This book develops the theory of qualitative growth. This theory provides a major overhaul of economic theory. Modern economies are evolutionary complex systems subject to a process of rapid innovation that makes aggregation very difficult. Mainstream economics is based on aggregating variables. When aggregation is impossible, mainstream economics creates idealized economies without any empirical basis. Our theory of qualitative growth is based on the principles of modern empirical science where models might include terms and variables that acquire meaning through global theory and its measurement processes. That is, in modern empirical sciences, variables are ultimately defined by the process of observation. However, the observation process might include the entire theory. For example, we do not observe temperature directly but only through instruments that exploit how temperature is linked to other variables such as the elongation of a column of mercury. We develop an integrated monetary economic model where the real economy is represented by hidden abstract variables that include quantity, quality, and generalized inflation. These variables do not have a direct observation process but are in relationship with observables such as the Economic Complexity Index. In this way, we develop an economic theory able to support decision making for qualitative growth while in contrast mainstream economics would label qualitative growth as a recession. The idea of qualitative growth, put forward by Capra and Henderson in 2009, is the basic notion that growth is a good and essential feature of human societies, but it must be understood as organic development of qualitative aspects of life. Qualitative growth responds to the basic need of “decoupling” growth from the use of natural resources which is now recognized as a pillar of the green transition.

This book develops the theory of qualitative growth. This theory provides a major overhaul of economic theory. Modern economies are evolutionary complex systems subject to a process of rapid innovation that makes aggregation very difficult. Mainstream economics is based on aggregating variables. When aggregation is impossible, mainstream economics creates idealized economies without any empirical basis. Our theory of qualitative growth is based on the principles of modern empirical science where models might include terms and variables that acquire meaning through global theory and its measurement processes. That is, in modern empirical sciences, variables are ultimately defined by the process of observation. However, the observation process might include the entire theory. For example, we do not observe temperature directly but only through instruments that exploit how temperature is linked to other variables such as the elongation of a column of mercury. We develop an integrated monetary economic model where the real economy is represented by hidden abstract variables that include quantity, quality, and generalized inflation. These variables do not have a direct observation process but are in relationship with observables such as the Economic Complexity Index. In this way, we develop an economic theory able to support decision making for qualitative growth while in contrast mainstream economics would label qualitative growth as a recession. The idea of qualitative growth, put forward by Capra and Henderson in 2009, is the basic notion that growth is a good and essential feature of human societies, but it must be understood as organic development of qualitative aspects of life. Qualitative growth responds to the basic need of “decoupling” growth from the use of natural resources which is now recognized as a pillar of the green transition.