BY RAPHAEL HAMMOND
There is a global economic consensus on the need for growth. It has been the default economic objective of governments worldwide since the Great Depression and remains so to this day. Parties of all stripes across the world are aiming for growth. The Labour party’s current economic objective is to achieve the highest sustained growth in the G7. Liz Truss’s economically libertarian platform (which has recently launched a new ‘think-tank’, the Growth Commission) was underpinned by promises of growth, growth, growth. President Macron’s government in France has been consistent in their objective for growth and increasing domestic production. The International Monetary Fund’s regular global economy ‘health-check’, the World Economic Outlook Report, is written in GDP growth terms. The reasoning for this is simple. Growth is commonly associated with rising employment, wages, health, and living standards.
However, in the light of the climate emergency, constant talk of growth seems almost childishly stubborn. In our quest for growth, the world consumes more and more resources each year, further and further beyond the rate of natural renewal. The natural environment is increasingly polluted by plastics, chemicals from electronics, and developed countries’ unprocessed exported waste. Most importantly, rising greenhouse gas emissions are causing catastrophic death and destruction worldwide, and sending us towards a ‘hellish’ 3C above pre-industrial temperature averages. While some countries have seemingly managed to decouple GDP growth from carbon emissions, such as the UK and South Korea, this trend is absolutely insignificant in the face of our current challenge. The UN notes that current emissions reduction commitments will not keep us within Paris agreement targets of 1.5C. As it currently stands, economic growth is going hand in hand with increasing emissions and pollution.
Beyond environmental points, GDP doesn’t measure societal wellbeing. Bobby Kennedy said it best in 1968: ‘it measures everything in short, except that which makes life worthwhile’. While GDP includes cigarettes and crass advertising, it doesn’t measure volunteering, environmental benefits, health, learning, or the (so-called ‘informal’) care economy. From the inception of growth metrics in 1934, Simon Kuznets, a leading economist, warned against their use as a measure of welfare. The economy, regardless of the choice of model, should exist to fulfill genuine needs. The fact of the matter is people need more than what GDP measures so we can survive and thrive: clean water, clean environments, social opportunities, and crucially a livable planet – which the obsession with GDP is a key culprit in destroying. GDP was initially created in the context of the Great Depression, as a convenient measure at a time when the field of economics was still developing – a mere tool in a wider arsenal of economic analysis. It is time to treat it as such and rethink our view of the economy.
The necessity of moving beyond GDP growth as a primary economic target should be clear. In order to maintain a livable planet for ourselves, and future generations, there is an urgent need to kick our growth habit. So called ‘Green growth’, rising GDP alongside reductions in carbon emissions, is a fantasy. So where do we go from here? This is very much up for debate. New theories of economics, such as Kate Raworth’s ‘Doughnut Economics’ and ‘Degrowth’ ideas offer potential future strategies. For example, Raworth suggests the use of ‘demurrage currency’ – currency that loses value over time – with incentive structures to encourage regenerative and renewable investments. However, we have a long way to go in making these ideas concrete – Raworth herself admits as such in the conclusion to her book. If there isn’t focus on GDP, so conventional criticisms of degrowth say, then we will not be able to support our state spending and investment. The impacts of this new enviro-economic paradigm will need to be thought through, policies formed and assessed, and the tax & financial systems adapted and reformed. But perhaps all of this is premature. For now, increased government focus on other metrics, such as the Human Development Index, the ‘Prosperity Index’ or the Social Progress Index might already be a step in the right direction, as an intermediary position, while more rigorous policy proposals are developed.
We have known,since 1972, when the Meadows report on the Limits of Growth was published, that at some point we would need to reconsider our attitude to growth. Infinite growth is simply not possible on an earth with finite resources. With COP28 just around the corner, instead of cynical grandstanding about ‘phase-downs’ of fossil fuels, it’s time for a serious global conversation about rethinking and restructuring our views of economics - and paving the way for the sustainable economy of tomorrow.
Photo by Billie G. Ward