Commentary on Economics for a Full World
Herman Daly invites us to ask the most fundamental question of all—What is the economy for?—and then to ask what conceptual tools we need to analyze the economy once we have answered the first question. His essay also poses an even more challenging question: What if the economic problems we face in those parts of the world suffering from “uneconomic growth” (to use Daly’s evocative term) are not ones to be addressed by more production and consumption and productivity gains as conventionally viewed? What if our economic issues can be better addressed by looking at them as, in part, problems of excess demand/consumption and not insufficient supply? And additionally through looking at redistribution and equalizing consumption?
The idea of undifferentiated economic growth (GDP) as a permanent feature of the economy, as opposed to a historically necessary but analytically contingent feature of understanding the economy, is the moot issue. We need to dispel some understandings about “post-growth” political economic thinking. First, it does not mean no growth in the majority world. In the full world described by Daly, a condition for the development of the majority world, via economic growth in part, is the reduction in economic growth in the unsustainable minority world. Second, “no-growth” at the aggregate level is compatible with growth within different sectors of the economy—a reallocation of resources as Daly puts it, e.g., more public libraries and growth in public transport rather than private car ownership and use. Third, a post-growth political economy does not mean an end to development, prosperity, progress, and human flourishing. Finally, being post-growth does not make one blind to more progressive forms of growth such as pro-poor growth, growth with egalitarian welfare policies such as a living wage, or indeed “green growth” of the low-carbon sort promoted under various policy proposals ranging from the Green New Deal, sustainable growth policies of the European Union. However, the incontrovertible empirical reality, but one that is extremely politically inconvenient, is that in the full world described by Daly, we have to move our economic imaginary beyond undifferentiated economic growth as a permanent feature of the economy.
My own work and thinking on this topic for over two decades has convinced me that undifferentiated economic growth as a permanent feature of the economy is an ideology, and an ideology which serves elite interests in both disciplining populations and especially in removing the issue of socio-economic redistribution and inequality from the political agenda.
Indeed, and taking inspiration from authors such as Daly and other contemporary “heterodox political economists” such as Tim Jackson, Molly Scott-Cato, Juliet Schor, Peter Victor, and Giogios Kallis (as well as older thinkers like Nicholas Georgescu-Roegen, Ivan Illich, Karl Polanyi, and E.F. Schumacher), my own suggestion for moving beyond undifferentiated economic growth as a permanent feature of the economy rests on the following three criterion or tests for any economic policy or strategy:
- Does it increase or decrease carbon intensity, resource use, and pollution?
- Does it increase or decrease socio-economic inequalities?
- Does it increase or decrease qualitative measures of human flourishing?
And this is why Daly’s essay and others that point out that the neoclassical economic growth “emperor has no clothes” are an invitation for economics to return to its roots in “political economy” and integrate political, democratic, as well as ethical and normative dimensions within how we think about and design policies and institutions for the creation and sustaining of the human metabolism with nature that is the human economy.
A significant issue at the heart of our problems is measurement and the use and dominance of GDP. After all, what gets measured gets done. Apart from the well-known problems of GDP as a measure of social welfare (not differentiating “goods” from “bads” primary among them), GDP since its creation in the interwar and post-war period has enabled thinking about the economy to become separated from the “real fundamentals” of the human economy, namely the natural world. As GDP is just a monetary figure, one could be seduced into thinking that as monetary measures can grow infinitely (“angelic” in Daly’s terminology or “noumenal” in the older language of Immanuel Kant), economic growth can equally infinitely grow beyond the biophysical limits of the planet. But given that money is a claim on resources/goods, unless we can eat inflation, and unless we simply view monetary increases in the value of economic activity as the object of economic growth, this monetized conception of GDP is a form of double think. It presents the phenomenal (in Kantian terms) or “throughput/resources/energy/pollution” (in Daly’s) as noumenal.
For elites, the increase in the monetized value of assets/economic exchange brings power (to the extent that it is both a claim on resources/the diminishing fruits of economic growth and part of an ideology which disciplines and organizes populations). For ordinary citizens, what matters is actual bread, electricity, and transport/mobility, not the monetized value. This is why ordinary citizens (unlike elites in the state, academic, corporate, and media worlds) are not concerned about abstract measurements or movements in GDP-measured “economic growth.” Working people are concerned about declines in economic growth because of their concerns with unemployment, not with GDP achieving a 3% annual increase. It is this difference which explains the relief of elites when “jobless growth” can be announced. Daly and others raise a key point: Why do we not see these elites promoting job-rich strategies in which economic growth is not the objective? Where do we find policies and op-eds extolling the urgent need to improve the energy or resource efficiency not of production but of human well-being and human flourishing?
For example, my own suggestions are for a transition away from “buildings, banks, and boutiques”—which I use as shorthand for property speculation/homes as assets, the growth of the financial sector relative to the real economy, and debt-based consumerism, which together constitute the dominant failed economic model. These are the key features of our failed economic growth system that so spectacularly crashed in 2007-8 and to which almost all governments and, it has to be said, populations seek to return (though perhaps with some more—albeit—light financial regulation). So instead of trying, like Dorothy in the Wizard of Oz clicking her ruby red slippers, to say “there’s no place like pre-2007,” Daly and other “green political economists” invite us to imagine a new economic vision. So instead of “buildings, banks, and boutiques,” why not “libraries, laundromats, and light rail”? Instead of a return to an economic system based on private debt-based ownership of goods and services, why not one based on forms of sharing and collective as opposed to private consumption? One where the management and use of real assets, rather than finance, are the basis of the economy?
Perhaps much like how the road to hell is paved with good intentions, the pursuit of economic growth has (in part and in the past) been motivated by progressive ideas. Who cannot welcome and celebrate the historical achievements of economic growth over the past century in terms of improved health, public sanitation, and the deployment of technology to reduce arduous labor, raise living standards, etc.? But, as astute observers from John Stuart Mill to Herman Daly have pointed out, we in the over/mal-developed minority world need to attend to thresholds (e.g., for carbon/resources/pollution or levels of inequality) as well as trajectories. Richard Wilkinson and Kate Pickett explained this well in their book The Spirit Level:
Economic growth, for so long the great engine of progress, has, in the rich countries, largely finished its work. Not only have measures of well-being and happiness ceased to rise with economic growth but, as affluent societies have grown richer, there have been long-term rises in rates of anxiety, depression, and numerous other social problems. The populations of rich countries have got to the end of a long historical journey.1There seems to be a growing consensus within green political economy around the need to move beyond orthodox GDP undifferentiated economic growth as a permanent feature of the economy. Like the consensus in the scientific community around anthropogenic climate change, it finds itself an inconvenient truth in terms of the large gap between intellectual/empirical plausibility and political/policy implementation. How do you sell a steady-state economy? That is, how do you present the vision and narrative of green political economy in a way that is appealing and likely to garner public support?
This seems to me to be the question and one perhaps worthy of a future debate. But, for now, let me finish with a suggestion. I think there is some potential in replacing “economic growth” with alternatives such as the International Labour Organization’s concept of “economic security.” The ILO report defines economic security as “composed of basic social security, defined by access to basic needs, infrastructure pertaining to health, education, dwelling, information, and social protection, as well as work-related security.”2
Tellingly, the report continued,
People in countries that provide citizens with a high level of economic security have a higher level of happiness on average, as measured by surveys of national levels of life-satisfaction and happiness....The most important determinant of national happiness is not income level—there is a positive association, but rising income seems to have little effect as wealthy countries grow more wealthier. Rather the key factor is the extent of income security, measured in terms of income protection and a low degree of income inequality.3Whether linked to notions of Maslow’s hierarchy of needs; interests in security (witness the emergence of “energy security”); welfare state notions of social protection and provision of needs; or a shift towards holistic notions of human flourishing, well-being, and quality of life, economic security in such anxious times as ours, with heightened socioeconomic “insecurity” and growing employment precariousness, may find resonance with publics in a way to challenge the dominant ideological “common sense” of “a return to economic growth.”
However, whether it is “economic security,” “degrowth,” “prosperity or development without growth,” the “steady-state economy,” or even “sustainable development” itself, it is clear that what “post-growth” politics needs is a compelling narrative that attaches to peoples’ needs, aspirations, and values, and this can only be done by democratizing this challenge and the search for alterative economic models and associated alternative economics. The challenge is in large part one of competing visions. It is an old adage that “without vision the people perish.” However, it is precisely with the dominance of this economic growth vision and myth that human and nonhuman perishing, needless suffering, and blighted life chances will result as opposed to equitable flourishing. What we need are new economic visions of the type eloquently outlined in Herman Daly’s essay. And while the entire “post-economic growth” political project is indeterminate and asks more questions than it has answers for, we can do no better than to begin this inquiry into a new economy for the twenty-first century than by asking that fundamental question: What is the economy for?
1. Richard Wilkinson and Kate Pickett, The Spirit Level: Why More Equal Societies Almost Always Do Better (London: Allen Lane, 2009), 5-6.
2. International Labour Organization, Economic Security for a Better World (Geneva: ILO, 2004), 1, http://www.ilo.org/public/english/protection/ses/info/publ/economic_security.htm.
3. Op cit.
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