Think the unthinkable. We do not need perpetual economic growth. Truth be told, it is impossible. Industrialization arrived with an inclination for growth. As Globalization ramped up in the 1980s, we were told “There is no alternative.” Is that so?
Where did Globalization lead? Money can go where labour is cheapest and environmental regulations weakest, and on this basis the global system expanded almost steadily – as promised. One might think we approach Utopia. Instead ever greater portions of the world’s wealth has concentrated into fewer and fewer hands, and the Earth’s ability to provide natural resources and to absorb our waste has deteriorated. Perpetual growth is causing trouble.
Centuries of expansion locked patterns of growth into our customs and institutions. As long as the process is still making fortunes for some, the goal remains unchanged. Yet, growth has to be questioned.
We have come to believe that if GDP is not growing, we have hard times. But this is not a fact of nature! It is a result of how the system is set up.
To grow at 3% is to double in 24 years. How can anyone imagine that continuing to do everything humans are presently doing and, at the same time, to do as much more again would be easier than just maintaining what we have? Within the time it takes for a baby to become an adult, we would have to have twice as many houses, businesses, cars and highways and produce twice as much energy as we do today. What could go wrong?
Some argue that growth is needed to provide for a growing population. Population is growing in poorer parts of the world, but throughout the developed world, without immigration, populations are falling. Wherever basic needs are met by a society, where people can expect their children to survive and their old age to be be cared for, population stabilizes. Family size shrinks to where all can be well fed and well educated. If, rather than exploiting the resources of poor countries to fuel our own conspicuous growth, we shared our knowledge so they could secure their own basic needs, the population issue would resolve.
What will people do for work if the economy is not growing? This too is a problem with how the system is set up. Wherever there is need, there will be work. When all needs are met, it will be time for celebration, not for hardship. How might we adapt for such success? If we did not have the constant ‘rat race’ scramble to produce ever more of everything, we could actually catch up. We could even make things to last. Need will arise again and there will be work to do. Under such circumstances, we might even feel it a privilege to work to provide for each other.
Another issue compelling growth is how money is created. Details can be found here. In brief, money is borrowed into existence, all except for coins and bills, which are about 4% of the supply. The rest is credit. Most of our money is loaned into existence. If one borrows $1000 from a bank, one is not given depositors’ money. The bank simply enters the number into one’s account. As that money gets spent, it goes into circulation. That is where money comes from. When one pays back the loan, the money disappears. The problem is that the bank didn’t create extra money for the interest payment. Unless there is a greater volume of loans the next year, there is not enough money in circulation to pay off previous loans plus interest. When payments cannot be made, businesses, jobs, homes and more can be lost. Hard times result when a debt-based economy is not growing. It doesn’t have to be that way.
Charging interest on the use of money is a societal growth hormone. We need a monetary system that does not compel expansion. To get what we need individually, we need work to do that is useful to others so that we can earn what we need to trade for what others provide. Alternative systems of mutual provision exist.
We humans are tremendously creative. We will find ways for everyone to participate when we stop pursuing the simplistic goal of growth and set our sights on the long-term well-being of people, communities and ecosystems.
Mike Nickerson is the author of Life, Money and Illusion; Living on Earth as if we want to stay. He lives near the Village of Lanark. His work is collected on this site and the Eco-Village site.
This piece is a part of a three part series. Part 1, Worthy of Our Better Selves, can be accessed here.