Just say no to economic growth

July 30, 2010

Back when I was an anarcho-capitalist, my answer to poverty was simple: economic growth. I believed that over time, entrepreneurs would figure out how to make more and better stuff from the same amount of input, resulting in more stuff for everyone.

The role of law, whether provided by a government or by competing legal systems, was to create a stable environment in which entrepreneurs would be free do their thing. Sure, I may have been a little bit fuzzy on the details of how economic growth worked in practice, and therefore who it benefited, but I was confident that a rising tide would lfit all ships.

Now that I’m obsessed with race, gender and class issues, I find it much easier to understand my former belief as a manifestation of white male privilege than as some penetrating economic insight. It’s true that GDP has risen steadily since the 1940s. But real wages (i.e., wages adjusted for inflation) peaked in the 70s and have stagnated since then. (Disclosure: I’m not even close to an economist, so take my pronouncements with a big grain of salt.)

These days, as loyal readers may have guessed, I’m more of an anarcho-syndicalist, and as such, I see this “economic growth” thing as code for exploitation of poor and middle class people by rich people.

So of course I went ga-ga over a new Clive Thompson piece in Mother Jones about “no-growth” economics. Thompson explains that the growth doctrine has been firmly in place for a long time:

By the 20th century, growth had become not only an item of faith in economics, but a deeply held political belief. When Franklin Roosevelt supported grappling with Great Depression unemployment by decreasing the workweek to 30 hours, the largest corporations fought back fiercely. America, they argued, would be saved only by the new “gospel of consumption.” The administration would need to pursue flat-out growth, loosening labor laws and so forth, so that the industrialists could revive the nation. Roosevelt backed down.

Note that Thompson has just given us some historical evidence for David Harvey’s thesis that neoliberalism, or free market economics (see my last post), benefits the rich at the expense of the rest of us.

Thompson tells us that economists such as John Stuart Mill and John Maynard Keynes foresaw the possibility that an economy might hit a point where average income was sufficiently high to secure a good existence for everyone, making further economic growth superfluous. He then introduces economist Herman Daly’s wonderful concept of “uneconomic” growth, or growth that drives living standards downward.

[Daly] points out that the happiness of Americans, as reported by social scientists, rose steadily after World War II as GDP grew. But by the late ’50s, that connection broke down: Although our median family incomes have nearly doubled since 1957, the proportion of people who say they are “very happy” has barely budged (pdf). Daly thinks we simply hit the point of diminishing returns. Our growth turned uneconomic: GDP now keeps growing mainly because we are producing gewgaws and services that don’t significantly add to our happiness. Or worse: It grows because we are spending money to solve problems that growth itself created.

One of the big problems with using GDP as a yardstick for national well-being is that GDP rises when really bad things happen, too. If a company leaks PCBs into a reservoir and local cancer rates spike, the result is a flurry of economic stimuli: Doctors treat the cancers, crews clean the reservoir, lawyers busy themselves suing and defending the polluter. It’s still growth—uneconomic growth. By the aughts, Daly had authored four books exploring these ideas and trying to figure out how a nongrowing economy might function.

Here’s what Daly and others have come up with:

[N]o-growth economists agree with mainstream economists on one big point: Technological advances make workers more productive every year. In the mainstream view, these labor efficiencies make goods cheaper, which leaves consumers with more disposable income—which they invest or spend on more stuff, leading to more hiring to fulfill demand. By contrast, the no-growthers would do things differently; they would use those efficiencies to shorten the workweek, so that most people would stay employed and bring home a reasonable salary. If new technology continued to drive productivity gains, citizens in a nongrowing economy would actually work less and less over time as they divvied up the shrinking workload.

Handled correctly, this could bring about an explosion of free time that could utterly transform the way we live, no-growth economists say. It could lead to a renaissance in the arts and sciences, as well as a reconnection with the natural world. Parents with lighter workloads could home-school their children if they liked, or look after sick relatives—dramatically reshaping the landscape of education and elder care. (Some steady-state thinkers argue that these typically unpaid forms of domestic labor ought to be included in GDP calculations and even subsidized by the government, since they contribute so heavily to national well-being.)

The downside? We would have to turn the wage clock back to perhaps the 1960s, when the median income (i.e., 50th percentile) was in the upper $30,000s in today’s dollars, compared with $62,000 in 2008. But thanks to technological advances, a dollar goes a lot further than it used to.

In a no-growth economy, as Daly points out, we would still consume new stuff—just at a much slower pace. People might need to develop a renewed appreciation for durable goods that require lots of labor to make but ultimately use fewer resources than their throwaway counterparts. We would also have to evolve away from “positional” consumption—feeling good because you possess something the Joneses don’t.

Let’s make it happen, folks!


One Response to “Just say no to economic growth”

  1. […] our greenhouse emissions to sustainable levels is to radically level incomes and cut back on the false economic growth that benefits the rich at the expense of the poor and middle class. (More to come about all […]

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