Shrinking Our Way Towards Happiness

When a British government commission
publishes a report calling for an end to economic growth, it suddenly
seems that our world is changing. Growth has been the central goal of
economists since the beginning of the industrial revolution. But Prof.
Tim Jackson, the Economics Commissioner of the UK's Sustainable Development
Commission has written a book that sums up the current state of our
knowledge about economic growth and shows convincingly that growth should
end.

We have all heard about the
environmental effects of growth, such as resource depletion and global
warming. The conventional wisdom is that we can deal with these
effects by shifting to better technology, but this book argues that
there is no plausible scenario in which better technology alone can
reduce greenhouse gas emissions sufficiently if growth continues at
its present pace. "The global economy is almost five times the
size it was half a century ago. If it continues to grow at the same
rate the economy will be 80 times that size by the year 2100."
This rapid rate of growth is likely to overwhelm attempts to use better
technology to reduce greenhouse gas emissions.

If we are serious about avoiding
the worst effects of global warming, we must move beyond this sort of
technological fix and deal with economic growth itself.

Ending economic growth does
not have to involve sacrifice. The evidence shows that, beyond
a certain point, growth does not increase our well being. For example:

• International comparisons
  of self-reported happiness show that higher per capita income correlates
  with greater happiness until income reaches about one-half to two-thirds
  of what it is in the United States today. Beyond that level, there is
  no correlation of higher income and increased happiness. In the
  United States and several other developed nations, higher income has
  not brought increased happiness during the last several decades.

• Indexes that correct
  the GDP to measure well-being more accurately have similar results.
  For example, the Genuine Progress Indicator shows that, until the 1970s,
  American's well-being increased as income increased, but since then,
  Americans' well-being has declined, though per capita GDP has continued
  to increase.

• International comparisons
  of other measures of well-being, such as life expectancy and educational
  achievement, have also similar results. Increased income does
  not improve well-being after per capita income reaches about half of
  what it is in the United States today.

We in the developed nations
are at a point where economic growth does us little or no good.
But growth threatens to do us and the rest of the world great harm by
causing global warming, higher resource prices, and potential ecological
collapse.

Yet it seems hard to break
our addiction to growth. The conventional wisdom says that growth is
needed to reduce unemployment and to promote economic stability. As
we can see during the current recession, when growth falters, businesses
reduce their levels of investment and lay off workers, making the economy
les efficient and increasing unemployment. It also seems that we need
growth to pay off our high levels of personal and national debt.

In response to these concerns,
this book cites the studies of Peter Victor, a Canadian economist, who
has run computer models of how the Canadian economy would react to the
end of growth. Results are dramatically different as he changes
the values for macroeconomic variables such as the savings rate, the
rates of public and private investment, and the length of the work week.
In one run, the end of growth brings economic instability, high unemployment,
and rising poverty. In another run, the end of growth brings economic
stability, cuts both the unemployment and poverty rates in half, and
reduces the ratio of debt to GDP by 75%. In part, the difference comes
because the second scenario has a higher savings rate, a lower rate
of private investment, and a higher rate of public investment.

In addition "unemployment
is avoided ... by reducing both the total and the average number of
working hours. Reducing the working week is the simplest and most often
cited structural solution to the challenge of maintaining full employment
with non-increasing output." The end of growth would make life
easier by reducing the amount of work we have to do.

There are very few macroeconomic
studies of this sort, and far more are clearly needed.

The book consistently emphasizes
that a two-fold change is needed for an end of growth: in addition to
these economic changes, we need social changes that shift our emphasis
away from materialistic values. Unfortunately, the book is weaker on
these social changes than on economic changes. It calls for a shift
from an economy that aims at opulence or utility to an economy that
aims at human flourishing, but it never provides a convincing vision
of what life could actually be like in a society where people have a
comfortable standard of living and have abundant free time to develop
their their talents and their humanity as fully as possible. There is
a long tradition of philosophical writing about this subject, going
back to Aristotle, but this book, written by an economist, is not strong
on philosophy.

Despite this limitation,
Prosperity Without Growth? is the best summary available of the
economic issues involved in ending growth. It is required reading for
everyone working to avoid ecological collapse.

The fact that it is published
by a British government commission offers hope that we may do better
than just avoiding collapse. If we follow the suggestions here, we could
have a far better world at the end of this century than we have today,
with widespread prosperity that is devoted not to empty consumerism
but to living well .