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How possible is prosperity without economic growth?

Economic growth at all costs has achieved the power of a religious ideology and is rarely questioned.  However, it does have serious shortcomings, as shown by the financial crisis of 2008 and the constantly widening gap in wealth between the super-rich and the rest.  This debunks the widely-held assumption that a rising tide (of growth) lifts all boats. Clearly this hasn’t happened, while billionaires have proliferated.

Economic growth, as generally understood is also based on the assumption that the natural resources on which we can continue our civilization’s progress are limitless. This runs counter to the way biological systems of (which we are an inseparable part) operate. These grow, develop and mature, reaching a state of resilience through the co-evolution of a diversity of species in an ecosystem over thousands of years.

The drive for growth through the incessant production and consumption of materials runs counter to the way natural systems operate, yet growth has been seen as the engine driver of our economies.  How do we stop the train heading for the abyss or at least redirect its path towards a destination that is more humane and less destructive of humanity and the ecosystems which support us? 

This dilemma has troubled the minds of economists over the years since industrial capitalism and its growth imperative  of ‘take, make, waste’  was kicked into gear over 200 years ago.

Contemporary economists include Thomas Picketty,  a pre-eminent French economist who wrote the 1000 page volume Capital in the Twenty-First Century. Published in 2014, it became a New York Times best seller and sold over 1 million copies worldwide.  The book focused on inequality and how capitalism in its current form rewards the already rich who very often earn more from returns on investments and property rentals than those working for a monthly income could ever do.

Picketty’s core argument is that inequality is not an accident but rather a baked-in feature of capitalism and can only be fixed through government intervention. Raising income and inheritance taxes for the rich are some of his recommendations.

Tim Jackson is an economic commissioner of the UK government’s Sustainable Development  Commission. In his book “Prosperity without Growth”, he set out how growth and the way it is measured, that is by Gross Domestic  Product (GDP),  are no longer properly serving people or nature.  The transformation towards a more benevolent economic system is a major task, one of the major challenges of our times. 

The call from Jackson is far from radical action, it is instead a carefully reasoned and accessible diagnosis of what is sick with the current economic paradigm and provides pointers as to how to heal it.

As Jackson writes, “Prosperity for the few founded on ecological destruction and persistent social injustice is no foundation for a civilized society.  Economic recovery is vital.  Protecting people’s jobs – and creating new ones – is absolutely essential.  But we stand in urgent need of a renewed sense of shared prosperity.  A deeper commitment to justice in a finite world.”

This is not about dismantling capitalism but about ending an age of irresponsibility. It’s about growing up to see the dangers to individuals and communities of rampant commercial consumerism, and how its resulting inequities in the end, serve neither rich nor poor, nor ecological health. 

Jackson’s premise points to reducing material use and throughputs by “decoupling” resource use from production, increasing service-based work with government taking a much greater role in investing in ecological capital, in fostering green jobs in a low-carbon economy and in encouraging greater social participation to help rebuild community life. 

Closer to home, Lorenzo Fioramonte is a professor of Political Economy at the University of Pretoria and director of the Centre for the Study of Governance Innovation. He is the author of nine books and over 60 articles including for the New York Times, The Guardian and Harvard Business Review.

In his book. “ Wellbeing Economy: Success in a world without growth’, Fioramonte traces the path of South Africa’s Reconstruction and Development Plan (RDP),  which was forged in the transition to democracy in the early 1990s. The RDP prioritized health, housing and education for the newly democratic country. Soon after however, it was replaced with GEAR – the Growth, Employment and Redistribution plan. This prioritized economic growth and helped create black millionaires, but millions of people remained in poverty, while HIV/AIDS became rampant through underfunding on health.

 The flaws of an economy based on  growth at all costs highlight the importance of government being in closer co-operation with business to help manage economies in a socially equitable and ecologically wise way.  The aim is a thriving and prosperous future. 

‘Prosperity without Growth’ by Tim Jackson (Earthscan Books)

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Hugh Tyrrell is a sustainable business coach and writer at www.greenedge.co.za