Economic Growth: A Social Pathology

The pathological pursuit of economic growth is central to the way in which our societies are run, and forms a major barrier to reaching a sustainable state for humanity. That such growth endangers our very survival by degrading and exhausting the environment upon which we are dependent upon, and per capita wealth above a given amount has been shown to not improve general well-being, is irrelevant to the dominant worldview. In addition, over 200 years of such growth has embedded many institutions and path-dependant infrastructure which provide large inertial forces to any move away from the pathology of growth. The movement to a no growth reality will require fundamental changes to belief systems and social practices, together with wastage or reassignment of significant parts of our path-dependent infrastructure. Such change will be strongly resisted by those that benefit from the status quo, such as the currently powerful and wealthy.

Economic growth, especially growth that is characterized as increases in Gross National Product (GNP)¹, does not correlate with improvements in social welfare. Even Simon Kuznets, who is credited with the development of this measure, never intended for GNP to be used as a gauge of overall social welfare, noting that “Distinctions must be kept in mind between quantity and quality of growth, between costs and returns, and between the short and long run. Goals for more growth should specify more growth of what and for what²”. GNP can be better characterized as a measure of market-based expenditures, and does not judge whether a given expenditure increases or decreases social welfare, with expenditures to wage war being judged the same as expenditures to feed the population. It also does not take into account impacts on social and ecological sustainability, such as social breakdown and soil degradation. A number of competing measures have been developed such as the Index for Sustainable Economic Welfare (ISEW)³, the Genuine Progress Indicator (GPI)⁵, and Gross National Happiness (GNH)⁶ to correct for the shortcomings in the GNP measure. These measures have had only a limited impact so far though, and GNP still reigns supreme as the hegemonic measure of societal success, as witnessed by the constant references to it (and the related Gross Domestic Product⁷ measure) by political and economic leaders and the media. A consistent pattern that has been seen is that after a given level of GNP per head, additional growth does not tend to produce increases in these alternate measures⁸. Also, surveys directly asking people about their level of happiness have tended to show the same breakdown in correlation between GNP increase and improved happiness above a certain level of GNP per head⁹.

The theoretical and epistemological bases of mainstream economics, of which GNP is an artefact, are challenged by attempts to integrate economic and ecological considerations. These see the economy as being an open system, embedded within the closed system which is earth. In this picture the economy is reliant upon ecological sources for inputs (e.g. raw materials, soil, plants and animals, oxygen), and ecological sinks for waste product outputs (e.g. nitrogen run-off into rivers, carbon dioxide into the air). Mainstream neo-classical economics does not factor in the measurement of such things, generally treating inputs as infinite or infinitely substitutable, and the impact of waste products as unquantifiable “externalities”. As long as the economy was not large in relation to the overall ecology, such shortcomings tended not to matter, but over the past 200 years of exponential growth the economy has become much larger in relation to its ecology. Authors such as Georgescu-Roegen¹⁰, Daly¹¹, and Victor¹² argue both for a fully integrated Ecological Economics (or a Bioeconomics as Georgescu-Roegen prefers), and the acceptance that continued exponential growth threatens the sustainability of human society through the depletion of non-renewable ecological sources, and the overuse of renewable ecological sources and sinks.

These views are reinforced through the study of specific effects of economic growth upon the ecology which humanity relies upon for continued existence. The most studied of the ecological sink issues is Climate Change, caused by the heat trapping gases (predominantly carbon dioxide, but also methane and others) expelled into the atmosphere as a side effect of human economic activity. As scientists have deepened their understanding of the dynamics involved, the resulting ecological changes have been seen to increase in both scale and rapidity with actual events tending to outstrip the models used to predict them¹³. A number of ecological source issues have also been identifies such as the depletion of non-renewable hydrocarbon fossil fuels¹⁴, the long term impact of industrialized agriculture upon food production¹⁵, and the over-exploitation of fish stocks¹⁶. The “Limits to Growth”¹⁷ study commissioned by the Club of Rome in 1972 also captured many such constraints with the viewpoint that human society was close to exceeding the carrying capacity of the earth (which it was judged to have done before the end of that decade¹⁸).

With much proof that incremental economic growth above a given point does not increase social welfare, and the many arguments that such growth may also directly imperil the sustainability of human society, it could be expected that calls for “no-growth” or even “de-growth” would have entered general discourse and challenged the hegemony of the growth paradigm. Instead, the current focus of those in power is how to maintain, or even to accelerate, growth rather than to contemplate a post-growth paradigm. What are the factors which hold back our societies from accepting, and embracing, these new pathways to both sustainability and social welfare? If a patient was to ignore such input about her survival and happiness, such resistance could be deemed pathological – a symptom of underlying psychological problems. What are those underlying issues stopping humanity from responding effectively to such input?

The exponential economic growth that has become both an underlying societal assumption, and an overriding imperative for government policy, is a relatively recent phenomenon within the history of human society. The history of human civilization prior to the Eighteenth Century is one of repeated developments of complex societies, followed by repeated collapses of those societies. Morris¹⁹ developed an index of social development and noted that only three civilizations could be identified as reaching the low 40’s on his index, those of the Song Dynasty, the Roman Empire, and modern civilization. One thousand years separate the first two, and over fifteen hundred years the latter two. As Morris puts it “If someone from Rome or Song China had been transplanted to eighteenth-century London or Beijing he or she would certainly have had many surprises … Yet more, in fact much more would have seemed familiar … Most important of all, though, the visitors from the past would have noticed that although social development was moving higher than ever, the ways people were pushing it up hardly differed from how Romans and Song Chinese had pushed it up.¹⁹” The development of complex societies relied upon the production of a surplus of food, and other forms of energy, above that required for basic existence. This surplus allowed for specialized occupations, such as artisans and soldiers, and an increased level of social complexity. Such societies are an “anomaly in history”, having only existed in the last 6,000 years, while “throughout the several million years that recognizable humans are known to have lived, the common political unit was the small, autonomous community”²⁰. The size and complexity of such societies was limited by the available bio-mass (predominantly food, fodder for animals, and wood) and the efficiency of the mammals utilized (humans, horses, oxen etc.) in converting that bio-mass into useful energy. The reality of these limitations can be seem even in the “cradle of democracy”, Ancient Greece, where the freedom and material comfort of a limited number of men was supported by a large cohort of non-citizens, such as slaves and serfs, whose surplus energy could be utilized for the benefit of the few²¹. Increased complexity can be seen as a problem solving strategy²⁰, with additional available energy as a pre-requisite, through greater levels of differentiation, specialization, and integration. Tainter proposed that the decreasing returns of additional complexity are a fundamental limitation on societal longevity²⁰, as would be a lack of the incremental energy required to support ongoing increases in complexity, and the resultant lack of ability to deal with new challenges.

The utilization of non-renewable hydrocarbon energy sources such as coal, oil, and natural gas within the past 200 years, allowing access to the product of previous historical ecologies, was a discontinuity that allowed human society to escape limitations on its size, complexity, and growth rate. By way of example “Hunter gatherer societies … contain no more than a few dozen distinct social personalities, while modern European censuses recognize 10,000 to 20,000 unique occupational roles, and industrial societies may contain overall more than 1,000,000 different kinds of social personalities”²². This phenomenal increase in societal scale and complexity was highly path dependent, in physical infrastructure, economic configurations, and hegemonic ideology, as human societies evolved to optimize their fit within the new circumstances of greatly enhanced access to energy. This process accelerated in the post-war period as oil, with its high energy density and ease of transport, was increasingly exploited. The outcome is a socio-economic configuration in the industrialized countries which is highly sensitive to the continuous availability of complex interconnections between specialized sub-systems, high quality energy, and ongoing growth. This is reinforced by a ruling ideology which assumes growth as a given, and treats the ongoing accumulation of wealth and physical goods as highly desirable and socially positive.

The sheer scale and complexity of modern industrial societies creates many barriers to fundamental changes. These changes would need to occur at differing scales, and to many heterogeneous sub-systems, with the cascading effects of such changes through the complex adaptive systems which typify modern societies. For example, a rise in the fuel taxes in the United Kingdom in 2000 lead to a blockade of fuel depots by protesting haulage drivers. Within days the UK economy was close to collapse, with supermarkets running out of food and even essential services such as hospitals at risk²³. Globalization has greatly increased such issues by both linking multiple industrial societies together and facilitating the industrial development of other societies. Complex systems can be both highly resilient to some changes, and highly reactive to others, depending upon the nature of those changes and amount of resilience within the system. Walker et al. consider that industrialized societies have been actively reducing their resilience through human-induced ecological degradation and the drive for economic efficiency which leads to the elimination of redundant sub-systems and interconnections²⁴. The impact of the latter was shown in the effects of the Japanese earthquake of 2011 and the South East Asian floods of the same year upon global supply chains, as highly integrated just-in-time global delivery processes were severely impacted²⁵. Complex systems can also switch between different stable equilibrium states when a threshold condition of the current equilibrium has been breached, undergoing a “regime shift”²⁴, as with the financial panic and economic recession of the 2008/2009 period. An open question is whether or not the current global industrialized human society has the level of resilience necessary to undergo the fundamental changes necessary for its long term survival without collapsing into a new equilibrium which exhibits a much lower level of social welfare.

Over the past two centuries of plentiful high quality energy very large investments have been made in physical and social infrastructure which may be either invalidated completely, or otherwise greatly diminished in value by a move away from economic growth. The financial system which underpins the functioning of modern economies is one of these, as at its very core is the assumption of exponential growth. The majority of what is counted as financial wealth is actually constituted of claims upon future economic growth, and without such growth such wealth would be shown to be illusory and evaporate. The value of any private corporation is predominantly dependent upon its future profit flows, and the growth of those flows relative to the current period. The higher the rate of growth the higher the company value, hence the lower “price to earnings ratio” (the ratio of the value of a listed company to its current earnings) of low growth companies such as utilities to high growth companies such as new high technology start-ups. Without continued economic growth the ability of a company to grow earnings would be severely constrained, and the realization of this would lead share prices to fall to reflect this new reality. The charging of interest on loans is also dependent upon economic growth as increased economic activity is required to produce the incremental cash flows required to pay back the interest²⁶. The dislocation of the as currently constituted financial system from a cessation of economic growth would be severe, and the effects of such a dislocation would greatly impinge upon society’s ability to both function and make required investments in sustainable alternatives. The very direct effects of financial dislocation upon the real economy were shown during the 2008/2009 financial crisis when global supply chains were temporarily impacted by reductions in international trade finance, resulting in some companies not being able to fund international trade shipments²⁷. From a systems perspective the present financial system can be seen as a positive feedback loop, which when functioning well drives continued growth and when functioning badly enhances systemic collapse. “Reinforcing feedback loops are self-enhancing, leading to exponential growth or to runaway collapse over time. They are found whenever a stock has the capacity to reinforce itself.²⁸” Capital is just such a self-enhancing stock, for example through the payment of interest which can then be reinvested to earn more interest.

The financial system has many of the largest and most powerful corporations in the world within it, all heavily motivated to support the ongoing economic growth which underpins their continued success. The fossil fuel industry, which is dependent upon continued hydro-carbon driven growth also has many of the largest corporations among its ranks. An example is Exxon Mobil, which has annual revenues greater than the GDP of the majority of countries in the world²⁹. The ability of such huge corporations to function effectively is dependent upon the transportation and communication systems made possible by fossil fuel energy. With their free speech rights, power over media organizations through advertizing spend decisions, the ability to directly fund political organizations in many countries (with little or no limits in the United States after Citizens United Supreme Court ruling³⁰), and hire lobbyists, such corporations provide very significant opposition to any movement to reduce growth and/or dependence on fossil fuels. Authors such as Oreskes & Conway³¹, and Hoggan & Littlemore³² have documented many of the activities used to forestall actions which may be in the public good, but would negatively affect corporate profits and freedom of action. These utilize many of the advanced socio-psychological techniques developed in the early twentieth century by such figures as Edward Bernays³³ to create the consumer culture required to drive the increasing levels of demand needed in an age of ever increasing material production facilitated by fossil fuel energy, and to “manufacture consent”³³ as a method of social control.

National security strategy, and the ability of a country to affect the policies of other countries for its benefit relies greatly upon relative economic size, with respect to both hard power (i.e. military threats and actual interventions) and soft power (diplomatic, economic sanctions and incentives etc.). The ability to field a significant military presence is dependent upon the ability to generate a large economic surplus which can be utilized to support such non-productive resources, and the respective power positions of countries tend to correlate to relative economic growth over time, as noted by Kennedy³⁴. The ability to project military power is also highly dependent upon liquid fossil-based fuels for the transport and on-going operation of personnel and military equipment. With the post-WW2 proliferation of nuclear weapons limiting the viability of direct military intervention, and the recent recreation of a multi-polar world (i.e. USA, China, and a resurgent Russia), the soft levers of power have come more to the fore³⁵. Thus, both the military and political elites will be heavily committed to continued economic growth, and will see unilateral de-growth as unilateral disarmament and an acceptance of less power relative to, and less ability to protect national interests against, other countries. The centrality of economic power to national security has been expressed publicly by Leslie Gelb³⁵, President of the Council for Foreign Relations which is a highly influential body in the area of national security planning and foreign affairs. The importance of continued access to fossil fuel resources has also been covered by both the influential Project for a New American Century (P.N.A.C.) ³⁶, and the well-connected Brzezinski³⁷.

Military scenario planning for such things as the effects of climate change and fossil fuel dependence do show one possible area where a difference in elite opinion may grow, as the military and national security planning organizations take more account of scientific opinions in these areas^{38, 39, 40}. Insurance corporations also provide another avenue through which elite opinion may be diversifying as they assess the effects of Climate Change upon their future claims and corporate viability^{41, 42}, although the US-based insurance companies seem to be seriously lagging their counterparts in other countries⁴³. It must be remembered though, that all of these efforts are within the paradigm of continued economic growth.

The ideological infrastructure has also been fundamentally affected by the continued exponential growth over the past two centuries. An underlying belief in the efficacy of continued economic growth, together with a near absolute confidence in human ingenuity and technology to overcome any obstacles pervade the dominant capitalist and socialist belief systems. Catton has likened the belief in technology to a “Cargo Cult”, and noted that modern technological advancement depends heavily upon the energy surplus provided by fossil fuels, and while such advances developed new and more efficient ways of utilizing fossil fuel energy they have not developed viable long term replacements for fossil fuels¹⁴. Greer also notes the dependence of renewable technologies on a fossil fuel subsidy, with the example of a solar cell “which requires large doses of diesel fuel to mine the raw materials and then ship them to the factory … larger doses of natural gas or coal to generate the electricity <to turn> raw materials into a cell” ⁴⁴. To this can be added the fossil fuels needs to transport the finished cells, and to install them. The hegemonic economic paradigm of the capitalist economies, “neo-classical economics”, also assumes limitless or infinitely substitutable natural resources. For the vast majority of the past 200 years of exponential growth this was consistent with reality as the human economy was not large enough to appreciably impact the overall ecology. The momentum of exponential growth has quite recently grown the human economy to a scale where it is having significant impacts upon its ecology, but the hegemonic economic paradigm has not caught up with this reality. Areas of research such as Ecological Economics and Bio-Economics, which strive to incorporate the economy within its overall ecology, are still very much on the fringes of economics with little or no impact upon the mainstream. The inability of scientific communities to change paradigms in the face of even overwhelming evidence was noted by Kuhn⁴⁵, with the eventual change being dependent upon the turnover of leaders within the respective discipline in many cases. With economists being so central to societal decision making processes this provides a major impediment to change. Cognitive Dissonance also provides a blockage to change generally, as individuals are driven to reject information that conflicts with their own beliefs, or those of the groups to which they belong⁴⁶, and a number of studies have indicated the role of cognitive dissonance in the rejection of the evidence for climate change^{47, 48}.

Industrialized human society is a complex system that has developed through adaptation to the availability of seemingly endless amounts of high quality fossil fuel energy. Two centuries of such adaptation have created a society that has a high level of fitness to its current ecological niche, but with a greatly reduced level of resilience to changed ecological circumstances and highly developed inertial tendencies. The example of a drug addict comes to mind, who knows that continued drug use will kill him but is unable to save himself. Parts of his body crave the drugs, the process of withdrawal is both emotionally and physically painful, and his drug-damaged body may not be able to survive the physical stresses of the withdrawal process. The continued drug use, or in the case of society fossil fuel use and economic growth focus, is truly a pathological, but also a very understandable response. Many organizations have focused on local initiatives in the face of such societal-level inertia and resistance, as with the Transition Town movement pioneered by Rob Hopkins⁴⁹, but they risk remaining relatively marginalized with little affect on the overall direction of society. Such local initiatives could also be overwhelmed by wider societal problems as ecologically-driven crises intensify, as they are not truly independent of the overall society and its ecology. Another reaction, as with David King (the former United Kingdom Chief Scientific Advisor), is that real change will not happen until the ecologically-driven negative effects are obvious and large enough to overcome societal resistance⁵⁰. Given the delayed feedback inherent in resource depletion and ecological degradation, together with the non-linear nature of complex systems such as the global ecology, it may very well be too late by then. A greater focus is required on changing the fundamental societal barriers to change, and on producing a competing positive discourse for a society that currently has an “inability to construct a narrative that links to reality” ⁵¹.

Humanitys