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The Costs of Economic Growth, by E J Mishan

First published in 1967, E J Mishan’s critique of our growth-driven economy was a forerunner of the new economic approach now associated with E F Schumacher and Herman Daly. While a little dated in its style, the basic foundations of his critique are currently only increasing in relevance as the credit crisis, climate change and the end of oil combine forces against the dream of eternal growth on a finite planet.

The key principle of The Costs of Economic Growth is that expanding population, technology and affluence have unintended ‘spillover’ effects, or social costs. Packaged with the consumer ‘goods’ that we seek, come ‘bads’ that we didn’t expect.

Some of these costs are social. For example, along with the new freedoms of car ownership came the novel problems of traffic congestion and the burden of longer commutes. Other costs are environmental. The invention of plastics has made all kinds of products possible and affordable, but has also added a whole cocktail of new pollutants to our air, land and water. Some of the costs of growth are psychological, and much harder to quantify: stress, dependence on technology, or what Mishan describes as “spiritual despair scarcely concealed by the frantic pace of life”‘. Some things have multiple effects. Air travel has made the world a smaller place, but we pay for it in air pollution, noise, contrails above even the remotest and most untouched landscapes, and increased fragmentation of our networks of family and friends. “We have paid dearly,” he writes “for the material plenty and for the technological toys bequeathed to us by science.”

Nobody takes responsibility for these ‘bads’, and nobody pays for them. Often the people who suffer the effects of consumer choices are not the ones who made the choice – pedestrians are killed by cars, children get asthma. I have to live with the air, noise and light pollution from nearby Luton airport, even though I don’t use its services. In the end, these unintended side-effects of our technology and spending power may destroy us.

The solutions are complex, and Mishan’s thoughts are a rambling set of ideas headed in the right direction rather than a prescription. We are told there is no choice but to follow technological advance, but he rightly questions this when technology and progress part company – progress has to be a matter of well-being and quality of life, and when technology no longer serves that overall aim, it needs to be halted. He advocates the extension of human rights to include ‘amenity rights’: access to things like silence, air, and water, that belong to nobody, should belong to all of us. If someone’s actions infringe upon these commonly held amenities, then we should be compensated for our loss. This is not dissimilar to the ‘polluter pays’ and carbon pricing ideas being seriously considered at the moment.

He also suggests ‘reservations’, areas of land where certain things would be allowed or disallowed. It’s an interesting but eccentric idea, especially so when he applies it to cars and suggests there should be motoring reserves where people who like to drive could live and work, while the rest of us get on without them. But then, he does have a remarkable hatred for cars: “The assertion that the invention of the automobile is one of the greatest calamities, if not the greatest calamity, to have befallen the human race is no exaggeration.”

A product of its time, not every suggestion here works, and Mishan’s predictions of robot poetry or artificial wombs veer into distinctly Brave New World territory. Still, despite its shortcomings, this remains a relevant and necessary book. It was updated in 1993, and is now a little hard to find. I wonder if it’s time it was updated again.

As E J Mishan has a certain style about him, as he condemns the ‘baubles and paraphernalia of soft living’, or paints a future that is a ”panorama of unrelieved gloom’, I’ll finish with a few quotes:

on the environment:

“With a complacency, nay a hubris, unmatched in history, and with a blindness peculiar to a consumer society, we have abandoned ourselves to a ransacking of the most precious and irreplaceable resources on our unique planet undeterred by the thought of the future desolation and deprivation of posterity.”

On expectations:

“After some four decades of gorging themselves from a cornucopia spilling over with the ‘good things of life’ – enabling them, incidentally, to wreak havoc on the environment in which they are immersed – and of quaffing regularly at the fount of unlimited expectations, workers in the affluent West have come to believe that they are entitled by providence to an annual rise in their earnings.”

On work:

“This is a sad state for any nation to be in, and in an affluent nation surpassingly strange: to have come this far into the twentieth century with economists interpreting the alleged increase in our real income as ‘enrichment’ or, more sagaciously, as an ‘extension of the area of choice’, and then to be told almost daily that we have no choice; that if we are to pay our way in the world we must work ever harder.”

On throwaway culture:

“The ‘Age of Abundance’, it transpires, is abundant with prepackaged and chemically processed foodstuffs, with plastic knick-knacks, with plug-in electric gadgets and stereo equipment. And a part of the price that people in the West pay for this unending procession of shiny assembly-line products is the concomitant loss of those now rarer things that once imparted zest and gratification – the loss of individuality, uniqueness and flavour; the loss of craftsmanship, local variety and richness; the loss of intimacy and atmosphere, of eccentricity and character.”

11 comments

  1. How come mr Mishan is not more appreciated, at
    least in the Scandinavian countries? During
    my studies in Stockholm in the sixties I read the Costs of…. and – jumped away from the studies.

    I had come to the conclusion that to propound
    M:s thoughts would be futile. So I turned to
    other things. Living comfortably now at the age of 73 gives me the opportunity to read
    – and reread.

  2. I don’t know why he’s not better known. It’s not just the Scandinavian countries, I’d never heard of him here in the UK either. I just spotted the book in a second hand shop and the title caught my attention. His books are out of print and there is hardly any information about him on the internet, but this book certainly still has lots to say.

  3. Please i would like you to be of help to me. I do have two questions and also i would plead that after it has been published here, a specimen of it would go to my mail as given above with all due respect. The questions are
    1. Is a constrained optimization approach a solution to the possible costs of economic growth?
    2. Are worries about the consequencies of economic growth a ‘luxury’ that only rich countries can afford?

    Thank you

  4. Hi Richard,

    I’m afraid I don’t know enough about constrained optimization to know how it would apply to the economy – I believe it’s a mathematical problem? If it is what I think it is, then the pricing in of externalities may apply?

    As for the consequences of growth being a ‘luxury’, no, I think they always remain a problem. As John Stuart Mill and other early capitalists explained, the idea was that growth would continue until a good standard of living had been achieved, and then the economy would level off. We’ve forgotten that, and we’re now into what Herman Daly calls ‘uneconomic growth’, where any further growth is actually detrimental.

    So, it’s never a ‘luxury’, but it is a problem that faces developed countries more. The lesson for developing countries is to avoid the mistakes we’ve made, and spread the rewards more evenly through society from the start.

    Copied to your email as requested.

  5. Very interesting

    Agree with Mishan – from a sum zero game conceptual framework,forget growth, if growth implies simple sums of Gdp/GVAs. These measures have recently proven us wrong as for this time we have had banking failures followed by corporate failures rather than the other way round. We are infact a ‘gut feel / quaitative’ era. Simple sums and calculus can no longer be the basis of our future, I am not implying that we indulge in complex modelling accomodating infinite factors, but more so suggesting a very change in our collective realism of consumption and trade, be it individual, local or central government on issues such as responsible procurement and international trade. Sharma Guness

  6. I think that recent financial crisis highlights the need for drastic change with regard to the economic models and systems that every country in the world adheres to. I talk of monetary systems (whether socialist or capitalist, they are both differing degrees of the same thing), that are designed to thwart progress, in order to maintain the status quo, where the rich get richer, and the rest work harder for less.
    Look at who benefitted from the recent crisis. These people will never relinquish their power. These people have moved further towards controlling everything.
    Politicians, and politics, as we know them are now redundant. They have nothing to offer.
    We live in a world of abundance, where scarcity is a choice made by those with controlling interests in the economy, to maintain high prices for their outdated products (airplanes for example, magnetic levitation powered trains can move much faster, and without adding to the pollution problem).

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