Institute, calls for a redistribution of income and wealth. It also argues that richer countries should accept slower economic growth to address global challenges, including environmental degradation and climate change.¹

In May, the United Nations High-Level Expert Group on Transcending GDP—an international group of economists—published recommendations for moving beyond gross domestic product (GDP).² The report urges governments to manage their economies using a dashboard of indicators that measures sustainable well-being, rather than relying on GDP alone.

These reports, however, may be asking the wrong question because they focus primarily on the risks of economic growth. The central issue is not simply whether economies should grow faster or slower, or how well-being should be measured. It is whether governments are leaving future generations with more or less wealth and opportunity.

Sustainability is fundamentally a question of justice³: what one generation owes to the next. Debates over how to achieve sustainability are creating tensions between competing approaches (see Nature 655, 547; 2026). The Global Justice Report primarily examines justice across space—between nations and between wealthy people and those living in poverty. By contrast, efforts to manage sustainability within planetary boundaries focus on justice across time: the relationship between present and future generations.

This article explains the meaning of intergenerational justice, explores how it applies to economic policy, and examines how comprehensive national wealth accounts—including produced, human and natural capital—could provide a way forward.

Understanding wealth and justice requires looking back at the history of economic thought, as I do in my book Comprehensive National Wealth (2026). Its publication coincides with the 250th anniversary of Adam Smith’s influential work, An Inquiry into the Nature and Causes of the Wealth of Nations (1776).

Smith defined a nation’s wealth not as money, but as its stock of capital. This included machinery, buildings and land, as well as “the useful abilities acquired by all the inhabitants and members of society.” Modern economists continue to build on this broader understanding of national wealth.

Smith also described the important role of government in delivering justice. In his earlier book, The Theory of Moral Sentiments (1759), he developed his ideas about how individual actions affect other people.

Smith rejected the idea that one person’s actions could interfere with the well-being of others, whether intentionally or through ignorance. “While his own happiness may be more important to him than the happiness of the whole world,” he wrote, “to every other person it is of no more importance than that of any other person.”

Beyond growth — why we need to agree on an alternative to GDP now

Smith proposed judging behaviour from the perspective of an “impartial spectator”—an imaginary, informed observer who considers whether an action is praiseworthy or blameworthy. Crucially, an impartial spectator would not accept “interfering with the happiness” of others simply because their well-being conflicts with one’s own.

Although Smith was writing about moral behaviour in his own society, future generations can be understood as a similar impartial audience. They may ultimately judge whether previous generations acted as responsible stewards of the wealth and resources they inherited.

Smith did not use the terms “sustainability” or “intergenerational justice”, but his analysis highlights a central economic principle: nations become wealthier not by consuming their inheritance, but by preserving and expanding the capital stock on which future prosperity depends.

Investments in roads, bridges and other infrastructure, for example, can increase a country’s capacity to produce goods and services. If these assets are maintained, they benefit people today as well as the generations that inherit them.

Smith also argued that it was unjust to enjoy benefits in the present while transferring the costs to future generations. He opposed government borrowing to “alleviate the present emergency” while “leaving the release of future public revenues … to the care of posterity.”

The capital stock available today is therefore partly the result of the “frugality” of previous generations. Decisions to preserve or deplete that capital affect not only current prosperity, but also the opportunities available to people in the future.

What is intergenerational justice?

Since the 1970s, economists have increasingly understood sustainability through the concept of intergenerational justice. This idea builds on Smith’s framework and expands on political philosopher John Rawls’s principle of “just savings”. Rawls argued that each generation must preserve the benefits of culture and civilization, maintain just institutions and accumulate an appropriate level of real capital for the future.⁴

Rawls suggested that these investments could include manufacturing equipment, education and learning. Although he did not provide a detailed policy formula, he offered two ways to think about the responsibilities of each generation.

The first approach sought to maximize the total happiness of all people. If future generations were expected to be wealthier, it would be unfair to require poorer generations today to save more for their benefit. Doing so could force current populations to sacrifice their well-being for people expected to enjoy a higher standard of living.

The second approach used a “veil of ignorance”: what if we did not know which generation we belonged to? To avoid favouring one generation over another, each generation would follow the same savings principles and determine how much to save according to its circumstances. In this way, every generation would benefit from the savings of those that came before it, apart from the first generation.

These ideas were developed further by Nobel laureates Kenneth Arrow and Robert Solow. Arrow applied them to conventional forms of capital, including machinery, buildings and infrastructure.⁵ Solow expanded the analysis to include non-renewable resources such as oil, gas and mineral deposits.⁶ Their work raised an important question: can one generation legitimately deplete natural resources if it compensates future generations by investing in other forms of capital?

GDP and beyond: Why treating nature as capital won’t save the planet

Economist John Hartwick concluded that one way to achieve adequate savings is to reinvest all profits from the extraction of non-renewable resources into other forms of capital.⁷ Solow applied this idea to the United Kingdom’s North Sea oil boom in the 1980s. He argued that the country was effectively wasting its natural wealth by failing to reinvest enough of the proceeds in other forms of capital, unlike countries such as Norway.⁸

Economists Partha Dasgupta and Amartya Sen extended these ideas to sustainable development.^9,10 Dasgupta defined sustainability in terms of an economy’s productive base. Each generation should leave its successors with a foundation at least as strong as the one it inherited, ensuring that future generations have no fewer opportunities for well-being.

Sen defined sustainability as preserving—and, where possible, expanding—the capabilities and freedoms of the present generation without compromising the capabilities and freedoms of future generations.

Today’s emphasis on preserving capital to protect the capabilities of future generations is therefore closely related to the argument Smith made 250 years ago.

Measuring tomorrow’s capabilities with inclusive wealth

The next challenge for economists is to measure whether societies are saving enough for the future. GDP cannot provide this information because it measures the value of goods and services produced within an economy during a given period. It does not show whether a country is building or depleting the assets that support future prosperity.

As I have argued with my colleague Mathias Beck, a management scholar at University College Cork in Ireland, savings and long-term economic capacity can be tracked through the concept of inclusive wealth. This measure focuses on three forms of capital: produced or manufactured capital, natural capital—including ecosystems and resources—and human capital, including skills, health and knowledge.

GDP reflects the output generated by these forms of capital. Institutions such as legal systems, markets and political organizations determine how effectively those resources are allocated. Inclusive wealth, by contrast, focuses on the underlying asset base itself.

In the context of planetary boundaries and global catastrophic risks, inclusive wealth can provide a more informative measure of economic health than GDP alone. It shows whether economic growth is creating wealth or depleting the natural, human and produced capital on which future prosperity depends.¹¹

When the current generation depletes natural capital, future generations may lose access to the same capabilities and opportunities. Similarly, when infrastructure such as roads and bridges is allowed to deteriorate, future generations inherit a smaller and less productive capital stock.