Review of Analysis: Economic Growth – can we ever have enough?
Economic Growth – can we ever have enough? is an episode of the Radio 4 Analysis programme first broadcast on 12th November 2022. The received wisdom that maximising economic growth should be at the heart of economic and social policy is rarely challenged in any sphere of public life including the mainstream media. So it was very refreshing and exciting to listen to a 30 minute Radio 4 programme that did just that. The program, presented by Edward Stourton, represented both sides of the debate with contributions from six economists: Tim Jackson1Tim Jackson is an ecological economist and Director of the Centre for the Understanding of Sustainable Prosperity (CUSTP) , Diane Coyle2Diane Coyle is a Professor of Public Policy at the University of Cambridge, Benjamin Friedman3Benjamin Friedman is a Professor of Political Economy at Harvard university, Danny Dorling4Danny Dorling is a Professor of Geography at Oxford University, Motohiro Sato5Motohiro Sato is a professor of economics at Hitotsubashi University, Jayati Ghosh6Jayati Ghosh is a Professor and Poltical Economy Research Institute.
The most outspoken ‘pro-growther’ was Benjamin Friedman who argued that GDP growth was important for strengthening the fabric of society, saying that qualities like generosity, tolerance and commitment to democracy are stronger when GDP growth gives a sense of forward progression. But I wonder what his evidence is for this? Certainly the lived experience of many of us is that generosity is more frequently encountered amongst the less well off than the more affluent. Furthermore our social and economic structures start to fail under conditions of low growth precisely because they are constructed to only function effectively only under conditions of growth! Proponents of degrowth argue that we need fundamental changes to these structures so that low growth does not threaten social cohesion and cause recessions.
Japan was examined as an example of an economy which after a period of massive growth between WW2 and the 1990s, has experience almost three decades of low or negative growth. Danny Dorling pointed to the continuing prosperity of Japan as an example of adapting to low growth conditions. But Motohiro Sato lamented Japan’s low growth, on the one hand suggesting that poverty has increased since growth slowed, but on the other hand repeatedly referring to Japan’s good living standards. That paradox is suggestive of rising inequality, which is not surprising if Japan has failed to adjust its economic and social structures to the reality of low growth. The same rising inequality can be seen elsewhere when GDP growth has stalled but politicians grind on as if it hasn’t. Motohiro Sato said that if living standards don’t continually go up, people have no hope for the future. I completely disagree with this. Once people are comfortably well off and can see that continuing into the future, they look to progress in other ways, for example developing richer relationships with friends and family or their interests in the arts and other enriching spheres.
Diane Coyle – also a proponent of further economic growth in advanced economies – believes that low or no growth will prevent people from inventing new things and improving the quality of our lives. I’m continually staggered by the low opinion of humankind’s creativity, resourcefulness and imagination amongst those who uncritically advocate for economic growth. The view of humanity shared by Diane Coyle, Benjamin Friedman and Motohiro Sato seems to be based on the model drummed into all students of mainstream economics – Economic Man – a deeply flawed view that serves no useful purpose in the 21st century. It seems to them that we will all become zombies, incapable of innovation, creativity or improvement, unless we experience continuous economic growth, even beyond the point where we are comfortably well off.
Tim Jackson and Danny Dorling described the reality that advanced economies, after a period of high growth have entered a phase of low growth that is likely permanent. Danny Dorling said that for the last 70 years average world GDP growth has fallen decade on decade, but he also noted that advanced economies have already reached the point where they have all the wealth required to give everyone what they need. The problem is that we do not distribute it equitably: indeed inequality is rising.
All the economists on the programme agreed that in less advanced economies a period of strong economic growth is required to raise living standards. Tim Jackson and Jayati Ghosh both suggest that countries where the per capita income is below $15,000 require growth in their economies. The requirement for poorer countries to grow their economies while more advanced economies slow or stop economic growth is universally advocated in all the degrowth literature I have read. Despite this, Diane Coyle felt it necessary to imply that “degrowthers” advocate “pulling up the ladder” to prevent poorer countries growing their economies: a line more worthy of a campaigning neoliberal politician than the balanced view of a professor of economics!
Diane Coyle talked about widespread efforts to develop measures and/or tweak the measurement of GDP to account for environmental concerns. I would welcome such changes, but I don’t believe that current politicians in the UK – of any political persuasion – will pay attention to any measures which act as a break on growing the economy. Despite her evident concern for the environment, Diane Coyle herself is a strong advocate for economic growth – especially green growth – but as Tim Jackson pointed out, the very concept of green growth is not backed up by any meaningful evidence and there are many theoretical arguments to suggest that it is, in his words, only a “pipe dream”.
The final words went to Tim Jackson who said that despite the new reality of low or zero growth in advanced economies, we have not yet developed economics for these conditions: we remain unprepared for the future. We need to address this urgently if we are to adjust and thrive under conditions of degrowth rather than fall precipitously into a degrowth world.
On the whole, I felt that the program did a good job of representing both sides of the argument over a 30 minute format. But I was disappointed that there was a frequently repeated conflation of degrowth with recession. I wasn’t very surprised by this since the very term “degrowth” invites this confusion. But degrowth is not the same as recession and a recession is not a taste of degrowth. Proponents of degrowth go to lengths to say that recession is a very bad thing and something to be avoided. But all-to-real recessions are a feature of growth-based economies – the only economies we have – not economies structured around the principles of degrowth which we can only imagine but have never experienced. Recessions are what we get when the fantasy of endless economic growth bumps up against the realities of real-world limits. It is perverse to saddle degrowth with the burden of recession when recession is manifestly a feature of growth-based economies!
- 1Tim Jackson is an ecological economist and Director of the Centre for the Understanding of Sustainable Prosperity (CUSTP)
- 2Diane Coyle is a Professor of Public Policy at the University of Cambridge
- 3Benjamin Friedman is a Professor of Political Economy at Harvard university
- 4Danny Dorling is a Professor of Geography at Oxford University
- 5Motohiro Sato is a professor of economics at Hitotsubashi University
- 6Jayati Ghosh is a Professor and Poltical Economy Research Institute