Economic growth is supposed to deliver prosperity. Higher incomes should mean better choices, richer lives, an improved quality of life for us all. That at least is the conventional wisdom. But things haven't always turned out that way.
Growth has delivered its benefits, at best, unequally. A fifth of the world's population earns just 2 per cent of global income. Inequality is higher in the OECD nations than it was 20 years ago. Far from improving the lives of those who most needed it, growth let much of the world's population down. Wealth trickled up to the lucky few.
Fairness (or the lack of it) is just one of several reasons to question growth. As the economy expands, so do its ecological impacts. In the last quarter of a century an estimated 60 per cent of the world's ecosystems have been degraded. Global carbon emissions have risen by 40 per cent since 1990. Significant scarcity in key resources - such as oil - may be less than a decade away.
On the other hand, when growth stalls, as it has done over the past year, things go quickly from bad to worse. Firms go out of business, people lose their jobs and a government that fails to respond appropriately will soon find itself out of office. Dynamics are vital here. Continuous improvements in technology mean that fewer people are needed to produce the same goods from one year to the next. So if output doesn't expand, there is a downward pressure on employment and a spiral of recession looms. Growth is necessary within this system just to prevent collapse.
In short we find ourselves locked between the horns of an uncomfortable and deep-seated dilemma: growth may be unsustainable, but ‘de-growth' - a contraction in economic output - appears to be unstable. Questioning growth in these circumstances is deemed to be the act of lunatics, fanatics or idealists.
Business as Unusual
The prevailing wisdom calls instead for a ‘decoupling' of economic activity from material throughput. Since efficiency is one of the things that modern capitalist economies are good at, decoupling has a clear appeal as a solution to the dilemma of growth. And at first sight, this logic fits the evidence: global carbon intensity fell almost 25 per cent in the last couple of decades, for instance.
But efficiency improvements are continually offset by increases in scale. Global carbon emissions rose by 40 per cent even as the carbon intensity fell. We need to be decoupling much much faster. In a world of nine billion people, all aspiring to ever-increasing western incomes, carbon intensities would have to fall by over 11 per cent per year to stabilise the climate, 16 times faster than they have done since 1990. By 2050, the global carbon intensity would need to be only 6 grams per dollar of output, 130 times lower than it is today. Rethinking basic assumptions
In this context, simplistic assumptions about capitalism's propensity for efficiency are nothing short of delusional. A much deeper re-examination is called for. A different kind of economics is needed. The balance between consumption and investment, the split between the public and the private sector spending, the nature of productivity improvements, the conditions of profitability: all of these are likely to be up for re-negotiation in the new economy.
The role of investment is crucial. Sustainability demands enhanced investment in sustainable technologies and infrastructures, in ecological maintenance and protection. These investments are different in kind from conventional investments in labour productivity and they won't necessarily deliver continual consumption growth. A different concept of economic resilience is going to be needed. And the fetishisation of labour productivity will have to be renounced.
Fixing the economy is only part of the problem. Addressing the social logic of consumerism is also vital. This task is far from simple - mainly because of the way in which material goods are so deeply implicated in the fabric of our lives. But change is essential. And some mandate for that change already exists. A latent disaffection with consumerism and rising concern over the ‘social recession' have prompted grassroots initiatives to seek out ‘alternative hedonisms' - sources of identity, creativity and meaning that lie outside the realm of the market.
For at the end of the day, prosperity goes beyond material pleasures. It transcends material concerns. It resides in the health and happiness of our families. It is present in the strength of our relationships and our trust in the community. It is evidenced by our satisfaction at work and our sense of shared meaning and purpose. It hangs on our potential to participate fully in the life of society.
Prosperity consists in our ability to flourish as human beings - within the ecological limits of a finite planet. The challenge for our society is to create the conditions under which this is possible. It is the most urgent task of our times.