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The growth illusion

How economic growth has enriched the few, impoverished the many, and endangered the planet

Richard Douthwaite

First published 1992

Unpublished commentary January 2008

Economists seem to see themselves as servants of the Queen of the Social Sciences - "we are quantitative, we are employed by the powerful, we tell it like it really is, not how you soft-hearted ninnies would prefer it to be". You don't like the road scheme through the ancient wood? You'd prefer the beach was left untouristed? You mumble that agriculture isn't the same kind of activity as making widgets? Yes dear, very nice, now run along while the grownups talk.

I approach economics with caution because I know little about it. Markets are very powerful instruments for sure, but how, by their very nature, can they respond in time to the types of eco threat we face? Money is not the only thing that makes the world go round - surely it has a meaning beyond what it can do (as argued by Dorothy Rowe in The real meaning of money)? How can they be so sure that growth and not, say, redistribution, is the answer to every kind of poverty? What's the evidence? Do they ever do experiments? Perhaps my questions are the obvious first thoughts of the naive layman and any 'A level' economics student could put me straight.

Yet there does genuinely seem to be scope for argument. Economics as currently practiced has a poor prediction record and has been accused of 'physics envy'- of fancying itself to be on a par with the physical sciences but without having a very deep knowledge of them. Philosopher of science Stephen Toulmin, titles a chapter of Return to reason "economics - the physics that never was". Steve Keen, an australian professor of economics, devotes a whole book to Debunking economics in which accuses neoclassical economists of bad maths. They use maths to intimidate us, says Keen, but they don't use it appropriately. There's no reason why economic behaviour cannot be modelled mathemically - but the model has to be tested against reality and Keen - not even a greenie - reckons the mainstream models are hopeless.

The growth illusion

Traditional economics (or the version of it that has reached us non-economists) claims that "a rising tide lifts all boats". That tide is Growth as measured by GDP, a crude lumping together of all the economic transactions that take place. Government policy is angled to increasing GDP and we are all supposed to get worried when it falters. Douthwaite argues that growth doesn't do what it's supposed to do:

In theory, the resources it supposedly creates should allow us to achieve our objectives, whatever they may be. In practice, it either limits our choices by making some objectives unobtainable or it consumes the new resources itself or, since we have not identified our objectives, we fritter the resources away.

It does not create employment:

No government has yet openly admitted that the rise in unemployment is a global consequence of economic growth. However, the fact that governments everywhere attempt to solve unemployment at home by raising national competitiveness in order to steal work from less competitive producers proves that it is.

In short:

it removes as much choice as it creates, it destroys jobs rather than creating them, and it certainly does not make people - in general - happier.

Lessons from history

The growth illusion is primarily a historical argument and Douthwaite engages with the evidence in a suitably humble way:

... we have very little idea of what daily life was like in the Britain that the Industrial Revolution destroyed

This is an important point. One often sees, not careful arguments from historical evidence, but blustery shouting using a cartoon version of received history:

Simplistic green: People must have been happier before the industrial revolution! They had more time, more community, more space! It was more natural! Marshall Sahlins! Ancient wisdom! But cities in the nineteenth centruy were hell! And now we're all miserable! Pollution! Diseases of affluence! Increase in depression! Lack of autonomy!

Simplistic anti-green: Oh for goodness sake! Everybody died at an early age in the past! Cholera! Childbirth! Never leaving your village! They chose to work in factories in the industrial revolution because it was better than being a peasant! But now we expect all our children to live! We have cars! We have a choice of career! We have autonomy!

I exaggerate of course, but not very much - for recently encountered examples, the claim that people flocked to the factories of the industrial revolution in preference to oppressive rurality is made in The science of discworld III and the website contains crankish fudging on medical matters. The truth is surely that both the above caricatures contain partial truths and to argue anything from history requires care and detail.

Douthwaite does seem to be careful; there is much argument of this kind:

The years between 1850 and 1914 during which living conditions for ordinary people improved were those in which per capita national income did not rise

And although his central argument is that we must cure ourselves of growth fetishism because it's killing us, he also argues that the process of growth up to a point has brought one very real benefit:

... the increasing emphasis on the worth and rights of the individual


Growth gave us the feeling that social progress is possible, and this attitude could not have been implanted without growth taking place.

Taking on a big topic inevitably carries the risks involved in straying outside one's home territory. As part of a chapter about growth-promoted environmental degradation he talks about "electromagnetic pollution". Electrosmog is an embarrassing canard and I'm afraid I briefly turned into Mr Jeering-anti-green at his suggestion that I am in any sort of danger from my habit of falling asleep with the bedside radio still on.

Despite this, Douthwaite's overall argument seems respectable. While writing this, I heard several radio news items about growth slowing down, delivered in very serious voices. Am I allowed a tentative smile?

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