What is growth anyway?

In recent years ‘growth’ has become shorthand for progress, with politicians quick to promise growth and jobs. Policies are vetted and those that are ‘bad for growth’ are swiftly off the table.

But growth is an abstract term – like ‘activity’ or ‘movement’. It cannot be inherently a good or bad thing, and therefore it ought to be impossible to be blindly for it or against it. As E F Schumacher said in Small is Beautiful, “In a sense, everybody believes in growth, and rightly so, because growth is an essential feature of life” said E F Schumacher. “The whole point, however, is to give to the idea of growth a qualitative determination; for there are always many things that ought to be growing and many things that ought to be diminishing.”

Rather than box people into being for or against growth, a more fruitful question is to ask what is growing? And is that the kind of growth we need?

In his latest paper, Samuel Alexander mentions four possible definitions of growth:

  1. An increase in the resource/energy requirements of an economy (quantitative growth);
  2. An increase in the productivity per unit of resource/energy (qualitative growth);
  3. An increase in Gross Domestic Product (GDP growth);
  4. An increase in wellbeing or happiness (wellbeing growth).

These are not synonymous. As Alexander points out, “one form of growth may or may not lead to other forms of growth. Some forms of growth may have limits, others may not.”

We can all agree that growth in wellbeing is a good thing. There’s no degrowth movement calling for people to be less happy and fulfilled. A postgrowth or steady state economy could take growth in that department as a good measure of progress.

The other definitions are trickier. Endless quantitative growth is logically impossible on a finite planet. You cannot dig more sand than there is sand to dig. Much of the work on the steady state economy is about materials throughput rather than GDP. The circular economy, which is moving rapidly into mainstream business thinking, is also concerned with reducing quantitative and improving qualitative growth.

That qualitative growth, number two on the list above, can take various forms. Some of them can grow substantially, others not. You can never achieve 100% efficiency, for example, so there’s a physical limit to some forms of productivity increase.

So GDP is the only form of growth that can even theoretically continue – and that depends on it not being linked to the other forms of growth. As things currently stand, GDP growth tends to drive growth in energy and materials too, so the mainstream approach assumes decoupling: breaking the link between economic growth and growth in materials and energy. In reality, there is currently no feasible way to decouple fast enough and far enough to avoid ecological collapse. The maths just doesn’t work.

The debate over limits to growth and decoupling will no doubt rage on. For Alexander, and I agree with him, it’s important to get on with developing postgrowth ideas for when they’re needed. “I believe the debate will inevitably evolve,” he writes, “and the question will not be whether a post-growth economy is required, but rather how to create one – by design rather than disaster.” For more on that, check out the full paper, Policies for a Post Growth Economy.

14 Comments on “What is growth anyway?”

  1. lunny06 May 5, 2016 at 5:26 am #

    Reading this from Dubai and based on the conversations I have here I can’t find a single person here who wouldn’t laugh in the face of this idea, as they have been doing laughing in my face with the idea of an alterative world view and economy. However the UAE has just appointed a new Minister for Happiness and they have a Minister called the Green Minister who is passionate about society and environment and this week there was a campaign for people to drink the safe tap water in Dubai. Let’s hope the top down approach works because at the individual level they are still off the charts in knowing, understanding or embracing any other form of growth than GDP!

  2. DevonChap May 6, 2016 at 8:38 am #

    I have read all of Mr Alexander’s article and I feel quite dirty. While his usual lack of grasp of economics was on show as he tried and failed to erect a strawman on the pricing mechanism, what was distateful was the call for dictatorship and could have been entitled ‘Make Liberty History’. This call for control of free speech, state propaganda, re-education of the populus, property confiscation and a return to peasantry is posted here positively. You wonder why I’m critical of this site?

    That this Spode like figure sadly concludes that he won’t get his dictatorship as those pesky humans won’t willingly hand power to him and the eco-Khmer Rouge doesn’t excuse him or those who support him.

    On the plus side he only references himself once which is low for him.

    • Jeremy Williams May 6, 2016 at 3:04 pm #

      • DevonChap May 6, 2016 at 5:22 pm #

        Really? Try reading the article. He does call for all those things. You’re fine with that?

        • lunny06 May 6, 2016 at 7:26 pm #

          That is quite the Sci-Fi response Devonchap with reference to a dictatorship that killed real humans as I know Samuel doesn’t even faintly hint at. This is a new low in your response to your beloved sacred ideas of ‘growth’. As a personal friend of Sam’s he would be too polite to respond so I whole-heartedly agree with a yellow card. I appreciate your alt views to growth and it is sometimes healthy for this blog but there is an extra bitter element in your comment. Might be nice to delete it eh?

          • DevonChap May 7, 2016 at 12:14 pm #

            Alexander’s top down approach requires a huge removal of liberties that are regarded as essential to democracy. He calls for eco- socialism, where whenever socialism of whatever stripe has been tried it has resulted in dictatorship.

            Nice people can believe in nasty things.

          • Jeremy Williams May 7, 2016 at 6:29 pm #

            Two reasons why I’m not dignifying your comment with anything other than a warning:
            1) Gross misrepresentation of the paper itself, which says in the conclusion that “a post-growth economy, if it is to emerge,
            may have to be driven into existence ‘from below’, with local communities coming together to do it themselves” – pretty much the opposite of what you’re suggesting. If anyone’s in any doubt about what Alexander stands for, go and read the paper and decide for yourselves.
            2) More importantly, nobody gets to compare anyone to the Khmer Rouge on this blog. Nor the Nazis or the Taliban. That’s a level of hate that I will not tolerate and I’ve banned others for similar comments.

          • DevonChap May 8, 2016 at 5:32 pm #

            I think we read this slightly differently. Alexander clearly thinks the top down approach is preferable, just not possible. Bottom up is his second choice, not what actually wants to happen.

            “I contend that these policy platforms – all in need of detailed elaboration and discussion – should be the
            opening moves in a ‘top down’ transition to a post-growth economy.”

            “So where does that leave us? In the paradoxical position, I would argue, of knowing that a planned
            transition to a post-growth economy is both necessary and seemingly impossible.”

            I’m sure he’s a lovely man but you are hearing what you want to hear.

          • Jeremy Williams May 9, 2016 at 2:03 pm #

            And from that you apparently jump to genocide, so don’t talk to me about seeing what you want to see.

            And before you comment again, can you do me a favour and read the post again? Because I’m actually interested in talking about the various forms of growth, not what Samuel Alexander might have meant or not meant.

  3. 24-6.org May 6, 2016 at 11:32 pm #

    Congratulations on your blogging award Jeremy.
    The readings you have cited and critiqued have been fascinating, informative and especially rewarding. You clearly provide tangible and inspired ways for society to address humanity’s failures. Samuel Alexander’s paper is a good example though admittedly only an outline of the post-growth conundrum.
    Though irritating that Devon Chap (a dedicated reader of yours) heaps ridicule to the extreme, I shouldn’t disregard his experience or belief uncritically. In fact he seems to relish the insulting tone of derision in defending the status quo conservative ideology.
    I did detect a mention of possibly coercive governance in Samuel’s paper regarding population control. But the overall presentation is illuminating – especially as the idea of GDP is woefully inadequate in a post industrial world. This from The Economist; http://www.economist.com/news/briefing/21697845-gross-domestic-product-gdp-increasingly-poor-measure-prosperity-it-not-even?fsrc=scn/tw/te/pe/ed/thetroublewithgdp
    Steve

    • Jeremy Williams May 7, 2016 at 6:43 pm #

      There are radical implications in the paper, for sure – but those points can’t be raised in a tone of hatred and insult. I do value DevonChap’s contributions and have said so in the past, but this is a level of hysteria too far.

      On the specific example you mention, I didn’t detect that hint of coercion on population. It says quite clearly that ‘command and control’ policies would be a last resort, but preferable to catastrophe.

  4. DevonChap May 9, 2016 at 8:35 pm #

    I find it a delicious irony that the article you referenced to back up Alexander’s contention that (which you clearly agree with) that the maths for decoupling doesn’t work is based on another Alexander paper which in turn references 4 more of his own papers. Is this the Circular Economy in action?

    But enough of that fun. To Alexander’s 4 definitions of growth. To say that there are eventual limits is hardly profound but does not mean we have to go rip up our current lifestyles.

    Quite how close we are to have used all the sand (so to speak) is very debatable. We have had scares about how we are running out of various commodities such as oil for nearly as long as the industrial economy. Hardly surprising since we never need more than 30 years supplies of anything proven. We keep finding more or replacements.

    Similarly with energy efficiency gains. How much scope we have is again debatable with the pessimistic view presented here. Given how much money can be made the incentives. Would this be one of the few things Alexander accepts markets might be good at.

    GDP can grow forever, that really is only limited by human imagination and the rate of decoupling has been rising. This is an area where economic knowledge is key. I’m afraid using Alexander’s papers to prove your contention here is foolhardy since his economic knowledge extends to a few strawmen and no further.

    Human wellbeing is the growth that matters but I hardly think making people 80% poorer will improve their wellbeing. Humans hate loss. The Greeks seem to have suffered a major decline in wellbeing with their economic collapse (nowhere near 80%). There does seem to be a correlation between rising wealth and social improvement in things like equality between the sexes and decline in discrimination against minorities. Advocating a return to a world where most household appliances have gone and working in allotments to supplement your diet suggests women returning to a world of 50 hours+ plus of housework and men doing manual labour. That world is less equal with sharp gender roles. A steep reduction in trade and doing everything locally would reduce people’s horizons and make them more likely to fear the ‘other’. Massive reductions in resources would create a zero sum game mentality in global politics. Basically a return to 1930’s levels of wealth would quite possibly mean a return to 1930s national and geo-politics.

    The idea that the world is circling on the cusp of disaster is an old one and the failure of those disasters to occur does not undermine the faith that something bad will happen. Cognitive dissonance plays a big role. People who still seriously quote Paul Ehrlich generally have a bad case of it.

    • Jeremy Williams May 10, 2016 at 9:44 am #

      See, that wasn’t so hard. Why don’t you skip the abuse and hyperbole and get straight to the point next time?

      A few things to mention:

      First, Alexander’s figures on decoupling are actually from Tim Jackson. And I’m not sure why you’re being snarky about referring to past papers. It’s a way of saying ‘if you want to know more, I’ve written about it here’, which I do all the time.

      Second, GDP is a measure of economic activity that doesn’t measure wellbeing or life satisfaction, which can be rising or falling independently of GDP and there’s plenty of examples of that. And I see no reason why falling GDP would somehow wrestle women back into the kitchen – there’s nothing to suggest that trend works in reverse.

      Third, I don’t think we’re on the cusp of disaster. I think we’re a decade into a long decline, driven by falling energy returns, debt, and a destabilising environment, among other things. That may well turn into disaster if we don’t recognise that and insist on trying to force business as usual. And don’t be so quick to tar all projections of the future with the same brush. Ehrlich may have been very wrong, but the Limits to Growth projections run to 2100 and are still on track.

      “GDP can grow forever, that really is only limited by human imagination” is a massive statement of faith both in the human imagination, and our ability to actually create what we imagine.

      • DevonChap May 10, 2016 at 8:56 pm #

        The focus on GDP is a bit of a red herring. When evaluating a national economy it is one metric of several. I can grow GDP by borrowing, such as Goirdon Brown did or China seems to be doing now but that isn’t sustainable for long. Yet a static GDP against a falling population, such as Japan still means that wealth per head is growing.

        I have a great deal of faith in the human imagination. Our technology would be considered magic by almost the entire history of mankind. Ray Kurzweil thinks we are on the cusp of the technological singularity where human and machine intelligence merge and we have exponential growth. Sounds nonsense but no less than some of the things linked to here.

        I think there is a clear divide between those who see humanity as a problem to be controlled (Alexander, Ehrlich) and the optimists (Simons, Lomberg) who see humanity as the solution. It’s the black v green political paradigm we could be moving to.

        https://aeon.co/essays/left-and-right-are-over-the-future-is-up-and-down

        I was clear that severe social harm will occur if we follow Alexander’s prescription of 80% cuts to our wealth. Staying where we are clearly is causing some social frustration and seems to encourage demagoguery such as Trump but isn’t going to bring social advance crashing down.

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