2012-04-27

Prosperity without growth

Tim Jackson is Professor of Sustainable Development at the University of Surrey and author of the book “Prosperity without Growth: Economics for a Finite Planet”. In 2010, he held a talk on the topic of that book. This blog post summarizes it.

The talk

What does economic growth give you? In developing countries, every increase in income increases prosperity (less infant mortality etc.). However, in developed countries, higher incomes help very little. Unfortunately, economic growth is not sustainable. The economy is embedded in a limited system – nature – which constrains how much it can grow. Economic growth is still the dominant vision, globally, for your future, but bringing all countries up to the same standard of living would be disastrous for the world. Hence, one could say that we are addicted to growth: We know it’s not good for us, but we don’t see an alternative. Where does this addiction come from? We don’t know how to make an economy stable without growth. The problem is that our economic system encourages worker productivity (doing the same things with less people). And without growth that means that people will lose their jobs.

We are hence faced with a dilemma: growth is unsustainable, degrowth (saving resources etc.) is unstable. At the moment, many people still hope for a technological solution: Decouple economic growth from resource consumption, e.g. by dematerializing parts of the economy. The economy has indeed become more efficient, but those improvements were outweighed by an increase in consumption – scale outweighed efficiency. The current system is in a vicious circle: increased efficiency leads to decreased prices which leads to more goods begin consumed. It is all driven by anxiety: Companies are afraid of being outperformed by competitors, individuals are afraid of losing their status (and the accompanying shame). An example of the consequences of this kind of thinking: Before the current economic crisis, personal economic debt in the UK was greater than the gross domestic product – for three years in a row. Tim Jackson summarizes this as:

You spend money you don't have on things you don't need to impress people you don't really care about.
That begs the question: Does the economy really have to be that way? Is this really who we are? If we are to solve the dilemma of growth, we need prosperity without rising incomes. A key ingredient of prosperity is hope for the future. That hope can come from social flourishing, via participation and a cultivation of the public space. As a complementary measure, we need a different model for economic investment: Don’t chase profits any more, invest ecologically. When it comes to changing human behavior, social sciences have good news for us: We are not inherently materialistic. Alas, the current economic system favors selfish behavior. And is supported by advertising whose goal it is to increase anxiety and consumerism. We have to ask ourselves: Does it make sense to mostly go after productivity and efficiency? A good example are doctors: Do we want them to become more efficient, to be able to treat more patients each month, or are there other, more important, criteria? Any decrease in efficiency brings more paid employment.

Comments

I suspect that the best we can do is to make everyone feel safe. Given that feeling good seems to require feeling bad every now and then, I don’t think that we can achieve constantly increasing happiness. Nature works in cycles, constant growth is a human invention. Even if economic growth was completely immaterial, it would still be about greed and continuous acceleration. And, for prolonged periods of time, that isn’t good for the human psyche. It needs periods of rest.

Related reading

  1. Basic income – an idea to bring stability to our economies
  2. Economic inequality is bad, even for the rich

No comments: