The Myth of Timeless Growth

I just finished reading an address given to the British Trades Union Congress (TUC) by Rowan Williams, the Archbishop of Canterbury. He argues for a more holistic understanding of economics as housekeeping for our society. I'm largely sympathetic to his argument, but I imagine that at least one other author on this blog would dismiss him as idealistic, if not naive. Consider what he says about economic growth.

Practically speaking, this means that both at the individual and the national level we have to question what we mean by 'growth'. The ability to produce more and more consumer goods (not to mention financial products) is in itself an entirely mechanical measure of wealth. It sets up the vicious cycle in which it is necessary all the time to create new demand for goods and thus new demands on a limited material environment for energy sources and raw materials. By the hectic inflation of demand it creates personal anxiety and rivalry. By systematically depleting the resources of the planet, it systematically destroys the basis for long-term well-being. In a nutshell, it is investing in the wrong things.

A fairly standard rebuttal to Williams’ critique of growth is that the growth he criticizes lifts people out of poverty, raises overall GDP, etc. Yet his criticism still stands, because the economic growth currently promoted is simply unsustainable. Can you imagine what would happen if per capita consumption in China and India approached America’s?

Another response would be that the market prices in scarcity, so that as natural resources are used up, prices go up, and people consume less. Although in principle this may be true, this argument strikes me as hollow on two fronts. First, I seriously doubt the market’s ability to price in externalities – the market seems to be myopically focused on the production and consumption of goods, with no thought for secondary or long term consequences. Second, I am even more skeptical of the market’s ability to operate without growth as the driving factor. I doubt that a politician could last long while saying things like, “I’m sorry, we just have to recognize that our consumption is unsustainable. You, the American people, must shop less. Our GDP must go down.” That’s a political third rail. Think about current proposals for green technology. They’re suffused with the language of job-creation, new market opportunities, etc. They present this as an opportunity for growth when in fact our growth patterns are unsustainable.

I’ll close with a few questions. Does our current economic system have the internal capacity for becoming a system that is sustainable? In other words, can factoring in externalities and changing tastes and preferences really create a more sustainable global economy? Or are we going to continue barreling along our pattern of growth until scarcity forces prices to increase to unacceptable levels, and we either reduce our consumption patterns or go to war over natural resources? Finally, do we as a society have the moral resources necessary to change our consumption patterns? The deck seems stacked against this change.

I look forward to your comments, and I apologize for a rather unfocused and depressing first post.