Niall Briggs, who is currently working on the Plenty programme, explains why a fair and sustainable economy needs to ask some difficult questions about economic growth:
Growth seems to be baked into our ideas of a well-functioning economy. What does this really mean and is it a sensible objective for post-industrialisation economies? How should we balance the demands for individual ‘prosperity’ and the needs of wider society?
Once, growth in human activity seemed normal and natural. But now, in many ways it’s being called into question. Once, humans were just another animal working out how to live on the planet, but now we are aware of global and planetary limits to resources – minerals, fossil fuels, carbon use, population.
So, it is a good time to reappraise the notion of growth – particularly in economic terms as this is the key driver behind all other types of growth.
In nature, growth is part of a larger system that also includes death and decay and the earth renews itself for future generations. All of this happens within a broadly closed system where the only external input is energy (light and heat) from the Sun.
Our current system relies on extracting resources from the Earth at a faster rate that they have been created – we’ve extracted millions of years’ worth of fossil fuels in just a couple of hundred years or so. This obvious challenge to the current system isn’t factored into the relative costs of one-off and sustainable industry.
But the proximity of global limits to resources is not just the only reason to be concerned. As has already been noted, we live in a society where we are encouraged to be consumers first and citizens second (if at all). This is linked to readily available consumer debt and this has led to an increasing polarisation of both income and wealth.
The system under which our economy largely works – capitalism – has undergone some significant revisions in recent decades which have made this inequality inevitable and some of its features are significantly different than in previous centuries. This has happened with relatively little understanding by the public and many experts: most politicians and professional economists are ignorant of the fallacies of basic economic assumptions.
What is now referred to as neo-liberal capitalism has been encouraged to flourish following relaxing of financial controls in the 1970s and 80s and the political changes brought in during the Thatcher/Reagan era. One particular feature of this is the increasing financialisation of markets. This means that since investments are backed by debt and not capital assets, they must generate a return higher than the rate of interest on the debt.
We need to take a fresh look at our society and the systems which enable it to function. Not least, is the need for a full understanding of money and how the means of its creation mean that a presumption towards economic growth is inevitable.
As we move to living in a system defined by its limits, we need to change from borrowing from the future to investing in it. We need to reimagine our understanding and definition of prosperity; to reconsider the importance of the ‘common good’ over the unfettered desires of individuals.