Why do we need economic growth?

Because the alternatives to economic growth are not attractive

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EDMONTON, AB, Apr 12, 2015/ Troy Media/ – A recent article in Britain’s major left-leaning newspaper The Guardian asks its readers to imagine a ‘post-growth’ society, a world where we do not focus obsessively on economic growth. It argues that we need to ‘reframe the central issue of politics’ to quality of life rather than expansion of the economy, that the proper goal of an economy is not to grow wealth but “satisfying needs, creating a better society and improving our quality of life.”

The authors cite studies of reported happiness that seem to show that since the 1970s happiness has not kept pace with economic growth and has, in many countries, levelled off or declined.

Economic growth and the Myth of the pie

They attribute this unhappiness to inequality, citing yet more studies showing that people report being less happy when other people in their society have more than them compared to societies where levels of wealth are more equal.

Let’s allow that “happiness” can be defined, measured and that people report it honestly and accurately – all dubious propositions. If economic growth leads to all that bad stuff, why then should we still want it?

Because the alternatives – zero or negative growth – are much worse.

economic growth
It’s worthwhile reminding ourselves what the world was like before the Industrial Revolution

First, I must make a digression on pastry. People who know nothing of economics speak of society’s wealth as if it were a pie, asking themselves who should get how much. This implies that wealth and resources are fixed, with only a finite amount to go around. Worse, this Myth of the Pie leads to the Myth of the Chef, some powerful central figure who divides the pie (fixed in size) into pieces and “distributes” them. If the pieces aren’t equal, so goes the Myth, then we are right to demand they be “re-distributed” by that central power in a way we think is more equitable.

In a modern economy, there is no fixed pie. If anything, there is a pie that grows in size with people’s work, entrepreneurship, and innovation. Economic growth, measured by GDP and other factors, is a very crude way to say that more services and goods are being exchanged to meet human wants and desires. Growing the pie consumes resources (though often what is a “resource” can be changed by innovation, as we can now use previously useless uranium oxide to produce power in nuclear reactors).

That ends the pastry digression. We’re used to economies that grow by one or more percentage points every year. In fact, we grow panicked when that growth does not take place, when the growth slows, levels off, or declines. This fear often drives governments into rash and counterproductive action. Why are we so worried?

It’s worthwhile reminding ourselves what the world was like before the Industrial Revolution. In that age, growth (if it happened at all) took place across decades. You could live your entire life and never see anything get better. Each new person born was a new mouth to feed, a new burden on the world. It was hard to produce wealth, and even harder to concentrate it. In a world where the “pie” cannot grow, there is only one way to get more – to take it from someone else.

This taking was not often the result of greed alone. In a world where harvests failed so often that hunger was a regular recurrence, raiding and pillaging were means to survival. If your family were going to starve, you would never share what you have, and would eye covetously the possessions of your neighbour. We give aid to the Third World because we both have much and believe we will have more in the future. If we never thought we’d have more, we’d not only not give them anything, we’d try to take what they had.

Economic growth leads to peace and security

In a world of zero growth, politics would become even more important than it is now for determining who gets what. It would create a Chef to distribute the shrinking pie, and to be Chef would be a position worth killing for (see most of the history of humanity).

That is why we need growth. A world of growth is one of general peace and security, where nation does not look covetously upon nation, and those with wealth do not have to consider themselves at war with those without. That the Guardian can be concerned with something so vapid as “happiness” is a sign of our great illusion, that we imagine ourselves to have transcended human nature.

Michael Flood is a marketing writer and communications consultant. He holds an MA in Philosophy from the University of Alberta.

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