Must Economic Growth Continue?

I recently suggested that one solution to the crisis of our age is a shift in economic paradigms to one called Sustainable De-growth.  To understand fully the implications of de-growth, we need to see where the phenomenon of growth comes from.  A new book by Swiss economic historian Matthias Schmelzer provides deep insights into the roots and development of the growth paradigm since World War II.  (Schmelzer, The Hegemony of Growth: The OECD and the making of the Economic Growth Paradigm, Cambridge University Press, 2016.)   Schemlzer expands on the earlier book by R.M. Collins – More: The Politics of Economic Growth in Postwar America – by showing through the lens of the Organization of Economic Cooperation and Development (OECD) how the growth paradigm became a central tenet of Western societies.

Economic growth, as measured by increase in Gross National Product (GNP), and its later refinement Gross Domestic Product (GDP), was supposed to do several things.  This promise of growth was made for the U.S. starting with the Truman Administration and then spread to Europe as a legacy of the structures established to administer the Marshall Plan for post-war reconstruction.  Growth was embraced because it helped politicians avoid having to worry about inequality.  In the classic expression of the time, “a rising tide lifts all boats.”  Growth was to provide tax revenues first for the programs of the New Frontier in the Kennedy Administration and then the Great Society of the Johnson years.  Growth was a tangible means to show the poor countries of the world (labelled first “less developed” and then “developing” in the parlance of the growth paradigm) the superiority of Western liberal capitalism.  Growth was a central element of the Cold War.  Schmelzer shows how the growth paradigm became self-perpetuating, almost like an addiction.  If a little growth did not solve all problems, then a little more would.

But as Schmelzer points out, “The growth paradigm is ultimately unstable and self-contradictory since the expectation it raises of continually increasing levels of material production run up to the ecological limits of a finite planet.”  In addition, growth in GDP (so-called quantitative growth) failed to deliver in its promises to the people.  The growth paradigm led to growing inequality, a dissatisfaction with public services it was supposed to enhance, and growing alienation with the false promises of material consumption as a source of wellbeing.

Schmelzer’s history makes the story of the OECD and its role in the development of the growth paradigm a fascinating read.  With the exception of a couple of bizarre statements about Henry Kissinger in the Epilogue, it is thoroughly researched.  It is an important contribution to understanding how we got to the current state of the global economy and how we might proceed in a more sustainable way.

If you are interested in the alternative to the growth paradigm, I will present a public talk on de-growth at UMaine next week:

SUSTAINABLE DEGROWTH: A PARADIGM TO ADDRESS CLIMATE CHANGE, INEQUALITY, AND ALIENATION — Thursday, September 29 at 12:30 p.m., Bangor Room, Memorial Union, The University of Maine

Mark W. Anderson

About Mark W. Anderson

I am proud to be a Mainer, born in Caribou and schooled at Brewer High School, Bowdoin College, and the University of Maine. I am grateful for a 35 year career at UMaine, the last decade in the School of Economics.