Why growth?

World War Two was followed by a period of economic growth. Yet in 1968 many young people in developed Western nations were questioning the lifestyles provided by their societies. They wanted a more meaningful lifestyle, and recognised that it had become physically possible to provide universal social services and good living conditions, including well-paid employment for all with liberal conditions and ample leisure time within a workweek of 30-35 hours. The leisure society beckoned.

At the same time, through the late 1960s and the decade of the 1970s, a considerable body of information described looming global problems. Since evidently all was not well, many decided to search deeper, to ask the major questions of the time and find the answers. Modern society, with its rapacious desire for never-ending growth, was foolishly pushing against limits on a finite planet while increasing inequality and joblessness within a consumer society tightly controlled by ubiquitous advertising. 

Growth of population, the expansion of Homo Sapiens across the earth has long been accompanied by the extinction of other species. The first great period of human expansion was between 9,000 and 13,000 years ago after the end of the last Ice Age. The consequence was the Holocene extinction, the disappearance of large mammals from many lands. The process has accelerated in the last half-century. This “anthropocene extinction” is on par with the five catastrophic mass extinctions of Earth’s history. Yet how many economics texts mention any requirement to leave living space to what remains of the natural world?

The earth’s ability to cope with human activities has now been passed, as is evident with climate change, and resources are used nonsustainably for short-term gain – including oil and aquifer water. A number of estimates show that it would take more than two planets to support everyone at a Western standard of living; while no more than a few tens of millions could live in full balance with the natural world, perhaps two billion could experience a “developed” lifestyle. Desires for a better future most often fail to realise that equity and full development to a western standard is impossible.

A major question raised was whether the growing world population could be fed, even at a lower standard of living. If such a limit was reached, when would that be and how would events play out? Many global models, led by The limits to growth1 and followed by more complex models have provided the answer. Limits will be passed around 2030, with overshoot leading into collapse.2

The economy is a major defining force in such activity. The holistic scholar must combine information from so many disciplines. Expert information is gathered from many sources and, while suitable analyses of the physical world were available, mainstream economics texts and pronouncements were inadequate, with little or no appreciation of the changes coming. The frequently expressed belief in the triumph of modern growth capitalism is seen in the following two influential sources, the first a popular introductory textbook.

“Today, thanks to the intellectual contribution of John Milton Keynes and his followers, we know how to control the worst excesses of the business cycle. By careful use of fiscal and monetary policies, governments can affect output employment and inflation”, so that “the deepest depressions no longer appear to be a major threat to advanced market economies”.3

“I argued that a remarkable consensus concerning the legitimacy of liberal democracy as a system of government had emerged throughout the world over the past few years, as it conquered rival ideologies like hereditary monarchy, fascism, and most recently communism. More than that, however, I argued that liberal democracy may constitute the ‘end point of mankind’s ideological evolution’ and the ‘final form of human government’, and as such constituted the ‘end of history’. That is, while earlier forms of government were characterized by grave defects and irrationalities that led to their eventual collapse, liberal democracy was arguably free from such fundamental internal contradictions.”4

Despite such claims, the instability of developed economies is evident. It is important to understand why and to consider likely developments as other critical factors increasingly impact. My own search has been guided by experiences in scientific research, in particular by success in understanding non-linear instabilities in both a layer of fluid heated from below and in a shear layer where one body of fluid is moving across another. 5 In each case the system becomes unstable when a defined parameter passes a critical value, at a tipping point. The new flow follows a clear pattern, to cells in the heated fluid and to breaking waves in the shear layer. Then (depending on a number of other physical parameters) those patterns become more complex, eventually becoming turbulent. Each process can be followed, and understood, with the aid of simplified models that identify the key factor defining when the system is unstable, and the further factors that determine the subsequent behaviour. There is nothing random about these processes; there is a reason for the instability and for the resultant pattern, which in each case follows the laws of physics. These principles hold also in economics.

In science, if a model does not fit reality, if evidence is not in accord with a hypothesis, the assumptions are questioned and some rejected. The reason is sought and a new theory evolves. This process should be followed with a national, now global, economic system. Since the system is inherently unstable, will disturbances lead to some new situation, of either another regular pattern or breakdown and turbulence?

1 Meadows et al 1972
2 Robinson 2013
3 Samuelson 1948
4 Fukuyama 1992, Introduction, page xi
5 Robinson 1967 and 1973, 1974 and 1977

John Robinson

  1. Manuel Angeles
    December 15, 2014 at 7:15 am

    John Milton Keynes? Small wonder that Samuelson got it all wrong!

  2. Hepion
    December 15, 2014 at 10:03 am

    It is remarkable how growth, as an objective, is obsolete today in first world. We are far past the point of providing for basic needs: food, clothes and shelter. Opinion polls seem to agree with majority of people wanting less work and more free time.

    Still, more gdp seem to linger as an objective for many economist and policy maker. Partly, I suspect, because there is not many other ideas how to make society better. “More gdp” is seen as universal good helping every sector of society, unlike, say, public services or transfer payments that require taxation from other parts of the society.

    But the problem is, growth-centrism does not help anymore, it makes things worse. Majority of people want better work-life balance already, and progress should be measured by increases in life satisfaction.

    Working times are too long because those who have power over them have easy and interesting jobs and furthermore have been filtered into their positions by process that rewards work-centric people. Im talking about corporate management.

    Even labor unions seem relatively powerless against these systemic forces.

    • Marc Bebenroth
      December 15, 2014 at 2:01 pm

      John K. Galbraith wrote a book about it. He dedicated a lot of thoughts to the problem of switching from growth to leasure. Hence the title “Affluent Society”. I can only recommend reading it.
      In essence we have to come up with new economic theories and new ways to distribute the wealth we got. The social aspect is crucial in the Galbraithian affluent society.

  3. December 15, 2014 at 4:32 pm

    Manuel Angeles has beaten me to pointing out that either Samuelson, his editors or the present writer seems to be a bit inattentive about the middle name of J M Keynes. As almost everyone knows, it is Maynard, not Milton (despite there being an English town by the name of Milton Keynes). One has to wonder if they were thinking somehow, and rather inappropriately, of the late, loud but much less intellectually substantial anti-Keynesian Milton Friedman.

    More substantively though, it seems to me that the proper intellectual pedigree to be acknowledged when critiquing generalized economic growth as a public policy desideratum (and indeed, as a trajectory for the relatively long term that is even biophysically possible) runs from J C L de Sismondi, T R Malthus and David Ricardo, through John Stuart Mill (and maybe even, in a small measure Alfred Marshall and Arthur Pigou), Frederick Soddy, (Keynes, again in a small measure) and thence via E.F. Schumacher,, E.J. Mishan, Kenneth E. Boulding, Nicholas Georgescu-Roegen and Herman E. Daly.

    Michael Barkusky
    Pacific Institute for Ecological Economics
    Vancouver BC
    Canada

    • originalsandwichman
      December 15, 2014 at 4:48 pm

      Keynes mentored Schumacher.

  4. December 15, 2014 at 10:26 pm

    Before we attempt to understand a solution to anything, we need an understanding of everything in want of a solution. A consideration of the material at http://www.edenorg.com/edp-001b.htm can provide a start. For a more comprehensive understanding of the problem, one need only refer to the posts generated by the article “Mainstream macroeconomics distorts our understanding of economic reality.”

  5. Macrocompassion
    December 16, 2014 at 11:00 am

    Considering the fact that two thirds of the worlds population are living in poverty with insufficient food, many of whom are starving and whose children often do not survive the first 5 years of life, we cannot today begin to think that a limit to population growth will be reached. Even with improvements in public health, education and better sharing of resources, it seems that we have already passed the limit for successful survival of the majority of humans. Obviously this limit is a very flexible one because the other third of the population mostly survive reasonably well and a small percentage have a lot of luxury in their living standards too. But where do we see expressions of guilt at this unjust distribution of survival medium? We are still blind to the situation and as a result we cannot yet see that things will get a lot worse before half the world’s population die through drugs, disease, hunger and neglect.

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s