Newsweek has only part of the story in a short article telling about the rise of no (economic) growth studies out of Europe in recent months. While the growing interest in no-growth is clearly evident, the reasons Newsweek gives for its rise are not the primary impetus. Newsweek says:
Take the worst economic crisis in 60 years. Combine it with the erosion of the West’s predominance. Add apocalyptic warnings of climate change. What you’ll get are some radical new ideas. . . One of those now swirling through the European zeitgeist turns out to be a very old one, albeit in new garb. It’s the revival of the assertion that economic development is and should be finite—limited today by scarce resources, overpopulation, and rising sea levels.
The subtitle for the article is “Europe’s Attack on Capitalism. Wrong. Plain wrong. Arguing for no-growth is not such an attack. It is rather a call to re-examine the underpinning of the neo-classical models on which capitalist economic policy is based. The author, Stephen Theil, would do well to read the documents he points to more carefully. Sarkozy’s commission argues that using GDP as the proxy for human well-being is deeply flawed. Growth once reaching a level providing basic necessities is poorly correlated with other indicators of quality of life. The British report, Prosperity Without Growth, and the book of the same title by Tim Jackson it spawned go to great lengths to find ways to preserve capitalism in the face of growing levels of unsustainability beyond just climate change.
Arguing that the authors and proponents of this new strategy are making the same mistake as Malthus, Thiel makes the same mistake traditional economists are making today. Malthus was indeed wrong about several things, He got the timing wrong and he failed to consider the extraordinary power of technology to increase the availability of all sorts of resources. But his basic idea is still sound. We live on a finite planet from which all our most basic of sources come–the air we breathe, the water we drink, the food we consume, and all of the natural resources we use to underpin our economy. As we grow in number and affluence, these resources shrink in proportion. Technology can continue to do its wonders, but with unintended consequences that now are primary causative agents in the planetary mess. The massive application of new technologies such a genomics or geo-engineering carries with it the unknowable risk of further frittering away or even overwhelming the benefits. Massive flooding and the displacement of multitudes would be overwhelming to them.
Theil suggests that is Europe’s longstanding suspicion of the market that is the culprit is promoting such a terrible idea.
It’s also no surprise that the movement is now centered in Europe and led by a French president. In no other country on earth is public disapproval of the market economy, as measured by opinion polls, deeper. French children, in a widely used and by no means exceptional schoolbook, learn that “economic growth imposes a hectic form of life that produces overwork, stress, nervous depression, cardiovascular disease, and cancer.” To the 2.6 billion people worldwide trying to stay alive on less than $2 a day, the idea that economic growth causes stress may sound crazy. But in Europe, even conservatives have widely bought into the Marxist idea of “economism”—the notion that capitalism has reduced our lives to a series of market transactions.
To conflate some data about the effects of unconstrained, intentional growth with the plight of the poor of the Earth is a cheap shot. And none of the reports he quotes would neglect their needs. They are talking about the already rich nations. Part of the motivation for these studies comes from a concern that continued growth by the rich will further impoverish the already poor because of the real, not economic, scarcity of all the resources I mentioned.
Finally, he thinks the proponents of these policies ignore or greatly underestimate the destabilization that implementation would entail. There is no escape from conflict in the future unless action towards reducing growth in the affluent nations starts now. The conflicts that come as a result will be much less and easier to manage than those that are bound to come when the finitude of the Earth and the gross inequity of today’s global economic system leave us no choice but to act under the worst of circumstances.
The argument against taking this new reality seriously is the same old, same old. Growth is good because more is better. Maybe for those already near the top. But our growth hasn’t helped most of the world’s really poor people nor even many of our own population. He uses Benjamin Friedman’s 2005 book as his authority for arguing that growth is the right path. I haven’t read the book (592 pages) but found a very good review by Joseph Stiglitz (the chair of Sarkozy’s commission and a Nobelist) that suggests that the book leaves out important parts of the story.
In this major work, The Moral Consequences of Economic Growth, Benjamin Friedman takes on such critics, positing that growth has not only obvious economic benefits, but moral benefits as well. He argues that it has the potential to improve the environment, reduce poverty, promote democracy, and make for a more open and tolerant society. But this is not to say that Friedman, a professor of economics at Harvard University, is simply a naive cheerleader for the market economy. His message is nuanced (though not, in some respects, as nuanced as I would have liked), and he realizes that growth has not always brought the promised benefits. The market economy does not automatically guarantee growth, social justice, or even economic efficiency; achieving those ends requires that government play an important role.
For another slant on the problems of relying on conventional [capitalist] economics, more accurately the economics that underpin most if not all capitalist societies, see my previous post.