Wednesday 3 August 2011

Happiness without Growth

While I was on holiday last week figures were published to show that the British economy had grown by only 0.2% in the previous quarter. The news was reported with almost universal lamentation, accompanied, I suspect, by secret relief from the government that the figure wasn't actually negative.

Just as unfettered market forces and monetarism have been the unchallengeable economic creed for the past 30 years, a situation which has led to disaster, so now it it seems universally accepted that the only way to achieve full employment and prosperity, is thorough further economic growth, which will inevitably lead to a greater and more irreversible disaster.

The political right have not hesitated to use the present crisis to implement their ideology of cutting back the state but we on the left are shamefully neglecting the opportunity to propose the alternatives which do not involve the further ravaging of scarce resources, pollution of the environment and the disfunctions which arise from increasing inequality.

We don;t expect people, animals or plants to carry on growing for ever: they reach maturity and stop. Surely it is now time to accept that our economy has reached maturity and explore better ways of sharing its abundant fruits, beyond the wildest dreams of our grandparents, so that "no one shall be enslaved by poverty, ignorance or conformity," as my Liberal Democrat membership card has it.

For academic back-up to these idea see Tim Jackson's "Prosperity without Growth" (subtitled "Economics for a finite planet"). Wilkinson and Pickett's "The Spirit Level" (subtitled "Why equality is better for everyone") and the website of the Centre for the Advancement of the Steady State economy, CASSE.

I'd like to hear more discussion on these lines at the Liberal Democrat Conference, and less on how we can restore a more benevolent version of the system as before, under which, as an American economist has put it: "The faster we run the behinder we get."


  1. Good luck with that. Just to take a simple example medical costs are rising as we have an ageing population and the development of new technology/drugs etc. Without growth how will you pay for it?
    The Sprit Level has been totally discredited - they have used hand picked statistics and countries

  2. A book by Benjamin Friedman (the Moral Consequences of Economic Growth) argues that liberal tolerant and even costructively equality-seeking societies evolve under conditions of economic growth. Steady state or contracting economies engender oppressive societies. I suspect this argument should be part of the debate one way or another.

  3. Re Anonymous:
    1. Without growth we pay for the NHS by giving up something else - could be Trident, or an extra continental holiday. In economics it's called "opportunity cost."
    Harold Wilson in the 1960s tried the line that we could improve society through growth and without costs to ourselves. In fact we now find that it costs the earth.
    2. It is true that a couple of right-wing think tanks (The Taxpayers' Alliance and David Cameron's favourite, "Policy Exchange") have tried to discredit "The Spirit Level," but Wilkinson and Picket have published refutations and the general opinion seems to be that the attacks are simply smears and the original is academically sound.

  4. Re Edis:
    Thanks for raising this. I wasn't aware of Benjamin Friedman's work and shall try to follow it up. You are right, it should certainly enter into the debate.

    I suspect the problem is that, whereas with growth, we don't need to consider opportunity cost (see above.) Consequently we can kid ourselves that we can deal with , say, the problems of poverty, without giving up anything ourselves. Without growth then such problems have to be dealt with by greater sharing. In an autocratic, top down, system, this can lead to oppression. I would hope that an open, democratic, bottom up system could avoid this.

  5. Jaime wished to make the following comment but because of some computer glitch was unable to do so. Here it is, sent via Email.

    "One of the 'excuses' for the quarter's low growth rate was the good weather. But good weather = a lot of utility, well-being, happiness or whatever GDP is trying to indicate. Would we be happier with a couple of points faster growth and lousy weather? I recommend the World Bank's 'Changing Wealth of Nations' as a corrective to simplistic concepts of national income/wealth. Better than Tim Jackson's book, I would say."

    The World Bank work is based on 20 year's of analysis of National Income accounts and shows very clearly the importance of natural and 'intangible' (social, institutional etc) capital - as distinct from productive capital - in advanced economies. This continually gets ignored in most economic discussions in the media. It's available on the internet

  6. Re the Friedman attachment, I think it is a legitimate criticism of "Steady State economy" thinking. What is needed is a global growth in output which is sustainable and which is shared out disproportionately in favour of the "have nots". This should satisfy Friedman and, into the bargain, Wilkinson & Pickett ("Spirit Level"). I believe there is scope for running "spirit level" arguments within the thesis put forward by Friedman. Do you agree? Provided growth is ecologically sustainable, globally we get the best value out of that growth if it is shared as I have indicated.

  7. Certainly we need to do more sharing, both within our own UK economy and between the developed and less developed economies. The prime objective for any economic policy ought surely to be to lift those in abject poverty out of it. Too many of us the in developed world complacently assume that the "trickle down effect" will achieve this, but there are better and more direct ways.

    Another convenient assumption is that we can develop a new kind of growth which will neither ravage the earth's scarce resources nor pollute the planet. There is some support for this when we recognise that most growth in the developed world now comes from the expansion of the service and knowledge sectors rather than exploitative and polluting smokestack industries. However, in Chapter 5 of "Prosperity Without Growth" Tim Jackson disposes of this hope, which he calls the "Myth of Decoupling."

    An important step in the right direction would be to start measuring quality of life rather than simply GDP. Obviously per capita GDP is important, especially for poorer countries, but other factors play an increasingly important part once the basic necessities have been acquired. As Jaime points out, one of them is the weather. Another is surely the amount of leisure. In the 50s and 60s we all supposed that technological advances would give us all more time to enjoy the wonders of this world, and to some extent this has happened in the UK (the standard working week has dropped from 48hours and the standard annual holiday has increased from 1 week) but at the same time the number of households where both adult partners work full time has vastly increased.

    Factors which could be included in an ndex of national well-being are discussed in an earlier post, "An Airy Fairy Measure."