a flock of birds flying in the sky. You can never quite predict where
they're going to head next. They can swoop up and dip down, a bit like
financial markets or fashion trends can.'\That kind of
economic model do
we need?vVe need to get away from the idea that a growing
economy means that we might go through a period
of inequality but 'don't worry, we'll all come out
better on the other side'. This was a dominant myth in the second half
of the 20th century. Economies don't become more equal. We've seen
an extraordinary concentration of resources in the hands of a global
one per cent. We need to create economies that are distributive by
design - distributing opportunities to generate your ovvn electricity,
to have access to the internet, to have access to open source ideas.
Today, we are structurally dependent on endless growth; financially,
politically and socially.\Yhy are we locked
inlo a need for GDPs
Lo ()'row "" or , aL Lhe
leaRL, not shrink?This is one of our structural dependencies.
Our economies have had a long run of gro·wth,
broadly 100 years, and it's become so normalised
that '"·e've structured it into the design of our
institutions. Financially, we have a system that pursues the maximum
rate of return. That means that any company that's owned by
shareholders is under pressure every quarter to show that it has
gro\\ing sales, growing market share and gro,,ing profits - otherwise
it's under threat. 'Ve've also got a design of a banking system that
creates money by issuing debt bearing interest. vVe have lots of drivers
built into the financial sector that push for gro\\'th.
Then there are political lock-ins to growth. I like to look at the
photograph of the G20 leaders who get together every year and stand
on a platform and have their photo taken. I call it the G20 family
photo. Ko political leader wants to lose their place in the family photo
but if any one of those economies stops growing while the rest keep
growing, within a few years they'll be booted out by the next emerging
powerhouse, be it :Malaysia or Nigeria. 1Ve have an extraordinary
problem in political collective action, in that every economy needs
to keep growing to keep its place at the geopolitical table.'The economy is more like a flock of birds
flying in the s '
This is a global governance question really. But we've also got
a conundrum that every government in the world would also like to
raise tax revenue ''ithout raising the tax rate, and a growing economy
is the surest, fastest way to do that. There is also the crucial issue that
during recessions, or when the economy isn't growing so fast, there
are businesses that are really good at chasing labour productivity
(ie, making the same amount of stuff but employing fewer people)
and consequently you start to get an unemployment queue. Another
example is the way our pensions are funded; on the presumption
of shares that are going to grow in value. Put a nest-egg in now and
it'll be plenty to live off when you retire. All of these are designed
assuming that economies will grow· endlessly.\\1lat happens if
endless growth is
not possible?I was never invited to ask this question as
a student, and I don't think today's students are
either. Environmentally we have not figured out
ho-w to sufficiently decouple GDP growth from environmental impact.
There is no country in the world that is showing it can happily
maintain rising GDP yet is simultaneously on track to come back