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

So it's goodbye from me

After 11 years at the BBC, I'm leaving for a new role in the City.

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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
    0

    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 )

  • rate this
    +3

    Comment number 178.

    I agree with 168 and 169 among others. We must first reconsider from first principles how we should measure "growth". Govt deficit and QE etc should be treated as debits to be set against UK growth. I'm sure there are other figures that should be deducted too. e.g. fantasy money created by FRB. We urgently need a true and fair set of accounts for UK plc.

  • rate this
    +1

    Comment number 177.

    We also need to take account of the type of growth. If it is growth involving more use of resources, such as bigger cars and more international travel, then let's cut back. But if it involves developing new treatments for chronic conditions like diabetes, or expanding the use of devices like iPads and electronic media, then surely the more growth the better?

  • rate this
    +2

    Comment number 176.

    Should we forget about growth?
    Who cares?
    What we shouldn't forget about though is the mis-selling of products, interest rate fixing, drug cartel money laundering, bribery etc...
    Corruption and crime is rife in the very sector which has and, continues to destroy economies. Where's the swift justice promised by Cameron and his henchmen? Stop protecting the guilty, trials and prosecutions now!!

  • rate this
    -1

    Comment number 175.

    "BBC should be more impartial "
    " not treat every rise as good news" - Steph

    The BBC has not treated any rise since the election as good news. But you have hammered any fall .

    maybe those comments were from 2009
    Where every rise was praised ,,and even the huge slump in 09 was downplayed.

    Selective impartiality .
    can't beat it.

  • rate this
    +1

    Comment number 174.

    "Manufacturing in slump in US, UK, eurozone and China"

    And yet people are still alive, assuming they have access to food water and shelter. What a shame to learn that life would go on without ipads, windows(whatever number), hi-fi monster cables, digital watches, etc etc. technocarp...

  • rate this
    +1

    Comment number 173.

    Limit advertising, stop buying expensive rubbish we dont need. Democratise the workplace so those affected by decisions have a say in them. A basic citizen's income. Limit the influence of corporate lobbying or make it transparent. End the politician ->boardroom->politician revolving door syndrome. Start taxing that $21trillion mega rich stash. The old paradigm is not delivering we need new ideas

  • rate this
    -1

    Comment number 172.

    One way forward may be to kill off the notion that businesses have to be for profit and preferably to lots of it.

    Replace with co-operative ventures that focus on delifery of 'community benefits' at a moderate (and shared) profit / sustainable loss.

    We keep hearing how the banking sectors need to change their cultures. Maybe they're not the only ones that need a new mind-set.

  • rate this
    +1

    Comment number 171.

    For years growth was the carrot used to justify borrowing . Its a shame we did mot have this conversation seven years ago .

    IE before we got into the trap of deminishing increases in growth , being fuelled by increasing gov borrowing .

    The system was broken half way through the last decade . But the extra 1/2 trillion pounds pumped in made it look healthy .

  • rate this
    +1

    Comment number 170.

    This was a program I have long waited for, the argments for growth are all to comman but it is rere to hear the arguments aginst. This is not suprising given the balence of power in Britain is in favor of those supporting growth. Personaly I have embraced the principals of low-vero growth in my own life great.

  • rate this
    +2

    Comment number 169.

    The current GDP figures would be more honest if they discounted government borrowing ( which artificially inflates economies ) , and the rate given on a per person basis to take out the effects of immigration .
    On these rates we have been in recession for the last five years . With actual recessions earlier last decade .

  • rate this
    +1

    Comment number 168.

    I generally agree with the content in the column
    gdp is a poor metric. debt is not an asset.
    debt based money creation requires an increasing creation of money and as others state below nothing can continue to grow.
    There are other methods for money creation and these should be included in discussions for a different type of economy as this paradigm is broken.
    how to survive the collapse?

  • rate this
    +3

    Comment number 167.

    How does capitalism work without growth? Where will the reward for investment and risk taking etc. come from? A completely new model would be needed and not one of those currently a major gainer from the present system (Who run this world) will ever agree to it. Dream on.

  • rate this
    +2

    Comment number 166.

    Option 1: Control the financial sector = control the economy.
    Option 2: Feeding frenzy at the trough = empty trough
    Your economy, your choice
    Osborne is sticking with option 2, shame.
    As Albert Einstein pointed out: Insanity: doing the same thing over and over again and expecting different results.

  • rate this
    +2

    Comment number 165.

    Read 'Prosperity Without Growth, the transition to a sustainable economy' by Tim Jackson

  • Comment number 164.

    All this user's posts have been removed.Why?

 

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