Prosperity without Growth?

Tim Jackson, Prosperity without Growth: Economics for a Finite Planet

Post No. 2 in a series about Prosperity

What would it be like if our economy stopped growing?

It’s a prospect that terrifies governments, as we know from the desperate measures they took to restart growth after the Global Financial Crisis. So why does Tim Jackson want rich countries to stop growing?

Because, he says, a continually expanding economy collides with the limits of a finite planet, so that we run out of resources, cause climate change and destroy ecosystems. To stabilise these impacts while continuing to grow, technological innovation would need to occur many times faster than it has in the past, which is improbable, so we need to stop growing. But when we stop growing, businesses go bust and people are thrown out of work. Thus the stark dilemma: growth is unsustainable, but de-growth is unstable and causes suffering.

Restless consumers, restless producers

According to Jackson, we are trapped in a perpetual cycle of ballooning production and consumption. The profit motive stimulates newer, better or cheaper products and services through continual innovation, and the demand for these goods is driven forwards by the way that material goods have come to provide us with meaning, identity and status.

Jackson says that we continually receive social signals favouring materialistic individualism and the pursuit of novelty, signals which penalise pro-environmental behaviour and make it hard to act sustainably without sacrifice. Novelty keeps us buying more stuff. Buying more stuff keeps the economy going. The end result is a society locked in to consumption growth by forces outside the control of individuals. The restless desire of the consumer is the perfect complement of the restless innovation of the entrepreneur, and these two self-reinforcing processes are exactly what are needed to drive growth.

Jackson makes use of Shalom Schwartz’s theory of human values, which is structured around two tensions: firstly between selfishness and altruism and secondly, between novelty and maintaining tradition. Both selfishness and novelty have played an adaptive role in our evolution, but so have altruism and tradition. Each society strikes a different balance between them. When our social norms and institutions – media, schools, government, etc – send signals rewarding self-enhancement and novelty, these prevail.

How can we have prosperity without growth?

Jackson wants a debate on what constitutes true prosperity, and whether we can move to an economy that does not grow but where humans still flourish. He eschews both revolution and incremental change, seeing dialogue as essential to the achievement of prosperity without growth. Such massive change would need both leadership and popular mobilisation. He puts forward some possibilities for fixing the economy and addressing the social logic of consumerism.

On the economy, he questions our fetish with labour productivity, and suggests low-carbon, labour intensive activities and services that employ people in ways conducive to human flourishing, such as what we see now in community-based social enterprises.  He also considers more ecological investment, regulation of financial markets, greater incentives to save, and moving to a shorter working week and more leisure time in order to share the work.

To dismantle the culture of consumerism and build up the capabilities for people to flourish in less materialistic ways, the signals rewarding selfishness and novelty need to change. This can only be done with popular involvement and support for change. Among Jackson’s many suggestions are tackling inequality, building social capital, stronger regulation on commercial media, flexible working hours and trading standards for durability.

The book has problems: one is a lack of a convincing political strategy, given the difficulty of persuading people who are not already committed environmentalists. The second is his assertion that we can have capitalism without growth. Jackson defines capitalism as private ownership or control of the means of production. But capitalism is more than this – it is the dynamic that links innovation to accumulation and investment, which means growth, as discussed by Matthew Lockwood (Head of Climate Change at the University of Sussex). Jackson hasn’t fully explained how a steady state economy could exist within a capitalist system, and if it can’t, what the alternative would be.

Apart from these deficiencies, Jackson’s book is a comprehensive introduction to the rationale for zero economic growth, and has much more analysis and many more proposals than I have been able to hint at in a short post. But is he right? There are many who believe it is not only possible but necessary to stay on the growth path. One of the most eloquent advocates of this view is Matt Ridley, and later posts in this series will review his recent book, The Rational Optimist: How Prosperity Evolves, and tackle the question: which of these clashing world views better represents reality?