progress is not the elimination of struggle, but rather a change in its terms’ - Aneurin Bevan

growing pains

Quantitative economy growth.

What a subject.

The above video has been produced for the release of the New Economics Foundation report, Growth isn't Possible, a follow-up to the 2006 report, Growth isn't Working, which showed that economic growth wasn't as beneficial for the poor as for the rich.

Since WW2 the main macro-economic goal has been quantitative economic growth - defined as increases in gross domestic product (GDP) which means increases in the financial value of all of the goods and services produced within the economy.

It's not hard to see why this was an important goal in the wake of a war, but now we have reached a stage in which quantitative economic growth no longer has a direct relationship with improvements in living standards, such as health and wellbeing, a sense of security and trust.

There's another problem. The environmental and social costs are not measured and deducted from GDP figures in the same way as the financial value of imports are deducted.
"Just as the laws of thermodynamics constrain the maximum efficiency of a heat engine, economic growth is constrained by the finite nature of our planet’s natural resources (biocapacity)."


"The most recent data on human use of biocapacity sends a number of unfortunate signals for believers in the possibility of unrestrained growth. Our global ecological footprint is growing, further overshooting what the biosphere can provide and absorb, and in the process, like two trains heading in opposite directions, we appear to be actually shrinking the available biocapacity on which we depend.

"Globally we are consuming nature’s services – using resources and creating carbon emissions – 44 per cent faster than nature can regenerate and reabsorb what we consume and the waste we produce. In other words, it takes the Earth almost 18 months to produce the ecological services that humanity uses in one year. The UK’s footprint has grown such that if the whole world wished to consume at the same rate it would require 3.4 planets like Earth." (Simms, Johnson, and Chowla, 2010, p. 5)
The goal of macro-economic policy therefore should be to have a "dynamic equilibrium" - to ensure that economic activity is sustainable in the long-term and serves the interests of people and planet.

The ecological economist Herman Daly has put it in nautical terms:
"When a boat is too full, rather obviously it is more likely to sink. The problem used to be that, without any clear warning that a safe maximum carrying capacity had been reached, there was always an economic incentive to err on the incautious side by overfilling. The Plimsoll line solved the problem with elegant simplicity: a mark painted on the outside of the hull that indicates a maximum load once level with the water." (Simms, Johnson, and Chowla, 2010, p. 119)

Of course, measuring the capacity is not enough. It also matters how resources are distributed and how efficently they are used.

The New Economics Foundation have developed the Happy Planet Index (HPI) which measures both biocapacity and wellbeing. You can take the HPI survey and find out your score here.

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