Sunday, September 5, 2010

Growth as a symptom and not a problem?

Growth is discussed again. The discussion is complicated by that people mean different thing with “growth”. First we can mean growth of the physical resources we have at hand. This is simply not possible, but of course, when we expand, colonize, into places we were not before, to the moon, deeper and deeper in the earth crust or into the sea, deeper inside the molecules, we obviously do expand the possible things we can use for economic activity. Another thing is that we can expand, or reduce, the value of such physical resources. And indeed we do. Things that were valuable, e.g. flint, becomes redundant because of the discovery of iron, and things that were abundant and therefore with no value gradually become scare and therefore valuable, today even sand for construction is a desirable commodity and water is increasingly getting more and more expensive. The beauty, from the perspective of growth, is that the more we deplete a resource the more valuable it becomes, until it collapses as an interesting resource. So in that sense, resource depletion will actually increase the value of the stock and not deplete it. The last decades have also created new growth sectors, the cleaning up sector, where the massive flow of capital to green house gas mitigation is a good example, but there are so many more. The ultimate growth prospect is in the idea of selling that you will not use a resource, to preserve it. And of course, we could create unlimited growth of doing nothing. What will you pay me for not colonizing Mars or what will you pay me for going back to the hunter and gatherer society, personally negating last millennia of environmental destruction. That kind of growth have no limits for sure. Sometimes it is discussed that “fixing” the problem with green house gases will “cost” so and so many per cent of the GDP, but the reality is that it will increase the GDP. The final, and in the long run interesting discussion, about growth is if it will increase our well-being.

There is a paradox that those who are the most positive to the capitalist society and modern technology don't seem to believe in it. Wasn't it the whole idea that we could work a bit less and that industry, technology and energy should relieve us from the toil of work, give us more leisure, more time to enjoy culture or whatever we want to do? How come that those who want that are against a society without growth, a society where people work less and not more? In a similar way, those politician that are skeptical over the growth paradigm are lured into it and speak about “green growth” and “green economy”, which shows how strong the growth paradigm still is.

Perhaps the interesting thing is not to discuss growth or zero-growth but to free our minds from at all use economic growth as a good indicator of development of any kind, whether it is good or bad. Growth is, in this perspective not the problem and certainly not the solution, but just a symptom of other things.

First it is a result of an economic system that needs to expand all time. It seems to have in-built mechanisms that makes standstill impossible, its “stable” mode of operation is growth while no growth, is unstable and is described as crisis (which interestingly enough is the opposite to the normal definition of crisis). It seems to me that it is mainly profit, and the constant expectations of profit that is the primary driver here, and that it might not make such a difference if the profit is comes as rent on capital, speculation or dividends on stock. In a stationary economy, all these forms of profit would lead either to inflation or to that money is transferred from the poor to the rich. And, well, money is transferred from the poor to the rich constantly, and it is only by growth that the poor don't end up starving (which they still do in many parts of the world) or making revolution.

Mirroring this, we humans also aim for increasing our material wealth, that is largely a function of our strive for status, and that status in today's society is acquired by a high income and wealth. The desire for status is rather hard-wired in humanity, in particular among males one might assume with a bit of evolutionist thinking. In most societies there have been mechanisms to keep the hunt for status under control. So even in societies where physical force gave high status, there were limits in how you could express that physical force. Many traditional societies have strong limits for the possibility for the individual to amass property, and the expectation is that you will share with all your siblings, the clan or the community. And even after that money had become important for society, the handling of money was not seen as a status job, in the contrary. The Spaniards didn't take well care of all the silver they stole in America, their nobles didn't want to deal with money, so it was the Dutch and the English that transformed their money into luxury goods (that they did want) from China, and of course made large profits from it. The Spaniards own money was managed by the Genovese. Jews were heavily involved in finance and money matter as much a function of that it was not a noble activity as a result of their own industriousness. In the Ottoman empire, the infidel Greeks were the merchants and bankers as the noble Turks didn't want to soil their hands with such menial work (there is certain irony today that someone will entrust the Greek with their money....). Capitalism did away with all these restrictions and made money making into one of the most noble endeavors and being rich a potent aphrodisiac.

Finally, the introduction of fossil fuel made all this possible, to cut the chains of in-built biological limits, limits that, in any case made growth impossible. It is therefore more interesting to discuss profit; the status of materials wealth; the degradation of nature and the use of energy than growth per se.

1 comment:

  1. Is growth the root problem? No.

    I'm not sure if it is a symptom either though. To me growth seems to be best described as a necessity, the fuel that drives the system so to speak. Without growth and the personal, corporate and government debt that goes along with it (you have to pay for growth after all) the entire system we are being subjected to (i.e., corporate driven global free-market capitalism) would come crashing to the ground.

    A ponzi scheme needs a constant influx of money to keep the scheme going... that's what "growth" provides.

    Good site Gunnar! Lots to ponder.