Economic growth is supposed to deliver prosperity. Higher incomes should mean better choices, richer lives, an improved quality of life for us all. That at least is the conventional wisdom. But things haven’t always turned out that way.
Growth has delivered its benefits, at best, unequally. A fifth of the world’s population earns just 2 per cent of global income. Inequality is higher in the OECD nations than it was 20 years ago. Far from improving the lives of those who most needed it, growth let much of the world’s population down. Wealth trickled up to the lucky few.
Fairness (or the lack of it) is just one of several reasons to question growth. As the economy expands, so do its ecological impacts. In the last quarter of a century an estimated 60 per cent of the world’s ecosystems have been degraded. Global carbon emissions have risen by 40 per cent since 1990. Significant scarcity in key resources – such as oil – may be less than a decade away.
On the other hand, when growth stalls, things go quickly from bad to worse. Firms go out of business, people lose their jobs and a government that fails to respond appropriately will soon find itself out of office. In short we find ourselves locked between the horns of an uncomfortable and deep-seated dilemma: growth may be unsustainable, but ‘de-growth’ – a contraction in economic output – appears to be unstable. Questioning growth in these circumstances is deemed to be the act of lunatics, fanatics or idealists.
The prevailing wisdom calls instead for a ‘decoupling’ of economic activity from material throughput. And since efficiency is one of the things that modern capitalist economies are good at, decoupling has a clear appeal as a solution to the dilemma of growth. And at first sight, this logic fits the evidence. Global carbon intensity fell almost 25 per cent in the last couple of decades, for instance.
But efficiency improvements are continually offset by increases in scale. Global carbon emissions rose by 40 per cent even as the carbon intensity fell. We need to be decoupling much, much faster. In a world of nine billion people, all aspiring to ever-increasing western incomes, carbon intensities would have to fall by over 11 per cent per year to stabilise the climate, 16 times faster than they have done since 1990. By 2050, the global carbon intensity would need to be only 6 grams per dollar of output, 130 times lower than it is today.
In this context, it is fanciful to suppose that ‘deep’ resource and emission cuts can be achieved simply by appealing to capitalism’s propensity for efficiency and without confronting the underlying structure of market economies. A much deeper re-examination is called for. In particular, we’re drawn inevitably towards the role of two inter-related features of modern economic life that together drive the growth dynamic.
On the one hand, the profit motive stimulates a continual search by producers for newer, better or cheaper products and services. This process of ‘creative destruction’, according to the economist Joseph Schumpeter, is what drives economic growth forwards. For the individual firm, the ability to adapt and to innovate – to design, produce and market not just cheaper products but newer and more exciting ones – is vital. Firms who fail in this process risk their own survival.
But the continual production of novelty would be of little value to firms if there were no market for the consumption of novelty in households. Recognising the existence, and understanding the nature, of this social logic is essential. Novelty plays an absolutely central role in our lives for a variety of reasons. In particular, it has always carried important information about status. But it also allows us to explore our aspirations for ourselves and our family, and our dreams of the good life.
Perhaps the most telling point of all is the almost perfect fit between the continual production of novelty by firms and the continuous consumption of novelty in households. The restless desire of the consumer is the perfect complement for the restless innovation of the entrepreneur. Taken together these two self-reinforcing processes are exactly what is needed to drive growth forwards.
Despite this fit, or perhaps because of it, the relentless pursuit of novelty creates an anxiety that can undermine social wellbeing. Individuals are at the mercy of social comparison. Firms must innovate or die. Institutions are skewed towards the pursuit of a materialistic consumerism. The economy itself is dependent on consumption growth for its very survival. The ‘iron cage of consumerism’ is a system in which no one is free.
Government itself is conflicted here. On the one hand, it has a role in ‘securing the future’ – protecting long-term social and ecological goods. On the other, government holds a key responsibility for macro-economic stability. For as long as macro-economic stability depends on economic growth, government will find themselves calling for consumption growth even when the instinct of people is to save, because spending is what’s needed to boost high street sales and stimulate recovery.
Conversely though, freeing the macro-economy from a structural requirement for growth will simultaneously free government to play its proper role in delivering social and ecological goals and protecting long-term interests. First and foremost this means developing a resilient and sustainable macroeconomy that is no longer predicated on relentless consumerism.
For at the end of the day prosperity goes beyond material pleasures. It transcends material concerns. It resides in the health and happiness of our families. It is present in the strength of our relationships and our trust in the community. It is evidenced by our satisfaction at work and our sense of shared meaning and purpose. It hangs on our potential to participate fully in the life of society.
Prosperity consists in our ability to flourish as human beings – within the ecological limits of a finite planet. The challenge for our society is to create the conditions under which this is possible. It is the most urgent task of our times.
Tim Jackson is Professor of Sustainable Development at the University of Surrey and author of Prosperity without Growth – economics for a finite planet. He was a keynote speaker at the recent Alfred Deakin Lectures in Melbourne. This piece originally appeared in Business Spectator.
It’s a noble ideal but I don’t see it happening. First and foremost people are selfish. It’s the pursuit of self that drives capitalism, as Gordon Gekko said in those immortal words, Greed is Good. It makes people strive to acheive.
Secondly, those who are in power know this and thats why we’re constantly bombarded with celebrity gossip mags, trash about Paris Hilton, Miley Cyrus, other nobody’s who don’t matter a single thing in our day to day lives, yet they occupy so much space. Keep flicking the 100’s of channels on your Foxtel, keep buying those trash mags, keep twittering and supporting that footy team – just keep your eyes off the real issues.
Besides, they’re boring and not pretty or sexy.
People are unable to comprehend long time lines. This is partly due to our short lifespans, but I feel part of the reason we don’t take things like destruction of the rainforests, global warming or resource depletion seriously is simply because we won’t be around long enough to see the impacts. We will be gone, and, were gone, before we were born. The only consciousness we have is in the fleeting time between birth and death, and, this is miniscule in the universal sense of the word.
Sounds fair. Obviously there’s novelty, and then there’s novelty.
A medical researcher who produces a novel new treatment for asthma, saving childrens’ lives and setting them free, should of course be left in peace to continue her work.
But someone who designs a novel new fashion in sunglasses, and plays marketing tricks to make you think there’s anything wrong with the pair you already got last year? Well that’s just frivolous, and maybe even enslaving, as Mr Jackson says.
One thing though … where do you draw the line? What about a novel type of telescope so cheap that anyone with a bit of clear sky can look mre closely at the stars? What about a novel type of skateboard that’s easier to learn on and do tricks? Should we do away with those?
What about the latest album from U2? Isn’t there enough music by now for everyone to have a big collection of whatever style they want?
And when that medical researcher has invented a new treatment for asthma … let’s suppose she’s already got a big house, quality furniture, full medical insurance, and enough money to feed and clothe her family for the rest of her life. What, then, are you going to reward her with?
It would change our society significantly if we started to include the cost of all of the “externalities” of our current life styles into the prices we pay for our goods and services. This would make many elements of our consumerist lifestyes (such as profligate use of energy and mindless consumption of throw-away consumer goods) a lot more expensive. Appropriately charging for cleaning up of pollution, use of non-renewable resources, recycling, health impacts of might encourage corporations to invest money into other areas of endeavour such as clean energy, medical advances and products to make our lives better and more sustainable.
If we stopped subsidising our corporate farming and food production systems, it would become a lot more expensive to eat the junk that is making us fat and killing us, and would encourage people to eat more sustainabe and healthy food. It would also reduce the cost of running our “Health” care systems.
If we stopped subsidising people to drive cars everywhere through direct tax benefits with increased car use and massive taxpayer subsidies for road building, and start designing our cities and towns so people live near to work and activity centres, it would make living cheaper, and people could live without the huge financial cost of car ownership, we would reduce our dependency on overseas oil, and reduce the significant health costs of air pollution and car accidents.
Government needs to grow a spine, and tell the corporate rent seekers that the time for pushing these sort of costs back onto taxpayers is over. This will encourage new, sustainable development and discourage the current consumerist paradigm that is killing us and our environment.
I think it was Vance Packard (“The Wastemakers”) who described salesmen as the “princes of discontent”.
Somewhere, I forget where, I read that in recent times, in societies that had remained stable for centuries, it was the introduction of television which created discontent and the breakdown of the traditional society.
Scott Grant – that was Bhutan you were thinking of.
When I look at the hype of Ipads, Iphones and all the other gadgets that involve ‘my’, ‘I’ or other self-referential branding, I think there is no hope for a reduction in ‘novelty consumption’.
Just have to get all those producers to reuse and recycle and reduce their throughput – that is the only realistic hope – create incentives to hand back your old Iphone so the parts can be used for the next generation of gadget…
sigh