Last week the latest round of GDP estimates were released by the Office of National Statistics. They show that the economy returned to growth in the last quarter, thereby ending the double-dip recession.
This was broadly expected and I wasn’t going to write about it, except that I’ve had a couple of comments that I feel I ought to respond to. The gist of them is that as someone who is sceptical about economic growth, I probably quite like recessions and am secretly disappointed that the economy is on the up again. This is a misunderstanding, and a pretty common one. Most of the knee-jerk dismissal of postgrowth economics boils down to this problem. So let me just iron a couple of things out.
Firstly, we have to steward the economy that we have. To be against growth on principle is self-defeating if you have a growth economy. It’s like wanting to plug your petrol powered car into the mains. It doesn’t matter how much you’d prefer an electric car, you’re not going to go anywhere like that.
Because of the way our current economy is constructed, there are serious consequences when growth stalls. People lose their jobs and their homes, services are cut, and politics can get nasty. Recessions can wreck lives and we want to avoid them. When they happen, we want to recover as fast as we can. Unfortunately, a growth economy will always suffer from booms and busts – that’s actually one of the most compelling reasons for creating a more stable economy.
Which brings me to the most important point: a postgrowth economy isn’t just an economy that isn’t growing – it’s an economy that doesn’t require growth. You can’t create a sustainable economy by switching growth off and hoping for the best. It has to be designed, including new forms of finance and new institutions to manage them, action on inequality and debt, new tax systems and much more besides. It’s a proactive, strategic, and long term project. A sustainable economy will take decades to evolve, and will involve every sector of society.
None of this comes free either. Things like renewable energy or a sustainable transport network will take considerable investment. That’s never going to happen if step one is to break the economy as its currently configured.
So no, there’s nothing to celebrate in recession. I may disagree with the overall goal of the economy, but a collapsing economy is worse. The only downside to the recovery might be a sense of complacency that our current economic configuration is working after all, and we’ll have missed the opportunity to fix it. But I suspect that the opportunity has already come and gone.
UPDATE – Here’s postgrowth economist Serge Latouche, who says something similar:
“We know that simply contracting the economy plunges our societies into disarray, increases the rate of unemployment and hastens the demise of the health, social, educational, cultural and environmental projects that provide us with an indispensable minimum quality of life… Just as there is nothing worse than a work-based society in which there is no work, there is nothing worse than a growth-based society in which growth does not materialize. And that social and civilizational regression is precisely what is in store for us if we do not change direction. For all these reasons, de-growth is conceivable only in a de-growth society, or in other words within the framework of a system that is based upon a different logic.”
The Earthbound Report 
Reblogged this on gfmurphy101 and commented:
GFM101 Comment: While I agree with much of this I fundamently believe that ‘recovery’ is not going to happen! If we look at what has happened since this crisis has begun, there has mainly been a three pronged approach…austerity, limited stimulus and arrangements particularly in the Euro area, to ensure the crisis is not repeated. What has not been factored in is what to do if we do have another crisis…. a sort of double global dip….and this is where the s##t will hit the fan! Already governments are putting in place measures that will restrict their options to deal with a future crisis (the fiscal compact!) so the cost of any future crisis will have to be paid for through yet more austerity….and where will that lead to ????
Well that’s another question! Like you, I don’t have any confidence that we’re on track for sustained growth. After all, most economists didn’t predict a double-dip, although it seemed obvious to many others. I actually think we’re on a plateau, and will remain there for a good while yet.
Just hoping for more people to see an alternative to a must have growth (and create equal debt or instability) approach in this ‘new growth’ economy… Surely more than last time.
A recession is there to clear out mal-investments and find out who was swiming with out a bathing suit.
If you bail out companies to stop them going bust there can never be a recovery just a lost decade or two.
S&P 500 has been going sideways since 2000 Yeap that is a sure sign of growth NOT.
Your gorvenment contiunues to spend more than it steals. This is not a recipe for growth.
This is so clear. Thanks. I too feel disappointed when the ‘problem’ looks like it is being fixed because I want people to keep questioning our system and they tend not to unless things look dire. I think we need to keep pointing out that growth in the economy does not necessarily shrink the gap between rich and poor, and it is the closing of this gap which is what we need.
So many are taught that money will provide the answer to all ills, and so many incessant growth seekers want us to believe this. But how many are taught to think about it in schools? Opportunity will be constantly missed by those with no will to change, and pointing out the inherent flaw, till we’re blue in the face, won’t make them listen. So can we get more education on economics? I believe that too many, like I did, still enter the adult world with no adequate idea about economics and politics. Too many are kept in ignorance.
I think more economics should be taught in schools, but I suspect it would be the status quo economics that doesn’t have any room for the kinds of ideas I’m talking about here. I did economics modules at university and it was entirely from one school of thought.
No doubt Jeremy. Maybe, I’m wrong, but I think I’d rather have heard only one school of thought to open /initiate my awareness, than none at all.
Yes, and schools could certainly teach the basics of how the economy works, about employment, government spending, inflation and so on. I agree.
I just read this from Why Socialism? Albert Einstein’s essay ‘This crippling of individuals I consider the worst evil of capitalism. Our whole educational system suffers from this evil. An exaggerated competitive attitude is inculcated into the student, who is trained to worship acquisitive success as a preparation for his future career’. The essay and a review of the book ‘The Ecological Rift’ must be the best reading I’ve recently come across. Any comments on them from you Jeremy?
I agree, the competitive instinct is bred into us, and as I’ve argued before, has been given a scientific legitimacy.