The Diseconomics of Growth

H.V. Hodson


Chapter XIII.

What is to be Done

Great changes need to be wrought in people’s attitudes and in public policies. Economic growth must be removed from its idolatrous pedestal. The first lesson to be learnt by everyone is that economic growth is far from being identical with increased general welfare. Serious economists and statisticians have never claimed that it was, but mass opinion has come to believe not only that growth of GNP is the way to better life for all but indeed that it is the only way. An only means to an end becomes an end-in-itself. Undoubtedly economic growth can be a means to good ends, but it can also be a means to bad ends. In respect of ends, growth is neutral.

When as a child one was given a tip or a little extra pocket money the classic admonition was “Don’t spend it all on sweets.” We should accept the same lesson about growth. If a nation has potential economic growth the first question its leaders and citizens should ask themselves is “What shall we spend it on?” What are our priorities in need? More consumption all round? Or a fairer deal for the economically weak? Or space exploration? Or less work, or better homes, or more education, or healthier, saner cities, or less contamination and destruction of our natural surroundings, or more help to peoples much poorer than ourselves? Some of these purposes would turn real potential growth into nil actual growth, some would use actual growth better than spending it on higher and higher standards of material, living. The choices must be made, moreover, with an ever-sharper eye upon the ultimate effect of national actions upon the global environment and the future of mankind on earth.

Once economic growth is demoted from its false status as an end in itself, people will no longer clamour for any means, however otherwise objectionable, of achieving it. Because deflation may momentarily halt growth, as statistically measured year by year, inflation is tolerated or even demanded as a means to growth. But the most that inflation can do for growth is a hectic and short-lived stimulus: it cannot by itself cause long-term growth, or, better, potential growth. (Over two decades, one of the countries with fastest economic growth in Europe, Western Germany, has been one with the most stable price-levels and the most pervasive enmity towards inflation.) Meanwhile inflation positively runs counter to many of the most sensible purposes to which potential growth can be put. It penalises the economically weak, undermines social stability, slows down the rehabilitation of cities and countryside and help to the disadvantaged, which too often depend on public and private funds that do not keep pace with rising prices. Inflation is thus an evil process, to be listed in the calendar of crimes against the welfare of society. It is strange that a degree of unemployment which may hit one in a hundred of the whole people brings an outcry, but only muttered grumbles follow a degree of inflation which may directly harm more than one-half of them.

Great blame falls upon political leaders and moulders of opinion for misleading the people about economic growth. They have become priests of its temple when they should have been prophets calling the ignorant from worship of false gods. Some have not understood, others have not had the courage to be unpopular. We can hardly expect business men or trade-union officials, with their own axes to grind, to act and speak in a general interest which may run counter to their own, but can we not hope that in the press and other media, and even in politics, some voices may be raised to tell the people that they have been deluded?

If it were so, a change of attitudes could come more quickly than one might think. Only a few years ago, conservation was a small minority interest, like euthanasia or vegetarianism, and ecology was a word that newspaper editors had to look up in a dictionary. Now “environment,” with all its associated ideas, is a common catchword. In Britain we have a Secretary of State for the Environment, not a minor Minister but one of the most powerful members of the Cabinet, and one who evidently means business. He and his Department should be the first to counter-attack against the vested interests of the growth cult. France also now has a Minister for Environment: the USA, Italy, West Germany and Japan are among other countries that have shown an official awakening to their environmental dangers, though as yet no Government has faced the latent cause, in unmitigated growth, as contrasted with the visible symptoms.

Educationists, too, have a big responsibility. Too much in education has been taught as end and not means. Science has been glorified as if it were a goal, not a technique. It is an instrument of thought, just as reading or writing are instruments. In practical classes, we should think it odd to teach boys how to handle carpentry tools without teaching what to make with them: it is equally odd to teach how to read without teaching what to read, or to teach scientific method without giving at least a glimpse of the ends that science can serve.

This bears on the much-debated question of “relevance.” Students demand relevance in their studies, by which they mean that they should see what meaning their studies have for their own lives and the problems they see around them. There is good and bad in their demand. If it means scorn for “academic” subjects, or “pure” learning, and the supremacy of ill-disciplined so-called “social sciences,” or if it means perverting education, whose ideas should be timeless and universal, to sectional and contemporary interests; it is bad. But if it means that the teaching of techniques and methodology, like physical science or economics, which are means, should not be divorced from a philosophy of ends and the teaching of purposes and general structure, it is surely good.

Paul Goodman has written:

My advice to students is that given by Prince Kropotkin in “A Letter to the Young”: “Ask what kind of world do you want to live in? What are you good at and want to work at to build that world? What do you need to know? Demand that your teachers teach you that.”

This combination of idealism and utilitarianism sounds well, but it is specious, because it begs so many questions. How does the student, implicitly young and ignorant, know what kind of world he wants to live in, let alone how to build it, until he has been shown both ends and means? How does he discern what he needs to know until he has been taught? How is he to follow Kropotkin’s advice if what he is good at seems to have little bearing on building any kind of better world? Clearly he might be taught not only how to answer his own questions, but what questions to ask.

The subjects, therefore, that will be of fundamental importance and relevance in general education are history, which tells how men and societies have behaved, the best guide to how they will or can behave; geography both physical and human—how people live, their religions and social structure, the resources of the world; languages to understand other men and cultures; biology on the large scale, including agriculture; the framework of society, both national and international, including its legal and economic structure; but not “sociology”, which is a compost of specialisms. Too much sociology is handed out to those who do not understand the whole complex into which the parts fit, and too much economics is handed out to (and by) those who have no knowledge of how the effective economic decisions are taken and how they fit into the whole pattern of developing society.

Reform in education comes slowly, partly because the agents of reform—educational administrators and those who teach the teachers—tend to conservatism and academic vested interest. But it is already spreading, as the curricula of our best schools demonstrate. The impulse for change in outlooks, however, must come from many quarters, from publicists and preachers and writers and philosophers and politicians. We have to work the poison of wrong ideas out of our system; we cannot get rid of it by some specific antidote or emetic.

Policies are conducted, and to a great extent formulated, by institutions. Creative human genius is required for true innovation, but it is little more than the spark that starts the machine, which thereafter generates its own ignition. We are therefore more than half-way to right policies if we have the right institutions. In Britain a great advance was made, at the political level, by the creation, under Mr Heath’s Government, of the Department of the Environment. What matters is not its title but the fact that it embraces transport, housing and town-and-country planning, previously under separate Ministries, and all central government policies towards them, as well as other, more particular activities concerned with pollution, within the ambit of an overall responsibility for maintaining the nation’s environmental health. These are all key elements in the translation of environmental intentions into practice. Moreover they give the Cabinet Minister in charge a big administrative and financial apparatus, without which he could be only a thinker, to whose advice lip-service was paid by administrative departments that went their own way according to their established interests and ethos. It is too early to say that a pattern of environmental policy has emerged, but particular decisions and expenditures adopted by the Department and its Secretary of State imply that they have taken a broad view of the inter-relation between economic activity (like public transport and house building) and land-use planning, which in a free-enterprise system has necessarily a largely negative character.

Nevertheless, the governmental structure is only half-complete. Land-use laws, architectural controls, anti-pollution measures, government policies towards housing, transport, urban development, New Towns and all the rest, have to be seen as expressions of the total use of the economic power of the nation, within the limits of political direction. Misuse of that power—for example by ill distribution of national income, or by inflation, or by excessive consumption, or by imprudent use of resources, or by devotion to economic growth as an index of welfare and goal of ambition—can frustrate them or reduce them to the scale and status of fringe improvements, like better seat-belts or reduced engine-noise in an aircraft that is structurally faulty and inherently dangerous. In an ideal governmental structure, all major economic decisions would be taken in the context of their effect on the total development of the nation as a sub-species of humanity in its earthly environment. Such economic decisions would include monetary and budgetary, policy, policies towards prices-and-incomes and labour relations, the direction of educational expenditure, and much else. To approximate to this ideal requires something more than wisdom and long-sightedness and the courage to look far beyond the next election on the part of a Prime Minister or other Head of Government and his colleagues: it requires constant debate and reiteration of guiding principles. This means that it needs a machinery of inter-departmental discussion and a “think-box”—a council of Ministers, with a long-distance planning staff, professionally dedicated and skilled and unfettered by political pressures.

In France, the Commissariat du Plan, with its socially as well as economically oriented commissions, does fulfil at least part of this function. The scope of its thinking and research has been considerably enlarged. Other countries have their Planning Ministries or Commissions or similar structures. But most such national planning has two defects: it is too short-term, working to a three- or five-year time-scale, and it is dominated by purely economic motives, that is to say, it concerns itself too much with projections of actual economic growth and too little with potential economic growth and how best to use it.

In the United States, the embryo of a long-term planning organ was created when President Nixon established within the Executive Office of the President, in July 1969, a National Goals Research Staff. How great will be its influence on major policy remains to be demonstrated. In the narrower environmental field big strides forward were taken within the following year, when Congress passed two Acts (Public Laws 91-190 and 91-224) establishing a Council on Environmental Quality in the Executive Office and a closely-related Office of Environmental Quality inspired by the declaration “that man has caused changes in the environment; that many of these changes may affect the relationship between man and his environment; and that population increases and urban concentration contribute directly to pollution and the degradation of our environment.” Had Congress added economic growth as such a polluter, it would have painted a more complete and balanced picture; but to do so in plain terms was hardly to be expected in face of the notions that pervaded popular and political thought and continue to do so. However, Congress went a very long way in the preamble (Sec. 101 (a)) of the National Environmental Policy Act of 1969:

The Congress, recognising the profound impact of man’s activity on the inter-relations of all components of the natural environment, particularly the profound influences of population growth, high-density urbanisation, industrial expansion, resource exploitation, and new and expanding technological advances, and recognising further the critical importance of restoring and maintaining environmental quality to the overall welfare and development of man, declares that it is the continuing policy of the Federal Government ... to use all practicable means and measures ... to create and maintain conditions under which man and nature can exist in productive harmony, and fulfil the social, economic and other requirements of present and future generations of Americans.

Fair words! One cannot help fearing, however, that when it comes to action “industrial expansion, resource exploitation and new and expanding technological advances” will have the edge over “the overall welfare and development of man,” economic “requirements” will have the edge over social and other “requirements”, and needs of the present generation over those of future generations.

Despite such scepticism, it is clear that great advances have been made in some of the leading industrialised countries, which bear the brunt of global responsibility, towards comprehending the great problem, identifying its symptoms if not its causes, and shaping mechanisms for alleviating them. This awakening is a remarkable example of the adaptability of man and his political institutions in face of change and new ideas. Man, as contemporary sages so often tell us, is the one species of creation that is capable, with his intelligence and his power over all else in nature, of determining his own biological destiny. We need not yet despair of his using that capability better than he has often used his powers in the past.

The questions of economic growth and its relation to total human welfare (even, in the ultimate, human survival) which have been considered in this book are inherently world-wide. They call for international as well as national instruments. We have, under the United Nations, organs for study and action in various parts of the complex—for world health, for food and agriculture, for educational, cultural and scientific matters, for labour problems, for development assistance, for world trade, and technical organisations concerned with air traffic, maritime co-operation, atomic energy and so on. But there is no organisation for teaming all these elements together and relating them to the whole status of man and his activities amid the limited and fragile environment in which he lives on the surface of this solitary planet. The United Nations headquarters itself does not fulfil that role. It is dominated by politics, which means by conflict rather than construction, by national rather than species-wide human values. Its structure is a summation of its subordinate activities, not a synthesis of them. The Economic and Social Council is responsible for carrying out its functions with regard to social, cultural, educational, health and related matters. These are broad enough terms of reference for it to be the directing and thinking head of an organism designed to fuse all those matters into a conspectus of mankind’s non-political, non-religious activity. But it is nothing of the sort. Its ten commissions are concerned with statistics, human rights, social development, the status of women, narcotic drugs, population and economic problems in four geographical regions. This rag-bag is not knit into a garment merely by the existence of an administrative committee on co-ordination.

The United Nations, indeed, fell in with the fashion of the day, admirable enough in itself, by calling a Conference on the Human Environment in June 1972. But the objects of the meeting, as framed in advance, did not appear to go beyond the commonplace view of environmental problems as primarily those of pollution, although they did include mention, under methods for intensified action, of “ways in which the developing countries can minimise or forestall the adverse effects of industrialisation and urbanisation.” Why, one wonders, only developing countries? Industrialisation and urbanisation can have just as traumatic environmental effects in economically advanced countries. The planners of the conference seemed to avert their eyes from the impact of population growth, the using-up of natural resources, and redundant consumption as an enemy of the human environment.

From that meeting (still in the future as this is written) it is to be hoped there will emerge a permanent United Nations institution, not merely for reviewing environmental problems in the narrower sense, but for framing long-term goals for the human race and steering governments and international organisations towards economic, social and preventive policies, consistent with those goals. Such a move might do worse than adopt, as its justification and objective, the preamble to US Public Law 91-190, quoted a few pages back: “Recognising the profound impact of man’s activity on the interrelations of all components of the natural environment, particularly the influences of population growth, high-density urbanisation, industrial expansion, resource exploitation, and new and expanding technological advances ... to create and maintain conditions under which man and nature can exist in productive harmony, and fulfil the social, economic and other requirements of present and future generations of the human race.”

That new UN organisation, if it ever came into being, would be charged not merely with studying the question of human goals and the means to their fulfilment that would sustain rather than injure the natural environment, but also with indicating, through the Secretary-General, to the Food and Agriculture Organisation, the World Health Organisation and other international organs (not excluding the World Bank) the contributions they could and should make; with advising national governments and regional organisations on their relevant policies and programmes; with initiating international treaties on matters concerned with the environment in the broadest sense; and with reporting regularly on the progress made towards the prescribed goals or the lapses away from them. At a conference in Oslo in October 1971, representatives of some of the chief maritime nations drew up a draft treaty banning the deposit of industrial waste in the sea: on the face of it, this move is clearly to the good, but it needs to be considered in a global context—for instance, if the waste is not to be dumped in the sea, where is it to be dumped, and what environmental consequences would that have? The proposed UN organisation would keep all such initiatives under its horizon-scanning eye. We are all in the same boat, and this could be its built-in navigation system.

Besides the UN and its subordinate or related bodies, other international organisations have concerned themselves with broad environmental problems, including NATO (although its Committee on Challenges of Modern Society is much more limited in its actual scope than it sounds), the Organisation for Economic Co-operation and Development, and some regional organisations. The OECD has enlisted a team of economists to study and report on the problem of the environment. One of its members, Mr Alan Coddington, wrote (The Times, 9th August 1971):—

A truly environmental—or long-term economic—approach sees the natural environment being used. It is a waste disposal facility, and a source of inputs. Some of these services and inputs are normally available free of charge. But to treat a resource as free when it is, in fact, scarce and therefore valuable results in its over-utilisation, that is to say, a mis-allocation. On this line or argument, what is required is the establishment of clear property rights to these “free goods”. (Ownership may be vested in government or even in international bodies.)

Identification of the “truly environmental” with the “long-term economic” approach is right, and encouraging from that quarter. Right, too, is Mr Coddington’s observation that “economics can only be applied to the environment through politics.” Regrettably, the economic motives and objects of politicians and political institutions tend to be narrow and short-term, and environmental problems are treated as an appendage, not as the heart of the matter. The emphasis, when they consider the environment, is on pollutant by-products, not on fundamental processes of economic and social development; on professional conservationism, not on the inter-action of economics and all the other aspects of man’s life.

Many international organisations, apart from military and diplomatic functions, are indeed purposively dominated by the economic aims that a fundamental philosophy of the human future would call in question. Economic growth is their inspiration and their goal. Among poorer countries, such as those of the (pan-American) Alliance for Progress, this is more than understandable. Of course there is nothing wrong in economic co-operation as an element in international planning for the betterment of peoples. Nevertheless it is sad to see that the great organ of European unity, the combined European Commissions, is exclusively economic and technical in scope, and still sadder to observe that the predominant argument for Britain’s entry to the EEC is that it will promote an economic growth which it is far from certain that either she or her fellow European countries really need or know what to do with. A single issue of the London Times (1st October 1971) contained the following news items: “Mr Heath predicts fastest rate of expansion for years”—in a speech with emphasis on Common Market entry; “Mr Rippon [the chief Common Market negotiator for Britain] sees chance for more growth;” and a summary of a forthcoming expert study, “The Economics of Europe,” including a forecast by Professor John Williamson of Warwick University that by the end of the transitional period after British entry the national economic growth rate will rise, as a result of its effects, by 1 and a half per cent: since these effects would not have been exhausted, he expected to see some acceleration of growth of GNP being maintained thereafter. All this is instinct with the unquestioned assumption that economic growth is what Britain and Europe want and ought to have.

If the talk were of economic potential rather than of growth of national economic product it would make more sense for the long-term future. To some this may sound like verbal refinement, but it is much more. Economic growth has become inseparably linked with higher consumption and overall expansion of industry. This is manifestly what Mr Heath and Mr Rippon meant in their headlined speeches. But there are many other objects for use of potential economic growth—social and environmental objects, and improvements in non-economic (IE not money-measurable) aspects of life.

If the question is put, what can the individual citizen do to help in all this, the first part of the answer is that in his thinking—the way he reads the news, reacts to political utterances, asks questions of his elected leaders, talks with friends or professional colleagues—he should keep clear the distinction between economic product and total welfare, and between economic potential and recorded, expended economic growth. Idolatry of economic growth begins at home, and its overthrow begins at home.

When pondering what can and should be done with economic potential, each of us should reflect on those things in our lives which we hold most dear, and those things to which we most profoundly aspire. We shall find that many of them are inherently non-economic, or depend on good use of existing economic means rather than their increase. We ought also to reflect on the fact that we are but heirs-for-life of earthly creation, trustees for all those who come after us. Some present-day prophets have called for a “new religion” to replace the religions of economics, science and technology, which have so largely usurped the sovereignty of transcendental faiths in the West, indeed to replace the Man-equals-God theme of traditional Christianity. “Possibly,” wrote Lynn White Jr. (in Science, 10th March 1967, reproduced in The Environmental Handbook), “we should ponder the greatest radical in Christian history since Christ: Saint Francis of Assisi... The key to an understanding of Francis is his belief in the virtue of humility—not merely for the individual but for man as a species. Francis tried to depose man from his monarchy over creation.”

We need not accept the call for a new religion—for religions of their nature lose their novelty, become obsessive and exclusive, formulate their ritual cults, persecute their heretics, breed priesthoods as conservative as those they displace, whereas all that is needed is good sense and adaptability of mind—in order to recognise that if man is monarch of creation he owes his monarchical duty to all his citizenry, to all life as well as all humanity, and that disaster will overtake his realm unless he rules it better in the future than he is ruling it now. We can indeed find our guidance plainly enough in old religions.

We are responsible to God for our trusteeship over nature. It is part of this trusteeship that we should not waste non-renewable raw materials or foul the air with pollution. It is part of this trusteeship that we should not abuse the gift of procreation: it is immoral to bring more children into the world than we can properly care for. We have a duty to posterity, because all people, past and future, are made in God’s image and share in the inheritance of the earth. We have a duty to our neighbours, whom we are commanded to love as ourselves, and this applies both to our desperately poor neighbours in developing countries and to our unfortunate neighbours in our own country. We are commanded to share one another’s burdens and so fulfil the law of Christ. We are taught by Christ that a manes wealth does not consist in the abundance of things he possesses; and the Beatitudes inform us in simple language where true happiness is to be found... There is no question at all that if mankind lived by the Gospel, homo sapiens could make the colossal reorientation that is required of him. [Dr Hugh Montefiore, Bishop of Kingston, in the Rutherford Lecture 1971]

There are practical ways in which each of us can contribute his mite to the welfare of man as part of all creation. We can reduce the pollution that we ourselves commit, not merely by not leaving litter in the countryside or the city streets, but by such means as composting waste for our gardens, keeping them free of dangerous insecticides (a piece of advice from that great environmentalist Sir Frank Fraser Darling), being careful in the use of water, making less noise, refusing—if we can against the tide of interest of manufacturers and retailers—to buy non-returnable bottles of beer and soft drinks, making do and mending rather than discarding durable goods which are capable of useful life, buying food in its natural state rather than highly processed and elaborately packaged, pressing local authorities and councils to sort and recycle garbage and sewage instead of dumping it uselessly, giving up smoking—a valueless and damaging use of resources both natural and economic—and especially by economising in the use of that key exhauster of resources and polluter of the environment, mechanical transport. Under this rubric we should try to move less restlessly, walk when we can, use public transport rather than private automobiles, keep our long vision on the value of living close to work, or working close to home, use smaller cars, keep our cars in good condition—and make them last longer. One has only to list such ways of contributing to realise that we are all, in small ways or large, sinners against our fellow men and the conservation of what God or Providence or a beneficient evolution has furnished for him on earth. Man has no other place to live, no other means to live by.

“Mony a mickle maks a muckle.” All such little actions, abstentions and persuasions as have been suggested for the individual, wherever he lives and whatever his economic station, can add up to a significant impact on the misuse of the world’s resources and the abuse of man’s enormous, expanding economic and technological powers. If the major decisions and changes of direction have to be taken by an elite-statesmen, administrators, scientists, economists—they can be deeply affected by climates of thought that build up from below. The change of philosophy that is needed and is surely on its way has both an economic and a moral content. The economic aspect has been graphically worded by Kenneth E. Boulding (in Environmental Quality in a Growing Economy, edited by Henry Jarrett, 1966):—

The closed earth of the future requires economic principles which are somewhat different from those of the open earth of the past. For the sake of picturesqueness, I am tempted to call the open economy the “cowboy economy,” the cowboy being symbolic of the illimitable plains and also associated with reckless, exploitative, romantic and violent behaviour, which is characteristic of open societies. The closed economy of the future might similarly be called the “spaceman” economy, in which the earth has become a single spaceship, without unlimited reserves of anything, either for extraction or for pollution... In the cowboy economy, consumption is regarded as a good thing and production likewise; and the success of the economy is measured by the amount of the throughput of the “factors of production” The gross national product is a rough measure of this total throughput... By contrast, in the spaceman economy, throughput is by no means a desideratum, and is indeed to be regarded as something to be minimised rather than maximised. The essential measure of the success of the economy is not production and consumption at all, but the nature, extent, quality and complexity of the total capital stock, including in this the state of the human bodies and minds included in this system.

This is a little hard on the cowboy, who may be more romantic but has certainly not been more exploitative than the farmer, the industrialist, the technocrat or for that matter the spaceman. And although the general message is sound enough, it is not at all clear how the nature and extent of the capital stock are to be measured, or how they are to be divorced from production and consumption. Economic energy and power are not reprehensible in themselves: the danger for the spaceship and its passengers lies in their abuse and in their possible consequences, both material and moral. It is certain that mankind will go on becoming economically and technologically more powerful. What is in question is how that economic and technological power is used, and how its good fruits are to be weighed: certainly not by “throughput” or growth of gross product, regardless of how it is made up, at what expense it is achieved, or what non-economic elements have to be added or subtracted to arrive at the total welfare of “human bodies and minds.”

The diseconomics of growth comprises, then, an economic criticism, to the effect that, even within the limits of that which can be measured in money, the cult of growth involves unseen distortions, misuses and wastes. It also comprises a moral criticism, to the effect that the growth cult runs counter to moral and spiritual values. It is inherently selfish: it neglects man’s duty to his neighbours: it debases other parts of man’s being than the economic. It encourages a mechanistic outlook on the world—asking what can it be made to do, rather than how does it naturally behave—and this leads to a mechanistic view of man himself, as a machine for producing and consuming. It compounds the sins of envy and greed: it goads men and women on to over-competitiveness and material emulation, and this warps their natural personalities, often to the extent of physiological strain or mental illness. Its beatitude is “Blessed are the rich.” Christ said “Blessed are the poor, for they shall inherit the earth.” That was an apocalyptic promise, but it could be fulfilled in this world within a fraction of the time that lies between us and its Author.


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