- What’s the point in economic growth? - 29/10/2019
For decades, economists have treated humans ‘as atomic particles, rather than social beings’. Michael Spence, a Nobel Prize laureate, has argued “Missing from growth are many things: health, distributional aspects of growth patterns, sense of security, freedoms of various kinds, leisure broadly defined, and more.
In May 2019, Prime Minister Arden of New Zealand argued “Growth alone does not lead to a great country, dispelling the myth that economic growth is the never-ending goal within capitalism. Yet, economic growth has been the bedrock of neo-classical liberalism for over a century, with its echo chamber not ‘reflecting many issues in the real world; be they political, environmental or social’.
Unbridled economic growth, while working for the top 1%, has helped cause increasing economic inequality well before the 2008 financial crash. In the US especially, 48 Million Americans are still living in poverty, with wages remaining stagnant since the explosion in economic growth under the Reagan Administration. Ongoing economic growth has also caused mass environmental degradation throughout the globe, with strip mining causing entire swaths of terrain—including forests and whole mountaintops— to be scraped and blasted away to expose underground coal or oil.
So why is much of the Western world simply ignoring the negative elements of economic growth, and further striving for economic degradation, increasing income inequality and debilitating social services?
The question must be asked: What is the point in economic growth?
Capitalism and consumerism are inherently linked, with the forces of capitalism driving a process of self interest and greed, fueling a drive to make as much profit as possible. While this has been exacerbated further by Western governments in the period of brash free hand economics in the 1980’s, it has gone one step beyond with its detrimental association to environmental degradation. If we are willing to fully confront the ideas of economic growth, we must first be upfront with the outdated and archaic consumerist ideals of 21st century capitalism.
Simply, growth does not lead and will never lead to wellbeing. If we study capitalist juggernauts such as the US and UK who are world leaders in GDP, their process of neglect and exclusion in mental health only lead to sicker people getting sicker. While some profit from unbridled economic growth, others dramatically fall through the cracks, ending up not in hospitals but in ‘for-profit prisons’ or on the street. The US could easily be argued as the worst place to be mentally ill in the whole of the developed world.
Happiness is a loose term, with many people seeing money and growth as the key to one’s personal success. Yet, why should we not feel happy within the ideas of stability, safety, and equal distribution? If we are to radically alter the ideas of economic growth, we must first break down the barriers that are inherently created by capitalism and consumerism.
Is this the beginning of a paradigm change?
New Zealand’s Wellbeing Budget introduced in 2018 is perhaps the most telling sign of the reversal of the attitude towards economic growth. Prime Minister Arden’s attempt to revitalise the Kiwi economy bucked the trend, focusing more on the overall happiness of their citizens than fruitless economic growth.
While New Zealand is the world’s first developed country to initiate a process of unwinding economic growth, Bhutan’s introduction of the Gross National Happiness index in 2008 is perhaps the best example of a country breaking down the barriers imposed by economic growth. While Bhutan is still seen as a lesser developed country, they are dissimilar to many of their neighbours within the GDP index. This is down to their low level of those living below the poverty line (15%), the percentage of those with access to clean sanitation (95%) and net primary school involvement (100%).
Bhutan is thriving, not because of their economic growth of 4.8% (recorded in 2008), but because they understand the key to success and wellbeing is achieved through the tackling of human needs. Economic growth simply satisfies the materialistic wants of the very few, leading to a fundamental negation of the environment, social services, and poverty.
The need for a social revolution
Fundamentally and perhaps most crucially, economics is dogmatic, dogmatic in the sense that there is little room for critical discussion amongst the highest levels, little room for movement and most importantly it has been detached from the very real problems of the wider world.
While Western governments are the ones who hold the practical reality of change, it is the majority, especially the young majority, who need to inspire this change. The movement to change the deeply help perceptions on economic growth are already fundamentally changing: “We are in the beginning of mass extinction, and all you can talk about is money and fairy tales of eternal economic growth” a phrase by Greta Thurnberg, climate change global activist, that is waking up the political world.
This change has also been seen through the lens of academics, with Samuels describing how the ‘pursuit of growth as dangerous’. Governments alone cannot and will not enact change unless citizens rise up and counteract the alarming and unbridled negative effects of long term economic growth. For a seismic change to happen, there must be a radical cultivation of social norms through a social revolution. No longer must the ‘wants’ of the individual take precedence over their ‘needs’. The very idea of materialism and growth, the ideals that have been the bedrock of Western civilisation since the Industrial Revolution, needs to be stripped down and buried.
While it will take more than a social revolution for the very idea of economics to be rewired, we are already seeing signs of movements aiming to transform the study of Economics around the world, such as those led by organisations such as Rethinking Economics. We need to see a genuine change in social norms to question the consequential gutting of capitalism linked with the realities that people can understand, such as the debilitating effects for our planet or the direct negative impacts that growth has on driving social inequality.
Leave a ReplyWant to join the discussion?
Feel free to contribute!