Prosperity without Growth - book review

‘Prosperity without growth’

by Professor Tim Jackson (Earthcscan Books) 

From a study that examined “the kind of economic growth that is compatible with the transition to a genuinely sustainable society and the kind that absolutely isn’t’.”

review by Colin Cook  

First published in 2009 and based on a 2003 initiative of the UK government, ‘Prosperity without Growth’ by Prof Tim Jackson, is still very relevant. The passage of years has seen global increases in inequality – within and between nations - as political elites, often yielding to self-interested lobby groups, pursue economic growth; economic growth with but scant respect for the environment, social consequences and historical examples. How many millions of people are now ‘displaced’, how much debt ‘burdens’ nations – and more dangerously – their citizens?  

All such relate to the subject matter of this well-researched, invaluable look at where we are and where we ought to be heading.

Growth

The Term Growth is commonly understood to mean an ever increasing GDP figure – GDP being a measure of a ‘society’s busyness’.  It can be seen as ‘a fair reflection  in broad terms of rising incomes’  and since we continue to spend more and more on commodities and services, it can be argued that we would not do so unless they improved our lives, unless we valued them; hence, increasing per capita GDP is taken as a reasonable measure of increasing prosperity. But this conclusion is tempered by increasing inequalities within a population; an increase in the national average GDP can easily mask a significantly large disadvantaged population.

Jackson analyses growth in detail –

• its importance to the workings of the modern economy,
• its significance in our own ‘western’ lives,
• its incompatibility with obvious ‘only one world’ ecological and resource limits.

The modern economy must grow because labour efficiency is continually improving – we produce more for less labour input. Prof Jackson shows that labour productivity is a two-edged sword; producing the same amount of goods and services more efficiently means some will lose their jobs or income; producing more with the same labour means more resource depletion/ecological impacts. In Australia, we have the Productivity Commission to keep that sword finely honed.

We need more ‘stuff’ in our lives because we have invested material goods with attributes way beyond their strictly utility purposes. We ‘imbue material things with social and psychological meanings’. Our material possessions are felt to be part of the ‘extended self’. ’Our relationships to our homes, our cars, our bicycles, our favourite clothes, our books, our CD or DVD collections, our photographs and so on, all have this character’(p98). And in our social relationships, ‘Consumer goods provide a symbolic language in which we communicate continually with each other …. About what really matters to us: family, friendship, sense of belonging, community, identity, social status, meaning and purposed in life’(p50). Technology delivers an ever increasing array of goods and innovations so we need to keep updating our possessions so they continue to fulfil these needs; this latest gizmo heading for obsolescence is a powerful driver of economic growth – itself amplified by new ‘middle-class’ aspirations around the world. In consequence, we demand ‘growth’ from our politicians. A politician who does not promise growth is un-electable!

The growth of GDP needs continually increasing consumption of non-renewable resources – oil, natural gas, coal, steel, rare earths But there is a proposition that if we economise and recycle , we can de-couple growth of GDP from these ecological limits. ‘No way’, is Jackson’s conclusion. True, we can use less material per unit of GDP but if GDP were to keep growing indefinitely, the maths is conclusive; sooner rather than later, total material needs will overcome the supply.  The chapter, ‘The Myth of Decoupling’ makes the case indubitably.

Prosperity.

The capabilities, the possibilities of members of society ‘to flourish’, translates to ‘prosperity’ for Jackson. He writes, ‘Physical and mental health matter. Educational and democratic entitlements count too. Trust, security and a sense of community are vital to social well-being. Relationships, meaningful employment and the ability to participate in the life of society appear to be important almost everywhere’. And taking a wider view, ‘Prosperity is a shared vision’ - encompassing the elimination of hunger and homelessness, end to poverty and injustice, hope for a secure and peaceful world. Prof Jackson characterises the world today as having ‘islands of prosperity’ within ‘oceans of poverty’. Certainly, prosperity is not economic growth pure and simple.

But, he observes, ‘The role of government has been framed so narrowly by material aims and hollowed out by a misguided vision of unbounded consumer freedoms’. Recommending extensive change, Jackson later comments, that a critical task is ‘to identify and correct ..    those ..perverse incentives that are in favour of a materialistic individualism and undermine the potential for a shared prosperity’.

There is some evidence to suggest that up to a point, rising income levels/National GDP figures enable citizens to flourish better; being at the top of the social pile does give benefits in terms of health and happiness, of life satisfaction. So how can we meet the expectations of a population without growing GDP? There is much data showing that growth of GDP per capita above $15,000 (2005$) contributes little to factors enabling the population at large to flourish. Some recent work in OECD countries looking at a range of health and social issues shows that ‘Inequality has damaging impacts across the nation as a whole’.  Indeed. there is an underlying theme throughout the book that the world needs greater equality – for social cohesion, to make fairer use of its resources, to give everyone a chance ‘to flourish’, to enjoy their talents and opportunities within the ecological limits available. ‘An unequal society is an anxious society….’

Transition

Stating early on that, ‘Our technologies, our economy and our social aspirations are all mis-aligned with any meaningful expression of prosperity’ it is not surprising that Prof Jackson’s study calls for major changes. The chapter on the Transition to a Sustainable Economy lists a dozen of so areas of change under the headings of Establishing the limits, Fixing the economic model and Changing the social logic. Summarising he writes, ‘In the first place we need to establish ecological bounds (limits) on human activity. Secondly there is an urgent need to fix the illiterate economics of relentless growth. Finally, we must transform the damaging social logic of consumerism’. They comprise a daunting agenda demanding action from all sectors of society. This is the ‘must read’ chapter – encouraging, hopeful, even inspirational.

Capitalism

The economic model to which Jackson refers is, of course, capitalism and he is obliged to devote several pages to the question, Is this the end of capitalism?

There are several observations that may well ‘frighten the horses’! The need to develop the technical capacity…for ecological macro-economics  …..and to …..increase public control over money supply, the need for more public ownership to yield necessary infrastructure for people to ‘flourish’, stronger regulation in relation to the commercial media, …the creation of jobs whenever…...labour is employed in protecting or improving public assets. And, ‘The capitalist model has no easy route to a steady state position. Its natural dynamics push it towards…. expansion or collapse’.

The observations ‘A capitalist economy runs on debt’ and ‘A fundamental principle of capitalism is that these liabilities (aka financial debts) attract interest over time’ are of particular interest if you have read anything about usury – the charging of interest on loans. Much has been written arguing that interest can never be re-paid save by pushing others to take out other interest bearing loans – or ‘lose their shirt’, maybe bankruptcy. En passant, all major religions have strictures on usury – notably ignored by Christians! Increasing global indebtedness and ‘loss of shirts’ seem to confirm this hypothesis. Jackson does not go down this path but you can Google ‘usury’!

Prof Jackson does point out that capitalism exhibits varying characteristics under various circumstances – even nationalising banks when it suits! But generally economic growth and minimal regulation of commerce are accepted features of a ‘good’ capitalistic economy. He asserts that investment in capital assets will remain ‘critically important’ but how this happens will be very different from the way capital markets work today. ‘Probably a good thing too’ in view of their culpability for the 2008 crisis, he observes.

And is it ‘The End?  It could be the end of capitalism as we know it or it might remain as capitalism, ‘But not as we know it’! Take your pick – there will be changes.

Conclusion

What you take from a timely read of this stimulating, provocative book will depend on whether you are an optimist or a pessimist – there are convincing pointers, and excellent references for us all.  Prof Jackson makes a plausible case for the possibility encapsulated by the title and the inevitability of it if we are to survive as a civilised society in the face of the earth’s ecological restraints. Indeed, he writes, ‘For the advanced economies of the western world, prosperity without growth is no longer a utopian dream. It is a financial and ecological necessity.’

      

But the case rests on fundamental changes in us humans - our behaviour, value systems and outlooks – and there is the rub. It is up to us!

Footnote

The book is the outcome of an extensive enquiry by the UK Sustainable Development Commission (SDC). The enquiry was launched in 2003  on the publication of the Commission’s landmark report – Redefine Prosperity which challenged government ’fundamentally to rethink the dominance of economic growth as the driving force in the modern political economy, and to be far more rigorous in distinguishing between the kind of economic growth that is compatible with the transition to a genuinely sustainable society and the kind that absolutely isn’t’.  See Wikipedia for Tim Jackson (Economist)