Economics : Jonathon Porritt
AFFLUENCE THRESHOLD
Supermarket trolleys stopped in their tracks. Photograph: Corbis
It is time to examine the relationship between economic growth and social wellbeing.
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SO WHAT MAKES a politician take on the impossible? If politics really is "the art of the possible", then what makes UK Prime Minister Tony Blair dedicate himself to trying to sort out the problems of Africa (mission impossible, if ever there was one), or to persuade his fellow world leaders that climate change is for real, needing attention right now, not in the twenty-second century?
And in the same spirit of enquiry, when do you suppose that any world leader will ever summon up the courage to initiate a proper public debate about economic growth and the degree to which growth still does or doesn't do what it's supposed to do - namely, make us all happier? There are actually very few genuinely off-limits issues in politics, but this is the biggest of them all.
But why? There's actually no political controversy whatsoever about at least three of the basic elements in any debate about economic growth today.
First, economic growth (as an indicator) is not being used in the way that it should be. From the first day of an undergraduate course to the most sophisticated current research, the inadequacies of standard definitions of Gross Domestic Product (GDP) and economic growth as yardsticks for wellbeing are staples of academic economics. Yet economic policy still seems to be designed as though maximising gdp were its sole objective.
Secondly, no one now denies that securing the benefits that economic growth brings simultaneously generates both social and environmental externalities - and if they're large enough, these externalities can outweigh the welfare gains.
Environmentalists argue that these externalities are now so grave (in terms of impact on eco-systems, resource depletion, climate change, biodiversity and so on) as to imperil Nature's self-regenerating capacities - and, in the process, imperil humankind's own capacity to improve our quality of life. Whilst avoiding the apocalyptic rhetoric, government ministers now regularly acknowledge the seriousness of the situation, and deploy a range of policy levers in an attempt to limit the impact of these externalities.
Lastly, it's by no means clear that economic growth is any longer delivering the goods. The relationship between economic growth and people's quality of life (or 'life satisfaction') has been seized on recently by senior government advisers. In a paper published by the Cabinet Office's Strategy Unit in 2002 (Life Satisfaction: the state of knowledge and implications for government), Nick Donovan and David Halpern highlight the increasing discrepancy between per capita GDP and life satisfaction, between 1970-1997.
POLICY MAKERS IN the UK are, in effect, confronted with a double dilemma. Increased economic growth is generating more and more negative externalities, which may even threaten to overwhelm the life-support systems on which we depend. Equally, increased economic growth isn't necessarily making people any happier.
This does not make all economic growth inherently unsustainable - far from it. But it does mean that we need fundamentally to rethink the dominance of economic growth as the driving force in the modern political economy, and to be far more rigorous in distinguishing between the kind of economic growth that is compatible with the transition to a genuinely sustainable society, and the kind that absolutely isn't.
Those relatively uncontroversial insights occasionally persuade politicians to give voice to some non-specific angst about economic growth. In his Foreword to the 1999 Sustainable Development Strategy, Blair wrote: "Real progress cannot be measured by money alone. We must ensure that economic growth contributes to our quality of life, rather than degrading it." More recently, it's actually very encouraging that the Treasury has just decided to expand its current aim "to raise the rate of sustainable growth and achieve rising prosperity" by "reflecting the Government's overall commitment to sustainable development, incorporating a reference to achieving a better quality of life." A definite improvement - even if the oxymoron of 'sustainable growth' still jars!
But it never goes much further than that. These things never get raised in any public policy debates, and this is now a major problem for anyone trying to work out whether genuinely sustainable development can ever be delivered alongside 'business as usual' promotion of economic growth, or whether it demands a complete rethink. The problem is neatly encapsulated in the British government's four sustainable development objectives, on which the whole of its strategy depends:
- Social progress which meets the needs of everyone;
- Effective protection of the environment;
- Prudent use of natural resources; and
- Maintenance of high and stable levels of economic growth and employment.
In broad policy terms, the Government's favoured strategy (actually its only strategy) for squaring this circle (i.e. maintaining high and stable levels of economic growth but without the social and environmental externalities) is improving resource productivity - getting more economic value from each unit of production, and 'decoupling' economic growth from increased resource use.
Resource productivity lies at the heart of the Government's Sustainable Consumption and Production strategy, and featured prominently in the three big environment speeches that Prime Minister Blair gave in 2001 and in his sustainable development speech in February 2003. "More from less" is a seductive strategy in that it appears to offer an almost pain-free route to a "cleaner environment" without in any way jeopardising macro-economic priorities. It is far more attractive to concentrate efforts on the supply side (seeking technological changes that improve efficiency of resource use) than it is to confront problems of demand management.
But the truth of it is that taking resource productivity seriously (i.e. systematically driving down resource and energy consumption across the entire economy) is not as pain-free as it first appears. Decades of perverse subsidies and the licensed externalisation of costs to keep prices low have left a mountain of market failures that people have got used to and resent having taken away from them. The fuel tax protests of 2000 are etched in the memory of civil servants and ministers alike, as an example of what happens when an eco-instrument is deployed insensitively or punitively. The fact that no-one in Government could summon up the courage to defend the fuel tax escalator as a key policy measure in the Government's overall transport and climate change strategies was both deeply regrettable and an important reminder that even something as 'simple' as resource productivity demands consistent, sustained and inspirational political leadership. Of which, on that occasion, there was none.
And you really can't blame politicians for being a little cautious here. There would appear to be very little public support for 'consume less' political alternatives. Green parties the world over have succeeded in attracting significant minorities of voters, but have rarely seen that percentage move above 10% even in the world's richest countries, which one might reasonably assume to be more open to the concept of reaching some kind of 'affluence threshold' beyond which further increases in consumption or material standard of living are deemed to bring diminishing utility.
The concept of 'voluntary simplicity' will continue to have considerable resonance with a relatively small number of people in rich northern countries, but is unlikely to have much purchase either for OECD (Organization for Economic Cooperation and Development) governments intent on addressing residual poverty within their own borders, let alone in developing countries, where the principal challenge resides in the fate of the world's poorest two billion people who live on less than US$2 a day. There is very little, if any, evidence that those countries are prepared in any way to forego the delights of Western consumerism which they see paraded in front of them through a constant battery of mass-media programming and advertising that reaches into the poorest corners of the poorest countries.
And if we're being honest about the difficulties the politicians face here, how might they advocate 'simpler lives' while simultaneously defending what has become a central tenet of contemporary capitalism in all its triumphant glory - namely, increased choice in more or less free markets? It's clear, for instance, that increasing individual choice does not automatically make us better off. Every choice we make is conditioned and constrained by the choices others have already made, and in turn conditions future choices. Individually sensible choices to travel by car, for instance, lead cumulatively to traffic-clogged degraded inner cities, car-dependent suburbs and amenities accessible only by car - a mess nobody wanted or intended, in which nobody can access what they want reliably and easily, those without cars are further disadvantaged, and fossil fuel wastage is structured into lifestyles.
DESPITE MORE THAN twenty years of lively debate about one of the earliest definitions of sustainable development ("sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs"), as first used in the 1987 Brundtland Report, there is no consensus either on the "boundary conditions" to be used in defining human needs, or on the potential usefulness of the concept of human needs in promoting better policy making. The vexed debate about what is a 'need' and what is a 'want' rumbles inexorably on.
But ever since the ground-breaking work of Abraham Maslow and Manfred Max Neef, psychologists and alternative economists have set out to demonstrate that far from there being any automatic increase in wellbeing for every increase in levels of consumption, much of our current consumption is turning out to be a very inadequate surrogate for meeting human needs in a more satisfying, durable way.
People can be happy with very little wealth and few possessions, or miserable with plenty. Most research indicates that people's quality of life is determined far more by the quality of their working life, their family life and their overall social relationships - all seem to be more important relatively than the amount of consumption they are able to enjoy. And if that consumption is simultaneously eroding the quality of those other aspects of overall wellbeing, then it is clearly far less beneficial than it might at first sight appear. There is now a huge literature on the reduced wellbeing of family life as a result of intensified workplace pressures over the last twenty years. The percentage of people describing themselves as "very happy" has declined since the late fifties, despite the fact that personal real income has more than doubled since that time.
It's worth remembering that for governments, the end goal of the use of their democratic mandate is to improve people's wellbeing. The means available to them for achieving this are many and various, though securing as high a level of economic growth as possible has become the most important. Indeed, it's become so dominant that it's easy to forget that the ultimate purpose of this economic growth is in fact to improve wellbeing. Economic growth may well have served post-war politicians well as a reasonably accurate proxy for human wellbeing or contentment, but now that the environmental, social and psychological externalities entailed in generating economic growth in that way are weighing heavily on people, there is a pressing need to reopen the debate about economic growth and wellbeing itself.
The position of the Sustainable Development Commission in this political minefield is a simple one. It took the best part of twenty years to demonstrate that economic growth and increased energy consumption were not inextricably wedded, and that it was perfectly possible to secure high levels of economic growth without corresponding increases in energy consumption. But will it really take another twenty years to persuade politicians that one can decouple improved societal wellbeing and individual happiness from high levels of consumption?
Whilst it may be perfectly reasonable for politicians to avoid high-risk strategies on economic growth and consumption, given the dearth of convincing evidence that such strategies will strike a chord with today's electorate, it is not reasonable to ignore the true nature of the economic challenge entailed in learning to live sustainably on this planet.
Jonathon Porritt is Chair of the Sustainable Development Commission and Programme Director of Forum for the Future.
Keywords: economics economic policies
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