Good and bad growth - are we asking the right questions?

How should we understand what is good or bad about growth?  What theoretical and practical frameworks are useful in grasping the key choices?  

My interest in this question was first sparked some 25 years ago when I became involved in what was coming to be called the circular economy – seeing the economy not as I had learned about it in university, but rather as a metabolism that takes in vast amounts of matter and energy, pushes out goods, but also pushes out mountains of waste.   Our interest then was in the practicalities of reducing, reusing, and recycling paper, glass, metals and plastics (a task that is far from complete at a time when we still produce vast amounts of e-waste, or when barely 1% of clothes are recycled). It seemed obvious then that there might be some things we wanted to grow and others we wanted to shrink, and that much of policy and regulation was moving from encouraging more growth towards the opposite (for example the regulation of energy moving from watts to negawatts).

My more recent interest has come from work on the imagination, including my book ‘Another World is Possible’, which looks at how we imagine a future economy that is more human, more ecological and more democratic.  In doing this work I became even more convinced that what is now quite a traditional polarisation between pro-growth and anti-growth perspectives is ever more anachronistic and unhelpful.

In this blog I:

 ·      Describe the traditional polarity between pro and anti-growth positions

·      Set out the many alternative ways of thinking about growth

·      Argue why descriptions of capitalism as pure and complete (which often lie behind both pro and anti-growth positions) are profoundly misleading

·      Suggest a different approach to economic growth

·      Define five different types of economic good that can help us think more rigorously about the virtues and vices of growth

 1.The traditional polarity

 Let me begin by describing this now very familiar binary or polarity.  For the capitalist west, Larry Summers put it clearly: “It is the task of economic policy to grow the economy as rapidly, sustainably, and inclusively as possible”.  In the mid-20th century Nikita Khrushchev took a similar view for the communist world: “growth of industrial and agricultural production is the battering ram with which we shall smash the capitalist system”.   Contemporary China prioritises GDP growth over all other goals, built into the rewards for officials at many levels (indeed it is a paradox that communism has been even more growth-oriented than capitalism).  And for the current UK government growth is often said to be the top priority. 

Growth is indeed the most remarkable feature of the modern world, ever since the great lift-off of the late 18th and early 19th centuries, and economic growth has been strongly associated with growth in life expectancy, education, and availability of the essentials of life, from food to energy.

A counter-view argues that growth is bad. This view has been articulated since the early 19th century: the pursuit of growth necessarily means despoiling the environment, running down scarce resources, sacrificing life, and imprisoning people on a treadmill of hope and dissatisfaction.   It’s better to be satisfied with enough and better to encourage a steady-state economy.   Zero growth is a good in itself, morally superior, and certainly more sustainable.  Some celebrated when Japan moved into a long period of stagnation in the 1990s and 2000s. Here perhaps was a new model of sustainability. This view—that zero growth is inherently desirable—remains popular across large parts of Green and left politics.

In my view both positions, which have co-evolved, are untenable. Both misunderstand that growth is not just a peculiar genius or fetish of capitalism.  In an odd way the critics mirror the thought logic of who they are criticising rather than transcending it.

2.The many forms of growth

A longer and larger perspective reminds us that growth is what nature does too—the growth of plants, creatures, and ecosystems makes the natural world what it is. Where there is no growth there is no life. And growth is the very hallmark of civilization if we mean growth of knowledge, understanding and intelligence. So, the problem we should discuss is not growth as such, but rather what kinds of growth an economy should produce.

To help us, as a thought experiment, it can be useful to list all the possible meanings of growth. Growth can happen inwards, downwards, upwards, outwards.   Mushrooms or mycelia grow sideways. Humans grow in childhood and then stop growing (hopefully).   Plants grow, mature, and then die.  In nature we see the growth in diversity you get in edge habitats, the tendency then for some species to become dominant, growing in number in cycles of ecological succession, and often benefitting from periodic culling and disturbance.

We talk of growth in love, care and wisdom.  In many fields growth in understanding includes both quantity and quality, structure and extent (and in complexity studies it’s generally assumed that progress involves a combination of greater differentiation and integration).  We also have no trouble understanding the darker sides of growth – growth of viruses, computer viruses, weapons, tumours, infections, delusions.

These are all intuitively meaningful.   Anyone with a garden sees growth differently than the polar opposites of growth=good or growth=bad.  It’s true that an industrial civilisation based on carbon defaults to a particular set of ideas about growth – extractive in relation to resources, human time and commitment; limitless in ambition; profligate in waste, promoting obsolescence.  But there is no intrinsic reason why that should determine or limit our patterns of thought.

4.Capitalism as impure

Part of the intellectual problem has been a flawed perception of growth-based capitalism as more complete and pure than it actually is.  Such perspectives make it hard to ask more rigorous questions about what should or should not be grown.  In fact every real capitalism is never like either the picture of market fundamentalists, or of critics. Both typically present capitalism as something absolute and comprehensive, a complete and coherent system.

This is wholly at odds with the facts.  Instead, capitalism has always been dependent on other institutions with a radically different ethos:  the family (in which 8 children are not obviously better than 4 or 2); organised religion; and of course states that generally control as much as half or more of GDP.  The great cities of capitalism have always been packed with civic institutions – galleries, town halls, concert and sports halls.

Within capitalism are many institutions that do not see growth as a good. Schools are an obvious example; universities another.  A school of 10,000 pupils is not obviously better than one with 500.  A monistic view of capitalism leads to many errors of both diagnosis and prescription. It can imply that capitalism can only be changed as a whole rather than in a more organic way.  This runs counter to historical experience.  There is an obvious parallel with monarchy two centuries ago – which was then seen as natural, and based on universal principles (with democracy an interesting but failed experiment).  Some countries overthrew their monarchs.  But in others they were slowly squeezed to the margins until no institutions saw inheritance as a good way to fill important jobs.

The monistic view also tends to be ahistorical in other ways, presenting capitalism as uniquely destructive of nature and communities (which requires ignoring almost all the rest of human history, from the destruction of fauna in prehistory, to the global patters of imperialism to the experience of communism).

5.A different view of growth: quality v quantity

An alternative view argues that the economy could grow qualitatively but not necessarily quantitatively, selectively rather than in some general way of the kind captured by GDP.   It should grow in terms of the value of products and services, their usefulness and meaning, but not through using more matter or energy or more stuff which inevitably hits limits.

Indeed, this might be the definition of a truly successful 21st century economy: that all of its growth is qualitative and achieved from the creation and absorption of new knowledge, with knowledge replacing matter wherever possible (for example by reducing waste). It should grow in the sense of complexity, offering richer and more fulfilling ways to be and to live, and not just in things.

In this view there is no inherent reason why an economy should not grow 2–3 percent or more a year, without breaching any principles of sustainability (meeting the needs of the present without compromising the ability of future generations to meet their own needs, to use the simple and clear definition proposed by Gro Harlem Brundtland in her classic report from the late 1980s).   The rate of growth would be set mainly by the economy’s ability to create and absorb new knowledge, the ability to do things better, in all areas of life. Inputs of matter, energy, and time could and should decline since they are finite.

Since we know that the majority of productivity gains come from new knowledge—intangibles in all their forms—this might seem obvious.  Economies should be able to grow over very long periods of time primarily due to their superior ability to create and use new knowledge, even if demographic and other factors create constraints.

Those parts of the economy most dependent on energy and matter (which bring with them physical limits to exponential growth) would steadily shrink as a proportion of GDP, helped by taxes and regulations as well as consumer preferences. Other parts of the economy, which are not limited in this way, would tend to grow (including most services, the creative and knowledge economies and much else).

Doing this isn’t easy, and much is known about the many dynamic patterns (like rebound effects) that make it so hard to reduce addiction to energy and materials.  There are plausible arguments why decoupling is so hard, and the best arguments for zero growth are, perhaps oddly, pragmatic ones rather than principled ones.   But across the world a huge amount of effort has gone into designing decarbonization trajectories that allow for a steady transition and mitigate some of these effects.

I am partly influenced by my own experience.  20 years ago within the UK government I helped oversee climate change and energy strategy.   Setting long term goals and using a range of tools we helped the UK cut carbon emissions fairly drastically (more than Germany during this period) and increased the contribution of renewables from around 3% then to nearly 50% now (mainly through offshore wind).   This is a new industry within capitalism but strongly shaped by state policies (though oddly, because it was such a long-term strategy, it is talked about neither by current government ministers or by activists)

Having escaped from the crude dichotomies between pro and anti-growth it then becomes possible to engage with other lessons of growth from the natural world; like the importance of including and even encouraging cycles of birth and death; encouraging systems in which the waste from one form of life becomes the fuel for another; encouraging kinds of growth which are not just about becoming bigger, but are about deepening (like the roots of a plant).

6.Five types of good

Economics grew up as a discipline without many tools for judging the quality as opposed to the quantity of growth – a problem that has made much of the debate about the economics of growth in the Anthropocene misleading.   We now need to be more precise about which kinds of growth are productive, providing us with value, and which kinds of growth destroy value. Classical and neoclassical economics tend to see all goods as providing utility, while much radical economics provides critiques but not much in terms of alternatives (I have been involved in many of these attempts – covering everything from natural capital to wellbeing, some covered in my book ‘The Locust and the Bee’ a decade ago).

A more rigorous view judges all goods according to their balance of positive and negative effects on value (or positive and negative externalities in the language of economics).   At least five very different types of good are aggregated together in current measures of GDP (and usually combined in most economic discourse, including anti-growth discourse). Distinguishing them is key to better understanding what counts as good growth.

Positive externalities

The first category includes goods that become more valuable if others are also consuming them—like telephones and other network technologies. Because of their “positive externalities,” there is a case for judging growth in consumption of these as more valuable to an economy than growth of other kinds of consumption. Health can be of this kind; it’s valuable for me if other people don’t carry dangerous infectious diseases, or if they are brought up to avoid impulsive violence. Many communications technologies create a lot of indirect value, and their dynamic impact on growth during some periods reflects this special quality. Publicly available knowledge, Marx’s “general intellect,” also provides positive externalities of this kind. Again, it’s valuable for me or you to be surrounded by other knowledgeable people. Precisely how this additional value should be measured is not straightforward; but it’s striking to see the imbalance between how stock markets value the great network companies (like Google and eBay), and how their activities are valued in GDP.

Everyday goods

A second category encompasses more normal commodities like clothing or tins of baked beans. Whether or not I consume these doesn’t have much impact for better or worse on other people. These are the types of good around which most economics is shaped. Their profitability can be improved by reducing inputs or increasing the extent to which they are reused or recycled. But their external effects are modest.

Ambiguous goods

In a third category are goods that destroy value for some while creating it for others. These include cars (which create pollution, noise, and dislocation for those who don’t own them), airlines (which disproportionately worsen climate change) and many other industries. Economics recognizes that they produce “negative externalities.” It measures these when doing exercises in cost-benefit analysis, and policy makers try to internalize them through taxes or regulations. But only the most obvious, and material, externalities are recognized in economics; and even the ones that are recognized aren’t measured in GDP or company accounts.  Ones that are most carbon intensive or wasteful in production also create and destroy value if we take into account natural capital.

Positional goods

A fourth category is what the economist Fred Hirsch called “positional goods,” whose value comes from their exclusivity; stately homes and tropical islands developed for luxury tourism are classic examples as is getting on the guest list for the best parties or membership of the most exclusive golf clubs.

Their scarcity can be physical—meaning that a good is scarce in some absolute or socially imposed sense (such as land used for pleasure and personal enjoyment), or the scarcity can be social—meaning that it can be subject to congestion or crowding through more extensive use (as in the case of a privileged education).

More spending on positional goods is unlikely to increase overall well-being, and may actually diminish it. As Fred Hirsch wrote, “it is a case of everyone in the crowd standing on tip toe and no one getting a better view”; “if all do follow…everyone expends more resources and ends up with the same position.”

Harmful goods

Finally, there are goods whose very value comes from the negative externalities, or effects, created for others. At the extreme are weapons: teenagers buy knives and nations build nuclear missiles to frighten others. Their negative impact on lived value is not an unfortunate by-product but rather integral.

These types of good run in a continuum from ones, like knowledge and network technologies, that create lived value greater than their apparent value in the market, to those that tend to destroy lived value. It should be self-evident that these very different kinds of good cannot simply be aggregated into a single thing to be called “growth.”

Yet traditional measures of GDP make no distinctions between them and nor do our debates, or the arguments for zero growth, apart from a limited measurement of externalities. They conflate quality and quantity; they ignore both positive and (most) negative externalities; and they take no account of the running down of natural assets. They also take no account of non-monetized work.

Imagination

Getting this right matters greatly for our ability to imagine how a society or economy could work a generation or more from now.   A genuinely steady-state economy, with no progress in knowledge as well as no growth in use of matter and energy, might be a very unpleasant one to live in.    It would be the wrong response to awareness of the Anthropocene.

As I argue in my work on imagination[i] there are methods we can use to think much more imaginatively about how to run food, energy, politics a generation or more into the future – though these methods are scarcely used in social science.   But these methods are greatly helped by clarity in relation to concepts.  And to be truly anti-growth risks being anti-life.

[i] In my paper for Demos Helsinki ‘The imaginary Crisis’ and the book ‘Another World is Possible’ published by Hurst in June 2022