The bankruptcy of growth
We are duped by the ideology of economic growth. Growth for the sake of growth is a bankrupt idea and yet people are inculcated with it at home, at school, at work, everywhere, throughout our whole lives. Relentless economic growth doesn’t add meaning or happiness to peoples’ lives. Studies have shown that once countries reach a certain level of economic productivity general happiness does not increase. Most western countries reached this high level of happiness about fifty years ago and yet their economies have continued to grow in that time. If the purpose of an economy is to make people happy, as the economist David Landes suggests, why do we need continued growth when we are already happy?
Economic growth has numerous negative affects such as environmental degradation, social inequalities and, ironically, ‘uneconomies’ such as jobless growth, where the economy grows, but employment doesn’t; ruthless growth, where economic growth only benefits the rich; rootless growth, where economic growth starves people’s cultural roots; and futureless growth, where the present generation squanders resources needed by future generations.
Most economists agree that the world’s natural resources cannot sustain growth indefinitely. Humanity has already overshot the biocapacity of the world. We currently use about 140% of the resources that the earth generates in a year, and this amount is growing. You might wonder how can this be happening, how can we use more resources than we have? The answer is simple and sobering: we are using up the earth’s natural capital which is things like soil, freshwater, forests and biodiversity. As the reader will know, if you continually live beyond your means, and consume capital to make up the difference, you end up reducing your capital and therefore your means. It is a downward spiral that leads to bankruptcy.
Some optimistic economists suggest that it is possible to de-couple economic growth from the use of natural capital. This would be more magical than alchemy if they can make something out of nothing. Even by employing super-efficiencies it is still not possible to completely de-couple the economy from natural resources, or anywhere near it, if the economy keeps growing. For example, dramatic increases in energy efficiency over the past thirty years have been far outweighed by the even more dramatic, compounding economic growth. As the saying goes if you are hurtling towards a precipice just slowing down isn’t going to help in the long run.
The solution is to stop growing. If this seems unimaginable think of a mature forest. It may have grown quickly at first but once it reached maturity it remains in a state of dynamic equilibrium. This means there are constant cycles of growth, decay and redistribution within the system but there is no overall growth of the system (except for a very slow improvement, called evolution).
The American economist Herman Daly describes what he calls a steady-state economy in his 1991 book of the same name. However the idea goes even further back and was first developed by the political and economic philosopher John Stuart Mill who believed that after a period of growth, the economy would reach a stationary state, characterised by constant population and stocks of capital. Mill eloquently describes the positive nature of such an economic system:
“It is scarcely necessary to remark that a stationary condition of capital and population implies no stationary state of human improvement. There would be as much scope as ever for all kinds of mental culture, and moral and social progress; as much room for improving the Art of Living and much more likelihood of its being improved, when minds cease to be engrossed by the art of getting on.”
Studies show that when people are ‘engrossed by the art of getting on’ they tend to be less happy. People are driven to overwork, accumulate debt and defer happiness so that they can ‘keep up with the Jones’ by consuming more.
What is the point of prosperity if it just makes us want more prosperity? When is enough enough? The fact is we simply don’t know that we have enough because we are continuously told that we don’t. The problem is that contentment (happiness, subjective wellbeing) is the biggest threat to growth and that is why we are exhorted by advertisers to consume more, we are pressured by peers to keep up with the latest fads, we are urged by employers, politicians and even our families to produce more, earn more and spend more. Society-at-large, having bought into the ideology of perpetual growth, puts unlimited expectations on its members.
Perpetual economic growth is neither possible nor desirable. What will happen if we stop growing the economy and improve it through redistribution of wealth, fairer trade, restoration of natural capital, greater resource efficiency and redirection of human energy toward social progress and sustainable wellbeing for all?
We will all be better off.