New Internationalist

Argument: Is it time to ditch the pursuit of economic growth?

May 2013

Economist and author Dan O’Neill and journalist and author Daniel Ben-Ami go head-to-head.

Every month we invite two experts to debate, and then invite you to join the conversation online.

Dan

Kenneth Boulding once warned that anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist. It’s time for us to put an end to this mad pursuit in wealthy nations like the US and Britain.

DAN O’NEILL is a lecturer in ecological economics at the University of Leeds, and chief economist at the Center for the Advancement of the Steady State Economy. He is co-author (with Rob Dietz) of Enough Is Enough: Building a Sustainable Economy in a World of Finite Resources, published by Routledge and Berrett-Koehler this year.

Besides being a recipe for environmental disaster, we have reached a point where economic growth is no longer improving people’s lives. Although the British economy has more than tripled in size since 1950, surveys indicate that people have not become happier. Inequality has risen sharply in recent years, and jobs are far from secure. At the same time, increased economic activity has led to greater resource use, dangerous levels of carbon dioxide in the atmosphere, and declining biodiversity. There is now strong evidence economic growth is costing us more than it’s worth.

The real question is not whether we should ditch the pursuit of growth – that’s a given – the question is what to replace it with. How do we build a stable economy that meets our needs without endangering the life-support systems of the planet? Five years ago, it would have been difficult to answer this question, but now a new economic blueprint is emerging based on the work of hundreds of researchers around the world. It’s a blueprint for an economy of enough. It includes strategies to conserve natural resources, stabilize population, reduce inequality, fix the financial system, create meaningful jobs, and change the way we measure progress.

But in order to implement these strategies, we first need to let go of our obsession with economic growth. Only then can we build an economy where the goal is better lives, not more stuff.

Daniel

Before I make the case for economic progress it is necessary to challenge your peculiar premise that the US and Britain are obsessed with economic growth. On the contrary, the sentiments you express are essentially a stronger form of an outlook that has long prevailed among the élites in both countries.

DANIEL BEN-AMI is a journalist and author based in London. An extended version of his latest book, Ferraris for All, was published in paperback and Kindle by Policy Press in 2012. His website can be found at danielbenami.com

Admittedly, Western leaders sometimes proclaim support for growth. But they also, like you, talk incessantly about various types of alleged limits to prosperity: environmental constraints, the need for happiness and the dangers of inequality. Both US President Barack Obama and British Prime Minister David Cameron have made countless statements along these lines. Indeed, they became mainstream in Western thought back in the 1970s.

In that respect, your Kenneth Boulding reference from 1973 is fitting. Yet you fail to mention he was chair of the American Economic Association – a pillar of the establishment.

Before we go on, I would therefore suggest that to be intellectually consistent you should concede two points. First, that green ideas are mainstream even if the élite does not go quite as far as you would like; and second, acknowledge that for all your talk of ‘better lives’, what you favour is savage austerity. The implication of your argument is that the cuts in living standards that people have suffered since the 2008-09 recession do not go nearly far enough. If you believe such sacrifices are necessary you should at least say so explicitly.

Dan

I’m stunned that you consider a clean environment, happiness and equality to be ‘limits to prosperity’. These are the very foundations of prosperity. I fear that your definition of a prosperous society simply equates economic progress to an increase in GDP – to consuming more and more stuff.

Once we have access to enough goods and services, additional money fails to buy additional happiness. But other things do improve our lives, like strong personal relationships, good health, safe communities, and having a secure and fulfilling job.

You equate more with better, but the two are not the same. More schools is not the same thing as better education. More hospitals does not mean longer lives – Dan

I agree that the concept of a socially just and environmentally responsible economy is gaining traction, as demonstrated by initiatives such as the European Commission’s Beyond GDP project and the Organization for Economic Co-operation and Development (OECD)’s Better Life initiative. However, despite these hopeful projects, economic growth still remains the primary goal of most nations.

The main economic debate centres on how best to grow the economy: austerity or stimulus spending. But this is a false choice, and I don’t support either option. There is a much better alternative: a steady-state economy. We must change our economic goal from increasing GDP to improving quality of life. A steady-state economy would mean consuming less stuff and protecting the environment, but it would also mean creating meaningful jobs, a stable system of finance, and a more equal society. In short, it would mean real prosperity.

Daniel

If you read what I actually wrote – for example, ‘alleged limits to prosperity’ – we could have a more productive debate. My argument is that it is you, not me, who is obsessed with constraints.

You also misrepresent the case for growth. I have never argued that material progress is simply about having more ‘stuff’ – although I’m all in favour of people having the possessions they desire – or about infinite economic expansion.

Robert Scoble Under a CC Licence
Factory assembly line in China. Is economic growth key to meeting a population’s needs? Robert Scoble Under a CC Licence

The fundamental argument is that a high level of material prosperity is a necessary precondition for the full realization of human potential. As long as we are limited by scarcity we will not be able to flourish as a species.

This certainly means having consumer goods but it also involves building more and better airports, art galleries, hospitals, museums, power stations, roads, schools, telecommunications, universities and all the paraphernalia of modern life. All this takes enormous resources. It also means the associated development of medicine, science and technology.

During the period of modern economic growth from about 1800 to the present day the average life expectancy worldwide has increased from about 30 years to 70. Pause for a moment to consider the enormity of that achievement. What’s more, life expectancy is still rising. This is just one of innumerable benefits of prosperity.

Unfortunately, growth in the West has stalled and even in the developed world there is still enormous scope to raise living standards further. The challenge is to go forward with economic progress rather than rebranding austerity as ‘prosperity’.

Dan

I agree that we could have a more productive debate – by discussing real solutions to the environmental, social and economic problems that we face. 

Resource scarcity is no longer the problem. We have enough stuff, and we probably have enough airports, roads and power stations. People’s lives would be improved much more by reducing inequality, shortening working hours, and fixing the financial system, than by growing the economy by three per cent.

You equate more with better, but the two are not the same. More schools is not the same thing as better education. More hospitals does not mean longer lives. There is an optimal scale for all of these things, beyond which there is no point in building more. The law of diminishing returns is one of the most basic concepts in economics.

You say you don’t believe in ‘infinite economic expansion’. This is comforting because it shows you recognize there is a point where expansion should end. But where is this point for you? It should be where the costs of additional growth (for example, environmental degradation) begin to exceed the benefits (for example, more goods and services).

I agree that there is a correlation between affluence and life expectancy, but it only holds at very low incomes (less than $5,000). Life expectancy can increase, technology can develop, and people can lead better lives – without economic expansion. 

Economic growth may have been a good strategy for the 19th century, but we need a new strategy for the 21st. Fortunately, a blueprint is emerging. Read Enough Is Enough.

Daniel

A crucial difference between us is our attitude towards the problems facing humanity. You see us as being constrained by insurmountable barriers whereas I believe progress means overcoming challenges.

Take the notion of natural limits. You essentially argue that we need to accept savage cuts in living standards for the sake of the environment. I contend that through the application of ingenuity we can and should transcend environmental problems.

We should go forward with economic growth until the bulk of the world’s population feels its needs have been met. It is not for us to decide what is enough for everyone else – Daniel

Climate change illustrates the point vividly. To the extent that it is a problem which will require massive investment to solve. De-carbonizing the energy supply – including investing in new generations of cleaner power stations – will not come cheap. Only economic growth can generate the huge resources needed to pay for it. Building modern flood defences and the like also costs money.

Ironically, the thrust of your approach to climate change undermines our capacity to tackle the problem. The poorer and less technologically advanced we are, the worse our plight will be.

All you offer is an egalitarianism of misery. An impoverished world in which almost everyone will have their incomes slashed for the sake of green dogma.

I suspect that, whether you like it or not, coercion would be necessary to achieve your desired outcome. Few would embrace lower living standards voluntarily. That probably explains why you are coy about spelling out the pro-austerity consequences of your arguments.

Instead we should go forward with economic growth until the vast bulk of the world’s population feels its needs have been met. It is not for you or me to decide what is enough for everyone else.

Front cover of New Internationalist magazine, issue 462 This feature was published in the May 2013 issue of New Internationalist. To read more, buy this issue or subscribe.

Comments on Argument: Is it time to ditch the pursuit of economic growth?

Leave your comment







 

  • Maximum characters allowed: 5000
  • Simple HTML allowed: bold, italic, and links

Registration is quick and easy. Plus you won’t have to re-type the blurry words to comment!
Register | Login

  1. #1 Andy Shaw 25 Apr 13

    Dan may be disillusioned by modern society, but he should try selling his ’more is less’ theory to the 300 million people in China who have moved from being subsistence farmers to earning a decent wage or the billions of people who struggle to make a living across the world.

    Economic development is the basis of the modern life he currently enjoys. It is a crime that it is not enjoyed by more people.

    Oh and by the way, the planet is actually getting greener because of economic growth.
    http://youtu.be/S-nsU_DaIZE

  2. #2 disorderedworld 25 Apr 13

    OECD economies and emerging economies are facing radically different challenges when it comes to economic growth and development. OECD nations face the challenge of returning to moderate growth of typically 3% per annum just to maintain their current high standards of living. Emerging economies need to maintain growth rates of close to 10% per annum in coming decades to lift their people from poverty. Global warming of course places a major question mark over the feasibility of either set of economies reaching these goals. One very positive development we are seeing is that while rich economies continue their singular focus on economic growth, emerging economies are emphasising the twin goals of economic growth and reducing economic inequality. This may lead to a very different model of growth than the one that has succeeded to date, but is clearly in deep trouble.

  3. #3 Melanie Rees 25 Apr 13

    Daniel concludes that, ’We should go forward with economic growth until the vast bulk of the world’s population feels its needs have been met. It is not for you or me to decide what is enough for everyone else.’ I think Daniel is deluded.There are insufficient resources to achieve this and while some have ’vast amounts’ others have nothing. You can't just let people consume until they feel their needs have been met - you only have to look at the growing number of obese children to realise that BOUNDARIES are essential in life and we all need to learn when enough is enough.

  4. #4 Desmond Kilroy 26 Apr 13

    ’The fundamental argument is that a high level of material prosperity is a necessary precondition for the full realization of human potential’ I don't see much evidence of this in terms of what exactly is a ’high level.’ For ex noone is arguing that people should not have their health and education needs etc met. For me the discussion could be more closely framed in the context of science's strong suggestion thatthere has to be acceptance that the economy as we know it simply will not grow forever. Why is growth now so elusive? Is there too much money in the world?

  5. #5 disorderedworld 27 Apr 13

    One answer to Desmond's question as to why growth is so elusive is the fact that our model of global capitalism has changed completely over the last 40 years - and not for the better. The type of capitalism which lifted the now rich world from poverty was based on inventing new things that improved people's lives. The global economy was based largely on manufacturing industries that did just that. The model of financial capitalism that we have today is dominated by people making money by trading pieces of paper (or more precisely computer based trading) between one another. This model of capitalism has little or no productive function in society. It does help the rich get richer faster though.

  6. #6 Dave Gardner 28 Apr 13

    Cornucopian Growthmaniacs are from Mars; Sustainability Realists are from Venus

    Unfortunately, Daniel Ben-Ami cannot step outside his growth-is-good, more-is-better paradigm to give real consideration to the points made by Dan O'Neill. Ben-Ami clings to his unexamined assumption that embracing ’enough’ is somehow a ’savage’ sacrifice and that growth should be credited with our best achievements. Yet he offers no proof we can continue to ’overcome the challenges’ of the limits to growth (just because we managed to do some of this during the 20th century is no indication we can repeat that forever).

    This dialogue is like a monolingual Greek chatting with a monolingual Norwegian. We see it here at a micro level, and it well exemplifies the challenges faced at a macro level. This is the struggle!

    Dave Gardner
    Director of the documentary
    GrowthBusters: Hooked on Growth

  7. #7 Brian Flynn 28 Apr 13

    Daniel writes,’ ...we should go forward with economic growth until the vast bulk of the world’s population feels its needs have been met.’ This is a frightening prospect. What if all those in developing countries were to be hoodwinked by advertisers into accepting the illusion that they would be happy if only they lived like their western cousins? More than a given amount does not appear to make people in the West happier. The USA and UK do not come anywhere near the top of the Happy Planet Index - Costa Rica, Guatemala and Vietnam are in the top 5. I agree that improvements in living standards should be pursued for billions of people, but there are ecological limits and we, in the West, have reached them. We could do with starting by measuring something alongside GDP e.g. Genuine Progress Indicator. People need to make an informed choice about whether indefinite growth is good ( and/or possible) for them and for the planet . To do this they need more information. Knowledge here is definitely the first step to any change.

  8. #8 Dave Windship 29 Apr 13

    Economic growth in ’rich countries’ is no longer trickling down. The richest are getting richer while the poor are getting poorer. The only pursuit worth talking about is how to achieve greater economic equality. Failure to do so will lead to a pandemic of violence.

  9. #9 Harold Forbes 30 Apr 13

    Neither side seemed to listen to each other and neither addressed the basic problem that the entire economy is based on a false assumption that we can continue to use Earth's resources with impunity forever. We can't. http://www.guardian.co.uk/environment/2013/apr/29/biggest-economic-howler-of-all

  10. #10 Todawgs 30 Apr 13

    Unless there is Worldwide Successful Revolution, your arguments are a moot point. After a Successful Worldwide Revolution, your arguments may still be a moot point, due to Human Nature? Revolt from what? The upper 1%, and the Governments and the corrupt 'elected' and appointed lackeys.

  11. #11 Rod Burgess 02 May 13

    The claim for economic to fix our problems is absolute garbage, the only people who will benefit from it are big Business. The average person and our planet definitely will not benefit from it. This is based on my own observations over 50years and logic.

  12. #12 Peter Wrigley 02 May 13

    Like Dan, I am stunned by the way Daniel twists the arguments for a steady state economy (I personally prefer to call it ’prosperity without economic growth’) into the advocacy of austerity and misery.

    Dan's book is a reasoned argument based on two fairly obvious truisms:

    1.the earth's resources are finite and we can't go on exploiting them at the rate we are without both exhausting them and doing environmental damage.

    2. In any case, beyond a certain point (he suggests around an income per head of around $17 000) further economic growth doesn't improve the national quality of life.

    So, we need to think more about more sharing what we've got.

    How we get to that point is problematic, but if we don't discuss it we shall not reach it.

    Daniel is obtuse when he claims that the developed nations don't obsess about economic growth. Of course they do.

    He is also burying his head in the sand when he states that ’the application of ingenuity’ will solve our resource problems.

  13. #13 Ruth Goldberg 02 May 13

    I totally agree with Dan. Daniel wants to build more and more schools and hospitals etc., presumably for more and more people--which is also unsustainable. He is the type of person who wants to see more population growth as this helps economic growth.
    He says ’we should carry on growing until the vast bulk of the population feels its' needs have been met’ Might that also mean its' ’wants’, remember, humans on the whole have a big problem with being greedy, and that ’vast bulk’ is going to continue to increase if Daniel has his way, so it's highly unlikely it will ever be caught up with. I don't believe he can actually believe the things he's saying. (I am not an economist, but Dan's argument is also pure common sense, and there are other economists who have the same views).

  14. #15 Kareem Dieng 02 May 13

    Daniel: ’...Instead we should go forward with economic growth until the vast bulk of the world’s population feels its needs have been met.’

    I believe that if the vast bulk of the world's populations need is defined by economic growth and material prosperity, then there is no end to the consumption and environmental degradation. Until the majority of the world realizes that it is to the benefit of the greater good of the whole to reduce environmental impacts and exist sustainably, our path to eradication of our species and as many as we can take out with us is inevitable. Transcending modern industrial mindsets and embracing the ’savage’, as Daniel puts it, simplicity of life and the actual necessities to sustain life will lead us on a path toward true prosperity and the ability to coexist, not just with other humans, but also with the world as a whole.

  15. #16 simondc3 02 May 13

    Both Dan and Daniel are deluded by the hubris of their greatness, the cultural hubris that modern man is decoupling from its sorroundings and becoming by desire and hard work alone.

    Neither stops and question their pre-settled hubris. Neither stops and wonders how come there are so many in want, with desire to get ahead, across the world but don't? Neither sees that most those lack access to energy, namely, fossil fuel energy in enough abundance that allows them to forget the very source allowing their might and start believing the hubris of their own un-aided greatness.

    Beware, both Dan and Daniel are wrong.
    Daniel, besides epitomizing what it is to drink the cultural koolaid of greatness without question, doesn't understand enough physics to realize that never-ending exponential growth is anathema to the Laws of Thermodynamics that bound our finite system.
    Dan, though his heart in the right place, doesn't seem to understand human nature. He doesn't understand that even species that have had a whole lot longer span of time on Earth are hard pressed to keep themselves in check within their environment, instead Nature keeps them within bounds by the famines from their overconsumption, diseases due to pollution of their sorroudings and nutritional starvation, etc. Same as has occurred to human societies since recorded history and seems we're accelerating to go through that bottleneck again.

    If you think about it, you'll probably be with Daniel, for Daniel's love of growth-at-all cost will bring about the depletion of the resources our global civilization is based on, the pollution of the ecos our wellbeing depends on a lot sooner than Dan's quest for a slow-steady pace to get to the same bottleneck Daniel wants to rush us to.

    At this point our options are few, and all of them ugly. Good luck and thanks for all the fish. Wish you'll all make it through the coming bottleneck but that's neither here nor there. But I truly hope Evolution sees the wisest amongst through to the other side and build a society a bit more inanely equitable, just, and wise.

  16. #17 suzanne 08 May 13

    Most certainly. Industrial civilisation has produced many useful things but it seems to be destroying the enviormental system which keeps us alive in the process. It seems that we have a choice - we can continue to live in 'luxuary' as we seem to in the west (on the back of everyone else and the environment by the way) or we can accept that we need to reduce our consumption rates and begin to take proper care of the planet and the living things on it, including ourselves. Either way civilisation is going to implode eventually, so we can be a part of finding another way to live - that doesn't involve yet more industry and consumption - or completely destroy our planet, us along with it.

  17. #18 Franklin Booth 11 May 13

    The biggest problem is the unaccountable and unstable financial system. Ever since the Wall Street crash, we have had financial collapses that have profoundly affected any number of nations. The two most recent examples being the Asian financial crash and the global financial crash, both of which were predictable, yet were allowed to happen regardless.

    Even now there are various countries in Europe and the rest of the world trying to recover from the 2008 crash, deeply in debt, being forced to make exceptionally damaging cuts to their infrastructure. This in turn is leading to more and more problems within societies, which will no doubt shape future generations.

    As long as we're at the mercy of financial gambling that dwarfs the global GDP, we're totally reliant on how good the gamblers are, and so far they have a very unimpressive and disturbing history - one we would do well to learn from.

  18. #19 John Revington 12 May 13

    Could not find this article in the May 2013 edition of NI.

  19. #20 FatCatWatch 23 Jun 13

    I love that bit about working less... I will never fall into the trap of working my life away so I can have a better car than my neighbor (http://fatcatwatch.wordpress.com/2011/04/09/keep-your-old-car-part1/). Good debate, bring on the Steady State Economy please.

  20. #21 Adam 15 Feb 16

    Thank you Dan. If everyone lived at the standards of Americans it would take four planet Earth's to support our entire population. More is not better, being smarter with what we have is.

Subscribe to Comments for this articleArticle Comment Feed RSS 2.0

Guidelines: Please be respectful of others when posting your reply.

Get our free fortnightly eNews

Multimedia

Videos from visionOntv’s globalviews channel.

Related articles

Recently in Argument

All Argument

Popular tags

All tags

This article was originally published in issue 462

New Internationalist Magazine issue 462
Issue 462

More articles from this issue

New Internationalist Magazine Issue 436

If you would like to know something about what's actually going on, rather than what people would like you to think was going on, then read the New Internationalist.

– Emma Thompson –

A subscription to suit you

Save money with a digital subscription. Give a gift subscription that will last all year. Or get yourself a free trial to New Internationalist. See our choice of offers.

Subscribe