by Kate Raworth
Politically addicted: hope, fear and power
What of the ubiquitous political lock-in to growth? As we saw in Chapter 1, in the mid twentieth century, pursuing national income growth quietly shifted from being a policy option to a political necessity. Three reasons stand out among the politician’s concerns: hope for raising revenue without raising taxes; fear of the unemployment line; and the power that resides in the G20 family photo.
Hope for raising revenue without raising taxes. Governments depend upon public funds for investing in public goods but they are infamously loath to raise taxes. No wonder so many pin their hopes instead on unending GDP growth, since it promises to deliver an ever-growing stream of tax revenue without the need for a high rate of tax. How could this political addiction be overcome to make low- or no-growth economies fiscally viable?
First, reframe the purpose of taxes to help build social consensus for the kind of higher-tax, higher-returns public sector that has been a proven success in many Scandinavian countries. And remember, the verbal framing expert George Lakoff advises, to choose your words wisely: don’t oppose tax relief – talk about tax justice. Likewise, the notion of public spending is often used by those who oppose it to evoke a never-ending outlay. Public investment, on the other hand, focuses on the public goods – such as high-quality schools and effective public transport – that underpin collective well-being.57
Second, end the extraordinary injustice of tax loopholes, offshore havens, profit shifting, and special exemptions that allow many of the world’s richest people and largest corporations – from Amazon to Zara – to pay negligible tax in the countries in which they live and do business. At least $18.5 trillion is hidden by wealthy individuals in tax havens worldwide, representing an annual loss of more than $156 billion in tax revenue, a sum that could end extreme income poverty twice over.58 At the same time, transnational corporations shift around $660 billion of their profits each year to near-zero tax jurisdictions such as the Netherlands, Ireland, Bermuda and Luxembourg.59 The Global Alliance for Tax Justice is among those focused on tackling this, campaigning worldwide for greater corporate transparency and accountability, fair international tax rules, and progressive national tax systems.60
Third, shifting both personal and corporate taxation away from taxing income streams and towards taxing accumulated wealth – such as real estate and financial assets – will diminish the role played by a growing GDP in ensuring sufficient tax revenue. Of course progressive tax reforms like these can quickly encounter pushback from the corporate lobby, along with claims of state incompetence and corruption. This only reinforces the importance of strong civic engagement in promoting and defending political democracies that can hold the state to account.
Fear of the unemployment line. Humans are ingenious: we are good at making more out of what we’ve got, or making the same from less. When Henry Ford introduced the moving assembly line in his Michigan automobile factory in 1913, car production rose fivefold almost overnight; if there had not been a growing market for his Model T car, he would have needed far fewer workers. In an expanding economy workers laid off by one business can hope to find jobs elsewhere, but when economy-wide demand does not keep up with productivity growth the result is widespread unemployment. As history has repeatedly demonstrated, that can quickly lead to xenophobia, intolerance and fascism. It was the Great Depression’s endless unemployment lines that convinced John Maynard Keynes to focus on full employment as the economy’s goal in the 1930s, and the answer, he believed, was continual GDP growth. A century on from the Model T revolution, however, robots have taken over much more than car production. It is simply no longer feasible to expect GDP growth rates to keep pace with the anticipated scale of lay-offs due to automation, which only reinforces the case for introducing a basic income for all. But other changes can also improve the distribution of paid work in a growth-agnostic economy.
Keynes anticipated that, as technology increased labour productivity, the typical working week would shorten: he famously predicted that a 15-hour week would suffice in the twenty-first century, and society would endeavour ‘to make what work there is still to be done as widely shared as possible’.61 He got that wrong, at least up to this point, but time could still prove him right. He would certainly have been among the first to back a proposal by the UK’s New Economics Foundation to shorten the standard paid working week in high-income countries from above 35 hours to just 21 hours as a means of tackling both unemployment and overwork.62 It would, of course, be a challenging transition that could not happen without transforming the economics of employment. ‘We will need to get rid of perverse incentives in tax and insurance systems,’ explains Anna Coote, the social policy expert behind the proposal, ‘so that employers are encouraged rather than penalized for taking on more workers.’63
Such initiatives for a shorter working week are all the more likely to happen if the employers are the workers themselves: from the Great Depression to the 2008 financial crisis, worker-owned cooperatives have proven more adept at preventing lay-offs: they tend to share reduced working hours between all members instead – an excellent example of an adaptive employment response in the face of fluctuating demand.64 But there are ways to transform employment in traditional companies too. The widely recommended shift from taxing labour to taxing resource use would simultaneously draw human ingenuity away from making more stuff with fewer people towards repairing and remaking more things with less stuff, while employing more people too. Such policies would certainly help to make economies more distributive and regenerative, but could these policies also help economies to become growth-agnostic when it comes to providing sufficient employment? What other adjustments might be required? This is just where more innovative experiments and research are needed.
Power in the G20 family photo. Every year, when the leaders of the world’s most powerful nations meet at the G20 summit, an official group photograph is taken. I like to think of it as the G20 family photo, remembering that, just as in many modern families, its membership may occasionally be rearranged. No wonder every political leader jealously guards their spot in that picture as a sign of their nation’s geopolitical power. In his influential 1989 book, The Rise and Fall of the Great Powers, historian Paul Kennedy concluded that it is the relative, not absolute, wealth of nations that determines their power on the world stage.65 The rivalry between the USA and the USSR that was set in motion in the 1950s has become an unrelenting geopolitical race for all: keep growing to hold on to your spot in the family picture, or you’ll be bumped out of the frame by the next emerging powerhouse.
This is an international collective action conundrum and hence a tough growth addiction to tackle. Systems thinkers would suggest that one way out of this bind is to diversify and ‘start a new game’ with alternative measures of success. If a successful economy is one that thrives in balance, then that success will be reflected not in the metric of money but in metrics that reflect human prosperity in a flourishing web of life. Some well-known initiatives have taken this route. The UN’s Human Development Index, which ranks countries in terms of human health and education along with income per person, was created in 1990 precisely to start countering the sole use of GDP. Others like the Happy Planet Index, the Inclusive Wealth Index, and the Social Progress Index are now also aiming to create an alternative international family picture in which the biggest-GDP nations do not automatically appear centre frame. Other strategic initiatives have sought to bypass national rivalry by championing city-to-city collaboration instead. The C40 network, for instance, now connects more than 80 of the world’s megacities in a shared commitment to tackle climate change. Home to over 550 million people and 25% of World GDP, these cities – and their economic vision – will be profoundly influential far beyond their city limits.66
New games help, but the compulsion of the old GDP game holds its grip because GDP brings both global market power and global military power. This geopolitical lock-in demands far m
ore strategic attention. ‘An economic race for global power is certainly an understandable rationale for focusing on long-term growth,’ argues Kenneth Rogoff, ‘but if such competition is really a central justification for this focus, then we need to re-examine standard macroeconomic models, which ignore this issue entirely.’67 Beyond merely rewriting macroeconomic models, however, this lock-in highlights the need for innovative thinkers in international relations to turn their attention to strategies that could help to usher in a future of growth-agnostic global governance.
Socially addicted: something to aspire to
Lastly, how are we socially locked in, addicted to, and stuck on GDP growth? Through the culture of consumerism and the tensions created by inequality, which in turn are rooted in the need for something to aspire to.
Despite being far richer than kings of old, we are too easily trapped on a treadmill of consumerism, continually searching for identity, connection and self-transformation through the things that we buy. Keeping up with the Joneses has us forever chasing the promise of that next purchase. As we saw in Chapter 3, Freud’s nephew Edward Bernays realised that his uncle’s psychotherapy opened up a very lucrative world of retail therapy. His method of persuasion – tastefully named ‘public relations’ – transformed marketing worldwide and, over the course of the twentieth century, embedded consumer culture as a way of life. As the media theorist John Berger put it in his book, Ways of Seeing, ‘publicity is not merely an assembly of competing messages: it is a language in itself which is always being used to make the same general proposal … it proposes to each of us that we transform ourselves, and our lives, by buying something more’.68
Do we have a chance of shaking off this twentieth-century inheritance? In an attempt to do so, some governments, such as in Sweden, Norway and Quebec, have banned advertising to children under 12 (leaving the adult subconscious as fair game), while cities such as Grenoble and São Paolo have banned the ‘visual pollution’ of street billboards. But the simultaneous boom in targeted online advertising, backed up by high-tech consumer research, has taken personalised marketing into a far more sophisticated and invasive realm. Meanwhile, advertising has secured its role – in the street, in schools, on social media, and in the news media – as a major income source for local governments, and for free website services and news outlets, creating an uneasy financial dependence of the state and the digital commons upon the endless enticements of the market. Reversing consumerism’s financial and cultural dominance in public and private life is set to be one of the twenty-first century’s most gripping psychological dramas.
Society is also said to be addicted to GDP growth because it eases the tension of wide social inequalities. An ever-growing GDP is often claimed to be essential because it creates a ‘positive sum economy’ in which everyone can become better off.69 When the economic pie is growing, the argument goes, the wealthy are more likely to accept redistributive taxes that invest in public services because it can be done without cutting into their take-home income. Others, however, believe continual GDP growth is essential for the very opposite reason: because it serves to permanently defer the need for redistribution. In the words of Henry Wallich, governor of the US Federal Reserve in the 1970s, ‘Growth is a substitute for equality of income. So long as there is growth there is hope, and that makes large income differentials tolerable.’70
Whether growth is seen as the key to redistribution, or the key to forever avoiding it, its social importance is rooted in a basic conviction. I once found myself in a workshop discussing new economic thinking with a leading figure in complexity economics. He talked about promoting GDP growth in high-income countries as if it were an obvious necessity. When I questioned him about it, his answer was simple. ‘We have a deep-seated drive for growth,’ he said. ‘People need something to aspire to.’
I agree: people need something to aspire to. But is an ever-growing income really the best aspiration on offer? It was Alfred Marshall, back in Chapter 3, who endowed rational economic man with insatiable wants and desires. Thanks to Edward Bernays, that particularly seems to be the case among the WEIRD ones today – people in Western, educated, industrial, rich, democratic countries that are now the homelands of consumer society. Yet anthropologists can name both historical and contemporary examples of traditional societies that have lived by a principle of sufficiency instead, such as the Cree in northern Manitoba in the nineteenth century whose response to European traders defied economists’ expectations. In the hope of acquiring more furs, the Europeans offered them higher prices: in response the Cree brought fewer furs to the trading post, since a smaller number were now needed to obtain the goods that they wanted in exchange.71
If Bernays were here and willing to help try creating or recovering a similar sense of material sufficiency in WEIRD societies, which deep human values would he attempt to trigger? What might we aspire to instead, if not more possessions? ‘Wherever and whenever we are excessive in our lives it is the sign of an as yet unknown deprivation,’ argues the psychoanalyst Adam Phillips. ‘Our excesses are the best clue we have to our own poverty, and our best way of concealing it from ourselves.’72 When it comes to consumerism, perhaps the poverty that we aim to conceal lies in our neglected relationships with each other and with the living world. The psychotherapist Sue Gerhardt would certainly agree. ‘Although we have relative material abundance, we do not in fact have emotional abundance,’ she writes in her book, The Selfish Society. ‘Many people are deprived of what really matters.’73
There are many views on what really matters to us in life – from using our talents and helping others, to standing up for what we believe in. Drawing on a wide array of psychological research, the New Economics Foundation has distilled the findings down to five simple acts that are proven to promote well-being: connecting to the people around us, being active in our bodies, taking notice of the world, learning new skills, and giving to others.74 Perhaps these are first steps towards the kind of moral and social progress that Mill was imagining as he looked forward to a time when people who were no longer engrossed in the art of getting on would aspire instead to the art of living.
This brief sketch of how to prepare the economic plane for landing has touched on many addictions to growth that have become financially, politically and socially ingrained in many nations’ institutions, policies and culture. It is, of course, overwhelming to contemplate them all at once – just as every novice pilot is no doubt overwhelmed on first learning how to use a plane’s landing equipment. But that equipment can be mastered, and not one of the growth addictions outlined above is inherently insurmountable. If there is one task that merits the attention of the twenty-first-century economist, it is this: to come up with economic designs that would enable nations coming towards the end of their GDP growth to learn to thrive without it.
Welcome to the arrivals lounge
If we can master the art of landing the plane – creating an economy that enables us to thrive, whether or not it grows – what happens on arrival? I have no doubt that the next generation of economic innovators will be best placed to fill in those still-blank pages of the manual, so I will add just two thoughts.
First, if Rostow were indeed a fellow passenger on this flight, I think he would realise upon landing that an airplane is not actually the best metaphor to describe GDP’s future journey: it lacks the agility needed to lift up, touch down, lift up, touch down in response to ever-changing conditions. Flying was the novel way to travel in Rostow’s day: his book came out just five years after the first passenger jet flight so no wonder he was drawn to it as an economic metaphor. But introduce him to twenty-first-century water sports and I reckon he would set his heart on kite surfing as a far better metaphor for the future of GDP. A skilled kite surfer rides her surfboard across the rolling waves while catching the wind in her kite, and she must continually adjust – bending, dipping, and twisting her body – to maintain that dynamic interplay of the wind and the waves. That is j
ust how GDP should come to move in the twenty-first century, with the value of products and services sold each year bobbing and dipping in response to the constantly evolving economy.
Second, whatever else happens on arrival, I will bet one thing: that John Maynard Keynes and John Stuart Mill will be there waiting to greet us, ready to get to work on figuring out the economics – and the philosophy and politics too – of the art of living in a distributive, regenerative, growth-agnostic Doughnut economy. The destination will certainly not be what they had expected, but they will recognise our dilemmas. What better pair of original thinkers could we hope to have on the team?
WE ARE ALL ECONOMISTS NOW
Doughnut Economics sets out an optimistic vision of humanity’s common future: a global economy that creates a thriving balance thanks to its distributive and regenerative design. Such an aspiration may seem foolish, even naive, given the intertwined crises of climate change, violent conflict, forced migration, widening inequalities, rising xenophobia, and endemic financial instability that we face. Watch or read the daily news and the possibility of breakdown – social, ecological, economic and political – feels very real. Humanity’s glass can easily look half empty. Follow those fears through and you can quickly find yourself turning to the economics of collapse and survival which, like all powerful frames, could help to make those very outcomes self-fulfilling.
But there are enough people who still see the alternative, the glass-half-full future, and are intent on bringing it about. I count myself amongst them. Ours is the first generation to properly understand the damage we have been doing to our planetary household, and probably the last generation with the chance to do something transformative about it. And we know full well, as an international community, that we have the technology, know-how and financial means to end extreme poverty in all of its forms should we collectively choose to make that happen.
