I have found it disheartening to see Rachel Reeves’ endorsement of a third Runway at Heathrow, on the basis that this will promote economic growth, and that because we need economic growth above all else, this must be a good thing. This seems to put the cart before the horse.
Rather than uncritically ‘going for growth’, which might have detrimental side-effects – would it not be better firstly to think about whether such a project is beneficial across a wider range of indicators of social and economic well-being?
It has been over a decade since organisations such as the Centre for Thriving Places (formerly Happy City), the New Economics Foundation and more recently, Doughnut Economics Action Lab, started not only questioning GDP growth as the basis of economic and therefore societal success, but also offering well worked out alternatives.
When you think about it is a very strange thing, that in economics and in no other domain of life do we see growth as always being good.
If I have a child, I am happy if it grows at a certain usual rate during childhood, and then at an apparently faster usual rate during adolescence. But what if the child carried on growing at the same rate throughout adult hood as during adolescence?! I might not be so happy, and nor might the child.
Assuming a growth rate of 9.5 cm a year, at age 80, the now elderly child would be almost 8 metres tall, or 25 feet! (Beyond 7 and a half feet, in fact, human beings start to develop severe health problems owing to various factors related to height.)
Relatedly, if I step on the scales as an adult and my weight has grown, I will probably not be pleased, especially if it is after Christmas. However, if I have been undergoing a programme of body building through weight-training during the festive season, I might be.
When travelling, if I awake suddenly on the train, to find I am at the terminus, and have missed my stop several stations ago, I will probably will not be happy.
Undoubtedly, though, my journey will have grown.
And, who, during a visit to the doctor, would like to hear the words, ‘I’m afraid, sir, that your tumour has grown?’
These illustrations might be left-field, but they do serve to demonstrate, that though ‘growth’ is often seen as positive, sometimes there are situations, when it very much isn’t, even when it is the same type of ‘growth’ that is being discussed.
The first example, that of the child, illustrates that ‘more of the same’ isn’t always a good thing. The second, that of the weighing scales, shows that the same measure of growth may consist of very different things, one thought of as good, the other bad. The third, that of the train trip, demonstrates, that simply having more of a particular thing (in this case distance) doesn’t necessarily lead us to an end point we may like better.
The fourth, that of the tumour, shows that growth can even be malignant and might destroy the thing we want to preserve, i.e. the life and natural functioning of the body.
What is interesting, is that the discipline of economics itself contains an applied notion of growth sometimes being good, and sometimes bad called, ‘the law of diminishing marginal returns’, that I enjoyed learning about in GCSE economics.
For example, the output of a business – say a factory – may not increase equivalently to an increase in the number of workers (or new machines) that contributes to that particular level of output.
Say, the factory makes cardboard boxes. Five workers can make fifty boxes in a week, but an additional five workers takes that total to a hundred and ten. However, add another five workers, and the total drops down to a hundred and forty boxes, so only an additional thirty boxes are made for the same addition of workers. Add another five workers, and the total number of boxes produced in a week increases only by another twenty, to one hundred and sixty.
In a way, so far, so good. That is, if the factory owner prizes the number of boxes produced above all else, and doesn’t mind whether or not they are being produced more efficiently. Perhaps he is trying to flood the market with his superior brand of box, or something.
Believe it or not, however, there is also the concept of an absolute decrease in marginal productivity.
In this scenario, the mad factory owner goes on employing more and more workers, until the number of boxes manufactured actually starts to fall in total. And this is called negative marginal productivity. (The additional workers must be taking their tea breaks sitting on the production line, amongst other possibilities!) Whatever the problem is, though, less boxes are made per week overall.
Why then, should this concept apply only to examples that economists call micro-economic, that is, factories, and not macro-economic i.e. to the output of a entire economy, say the UK’s, or the entire global economy? This output, of course, is not measured in boxes, but in Gross Domestic Product. This is the sum total of the value of all the goods and services produced in an economy in a year, and the growth in this sum over a year is what we call economic growth.
Economists try to get round this, by pointing out the difference between micro-economics and macro-economics. What is true at the level of a business, is not necessarily true at the level of an entire country. This is true to an extent. Countries can print their own money. They can borrow long term on bond markets. They can expand into new markets. They can demand more flexibility on the part of their workers. They can adopt new industrial strategies. They can impose or repeal new laws.
But is the flexibility at the macro-level of the economy something that will be always be, and is inevitably true, especially when the ‘inputs’ that nature provides is considered?
With the breakdown of climate, and sharp decreases in bio-diversity, this is the question that needs urgently to be answered.
Joy in Enough 