The economy sometimes seems like a mysterious thing to ordinary people – something that is hard to understand – but there is nothing mysterious about it really. The Oxford English Dictionary defines it as “the state of a country in terms of the production and consumption of goods and services and the supply of money”. So, in everyday language it is how we, as a country, make use of available money, to ensure that everybody has enough to live on. In a way, it is about balancing the books on a national scale. It is about money.
I have been able to discover five different types of economy. Before the industrial revolution, local communities in the UK lived largely in farming cultures and the economic system was structured around this. But this changed significantly as the industrial revolution gained momentum. An agrarian economic system has also been called A Traditional Economy, and some countries which did not become industrialised, still use this type of economic system. Other countries, which followed Britain in becoming industrialised, developed economies based on trading links and, like the UK, developed A Market Economy, which is largely regulated by demand and supply. For some, a market economy is another way of describing Capitalism. Some countries have a mixture of traditional and market economies, called A Mixed Economy. Yet other parts of the world have government control of their economies and this has been termed A Command Economy or totalitarianism; this would include countries like North Korea.
A recent article by Pat Conaty describes a Collaborative Economy for the Common Good70. He suggests that co-operatives and social enterprises are bringing a new dimension to national economies and have been more successful in delivering growth than market economies (in Germany, Italy, Scandinavia, Canada etc.). Some call it community economic development whilst others call it a social economy. From this has developed a Solidarity Economy, which seeks to secure systemic change by organising small business and self-employed networks, bringing them into a collaborative economy movement. Such an economy is gaining strength across Europe, as it is based on serving the welfare of people and planet.
The relationship between trade and economies
In chapter 4, I discussed trading systems and how market economies first developed. One suggestion mooted there was that each country, instead of getting involved in complex and comprehensive international trading, should seek to be self-sufficient, only importing goods that they cannot produce themselves. However, I am pragmatic enough to realise that this is not going to happen overnight, as there are too many vested interests in the business world. So in this chapter, I will be looking at other measures that could be introduced, by modifying a market economy to a different (and new) form of economy, which helps to reduce the escalation of carbon emissions.
An uncontrolled market economy
But first, I want to look at the reality of what happens in an uncontrolled market economy. One way of doing this is to look at the measures introduced in the UK by the Conservative government since 2010, which wholeheartedly supports a market economy. These measures are set within the context of a belief that encouraging big business is the only means of making a country wealthy. Thus, the government introduced measures that enhanced the opportunities of the business world to make money: cutting taxes for the richest 4% and for corporations, whilst reducing the amount spent on benefits for the disabled and for the poorest in society. The measures were introduced in the name of so-called austerity which, the government argued, is necessary for reducing the deficit in the balance of payments. In practical terms, the outcome of this is that the government is giving away to the richest people in Britain more money than they are saving by reducing benefits for the disabled and the poorest in society. This does not make sense in a civilised society, as it will lead to further divisions and discontent in society, with the poorest becoming ever more militant.
Fig.60 used by permission
And big business, empowered by the extra money they have been given, use it to continue manufacturing and selling those products which add to emissions of carbon products and other pollutants. This enhances the rate at which climate change is escalating. So, in addition to being in the ever-speeding Industrial Revolution (IR) Continuum, our present government is encouraging businesses to feed that continuum, so that it runs ever more quickly out of control, producing ever more carbon emissions in the process.
A sensible economy in today’s circumstances needs to reduce carbon emissions, encourage businesses which produce goods and services which reduce carbon emissions and maintain its benefits systems for the poorest and most disadvantaged.
A market economy provides unfettered freedom for businesses to carry out their activities, with little government control and little expectation that they will show responsibility for those less well off than themselves, or any responsibility for restricting climate change. And the UK is not alone in encouraging this. It happens in most of the industrialised countries of the world, which are in vigorous competition with each other. Businesses like this freedom of course, to make as much money as they can, but this should not be at the expense of the planet, nor of the poorest in our society.
David Cameron swept to power in the UK in 2010, saying that his would be the “greenest government ever”. Jonathon Porritt, in his article: “The Coalition Government 2010-2015; The Greenest Government Ever: By no stretch of the imagination”61 has demonstrated that, in fact, carbon emissions increased during that term of office (2010-15). This has been reinforced by an article by Michael Le Page in the New Scientist, entitled “Ungreen and not-so-pleasant land”62. Le Page provides statistics that show that the UK is not on track to meet its climate goals (agreed in Kyoto Summit 1997) and that, rather than increasing its efforts to do this, the government has blocked a series of green measures, thus leading the country even further off course. Perhaps the most contentious is the proposed axing of feed-in-tariffs (FITs), which were available to people investing in solar panels for their domestic electricity needs. Because of these changes the UK has now slipped from 8th to 11th in the RECAI table73. (Renewable energy country attractiveness, published by www.ey.com).
Rewarding the rich is not the only way of creating wealth for a country. A recent article by Donald Braben, also in The New Scientist74, stated that it can be demonstrated that innovation is more likely to produce growth than existing market economy methods. His thesis is based on the history of scientific discoveries which, indeed, started off the industrial revolution in the first place. He has shown that some of the biggest scientific discoveries in our history led to the greatest growth in the economy. If this is true then, rather than funding big business, we should be funding research into new innovatory discoveries, such as carbon-free steel. I would add a rider to this, that the innovation encouraged in this way should also be about reducing our reliance on fossil fuels.
People who like to make money, in any part of the world, appear to have a mind-set that it is their right to do so without hindrance. Many have no conscience about the impact of their money-making on others and have little compassion for those who are the victims of their acquisitiveness, whether they are those in poverty, members of the animal kingdom or, indeed, the whole planet (see also in Chapter 4 – Paul Tudor Jones II).
Table 4: RECAI List of renewable energy country attractiveness (first 15 countries in the list) as at Sept 2015. (See: http://www.ey.com/Publication/vwLUAssets/RECAI-45-September-15-LR/$FILE/RECAI_45_Sept_15_LR.pdf)
Tax evasion (mainly by the rich) is a major source of lost funds for the economy (£5 billion a year), yet it is often the people who need to claim benefits who are castigated for playing the system. A recent article by James Bloodworth in The Independent75 showed that four times more money is lost to the economy by tax evasion than by benefit fraud, though the difference may be even greater than this if incompetence within the DWP is taken into consideration (www.independent.co.uk/voices/comment/its-time-to-bust-some-myths-about-benefit-fraud-and-tax-evasion). He described this as a double standard, with one rule for the rich and another for the poor
Fig.61 with permission from David Baldinger
In the last few years in Britain a number of scandals have been uncovered, all related to this same acquisitiveness: MPs claiming expenses they were not eligible for, bankers and chief executives getting bonuses, even when they have failed in the job; companies and individuals avoiding the payment of taxes, by using offshore business accounts – and so on. All of these are linked to the same acquisitiveness that fuels a market economy. And the general public in this country have had enough of this. They want to see some honesty – in politicians and in big business – and to see signs of the responsibility referred to above.
A recent scandal has been leaked about the super-rich hiding away their fortunes in tax havens, with details of the names of some of the people who are doing this. As a result, the Prime Minister of Iceland has had to resign and this may be followed by other resignations. Yet, we knew 6 years ago, in a study reported by Heather Stewart in the Guardian76, that a staggering 21 trillion dollars has been lost to the global economy through tax revenues, as it has been stashed away in tax havens.
Yet it is encouraging that, recently, the Governor of the Bank of England, Mark Carney77, made some warning statements in a dinner speech, that the impact climate change could trigger a new financial crisis and derail the economy, as it currently stands. He based this analysis on the effects climate change has had in Britain on the insurance industry. Since the 1980s, the number of weather-related events, such as storms and floods, has tripled and the cost to insurers has increased from £6.5 billion to £33 billion, mainly to cover the cost of damaged property and of disrupted trade. He warned that, once climate change becomes a defining issue for financial stability, it may already be too late.
What he identified is that much of the current financial investment is in companies which will be affected by climate change, such as energy suppliers, insurance companies, and oil suppliers etc., whose share prices will fall as climate change begins to bite. If these companies then fail, due to the pressures on them, the value of all kinds of investments, such as pensions and savings, could be affected. In the case of energy companies, if they do not convert to sustainable forms of energy, the pressure to reduce carbon emissions will also make them vulnerable to a reduction in the value of their shares. Oil companies and other polluting industries may be besieged by increasing numbers of claims upon them for compensation. This is already happening for Volkswagen, through their deception about carbon emissions from their diesel cars; and is likely to happen to ExxonMobil, who actively deceived the public about the reality of climate change over many years. The US coal giant, Peabody Energy, has already filed for bankruptcy.
If a financial crisis does occur and affects pensions, for example, the consequent loss of value (and potential income to pensioners) will come at a time when unprecedented numbers of people in the population reach pensionable age. The financial future of many thousands of people could thus be bleak.
This winter, there has been another catastrophic flooding event in the north of England, damaging many people’s homes and putting even more pressure on the insurance industry, as well as causing £1.5 billion worth of damage to bridges, roads and other infrastructure.
Also, a recent investigation has shown that, of 20 zones earmarked by the UK government for the building of new homes, five were hit with alerts and warnings during these recent floods and storms.
Fig.63 Flooding in Appleby, Cumbria
Fig.64 The destruction of Pooley Bridge, Cumbria by flooding
There is growing evidence that population growth and, more significantly, economic growth are the most important drivers in the increase in CO₂ emissions. Since 1970, emissions of CO₂ from fossil fuel combustion and industrial processes contributed to about 78% of the total GHG emission increase78.
Professor Justin Lewis, in an article to The Independent79 about a growing right-leaning bias in the BBC, argues that there is now a growing body of evidence suggesting that a model of permanent economic growth is of dwindling benefit to wealthy countries such as the UK. He cites research which shows that GDP growth is no longer linked to improvements in health or happiness, is environmentally unsustainable and stretches commodity choice far beyond the time we have available to us as consumers. He concludes that there is a serious debate about whether wealthy consumer economies should still rely on growth to generate prosperity.
Thus, there is an urgent need for the development of a new economic system. Just as the industrial revolution became the trigger for a change from agrarian economies to a market economy, there needs to be a development of a new economic system that is triggered by climate change. I do feel that the balance of the economy can be, and should be, adjusted to allow for the crisis that is heading our way. We can no longer continue to run the economy as if nothing is happening, with businesses maximising their short-term profit, with no heed for the wider damage that their activities are doing. It is not “Business as Usual”. Those who currently make vast profits from a market economy, and who promote it as the only way forward, need to take stock and change their attitudes and behaviour. Our planet can no longer sustain the robbing of its resources, and the contamination of its atmosphere, in the name of progress (see chapter 3).
Richard Douthwaite, in his book entitled “The Growth Illusion: How economic growth has enriched the few, impoverished the many and endangered the planet”6,80, states that economic growth does not have the benefits that many (mainly economists) claim for it. He demonstrates that, if the rate of growth is fast enough, there may be increased business profits and extra jobs but little improvements in the lives of ordinary people. Douthwaite goes on to say that the benefits for businesses come at the cost of lower wages and reduced job security. He also comments that achieving growth through the global system exposes each of us personally, and the countries to which we belong, to much higher levels of financial and environmental risk than did the more nation-state-based economies of earlier generations. A full quotation from Douthwaite is given at the end of this chapter (5).
Both Douthwaite6 and Fletcher81 (in “Free Trade Doesn’t Work”, 2010) are of the opinion that economists have got things badly wrong, most of their theories being based on inappropriate mathematical equations. This thesis is further developed by Paul Krugman in the New York Times82 in an article entitled, “How did Economists get it so Wrong?”
George Monbiot also addresses the issue of the mathematics being wrong in his article to The Guardian82 and on his website. The article suggests that the calculations have given a false sense of reduction in the use of the earth’s resources because they have failed to include goods purchased from abroad in the equation. Indeed, if you look at the UK alone, where carbon dioxide emissions apparently fell by 194 million tonnes between 2002 and 2012 (using the wrong calculations), the real figure cancels this out and gives in fact an increase in emissions, related to the commissioning and importing of goods.
The New Economics Foundation (NEF)83 has done much work on alternative, more sustainable, economic systems. They are the UK’s leading think tank on promoting social, economic and environmental justice. Their aim is to transform the economy, so that it works for people and the planet. However, one learns that they have received a large government grant to develop their work. Let us hope that they remain objective and are not influenced in their thinking by right-wing pressures.
They state on their website that:
“A strong national economy needs a flourishing network of local economies. These are shown to give resilience in times of crisis, but are consistently undermined by the sprawl of supermarkets and other chains – the kind of businesses that are most likely to up and leave in times of trouble. We should be ensuring that money stays in local communities rather than leaking out to distant head offices, and encouraging a range of diverse high streets rather than clone towns.”
On Bankers and Banking, they state:
“A dysfunctional financial sector led us to the brink of disaster in 2008, and yet bank reforms aren’t going far enough to tackle the root causes of the economic crisis. Our four big banks remain too big to fail, and continue to engage in the risky and unproductive activities that caused the crash. We need to establish a more stable, sustainable and socially useful banking system.
Jeremy Corbyn, in an article to The Times84, stated that Britain must empower citizen suppliers and direct private investment into green technology. He believes that our weakened public services will not be able to cope with the consequences of drastic weather events, such as the floods in Cumbria (2015) and Somerset (2013-4). He states that we need carbon budgeting to be the centrepiece of trade and commerce, taking the planet back to sustainable levels of CO₂ emissions. Environmental politics must include people working in today’s economy and decisions by government must not take us backwards but must instead invest in the huge opportunities that the low-carbon sector offers.
Colin Tudge presented a paper entitled “Economic Renaissance: Holistic Economics for the 21st century”85 to a think tank at the Schumacher college in 2007. The think tank explored what the key components are of an economic system which would successfully achieve poverty elimination, climate sustainability and human fulfilment. What kind of economy do we need to protect ecosystems and people’s livelihoods at the same time?
Professor Richard Murphy and Colin Hines wrote a report for discussion at the Paris 2015 Summit86, which provides solutions for how new green measures might be funded. The suggestion is that some of the funds already allocated for Quantitative Easing to keep the financial system afloat by the European Central Bank (€7 trillion of new money being printed), should be allocated in the form of Climate QE to save the planet – a figure of €10 million a month is suggested. This could be used in the form of climate change bonds from the European Investment Bank. These funds could then be directed to climate change programmes in Europe and in developing countries.
Fig.66 European currency
Other economists have suggested a different form of Quantitative Easing87.
Some countries have introduced a carbon tax and, in some cases, this has been successful in lowering carbon emissions88. Sweden has been particularly successful, first introducing a carbon tax in 1991. Their economy has grown by 50% since that time89 and their emissions of greenhouse gases have declined and been decoupled from economic growth. The OECD report89, which looks in detail at a number of pollution factors showed that Sweden has cleaner air than most other countries in the world (OECD Environmental Performance Reviews Sweden 2014).
The experience of Australia has been different90. They introduced a carbon tax in 2012, whilst led by Prime Minister Julia Gillard under a coalition with the Greens. This act was extremely unpopular and was repealed two years later by Prime Minister Tony Abbot. Full details of how they implemented the carbon tax can be found in Wikipedia. The chart in figure 69 shows the carbon emissions falling during the carbon tax period (2012-14) and then increasing again after it was repealed90. The decision to repeal the tax has led to Australia slipping from 10th to 13th in the RECAI list (see Table 4).
Fig.67 Carbon emissions in Australia before and after the carbon tax was repealed
A report from Climate News Network91 indicates that Brazil, whose president Dilma Rousseff is at risk of being impeached, will dismantle their environmental protection laws after the impeachment, in defiance of commitments made in the Paris Agreement. It would appear that the leaders in the impeachment process are businessmen who would benefit from these laws being repealed. Here is yet another female leader, who introduced environmental safeguards, being undermined by big business. Brazil has just suffered the worst environmental disaster in its history: the bursting of a dam of toxic mud last year in Minas Gerais state. All animal and plant life was destroyed by this disaster, which is said to be the worst since Chernobyl.
Fergus Green, a Policy Analyst and Research Advisor to Professor Stern, recently published a paper, which gave evidence that a nation can develop and implement green policies, without damaging the economy92. The paper was issued to encourage discussion on the issues.
Professor Nicholas Stern has written a paper for Nature93 in which he says that current economic models tend to underestimate seriously both the potential impacts of dangerous climate change and the wider benefits of a transition to low-carbon growth. He thinks that there is an urgent need for a new generation of models that give a more accurate picture and suggests that researchers across a range of disciplines (economics, engineering, science) work together to help those developing policy.
Other ideas have been to develop a system whereby the worst polluters have to foot the bill for cleaning up the damage they have wreaked on the planet.
Another group, linked to Feasta, have come up with a suggestion of capping the use of fossil fuels globally by introducing a global taxation system94. CapGlobalCarbon (CGC) aims to ensure that the aggregate global emissions from fossil fuels steadily decrease to zero. This would be achieved by a progressively tightening cap on fossil fuel extraction. Revenues from the extraction permits would be used to benefit the lowest consumers of fossil fuels. Such compensation could substantially alleviate poverty and reduce global inequality. By steadily and predictably reducing the global dependence on fossil fuels the process would also hasten a smooth transition to a zero-carbon economy.
Yet, despite all these well-argued documents and postings, in the UK at least, our present Government in the UK is rushing headlong into yet another era of austerity measures, based on the old economics, promoting growth and rewarding big business at the expense of the environment and the poorest in our society. And part of their strategy in taking this forward is to reduce spending on, and support for, green initiatives, aimed at reducing carbon emissions.
I am not an economist so I don’t feel qualified to come up with a new system; there are others much better qualified than me to do this. All I have done here is to demonstrate how everything in this world is interconnected: ecosystems, the stratosphere, the industrial revolution and its continuum, population explosion, trading systems, weaponry and war, the rise of big business and bankers and the failed economics which they promote. This interconnectedness means that, if any one of these goes wrong or out of balance, then this will bring down all the others in a domino effect. Denial of this effect has only made things worse, with so much more to do to reverse the destruction.
It is interesting that the word economy has a similar root (eco) to the word ecosystem or ecology. I am told that eco comes from the Greek oikos, meaning ‘house’ or ‘household’. I have shown in this book how ecosystems and the economy are inter-connected but what is needed is a new form of economy – or a new discipline – that appraises the needs of both through this inter-connectedness. Perhaps we should call it ecosystomics – a new form of the economy that provides for the human race, without damaging the ecosystems of the world.
Although I am not an economist, I feel I must put together some pointers (or suggestions) for those who do have the ability to construct such a system, making the changes necessary to have a balanced green economy. Shall I call it Economy 6? My readers may wish to add to it. It is my first venture into the new discipline of ecosytomics.
Suggestions for Economy 6
Some measures which might move us towards a new, balanced, green economy:
- For the introduction of greater incentive schemes to encourage businesses to develop, use and market greener technologies and to penalise those who don’t. Examples of this could include: using and developing renewable forms of energy; phasing out motor vehicles which use petrol or diesel and introducing those that run on easily-accessible clean energy;
- Investing in research institutions which have the ability to develop innovative solutions to today’s climate-change problems;
- Introducing legislation to reduce the use of the motor car, such as restricting the number of cars owned by each household, unless they run on clean energy;
- Phasing out coal-fired power generation and ending fossil fuel subsidies;
- Introducing a carbon tax on those companies who continue to use fossil fuels;
- Rebalancing the economy, so that the rich are not rewarded for irresponsible behaviour that adds to the carbon load;
- Setting targets, for meaningful reductions in carbon emissions by an early date, as suggested by Desmond Tutu in his petition (chapter 1) and ensuring that the calculations for this are correct;
- Phasing out nuclear power and nuclear weapons worldwide and re-channelling the money saved into the incentive-schemes and investments mentioned above;
- Proper funding of those institutions regulating the tax system, so that tax evasion and avoidance is properly penalised;
- Shifting the tax system to penalise those activities which need to be discouraged, such as greenhouse gas emissions and the accumulation of wealth;
- Banning certain household appliances and gadgets, which are not necessary and only add to the carbon load;
- Establishing a new institution, which will monitor the use of fossil fuels by companies and promote, and provide support for, the use of greener forms of energy;
- Encourage less air travel, by raising awareness about the damage this is doing to the planet and encouraging airlines to invest instead in technologies that do not damage the planet;
- Work globally with other partners to reduce deforestation;
- Re-balancing international trading systems, so that goods and animals are not transported unnecessarily across continents and seas, adding to the carbon load;
- Encouraging countries worldwide to be self-sufficient in terms of goods and resources, so that goods are not imported which can be produced internally;
- Re-think and re-balance entirely transnational trading systems;
- Work globally to find a better means of international co-operation in working jointly to reduce and reverse that damage that is currently being done to the planet;
- Encourage partnerships between local government and local cooperatives and social enterprises;
- Encouraging the setting up of local groups (3G groups), where individuals can meet together to share what they are doing to reduce their carbon emissions and to encourage each other to keep going with it, even if the majority of others are still in denial (3G stands for three generations – the amount of time we have left).
Some of the ideas above are already being worked on, and others are not about changing the economic system but about reducing carbon emissions, but I hope these are a starting point for others to add to, if we are really serious about taking meaningful anti-climate-change measures before it is too late.
Green Economy is not a new expression. It has been promoted by other groups, including the European Environment Agency, who produced the diagram in Fig.68:
Their definition of a Green Economy is one that generates increasing prosperity while maintaining the natural systems that sustain us95.
Their website goes on to say that:
- Historically, the trend has not been towards green growth. On the contrary, economic expansion has imposed ever greater demands on natural systems — both in terms of the amount of resources that we extract or harvest, and the volume of emissions and waste that we expect the environment to absorb and neutralise.
- As is increasingly understood, this cannot continue indefinitely: the environment has natural limits in terms of how much it can provide and absorb.
There is also a body called “The Green Economy Coalition”, which is a global network of organisations committed to accelerating a transition to a new green inclusive economy96. They believe the crisis we are in is profound and that piecemeal policy change is not good enough. They want to see deep-rooted transformation and the courage to forge a new economic vision.
Their vision is to develop an economy that provides a better quality of life for all, within the ecological limits of the planet. They are working on five action areas to make that vision a reality:
- Managing our natural systems – people and economies depend on nature for everything; until now our economies have not reflected that dependency;
- Investing in people – evidence shows that more equitable access to our natural resources benefits both people and planet; where communities have secure tenure and a say in decisions there are better outcomes for the environment as well as for the local economy;
- Greening high impact sectors – these sectors include food, housing and transport and their embedded energy needs – accounting for 63% of the global ecological footprint;
- Influencing financial flows – capital markets are dominated by large banks but smaller, values-based banks, which base their decisions on the needs of the people and the environment, have proved to outperform traditional mainstream banks on all indicators, including financial ones;
- Measuring what matters – economic metrics, such as GDP and quarterly reports, tell us nothing about the resilience of an economy or business; some investors are asking for new metrics. Governments in Canada, Botswana and India are already working on this.
And just recently, the Indian Prime Minister, Narendra Modi, has invited 120-odd nations to join a new International Agency for Solar Policy and Application97, aimed at helping poorer countries in the tropics develop solar power. India is investing $30 million to set up a headquarters and aims to raise a further $400 million. Modi has also written an article in The Economist (Gathering steam: The World in 2016, p70)98, which outlines the basic precepts of India’s economy, to include incentivising afforestation, setting ambitious targets for renewable energy, faster and more inclusive growth and eliminating poverty.
It is encouraging to know that many people across the globe are already looking to develop new economies that no longer threaten the sustainability of the planet. The agreement signed at the COP21 talks at the PARIS Summit also takes us in the right direction, even though fossil fuels are not mentioned in the wording of this agreement. The detail of this agreement will be discussed in chapter 8.
From: http://www.propostalavoro.com with permission
I have come to the end of describing the interconnected factors which have worked together to bring about a situation where the future of this planet is at risk. Many other people, apart from me, have realised this and are working in various ways to raise awareness and to lobby for change. However, I feel that far too many people, all over the world, do not understand the urgency of the situation and have not really curtailed their activities as a result. This is why I have written this book and tried to keep it simple.
The following chapters will look at how we may work towards global co-operation in a united effort to bring about a sustainable future. The final chapter looks at why, despite all the evidence to the contrary, there has been so much lethargy about doing something about it.
Table 5: Quotation from the Introduction to Richard Douthwaite’s book:
“The Growth Illusion” Green Books, 1999
“A decade ago, few of us had any doubt about what growth was for. It was to lift people out of poverty and enable them to have a better quality of life. Political parties dressed these
expectations up in different ways: the left would talk about growth leading to higher wages, improved social welfare, better hospitals, a lower pupil-teacher ratio and so on, while
the right would stress greater profits and a wider range of choice.
But now much of the old confidence about the results of the growth process has evaporated…the only benefits many of us expect from economic growth are increased business profits and – if the rate of growth is fast enough – extra jobs……..
So why, since we know the benefits of growth have… hefty price tags attached, is it still considered so important to achieve it? One reason is that firms are constantly trying to lower their costs by introducing labour-saving technologies. Naturally these technologies cost jobs, so every year, unless the total amount of activity in the economy increases by about 3 per cent, unemployment will rise. As far as jobs are concerned therefore, national economies have to grow pretty quickly just to stand still.
The second reason our countries need growth is that between 15 and 20 per cent of their workforces are employed at any time on investment projects designed to expand their economies in the coming years. If growth fails one year, firms that invested but couldn’t increase their sales in the flat
market will find themselves with surplus capacity. This will cause them to cut any further nvestment plans they might have, throwing the people who would have built their new
factories, offices and shopping centres out of work. And since these newly unemployed people will obviously have less to spend, further jobs will be lost in other sectors of the economy. Consumer spending will fall even more, causing more job losses. In short, a downward spiral could develop
leading to a serious depression. The possibility of this happening terrifies every government in the world to such an extent that they are prepared to do almost anything to ensure that growth carries on regardless of its social or environmental consequences……
In 1998, I conducted an Internet survey for almost 700 participants from over 50 countries. I had expected that it would take most of the seminar to reach some sort of agreement that, whatever growth might have achieved in the past, current growth was not benefiting ordinary people. Not
at all. It took a bare 24 hours, so most of the seminary was spent discussing how the economic system could be altered to remove its need to grow.”