Growth is not a plan. It’s an ideology (part 1 of 2)

Growth is a good thing, but not everything. The notion that it is a necessary prerequisite of progressive policies lends legitimacy to a narrower and more regressive understanding of growth

So, the British economy is receding. The ‘technical’ prefix the government and its client journalists have been adding before ’recession’ is rather apt given that the economy only really counts as an economy on a technicality nowadays.

People turn up or log on for work. To-do lists get ticked. Stuff is bought and sold. Yet we are getting poorer, sicker, and less productive. The roads are full of holes, the schools are falling down, and evermore people are sleeping on the streets. We spent tens of billions on not building a railway. There’s an obesity epidemic but our children are literally shrinking (faster than our gross domestic product). The government is heavily indebted, but mainly to itself. When it comes to long-term investment, the public and private sectors are currently stuck in an I’ll-show-you-mine-if-you-show-me-yours doom loop.

The answer to all of this is of course staring us in the face: when the economy stops growing, we should simply try to… make it grow again.

The absence of growth is indeed disastrous. But the pursuit of growth as a first-order policy priority is misguided and, as I argue in this two-part post, often disingenuous. The people who tell us that growth matters above all else invariably do not themselves believe this. And these people can often be found further to the left of British politics than Liz Truss, Nigel Farage and the rest of the radical right rabble.

In part 1, I interrogate the notion that growth should be the primary goal of economic management, and the related idea that growth is necessary before socially and environmentally beneficial policies can be enacted. In part 2, I explore the ideological implications of an ostensible focus on growth, arguing that it is a product of conservative thought, as much as, if not more so, of neoliberalism.

Growth before growing

The notion that more growth is needed before the public sector can spend any money on socially beneficial interventions – a mainstay of ‘third way’ thinking – is once again dominant on the centre-left in Britain.

I do not disagree that there are clearly things that the UK could do, rather quickly, to improve economic growth. Improve public transport, reform planning, liberalise immigration, rejoin the European single market, clear NHS waiting lists. We should do each one because they are good things in themselves, irrespective of growth, but I do not mind very much if others do them primarily because of the positive growth impacts. So I am sure the next government will make progress in each area, but each one has a high cost – politically if not fiscally – so won’t actually be done quickly.

Moreover, presenting these interventions as beneficial only because they improve the rate of growth is problematic. It clearly helps to lend credibility to the growth ideal more generally, and therefore a more laissez-faire growth agenda centred around tax cuts. Cutting tax rarely has a political cost (not least because tax is seen as inherently antithetical to growth, even if justifiable for other rationales), and the fiscal costs can be concealed by forecasting spending cuts that we can pretend, doped up on Laffer fantasies, will never be needed.

Of course, those spending cuts probably won’t happen, for the most part – the impact on actual growth in the real world would be too severe – because, as ever, the libertarians will simply choose to borrow more instead. Borrowing is always the left’s fault, so the right invariably gets away with it.

At the risk of over-simplification, if you want long-term growth, you have to invest in innovation that (a) improves productivity and generates good jobs across the income distribution, and (b) enables the economy to adapt to conditions that jeopardise the sustainability of extant production methods. Public investment is needed where private investment is absent, and is in any case preferable to private investment for many aspects of this agenda.

It is a quite the moment therefore for Labour to all-but-abandon its commitment to invest £28 billion each year as part of its green prosperity plan, the centrepiece of its mission to secure the highest sustained growth in the G7. (Note that some of this amount is already in the Conservative government’s plans, and that even full implementation of the pledge would have seen public investment fall over the next five years.)

Of course, we do not know what Labour intends to do – or will do, irrespective of current intent – once elected. But in reinforcing the view must grow the economy before we can afford to do the things that will most effectively grow the economy, damage is being done.

Growth without growing

There is one, crucial thing that needs to be understood about the political elites who shout loudest about growth: they don’t really believe in growth at all. Growth can be progressive and transformative: we should worry less about making it ‘inclusive’, because genuine economic expansion almost always is.

But the growth zealots do not want a bigger and better economy in any meaningful sense. They want to create (or defend) the kind of economy that is implied by the invocation of growth, irrespective of whether expansion occurs. The construction of growth as a political idea is about much more, or perhaps much less, than the question of whether output is increasing at a healthy and sustainable rate.

Image credit: 10 Downing Street (CC BY-NC-ND 2.0 DEED)

An economy that values growth, in this account, is one in which corporations and entrepreneurs are unencumbered, as the main instruments of growth are knowingly mistaken for the sole drivers of growth. Taxation is minimal, labour is disciplined, and all resources are exploitable. The absence of actual output growth is never a fault of the theory, but rather its mishandling by policy institutions beholden to anti-growth interests.

The welfare state in particular is seen as a drag on growth, despite evidence of the role it plays in sustaining demand (quite obviously) and in enabling innovation. Welfare provision and public services aren’t simply financed by growth – they are part of how growth is financed in the first place.

Nothing but the growth

I have two main objections to growth as a measure of economic performance or prosperity. First, its silence on distribution. The size of the pie tells us nothing about how big a slice we each of us will receive. Some rightly pointed out that, when considered in terms of GDP per capita – taking population size into account – the UK economy has already been growing more slowly than we realise since 2010, and especially since the COVID-19 pandemic. Looked at though the lens of output per person, the UK has been in a kind of recession for a while.

Yet GDP per capita only tells us about average living standards, in economistic terms, not the actual living conditions experienced by people at different levels of income and wealth. The UK is an extraordinarily unequal country compared to similar countries. Those dependent on labour income will be most affected by recessions, while those with significant financial wealth will be relatively spared (as well as benefiting from higher interest rates recently). This does not mean that we should redistribute income and wealth without consideration of the growth impacts of particular mechanisms – but nor can we assume that pie-size per person is enough.

There is little doubt many people would be better off, for example, if they could work less, so we can spend more time caring for ourselves and each over. This would probably make us more productive overall, in the short and long term; then again, it might not.

Second, the silence of GDP on ecological damage. An economy that destroys the habitability of the planet is not one that we should want to grow, and there are many non-commodifiable practices and technologies we need to now invest in to achieve decarbonisation, even if they are not fully captured by GDP statistics.

This is the essential and hugely valuable insight of the ‘degrowth’ perspective – but overall this kind of thinking has limitations. There are no grounds for naivety about how easy it will be to decouple growth from fossil fuels, but recessions don’t tend to help efforts to decarbonise. And doing many of the things we need to do to decarbonise will generate conventional growth. The assumption that living standards might need to go backwards to save the planet must be resisted. It is clearly not going to mobilise many people to act in our collective best interests, especially in parts of the world that do not enjoy Western-style living standards. And suppressing consumption would require a degree of state intrusion into daily lives that would be impractical even if desirable.

Overall, these silences mean that growth for its own sake cannot be our goal. But as my caveats to the caveats suggest, GDP can be a useful tool of social-scientific inquiry, and GDP growth therefore a useful measure of economic performance.

We need not accept that GDP captures everything that matters, including everything that matters for economic prosperity, in order to acknowledge that it can help us to understand the impact – and success, to some extent – of interventions designed to improve living standards for all, and decarbonise production. We should also acknowledge that increasing pie-size will help to maintain the political palatability of these efforts.

Alas, we are not really anywhere close to a mature dialogue about the value and limitations of growth, and the trade-offs that pursuing growth entails. Because growth is not being used as a tool of social science. It is being used instead as a tool of ideological hegemony – indeed one that constrains our ability to genuinely grow the economy. This possibility will be explored further in part 2 of this post.

Click here to read part 2 of this post