Should we forget about growth?

 
Lord Skidelsky, emeritus professor of University of Warwick. Lord Skidelsky, emeritus professor of University of Warwick

Never mind the size, focus on the quality. That's always good advice when picking fruit.

Some say it should now be our economic mantra as well.

They say that our fixation with GDP and growth is threatening an environmental disaster. Or, as Lord Skidelsky argues in a book he's just written with his son, Edward, it's distracting us from what really matters, which is leading a good life.

That was our subject on Stephanomics on Radio 4, which is re-broadcast later on Tuesday.

You might not agree with everything Lord Skidelsky says. But he's not the only one who sees the global financial crisis as an opportunity to take stock of the way we've organised our society - and maybe re-think our slavish pursuit of economic growth. (Especially since we don't seem to be doing very well at getting it.)

That is certainly a common theme of the emails and letters I have received since the recession started in 2008.

In fact, some of you think I and other economic reporters at the BBC should be more impartial on the subject - and not treat every rise in GDP as such good news. We didn't get into that in today's programme, but I'd be interested to know what you think.

The years leading up to the crisis might look like a golden age to many of us now. But if you think about it, they didn't feel so great at the time.

Even then, there were millions of people living in households with no work - and millions of others working longer hours they would like.

We worried about people running up massive debts to buy things they could not really afford, and talked, even then about the middle class being squeezed. Many were also uneasy about the crazy salaries being earned in the City - where, it turned out serious imbalances were building up we would all live to regret.

Everyone - from Sir Mervyn King, to George Osborne, to Ed Miliband - says we need to come out of this crisis with a different kind of economy, one that is more balanced, less vulnerable to crises.

What if we need to have a different approach to economic growth as well? Another guest on the programme, Cameron Hepburn, an economist at LSE, favours a more quality-driven approach to growth that would put "sustainability" at the heart of our economic future.

It's a familiar argument, that you hear from many environmentalists. The idea of there being natural "limits to growth" was a also a big theme for popular debate in the 1970s.

But, as I've suggested, Lord Skidelsky's ambitions are much bigger. In fact, he's quite rude about environmentalists in his book.

He and his son also have little time for those who say we should focus on "happiness" instead of economic growth. That, they argue "is simply to replace one false idol with another."

The point is to stop thinking we have to maximise anything - whether it's some measure of "happiness" or GDP - and start focussing on how to live. He wants us to re-learn the distinction between what we need, in order to lead a good life, and what we simply want.

Among other things, Lord Skidelsky thinks shorter working hours, higher taxes on consumption and less advertising might provide a way to do it.

He also proposes that every citizen be given a small "basic income", so everyone has the financial security to pursue their talents, even if those talents are not very lucrative. That's a policy proposal that's been around a long time: it's sometimes been called a negative income tax.

It's not been implemented in the past - and you have to wonder, at a time when people are angrier than ever about welfare cheats, whether it could possibly be implemented now. Even in the unlikely event that the government had some extra money to spend.

Some of you will think the rest of Lord Skidelsky's argument is equally impractical, or naive. Others will consider him worryingly paternalist - or maybe, all of the above.

My third guest, Patrick Minford, the veteran economist from Cardiff Business School, thought it was downright silly.

But you won't be surprised to hear we had a meaty debate which strayed a long way from the typical subjects covered in this blog.

A big topic, perhaps. But we don't sweat the small stuff on Stephanomics - except, perhaps, the small fact that today's programme was the last of the current series. Boo hoo.

 
Stephanie Flanders Article written by Stephanie Flanders Stephanie Flanders Former economics editor

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  • rate this
    0

    Comment number 183.

    I agree with jar on people,how many do we need and why has population growth been upstaged by demographic issues,the population is ageing - I am one,but I can reproduce without limit it seems although it can be limited by economics to a certain extent, but welfare state support may raise my top limit and there is no limit to the number of "partners" I may breed with, result happiness? I think not.

  • rate this
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    Comment number 182.

    yes forget about growth. the planet does'nt grow. what do we grow ? cars ,landfills and debt- and people. we should be growing only soy beans and solar panels

  • rate this
    0

    Comment number 181.

    158. Joe "we have inflated the value of assets by not keeping a reign on monetary supply"

    precisely.

    But the consequence is the destruction of the price of money.

    And in consequences this eventually destroys all effective decision making processes in the capitalist economy.

    This is the calamity that the insane and incompetent regulation has created.

  • rate this
    +1

    Comment number 180.

    Life and staying alive is really about sustainability not growth. Having the basics water, food and shelter. Something the native americans had completely until the Europeans arrived and concentrated on growth destroying a sustainable way of life.
    We are too far down the line now but something has to change unfortunatley change is normally only brought on by necessity, then its normally too late.

  • rate this
    0

    Comment number 179.

    The simplest change to implement would be to remove the concept of limited liability from commercial law.
    ( I would suggest requiring financial institutions to use the same accounting conventions as the rest of the commercial world, but I thought I'd avoid indulging in flights of fancy )

 

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