The Great Disruption: Why the Climate Crisis Will Bring On the End of Shopping and the Birth of a New World - Paul Gilding (2011)

Chapter 5. Addicted to Growth

The global economy is almost five times the size it was half a century ago. If it continues to grow at the same rate the economy will be 80 times that size by the year 2100.

So explains Professor Tim Jackson, who is being joined around the world by a chorus of experts now arguing that we have to question economic growth. It seems so obvious to question growth. Indeed, as argued by economist Kenneth Boulding: “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.” Yet growth is the underlying driver behind all economic policy and a sacred tenet of global capitalism.

The numbers referred to by Jackson and others clearly show we will inevitably see an end to economic growth at some point. While there is debate on the timing and the trigger, it is hard to argue that growth can continue forever. As we showed earlier, dramatically increasing efficiency or decoupling material growth from economic growth may at best buy us a bit of time. However, at some point we are going to have to face the reality that we live in a finite world.

So does this really pose a challenge? Can’t we just transition with a few bumps along the road to a new model, recognizing the game is up on the old one?

Yes, we will transition, but the bumps will be more like earthquakes and the transition will shake us to the core, forcing a substantial rearrangement of human values, political systems, and our physical lives. There are two reasons for this. One is that we won’t change until we’re forced to by actually hitting the physical limits, meaning we’ll change rapidly and through a crisis. The second reason is that growth is interwoven into the fabric of modern society. We’ll come to crisis later, but first let’s take a good look at growth.

I mentioned earlier that a few years ago I shifted the focus of my speeches from the unfolding global ecological tragedy to the short-term economic implications of ecosystem breakdown and resource scarcity. I particularly focused on the inevitable end of economic growth. As a result, the response of my audiences shifted from earnest concern and broad agreement to genuine engagement and serious controversy.

Then and since, the issue that grabs attention about my Great Disruption thesis is not the demise of 50 percent of global biodiversity, or the civilization-threatening changes to the global ecosystem over the coming century, or the potential for the reshaping of the global geopolitical landscape. No, what grabs attention is the prospect that we are facing the immediate end of economic growth.

We just love growth; it frames the political and economic strategy of every government in the world, democratic or not. It frames the strategy of every company and certainly determines the longevity of board directors, CEOs, and corporate executives in their roles. It is not, however, just about “those in charge,” it is for most people one of the key measurements of progress through life. We generally consider our success over time in the context of whether we see growth in our levels of assets, income, and financial security along with all the material manifestations of this, in our homes, cars, and lifestyles. We have also linked this to our emotional security and sense of self-worth.

So because growth is so closely entwined with our economic system and our personal and political expectations the end of growth is not going to be a smooth process. As population grows, we need more jobs, and that requires growth. That becomes more difficult because technological efficiency and productivity improvements drive down the number of people needed to create the goods we produce. If the economy doesn’t grow fast enough to overcome these efficiency improvements and deal with population growth, unemployment goes up, spending goes down, fewer products are produced, and fewer jobs are created. So growth gives us a high when it’s happening and a nasty crash when it’s not. It’s an addictive cycle that will be hard to kick.

Our addiction to growth is a complex phenomenon, one that can’t be blamed on a single economic model or philosophy. It is not the fault of capitalism or Western democracy, and it is not a conspiracy of the global corporate sector or of the rich. It is not a bad idea that emerged in economics, and it is not the result of free market fundamentalism that emerged in the 1980s with globalization. While each of those factors is involved, it is too simple and convenient to blame any of them as the main driver. Growth goes to the core of the society we have built because it is the result of who we are and what we have decided to value.

So the fact that it is finished, at least in its current material form and indeed in any form for some decades to come, is going to strike at the heart of modern society. While the end of growth is actually a symptom of the underlying crisis—the crash of the global ecosystem—it is this symptom that will be seen as the actual crisis, at least initially.

This is because a growth-based economy has gone well beyond being a policy, a desire, or a mode of operating that is judged to be superior to the alternatives. As we have seen, growth is now an addiction—and addicts resist change with increasingly complicated, desperate, and (in the end) delusional excuses. Anyone who has dealt with an alcoholic or other addict knows that denial, in the face of mounting evidence, slips slowly into lies and deceit. The justifications as to why the addiction is not an addiction and why the consequences are not as bad as they seem get more and more bizarre and separated from any objective reality.

It changes only when the consequences of the addiction become so overwhelming, direct, and all-encompassing that self-delusion can no longer be maintained and a decision to change breaks through the fog of denial.

This is how it will be with economic growth.

I want to be crystal clear here that I am not arguing in favor of the end of economic growth. I certainly could do so because there are credible arguments that economic growth no longer serves its own purposes of improving the quality of life for those out of poverty. We will return to this later. The desirability of growth is largely irrelevant to the coming crisis because that will not be the driver of change.

What I am arguing is that growth has effectively ended for reasons that are now locked in. We need to adjust to this new reality because it will trigger a global crisis, and how we respond to this crisis will determine the future of humanity, not to mention the planet’s ecosystem.

But first, back to the addiction. The idea and motivation behind growth is not bad. It’s probably comparable to the use of alcohol. People drink for various relatively healthy and socially acceptable reasons: the desire to socialize and share an experience, the wish to break down barriers, the enjoyment of the taste, or a delight with the whole cultural package of production, flavor, and socializing such as that experienced by wine lovers. None of these things are bad or destructive in themselves. However, the death and tragedy caused by drunk driving, the health impacts to an alcoholic of excessive consumption, or the alcohol-fueled violence and abuse of family members can all be truly devastating.

Likewise with growth: There are many drivers behind it, and many results of pursuing it, that are good and have served humanity well. While it can be argued that it no longer serves us well, the original motivation was not bad. There is nothing wrong with wanting to improve your quality of life, to enhance your comfort, to increase your financial security in later years, or to enjoy quality entertainment.

Extreme poverty, by comparison, has no redeeming features. I make a distinction here between poverty and living a simple life, which some argue has inherent value. For others, simplicity is chosen from a religious belief that the lack of possessions enhances the clarity and focus of spirituality. But neither of those is poverty; both are lifestyle choices or belief systems.

True poverty stinks and the alleviation of it for many millions of people has been one of the great outcomes of economic growth over recent decades and has enhanced many people’s lives. Likewise, going further back, economic growth enabled greater food security and urbanization and gave humanity the freedom for some people to specialize in roles that have considerably enhanced the quality of life for all of us. Examples include health services, energy technologies, and reliable food supply, along with sources of joy and insight such as music, art, and literature. Many of these developments have increased the true prosperity of our lives.

So the problem is not the idea of prosperity or its pursuit; the problem is the abuse and addiction of the drug at the center of our current economic model. This drug and the artificial “high” it delivers corrupts the reasonable and sensible pursuit of prosperity. This drug is the idea that increasing wealth, and in particular the material possessions bought with that wealth, is at the core of improving our prosperity.

The good news is that while we have an addiction problem, there are treatments in the advanced stages of development that are currently undergoing clinical trials. We now know when and how real quality of life improves and what causes these improvements. There has been extensive research and investigation under way around the world, the results of which we will return to. In summary, what it tells us is that we are pursuing economic growth aggressively without significant improvements in our lives, with the notable exception of those who are being brought out of extreme poverty.

However, despite the good news that we understand the problem and are on the way to defining solutions, we must be clear that we are definitely not yet ready as a society to face up to reality. Furthermore, the sustained period of continuing denial we are now in will not be easy. We are in the endgame, but we are not at the end.

Evidence of the scale of the challenge in accepting growth’s limits was seen in the response to the global financial crisis in 2008. While there were some interesting measures to focus stimulus packages on environmental initiatives, particularly clean energy, the fundamental and overwhelming focus was to get economic growth going again at all costs. Governments around the world of all persuasions, from liberal leaders like President Barack Obama and Prime Minister Kevin Rudd in Australia to conservatives like Angela Merkel in Germany to Communists like President Hu Jintao in China, all threw money at the economy to get it growing. No significant political or corporate leader questioned this approach or the urgency of it.

This was despite the ample evidence that our obsessive focus on growth was actually one of the causes of the crisis. The provision of cheap credit to feed our addiction led to irresponsible investment by banks and irresponsible consumption by consumers, which in turn drove global environmental impact and accelerated resource constraint, all while delivering increasing inequity between the rich and poor. Our solution to the failure of this approach was to quickly get back to doing it again.

Karl Marx argued that religion was the opiate of the masses, but religion has largely faded in its effect in this regard. Perhaps the new opiate of the masses is material consumption, delivered to us all without regard for ideology, in the two decades leading up to the 2008 financial crash, by the likes of Chairman Hu of China and President George W. Bush of America.

Now that we are addicted to endless increases in material wealth, governments are trapped. They recognize that if they don’t keep up the supply, there is a serious danger of rapid, unsupervised withdrawal leading to revolution, or at least of lost elections!

The reason I want to establish the level of addiction is to enable us to understand what’s coming. You see, even though the evidence is all around us that growth is driving us off the cliff, we will now go into ever more fanciful explanations as to why it is not. We will not let go easily. Such is the nature of addiction.

Mind you, a certain level of resistance is understandable. While I am arguing that continued growth is impossible because it would have to defy the laws of physics, an unplanned lack of growth or economic contraction is very unappealing and socially destabilizing. We are to an extent trapped. Our current system is designed for growth; that’s what keeps us employed, keeps services flowing from government via taxes, and keeps the poor believing that they can escape from poverty. Without growth or at least without the end of growth being carefully managed, there is a danger that the whole house of cards will come crashing down.

That’s why we need to understand that growth is finished and that we must plan the transition to a new approach carefully. Leaving it to unfold by itself is a risky strategy.

Yet despite the current system being in a cycle of growth dependency, this was not a design feature put there by early economists; on the contrary, they understood the limits of growth.

John Stuart Mill, one of the founding fathers of economics, recognized both the necessity and the desirability of moving eventually toward a “stationary state of capital and wealth,” suggesting that it “implies no stationary state of human improvement.”1 Even one of history’s most influential economists, John Maynard Keynes, assumed that the time would come when the “economic problem” would be solved and that society would then “prefer to devote our further energies to non-economic purposes.”

The problem we face is that we’ve conveniently ignored both the desirability and the inevitability of the end of growth, and as a result we haven’t planned for it. So not only do we have an addiction to the drug of material consumption, we have also entwined our lives, our culture, our political systems, and our economic structures in such a complex web with the growth monster that separation is going to be complex and traumatic.

We will cover many of the arguments as to why growth is failing us anyway and what we should pursue instead. As we do, however, remember this is relevant only to what comes after the crash. We face the end of economic growth regardless of our intentions, for reasons of physical constraint. When five hundred million people lose their livelihoods and one billion people their protein because fisheries collapse, growth for them will be a fading dream. If we have to eliminate the fossil-fuel industry to cut CO2 emissions, we will have lost $3 trillion of economic activity. If we don’t eliminate them, we will face runaway climate change with the potential for the loss of the insurance industry, the collapse of the food supply, and geopolitical crises and instability over water and refugees. If we get growth back on track as it was before 2008, then we will face peak oil and food shortages with prices soaring to new highs that stop growth again.

The issue is not therefore whether growth is stopping, the issue is how it will stop, when we will accept that it has, and how we will then adjust to our new reality. So when you hear arguments in defense of growth, consider them not as the case against ending it, because this is not a decision we will get to make. Think of them as more evidence of how challenging its inevitable end will be.

This cloud does have a silver lining, however. Economic growth has not been delivering on its promise of increased prosperity anyway, not once people are out of poverty. What the numbers from numerous studies show is that once societies move past approximately $15,000 per capita income, neither objective measures of quality of life nor subjective measures like life satisfaction show any material improvement. This applies across the board in all political systems and cultures with only minor variations. It even applies to such basic measures as life expectancy, infant mortality, education, and health—areas where you’d think money would buy progress.2

In measures of life satisfaction, the story is even more interesting. The evidence ranges from growth having no positive impact after basic needs are met to growth actually having negative impacts on some important aspects of prosperity.

As the Prosperity Without Growth report argued:

For example, in British society since the early 1970s incomes have on average doubled. But the “loneliness index” increased in every single region measured. In fact, according to one of the report’s authors, “even the weakest communities in 1971 were stronger than any community now.” “Increased wealth and improved access to transport has made it easier for people to move for work, for retirement, for schools, for a new life,” reports the BBC.… In other words, some degree of responsibility for the change appears to be attributable to growth itself.

We all have personal experience of this phenomenon—how wealth has increased but quality of life hasn’t.

While the data on lack of improvement for society overall is clear, there is one important and interesting exception to the lack of a wealth/happiness link and one that explains a core driver of the market’s success at motivating personal effort.

Having more or less income than those we compare ourselves with, at the local or societal level, does have an impact on perceived life satisfaction. This explains why people work hard to get ahead and compete within their organizations and society. While on the one hand this seems like a useful attribute, motivating people to work hard and strive to better their lives, it means that our focus on growing the economy, with the associated pollution and environmental damage, delivers no net gain for society as a whole. We just change positions on the dance floor. This is a rather profound design flaw.

Of course, many have argued for a long time that consumerism is socially unhealthy. Not just environmentalists, but religious leaders, economists, philosophers, and artists. They point to the destructive physical impacts of consumerism, but also to the negative social and values impacts of the pursuit of material sources of satisfaction rather than more meaningful ones.

Many of them blame capitalism and in particular corporate marketers. This has some validity in explaining the extreme consumerism of recent decades, but it is hard to argue that this is the underlying cause.

As Professor Tim Jackson argues, consumerism runs deep:

Material goods continue to entrance us, long past the point our material needs are met. The clue to the puzzle lies in our tendency to imbue material things with social and psychological meanings. A wealth of evidence from consumer research and anthropology now supports this point. And the insight is devastating. Consumer goods provide a symbolic language in which we communicate continually with each other, not just about raw stuff, but about what really matters to us: family, friendship, sense of belonging, community, identity, social status, meaning and purpose in life.

… The “language of goods” allows us to communicate with each other—most obviously about social status, but also about identity, social affiliation, and even—through giving and receiving gifts, for example—about our feelings for each other.

It is certainly true that corporate marketers build on and at times abuse this tendency, encouraging behavior that can become bizarre at the extremities: personal vehicles the size of small homes, equipped with multiple TV screens and refrigerators; family homes big enough to house a small community with TVs in every room; food consumption and wastage that goes so far beyond meeting needs that it borders on the obscene. All these are examples of marketing gone mad, and encouraging such behavior is unethical marketing, hiding behind consumers’ right to choose. As much as we like to find people to blame—and in this case they’re easy to find—the underlying causes are in us and the choices we make about our lives.

However, growth is about far more than consumerism. It is a complex system of interlocking processes.

One of these processes ensures that efficiency will never address the underlying problems of growth’s ecological impact. Efficiency, while hard to argue against given the obvious ecological benefits of less stuff and the consumer benefit of lower costs, actually just re-creates the problem it solves.

Market-driven efficiency reduces the resources and labor used to create goods. This lowers costs, thereby increasing demand and enabling people to buy greater quantities of the more efficiently produced goods. This is well understood in the experience of recent decades. The money gained through energy savings, for example, is often used to buy more energy-using appliances and services. Dramatically more efficient car engines over the 1970s to 1990s led to heavier cars laden with new features and accessories.

The system in the end feeds upon itself and, like many addictions, creates its own cycle of dependency. We want more stuff to communicate with one another, to fill the void of meaning, and to compete to show we are successful relative to others. Our companies and countries then compete to deliver these products by becoming more efficient, thus lowering costs and enabling more consumption, but creating less employment. We then need to grow the economy to keep employment up so people can keep buying these more efficiently produced goods and to avoid the political instability widespread unemployment would otherwise lead to. Unemployment would lead to lower life satisfaction because lack of money prevents citizens effectively engaging in a society driven by consumerism, as in the earlier example from the United Kingdom of loneliness levels increasing with societal wealth.

It is a system both pathological, because it doesn’t work, and incredibly effective at driving itself in a cycle of reinforcement.

Prosperity Without Growth again:

These understandings provide us with our clearest insight yet into the enormity of the challenge implied in delivering a truly sustainable form of prosperity. Perhaps first and foremost, that challenge compels us to develop a different kind of economic structure. But it’s clear that this task isn’t sufficient. We also have to find a way through the institutional and social constraints that lock us into a failing system. In particular, we need to identify opportunities for change within society—changes in values, changes in lifestyles, changes in social structure—that will free us from the damaging social logic of consumerism.

So we have a system design problem. The problem we face now is not that we can’t redesign it and find ways to address all these challenges. We can certainly do so, and the work to define those changes we need to make is well under way. They are challenging and complex changes, particularly in transition, but they are realistic and achievable. We will come back to these ways forward, and there is much good news to have on this front, including immediate actions we can take in our own lives.

No, the problem is not the lack of a way forward; the problem is that the system is so comprehensive and self-reinforcing, we will resist the need for change until we have no choice. Until we’re in the gutter, we won’t face up to our addiction.

A realistic comparison is to observe our response to the relatively easier challenge of climate change. Despite forty years of research and twenty years of very clear science and economic logic and the fact the transition to a net zero carbon economy will create many winners, we have failed almost completely to deliberately initiate change ahead of the crisis.

So when it comes to the transition to a steady-state economy, letting go of growth and consumerism, confronting the challenge of how we address the cancer of global poverty without the total pie getting any bigger, and dealing with the sustainability-driven transformation of the entire global economy, the system is going to resist change and do so fiercely. It will take a serious crisis to force the issue, and that’s why that crisis is inevitably coming.

In summary, growth is deeply ingrained in our global political, economic, and cultural systems. While change is inevitable, growth is so ingrained that this transition will not come easily. So even when growth stops, we will try hard to get it moving again, as we did in 2008. As a result, we will see growth return and then we’ll argue, “See, we can still grow!” Then we’ll hit the wall again because of the ecological damage and resource constraints that growth creates, and we’ll bounce off the growth limits and shrink again. Each time we’ll argue it was some other cause and we can fix it with a narrowly focused solution. We will stay in this cycle of denial for a while, denying the reality that we have a system design problem.

We will basically keep trying to treat our drug addiction with the provision of more drugs. We will do this until we’re in the gutter.

The financial crisis of 2008 was a case in point, a taste of what’s to come. As a talk-back radio caller I heard in the middle of the crisis said in response to the Australian government sending a check for $900 to most citizens as part of the national stimulus package:

So we have this crisis caused by people using money they don’t have, to buy stuff they don’t need, and in doing so helping to drive the planet to the edge of collapse. Now the best our government can do in response is to give us more money that they haven’t got, so we can do more of the same. Is that really the best we can do? Is that how far we’ve come?3