It seems to be almost axiomatic these days to think of economic growth as an unfettered good. But must it always be so? Johann Hari in the April 2010 of The Progressive magazine wrote in a review of a book about John Maynard Keynes, whose influential work has been used to fuel growth, about what that famous economist thought about when we might know that it might be time to call a halt to growth.
But Keynes’s analysis ran deeper still. He didn’t only see the problems unfettered markets caused in his own time; he peered way ahead, to glimpse the problems they would cause at our stage of economic development too. He understood how to ensure economic growth better than anyone, but he thought there would come a time—around about now—when the ceaseless pursuit of economic growth had done its work, and we should abandon it.
Today, the only shared structural goal of our society is to grow, grow, grow—so Keynes’s questions seem, at first, puncturing and bewildering. What is economic growth for? Why do we do it? Keynes said it should have only one goal: to enable human beings to live “wisely, agreeably, and well.” For a time, growth will—provided it is matched by a redistributive state—achieve this. It will make people less hungry, less cold, less ill, and therefore more happy. But he saw that there would come a time when a society had achieved “abundance”—and growth would stop adding to the sum of human happiness.
It was an uncannily accurate prediction. Professor Richard Layard of the London School of Economics has conducted pioneering research that proves once a society has a certain basic level of comfort, chasing more money doesn’t make us any happier. Over the past fifty years, Western societies have become massively wealthier—yet we are no happier. We are all running ever more frantically on the growth treadmill, but we are getting nothing out of it. Sure, we can—if we are lucky—keep a few inches ahead of our fellow citizens, and we can buy more flashy consumer durables we have been convinced by advertising to “need.” But it doesn’t give us joy.
Keynes also foresaw the other, even more crucial, point at which economic growth would hit the end of the runway. There are ecological limits to growth. We can burn and package and consume only so much before the planet becomes a depleted husk. Yet our economic models, again, cannot see environmental costs: Those are mere “externalities” that are always trumped by short-term profit. Carbon emissions might cost us the ecosystem, but they don’t cost corporations cash—so they continue. Keynes saw it coming, albeit in the shadows. In 1933, he wrote: “We destroy the beauty of the countryside because the unappropriated splendors of nature have no economic value. We are capable of shutting off the sun and the stars because they do not pay a dividend.”
The key is to try and ensure that everyone has a basic level of comfort and security, and the current rapidly growing inequality works against that.
As long as you live in a universe without the second law of thermodynamics, it is fine. In our universe, it HAS to be suicidal.
Constructing an economic system that relies on continual growth on a planet of finite resources is and always was a very bad idea. It’s why we now have more of our economic volume in the form of services, “intellectual property”, and various debt or speculation/gambling vehicles (we’re borrowing from tomorrow to fund today’s growth) than tangible products of value (be that value intrinsic, in the sense it’s necessary for human well-being, or socially constructed).
Ironically (and also expectedly), Keynes usually gets the same treatment as Smith, who likewise looked into the future and insisted that the corporate model was prone to abuse and required extensive legal controls and regulations to be a pro-social force. People citing Smith generally ignore those bits.
I dispute this line: “It was an uncannily accurate prediction.” No, it’s not uncanny in the slightest, it’s patently obvious to anyone with a basic (or greater) understanding of economics and a lack of pro-capitalist bias, which sadly doesn’t describe the overwhelming majority of economists in the USA (it’s more the second than the first, though there are also plenty of economists who support schemes that even their preferred pro-capitalist models demonstrate to be bad ideas).
Constant growth only benefits the wealthy and powerful. Unfortunately, the US stock market and most business models assume constant growth. If a company said “there, enough!” its stock would tank. Consequently there is an incessant churn of stupid as companies all try to, eventually, do everything.
So forgive my naive understanding of economics, but even if, say, we had some general abundance, good redistribution, and a steady/failling population, wouldn’t economic growth still provide benefits -> more stuff? I mean that ‘more stuff’ doesn’t have to come at the cost of the environment. It could be more art, better education, and better technology? Could you still increase the standard of living?
And @2 says a bunch of strange things. Keynes was unabashedly capitalist. You can’t use him as an argument against capitalism or ‘pro-capitalist bias.’ It just doesn’t make sense. Don’t use the bizarre right wing definition of ‘capitalism’ if you’re talking about Keynes.
Whether economic growth is “good” or “bad” is increasingly irrelevant. More important is the fact that perpetual economic growth is not only impossible, but likely to end fairly soon — the planet simply lacks the resource base to allow it to continue for very much longer. Unfortunately, our current economic system is absolutely dependent on growth — without growth, it has a strong tendency to collapse. I fear that things are not going to go well.
Actually, rethinking it, this is probably going to happen naturally, as long as we have a relatively liberal and egalitarian-minded government.
From my impression of what is “supposed to happen” is that as technology/education/etc rises, is that we become more efficient. So we can work less hours and have more leisure time to enjoy our family, friends, personal projects, and consumerism. Peeling back work hours also has the effect of slowing the growth rate. With the advantages of feminism, population growth also becomes more steady so we don’t ‘need’ growth.
Essentially it would be a slow reduction of what is considered “full-time” work.
And when I say “happen naturally” I mean like once we actually get our government back in gear and stop worshipping the rich.
This is an argument that is very dependant on how “growth” is defined. If growth mainly means digging/pumping ever more stuff out of the ground, or turning ever more acres of wild land into corn fields, then, yes, growth is unsustainable and will probably destroy our lifestyle. OTOH, growth can also mean learning how to make stuff with fewer resources, or creating new forms of economic activity that never existed before. If I have a building that requires lots of resources to keep cool in summertime, I can try to get more efficient A/C, or put an infrared reflective coating on the roof, or shade the roof with solar panels and turn an energy loss into an energy gain. None of these steps are growth in the old sense, because I still have the same number of Sq. ft. in my building, but each of them can provide increased employment and returns on investment.
And as far as growth only benefitting rich people, I guess it depends on your definition of rich, but I sure as heck am counting on growth in the stock market to support my retirement. If I could only retire on whatever I could stuff into my mattress it would be a pretty bleak future for me.
It’s not even good if you’re a cancer. Eventually, the host dies if the cancer is too successful.
That is disturbingly analogous to humans on the earth.
Just because we’ve been able to show a long run of sustained growth doesn’t mean Malthus was wrong. It just means we’ve been clever so far.
Well we have seen only recently (yet again) what happens when growth is halted even temporarily. A lot of people became poorer and have stayed that way while a few got much richer. The acquisition of more and more assets by the 1% has become a game and money is how they keep score. It’s not as if they can actually use those increased assets for anything other than keeping the game going. Growth is the only economic model we have now.
Unfortunately the real issue on a planet with finite resources is unfettered growth of populations -- especially as the resources are unequally distributed. There’s only one human model for dealing with that situation too; those who are more powerful will take from those who are less powerful in a new flowering of imperialism in which the losers get to live at a minimum standard, if at all, while the leaders of the conquerors are the only ones who live well.
I reliably find that people who make this claim know fuck-all about actual demography (the clue here is in the phrase “unfettered growth”). The global population growth rate peaked in the 1960s at around 2.4% p.a., and has since halved. There’s been a slight blip in the past few years, but this probably reflects earlier “booms” in the 1960s and 1980s (on this, see Danny Dorling’s Population 10 Billion: The Coming Demographic Crisis and How to Survive it). There are almost no countries where fertility rates (number of children per woman) have not fallen considerably over recent decades. We know a good deal about how to keep growth rates going down -- basically, improve the status and education of women and girls, then do that some more, then do it again. There are some other measures, which reinforce that improvement, but may also have an independent effect: improve healthcare, education and economic equality generally, make contraception and abortion readily available, make immigration from poor to rich countries easier (immigrant populations rapidly adjust their birth rates to those of their new countries, and this will avoid rich countries having to boost birth rates to avoid too high a dependency ratio). Urbanisation, which we couldn’t stop even if we wanted to, also reliably cuts birth and fertility rates.
Halting population growth is unlikely to halt economic growth, because consumer capitalism is expert at making people want more stuff -- although it may slow it down. The real question is whether capitalism is compatible with the end of either economic or population growth.
To paraphrase Edward Abbey:
So how’s that working out Lord Gotts? Use of the F word does not prove your case.
sailor1031@14,
Just because you showed your ignorance is no need to get snotty: by using the phrase “unfettered growth” you showed that you do indeed know fuck-all about demography, and it’s the facts that prove my case -- they are not difficult to find. Try here, for example, or the book by Danny Dorling I already recommended.