Summary: Economic growth is not bad in itself but has become an evil because of selfish attitude and idolatrous mindset. In place of discussing questions of whether economic growth is good o bad, or how much growth to allow, we suggest several principles by which we may understand it.
By many, especially those who use economics, the mandate for economics is presupposed to be economic growth. This is false and harmful, and, as Chapter 2 shows, many are the critics of the idea and the practice of growth, especially among those with environmental concern. But in politics, business and media, both left-wing and right-wing, socialist and capitalist, economic growth is presupposed by many as absolutely necessary and even a dominant aim.
Why is that? Many argue from a purely economics perspective that a small amount growth is needed, others from some other grounds (for example that growth gives hope), while others point to the externalized damage it does. Economic growth shields governments who want to impose taxes, because people have the illusion that their standard of living is getting better. It is similar for most businesses: their management or owners want them to grow, for variety of reasons.
On the other hand, there are not a few businesses that do not want to grow, for a variety of reasons (discussed in RLDG 28):
How do we resolve this issue of economic growth without taking sides (indeed should we take sides)? We will look at with the help of Dooyeweerd's aspects; for example, hope is pistic functioning and may be raised by other means than growth.
Though economic growth is a discourse that fills whole books, such as Raworth's Doughnut Economics, in this Rethink it is only one topic among many and hence is discussed only in this section. Why so? We agree that economic growth is deeply problematic in affluent economies, especially when measured by GDP, and a major reason for our environmental crises and other kinds of harm, but we believe the idea of economic growth holds some valid insight that should be taken seriously, and that the root of the problems lie elsewhere (which is also a root of many other problems too). Unless we truly understand aright, the problems caused by growth will not be solved, and those economies that should grow might be prevented from doing so.
Summary: Many criticise economic growth, most presuppose it as good; we allow both views.
Many have discussed the immense harm we see from (adherence to) economic growth, harm to the physical and ecological environment (climate change, biodiversity loss, pollution), to the health and mental health of the population, to relationships, to justice (especially for the rest of the world), to the mindset-attitudes taken by people, and to the very meaningfulness of life [=== refs needed?], some of which are discussed in Chapter 2. Much recent thinking has been motivated by one or other of these harms, seeking to overcome them. Some argue that economic activity itself suffers harm, especially in the longer term, from adherence to economic growth by the affluent.
Goudzwaard's idea of Economy of Enough, or Blossoming Economy likens the economy to a tree, which should grow until it is mature but then it should stop growing and become fruitful. So does Raowrth's Doughnut Economics, in allowing a region between two limits in which economies can grow. The problems it identifies are planetary limits, and wrong ways of thinking inherited from the past. We allow other kinds of root problems too.
Two related movements are growing, advocating Post-Growth [Jackson] and De-Growth [Hickel]. Within these movements many do not take an absolutist line but advocate economic growth among impoverished nations while ceasing or reversing economic growth among affluent nations. The EU [2023] has published a major study on Beyond Growth, looking at the possibilities. Recognising that (unlimited) economic growth does much harm, we need to find a way to have a good life without economic growth, but they also recognise the challenges. For example, maintaining welfare is challenged by ever-increasing demand, ever-increasing cost of welfare services, stagnant funding and political barriers. They recognise the need to "focus on real human needs, as opposed to desires or preferences" and the need for more prevention.
On the other side, some argue that economic growth is good because it has generated much benefit in health and material standard of living, etc.. We acknowledge that also. (The argument that economic growth is needed to pay for solving the problems, we have less sympathy with because most of the problems it itself has caused, and because it arises from false presuppositions.)
So how do we bring together the two seemingly opposed stances? We will employ aspects and seek to understand in which aspects benefit occurs and in which harm occurs - and we will continue the discussion in Chapter 7 especially where we differentiate Harmful and Useless economic activity from Good.
Summary: Economic growth involves all aspects, especially the ethical and pistic and must be understood thus.
What makes economic growth a problem is a combination of mindset-attitude that pervades society, a narrow view of value, a conflation of Harmful with Good economic activity, and a misunderstanding of money and other concepts, all of which occupy us over the next few chapters.
The valid insight in economic growth lies in the assumption that economic activity brings unmitigated Good. Multi-aspectual Good should increase so, insofar as economic activity always and only contributes to Multi-aspectual Good, and never Harm nor Uselessness, then economic growth is a valid aim. The fundamental weakness in that is that much economic activity contributes to Harm and / or is Useless. === [===] sees growing GDP as "a proxy for the fact that, generally, if GDP is going up, that does enable us as a society to do much more than we would have been able to do otherwise. But it does have negative effects as well." Bear that in mind until we discuss it in Chapter 7.
Nearly all politicians in affluent democratic nations compete over "Vote for us; We are the ones to give you highest economic growth!" whether "you" is the nation, its rich or its poor. Criticism of the idea of growth is democratically unsuccessful and also evokes defensive reactions that reinforce politicians' commitment to, worship of, growth. So affluent countries are (willingly) enslaved by the idol of economic growth and will not willingly turn away from it. Though the Pandemic of 2020 showed that there is much Good that comes without economic growth, politicians in affluent countries fell over themselves in the race to resume economic growth, especially of harmful sectors like aviation. (See Idolatry below.)
Through the lens of the economic aspect, economic growth in affluent economies has been speeded up by encouraging everyone to buy non-essentials, encouraging employers to generate unproductive jobs, by monetizing human activity that are better not monetized, and by speculative financialization so their growth is visible (politically useful!) but unhealthy. These four (and more) together, have bloated affluent economies. Had we been content with essentials (broadly defined, somewhat like Raworth's "social floor" but more so), kept jobs productive, prevented undue monetization and financialization, there would still have been economic growth but it would have been truer, better-grounded growth. Chapter 7 addresses this.
The economic aspect alone, however, does not allows us to ask "Why?" for any of the four, because they are answered by reference to other aspects, in particular the two aspects of mindset-attitude below. The four are discussed later, especially concerning Useless economic activity.
We need to take all aspects into account, not just the economic. For example, if market interest rates exceed inflation rates then wealth flows from borrowers to lenders, exacerbating financial inequalities, and risking social disorder. But these are problematic only by reference to the the juridical and social aspects and are too often neglected by those who focus only on the economic aspect. There are three options - to allow this to happen, to instal effective mechanisms (e.g. taxes) to flow wealth from the rich to the poor, or to encourage economic growth. Economic growth acts as a panacea because most people believe they are a little better off each year - and most governments, whether of left or right, choose this, hoping that wealth 'trickles down' or will furnish them with enough tax income.
This begins to open up our understanding of why growth is so widely adhered to. We understand the good and dysfunctional functioning in each aspect. Panacea involves dysfunction in the analytical aspect.
Two aspects are particularly important, but usually hidden and seldom discussed, the ethical and pistic aspects, which we call mindset-attitude below, and they operate at all levels. At governmental level, a deep belief (pistic aspect) that prevails globally, which is that the faster the economic growth, the better it is, which exaggerates the valid insight, and competition (ethical dysfunction) among governments to beat each other on this. So governments would take steps to enable and encourage all four. At the individual level too, these operate: the economic rationality of "feeding the family" along with the hidden attitude of self-centred commitment to one's own perceived prosperity and the 20th century assumption that my prosperity should always improve. We find them in businesses, the economic rationality of balancing books along with hidden fear of future and desire to beat rivals in league tables. Indeed, Goudzwaard names economic growth as one of the idols of our time. If we are to address the problem that is economic growth, then we must take proper account of these two aspects that we call mindset-attitude.
Yet there may be also a positive reason growth is adhered to: the formative aspect. The Good that the formative aspect enables is achievement, and as such this retrocipates our psychical functioning as delight in achievement. Economic growth is a clear goal to achieve, and people love achieving goals.
Thus, if we do not recognise this one positive, together with all the negatives, we will not understand nor be able to do anything to change the culture of idolatry of economic growth.
Summary: Five principles for a perspective on economic growth.
The mandate of economics is not to pursue economic growth. Nor is it to restrict growth. It is not even centrally concerned with growth, but with contributing to Multi-aspectual Good in the unique way the economic aspect can. We need to learn how to live with and without economic growth. So we tentatively suggest the following principles. (x Christian might remember Paul's claim at knowing how to be abased and how to abound.)
Principle 1. Turn away from idolising economic growth, from making it an absolute good, for which other things are sacrificed. Elevation of economic growth is wrong; it is a dysfunction in the pistic aspect (mindset; see below), especially when it becomes one of the "idols of our times~ [Goudzwaard 1984]. This is manifested in our presupposition of its necessity and absolute validity, as the primary aim or beneficiary of all policy, as an unquestioned expectation in affluent nations and as an unquestioned aspiration in so-called LDNs, where this is usually true among their elites and the better-off. This is the root of what has made economic growth an evil in our time and must be resisted.
Principle 2. Understand the Harm that economic growth brings about, and how, why and when it does so. Specifically, economic growth leads (indirectly perhaps) to ecolgolical destruction, biodiversity loss and increased climate change emissions. In affluent cultures, it almost always leads to overconsumption, and a change in attitude and mindset. See Chapter 7 to understand more.
Principle 3. Understand the Good that economic growth can bring about, and why, how and when it might do so. Insofar as it matches growth in Multi-aspectual Good, then economic growth can be good. Sadly, it seldom does among affluent nations today. It could be Good in impoverished nations. In some cultures, such as prevail in so-called LDNs, there may be a need for economic growth in order to properly resource their growth in various other aspects of Multi-aspectual Good. But in the affluent cultures, economic growth should cease and go into reverse, and attention be given to its fruit in all other aspects (c.f. Blossoming Economy [Goudzwaard ===]). Note, however, that it is not GDP that is to be grown in such nations but what might be called The Economy of Multi-aspectual Good - that human functioning that contributes to Multi-aspectual Good in all its aspects.
Principle 4. Economic growth is ancillary to this and possibly not even necessary for it. It may be that increase in Multi-aspectual Good can be obtained without economic growth, as Jackson argues in Prosperity Without Growth, and of course in what is currently unpaid household activity. Increase in Multi-aspectual Good can be obtained by growing other aspects, so the economic system that enables this need not itself grow (though it probably would). As testified for centuries, it is possible for those with few material resources to be happy, friendly, cogent, innovative, wise, just, generous and faithful, among the poor in affluent cultures or even in so-called LDNs. This also means that, in principle, De-growth is a realistic option among affluent cultures, though would need carefully thinking out.
Principle 5. We who are among the leaders and decision-makers of the world cannot make economic growth in the so-caled LDNs an excuse for our own continued economic growth.
Principle 6. Self-centred demand for ever more conveniences, pleasures and luxuries for ourselves as individuals, a competitive mindset-attitude among businesses and among nations, usually coupled with unconcern about the damage that adherence to economic growth has done, is dysfunction in the ethical aspect (attitude; see below). Prioritizing economic growth by the already affluent, adds to what has made economic growth an evil in our time.
Principle 7. We should tackle the problems of economic growth, not by arguing whether economic growth is good or bad, nor even how much growth (as in Doughnut Economics, nor even which grow (e.g. Goudzwaard, De-growth), but by:
Principle 8. This might tell us that some already affluent economies must de-grow. If so, we must carefully discuss which sectors must shrink and how to do this. That discussion should have begun already among all people, and certainly among those who advocate De-growth. Sadly, it does not seem to have done so.
On the ground, some of this does happen, but it is often curtailed and hindered by a media that presupposes economic growth and suppresses the discussion that is needed, by policies and measures that companies and governments use in their decision-making, and by extant economics theories that fail to incorporate the above. This is particularly so for measures like GDP (which is discussed later).
The approach to economic growth outlined here might make a contribution to the wider, recent debate, by offering a fresh perspective that is neither for nor against, but provides a basis for systematic understanding and serious discourse. Throughout this Rethink, we will see how these principles work out, occasionally making explicit reference to economic growth, but more often by implicit reference.
Created: 31 May 2024 from section in Chapter 4. Last updated: 8 June 2024 some edits. 7 December 2024 reasons a firm might not want growth. 10 January 2025 und why adhered to; formative asp positive.