Argument: Is it time to stop trying to make the economy grow?

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Argument: Is it time to stop trying to make the economy grow?

Dan O’Neill (economist and author) and Daniel Ben-Ami (journalist and author) discuss.

Dan - YES

Kenneth Boulding said that a person who believes that growth can continue forever is either mad or an economist. It’s time to stop trying to make the economy grow in rich countries like the US and Britain – it’s mad.

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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 wrote (with Rob Dietz)Enough Is Enough: Building a Sustainable Economy in a World of Finite Resources, (Routledge and Berrett-Koehler 2013).

This growth will bring environmental disaster, and we have reached a point where economic growth is no longer improving people’s lives. The British economy has more than tripled in size since 1950, but surveys show that people have not become happier. Inequality has increased a lot in recent years, and jobs are not so secure. A lot more economic activity is using a lot more resources: the amount of carbon dioxide in the air is dangerous, and we are losing biodiversity. We can now see that economic growth costs us more than the benefits it brings.

The real question is not “should we stop growing the economy?” – we know we should – a question is “what should we replace the growth with?”. How can we have a stable economy that meets our needs without putting in danger the life-support systems of the planet? Five years ago, it was difficult to answer this question, but now a new economic plan is developing from the work of hundreds of researchers around the world. It’s a plan for an economy of enough. There are plans to look after natural resources, make the population stable, reduce inequality, fix the financial system, create meaningful jobs, and change the way we measure progress.

But in order to put these plans into practice, we need, first of all, to stop our obsession with economic growth. If this ends, we can then build an economy where the goal is better lives, not more stuff.

Daniel - NO

Before I argue for economic progress, I need to challenge your strange idea that the US and Britain are obsessed with economic growth. This is not true. These ideas are just a stronger form of an outlook that has long prevailed among the élites in both countries.

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DANIEL BEN-AMI is a journalist and author based in London. His latest book is Ferraris for All, (Policy Press, 2012). His website can be found at danielbenami.com

Yes, Western leaders sometimes say they support growth. But they also, like you, talk all the time about various types of the possible limits that people talk about: environmental problems, the need for happiness and the dangers of inequality. Both US President Barack Obama and British Prime Minister David Cameron have made many statements about this. These ideas were very common in Western thought in the 1970s.

So your Kenneth Boulding quotation from 1973 is good. But you did not say that he was chairman of the American Economic Association – from the centre of the establishment.

So I suggest that you should agree with me on two points. First, that green ideas are mainstream even if the élite does not go quite as far as you would like; and second, that you talk about ‘better lives’, but what you really want is more and more cuts. Your argument means that the cuts in living standards that people have suffered since the 2008-09 recession are not enough. If you believe we need to make sacrifices like this, you should say this directly.

Dan - YES

I’m shocked that you think a clean environment, happiness and equality are ‘limits’ to prosperity. These are the main point of prosperity. I think that your definition of a prosperous society means only that economic progress is the same as an increase in GDP – which means we consume more and more stuff.

When we have enough goods and services, if we then have more money, this does not buy more happiness. But other things do improve our lives, like strong personal relationships, good health, safe communities, and having a secure and fulfilling job. I agree that more people are accepting the idea of a socially just and environmentally responsible economy. We can see this, for example, in the European Commission’s Beyond GDP project and the Organization for Economic Co-operation and Development (OECD)’s Better Life initiative. But economic growth is still the most important goal of most countries.

The main economic argument is about the best way to grow the economy: austerity cuts or getting people to spend more. But this is not a good choice, and I disagree with both of these. 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 means buying and using less and protecting the environment. But it also means creating meaningful jobs, a stable system of finance, and a more equal society. It means real prosperity.

Daniel - NO

If you read what I actually wrote – for example, ‘possible limits that people talk about’ – we could have a better argument. My argument is that it is you, not me, who is obsessed with limits.

Also, you are wrong about my argument for growth. I have never argued that material progress is simply about having more 'stuff' – but I agree that people should have the possessions they desire – or that the economy should grow forever.

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Factory in China. Is economic growth th most important thing if we want to meet the needs of a population? Robert Scoble Under a CC Licence

The basic argument is that we need a high level of material prosperity to become fully human and reach our potential. If we are limited because we do not have enough of something, this will not happen.

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 everything else in modern life. All this uses a lot of resources. It also means that we develop medicine, science and technology.

During the period of modern economic growth from about 1800 to now, world life expectancy has increased from about 30 years to 70. Just think how big that achievement is. And life expectancy is still rising. This is just one of many benefits of prosperity.

Unfortunately, growth in the West has stopped and even in developed countries there are still a lot of areas where we could improve living standards. The challenge is to continue with economic progress. Not give cuts and austerity the new name of ‘prosperity’.

Dan - YES

I agree that we could have a more productive debate – if we could discuss real solutions to our environmental, social and economic problems.

We do not have a problem of not enough resources any more. We have enough stuff, and we probably have enough airports, roads and power stations. There would be more improvement to people’s lives by cutting inequality, cutting working hours, and fixing the financial system, than by growing the economy by three per cent.

You think that more is the same as better, but these are not the same. More schools is not the same thing as better education. More hospitals does not mean longer lives. There is a good point to reach for all of these things, and there is no benefit from building more than this point. The “law of diminishing returns”, that you get less back when you have more and more, is one of the most basic ideas in economics.

You say you don’t believe the economy should grow forever. I’m happy you said that, because it shows you can see that there is a point where expansion should end. But where is this point for you? It should be where the costs of more growth (for example, bad effects on the environment) become more than the benefits (for example, more goods and services).

I agree that wealth and life expectancy are related, but this is only true 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 was probably a good plan for the 19th century, but we need a new plan for the 21st. And a new plan is here - read Enough Is Enough.

Daniel - NO

A very important difference between us is what we think about the problems facing humanity. You think we are restricted by very big problems, but I think progress means overcoming challenges.

Think of the idea of natural limits, for example. Your argument is that we need to accept very big cuts in living standards to help the environment. I say that, if we use our intelligence, we can overcome environmental problems.

Climate change is a very good illustration of this idea. It is a problem which will need massive investment to solve. It will be very expensive to take the carbon out of the energy supply – for example, we need to invest in new generations of cleaner power stations. The only way we can pay for this is through economic growth. It also costs a lot to build modern flood defences. It is ironic that your ideas on what to do about climate change will make us less able to do anything about it. If we have less money and less advanced technology, our problems will be worse.

The only thing you offer is for everyone to be equal, but poor. This would be a poorer world, where almost everyone will earn less because of green ideas.

I think that we would need to force people to accept this idea. Not many people would be happy to accept lower living standards. That probably explains why you don’t explain the cuts, which are the consequences of your arguments.

Instead of this, we should continue with economic growth until most of the world’s population feels it has enough for its needs. We should not decide what is enough for everyone else.

As this article has been simplified, the words, text structure and quotes may have been changed. For the original, please see:http://newint.org/sections/argument/2013/05/01/economic-growth-argument/