The capitalist world we are familiar with today requires continuous economic growth so that the delicate balance of employment, production, and consumer spending is maintained. When economic growth is low then unemployment is usually higher because there is less demand for goods, so businesses produce less and therefore need fewer workers. When economic growth is zero or negative then unemployment is always higher due to the fact that businesses are reluctant to hire workers because of uncertainty, and other businesses go bankrupt and have to lay off workers. When economic growth is high, which has long been the holy grail of economists and politicians, conventional wisdom suggests that the increase in national output significantly improves people’s standard of living.
The benefits of economic growth are thought to be:
Increased consumption
Consumers can benefit from consuming more goods and services, so with higher consumption levels the assumption is that there is greater prosperity.
Improved public services and infrastructure
With increased tax revenues the government can spend more on important public services such as healthcare and education, and improve infrastructure.
Reduced unemployment, poverty, and crime
Economic growth helps to create jobs to reduce unemployment which is a major source of social problems such as poverty and crime.
Economic growth does not always bring increased happiness for the following reasons:
Diminishing returns
If a section of the population is living in absolute poverty, then economic growth enables them to have higher incomes and therefore they will be able to afford the basic necessities of life such as food, and shelter, so there is a clear link with improved living standards for the poor. However, the notion that higher incomes increase the improvement in living standards is harder to justify. If we already have 2 cars, does our living standard really improve if we now have the capacity to own 3 cars? Often as economic growth increases incomes, people increasingly save their money because they struggle to find anything meaningful to spend their money on.
Economic growth can cause increased inequality
Those who benefit from growth are often the highly educated and those who already own wealth.
Increase in crime and social problems
One reason why crime rates increase during economic growth is that quite simply there are more things to steal. Another reason is that with increased inequality, crime can be motivated by envy not poverty.
More work
It seems people are unable to enjoy their higher incomes, perhaps feeling the necessity or preferring to work longer hours. This suggests people are valuing earning money more than leisure, but this trend may also be due to companies wanting people to work longer hours as the company prospers with more and more economic growth.
Diseases of affluence
Economic growth can improve healthcare treatments, but at the same time there has historically been an unexpected rise in the number of diseases and illnesses related to increased prosperity, one significant example being obesity. Modern lifestyles and modern diets have created an epidemic of obesity. Problems such as obesity and stress related illnesses are examples of where increased prosperity has plausibly created as many new problems as it has solved
Enough of the Economics lesson, the Absurdity is that apart from a very few intellectual thinkers and small progressive groups, there are no mainstream pundits or politicians bringing attention to the elephant in the room which is the fact that continual economic growth means never ending consumption of natural resources. While the huge majority of our politicians, business leaders, and elected officials are mainly concerned with their next term in office, or the financial success of their company, and almost certainly most care most about their own well-being and affluence more than anything else, even the most well-intentioned ones have no viable alternative solution to capitalism. It would be political suicide to take the stance that our society should strive for reduced economic growth for the reason that continual economic growth on a finite planet is mathematically impossible. It is much safer and less destabilizing to continue with the “economic growth at all costs” mantra, but obviously this is simply kicking the can further down the road.
Nutopia is an alternative solution that does not require us all to produce more, work more, and consume more and more just so that our civilization doesn’t collapse around us. It is designed deliberately to achieve a balance between production, work, consumption, and to ensure that we can sustain that balance indefinitely.
