Sunday, March 23, 2014

Economic growth is merely the tinfoil hat on the frothing lunatic that is conventional economic theory.

There is a discussion on a Green Party email list about economic growth. My 2p:

In the Alice in Wonderland world of politics that we seek to enter and influence, economic growth is held to be the norm that guarantees our prosperity. Recession, or contraction, also inelegantly called de-growth, guarantees misery for many because it means unemployment and poverty.

So conventional economics demands continual growth.
But it is axiomatic that it is impossible to expand forever into a finite space.
It is so axiomatic that even one or two conventional economists and politicians have noticed it.

We in the Green Party have been opposing growth for four decades. The reaction from the mainstream has been mainly "La La La, we can't hear you".
 Occasionally a more thoughtful politician will tell us "You cannot get people to vote for a reduction in their living standards".

(As an aside, the Tories have proved this wrong. You can get people to vote for a reduction of their living standards so long as you have the media on your side, and so long as you can blame it all on Labour, and so long as Labour doesn't have the nous to speak up for itself).

But given that we in the Green Party do not have the press on our side, it is true that we cannot get people to vote for a reduction in their living standards, which is what non-growth means in common parlance.

So maybe it is time for us to unpack the term "growth".

The essential problem with our economy is throughput of materials. Throughput as in transformation of coal, oil and gas into CO2 in pursuit of energy. Throughput as in using said energy to mine materials, to make them into items that are often trivial, unneccessary, and unfit for purpose, and then disposing them into landfill. While emitting toxic pollution at many stages of this process.

That is the problem - the linear, mine-make-dispose model. It is a model that is toxic at present levels, let alone at levels that must always be growing.

So the first priority for green economics is to transform the linear consumption mode into a cyclic mode. Manufacture for quality and durability, use the product for as long as possible, repair it, and eventually recycle it. A cyclic production mode.

At the same time as we close the cycle, we need to stop destroying resources that are essentially renewable - i.e. soil, forests and fisheries. It is one thing to exhaust a finite resource (like guano, a big source of phosphorus which has been the first to go), but an entirely separate order of stupidity to exhaust resources that should be inexhaustible if managed rightly.

So growth is not really the No 1 problem.
It is just an added stupidity on a system that is already intolerably stupid.
If we stopped growing the present economy, we would still run out of materials.

Then there is population growth. Contentious, but the short and conclusive answer to our friends that talk about consumption levels as being the most important issue is that if the entire human population of earth had the optimal ecological footprint, we would still have to curb our population growth.

So the political issue that we have to address is not just "Economic Growth" as an abstract concept, but the issue of throughput of physical materials through our economy, particularly of carbon.

This changes the game materially. The transition from linear to cyclical requires a lot of work. That will cost a lot of money, but money is not a commodity, it is a flexible human construct that exists for the purpose of easing the functioning of the human economy.

Our opponents (primarily the climate deniers) scream that the cost of transition from carbon energy will wreck the global economy. It is true that it will wreck the carbon corporations, but hey, things change. The Stone Age gave way to the Bronze Age, to the Iron Age, to the Steam Age, to the Oil Age and now finally to the Solar Age. Oil will wither, and yes, this does pose financial problems to those who have invested billions in their false prospectuses, but that's the market for you.

The point that we have to insist on is that the cost of the transition represents a lot of wages. A lot of salaries. A lot of families with food on the table. Yes, there will be lay-offs in the oil industry and its spin-offs, but there will be recruitment in the green sector.

There is recruitment in the hardware side of the green economy - the Green New Deal part, public transport, and the other physical projects such as house-building and flood defences. Green work is generally labour intensive.

At the same time, we can point to expansion of the softer "human" sector of the economy - health, education, and social care. The ageing population is not a threat, it is an opportunity for us to exercise our humanity.

So to summarise, growth is a problem, yes, but only in that it is growth of an economic system that is already  problematic (not to say insanely destructive). Curing this insanity is in no way similar to a recession or a depression. It is going to involve a period of intense economic activity, but in this case, it will be constructive, not destructive economic activity.

I hope that I have explained this clearly enough. I have left out many important details, as it is not possible to be comprehensive in a short post.

But I hope I have explained that to stop "growth" of our economy would not be enough. The real issue is to transform the economy from a linear to a cyclic mode. This transition is nothing like a recession. It means that everyone will have an opportunity to participate in the true wealth of the new economy.

[a little bit more on growth]


Stuart Jeffery said...

I am getting asked more and more about growth on the local radio. Rather than a complex line about cyclic economies, I explain what growth means: more people, more traffic, more pollution etc. Only then do I mention that there are alternatives which will improve fairness, increase jobs etc.

DocRichard said...

Stuart, you are doing well to be able to speak to the media, and to have found plain words that they will accept. However, behind our words there are concepts, and thinking is a valid thing for us to do, even if thought generally, and words like "linear" and "cyclic" have no place on the media.

Or we can use analogies. The present econom is like a single use battery, that you buy, use until it runs aout, and then throw it away. The Green economy is more like a rechargeable battery that you buy, use until it runs down then charge it up again, and keep on using and recharging it.

Not a perfect analogy by any means. Anyone got a better one?