03/07/2021

To grow: a good idea

3 min

We are told this with insistence, and it seems logical: there are limits to what we can do. Limits we cannot ignore. The Earth is finite and we have exploited it too much. So far, so good. But add that we must come to terms with the idea that the economy cannot grow any more, that it must even shrink. Moreover, we are told that accepting this will lead to a more harmonious, more cooperative and, in short, better economy. This is the doctrine of degrowth which, unsurprisingly, I do not share.

I believe that in some aspects it is excessively optimistic and in others excessively pessimistic.

It is optimistic in believing that humans, with all the exceptions you want, would easily adapt to an environment that asked them to cancel their aspirations for improvement. I apologise, but I do not have the capacity to imagine a humanity where, in relation to the patterns of each epoch, the components do not aspire to more for themselves and especially for their children. In the past, for all, and now still for many, this compulsion has encumbered the basic necessities of existence. In the future, namely, perhaps the desire, felt with no less intensity, will be not to work or an annual trip to the moon.

In a stagnant economy, even more so in a declining one, zero-sum situations are parts. In these there is only one way of self-improvement: take the other, exploit him (or, in a variant, exploit Nature). A stationary economy and an aspirational population - which, I repeat, I believe is the natural state of humanity - will be a conflict-prone and unharmonious society. A growing economy, on the other hand, makes it possible, in principle, for everyone to improve. Moreover, it makes it easier to reform. For example, if there is inequality, it is possible to move towards equality without reducing anyone's level, and therefore with less resistance: simply by distributing the annual dowry appropriately. Excusing myself in case someone has already said it (it is likely), I dare, in the style of the incompatible triads popularised by Dani Rodrik, to conjecture the following: the incompatibility of a (permanently) stationary economy, democracy and no social conflict. A stagnant, democratic economy will be full of conflict. A (permanently) stationary economy with no apparent conflicts is likely to be ruled by an authoritarian government and a democratic economy with little conflict is likely to be a growing economy.

If a stationary economy were inevitable, then what we should strive for is that, however unnatural, it would impose the philosophies of resignation, of which degrowth is a variant. But, as I have already said, while I think it is unrealistically optimistic about the capacity of humans to internalise limitations, I also think it is, fortunately, profoundly mistaken about the impossibility of growth. I will clarify terms.

First of all, a concession. If we leave aside the colonisation of the Moon and Mars, I believe that the finiteness of space on Earth and the size of a human being impose a limit to population growth. In principle, I am already happy for the limit to be stabilised at levels not much higher than today. It would make everything easier.

Of course, we cannot conceive of growth as a linear extrapolation of what we are doing now. This has always been impossible. Historically speaking, we cannot express the growth in people's welfare state with the quantitative increase of a parameter defined a priori based on what matters at any given moment (a composite index defined a posteriori is another matter). We can now look at the much-discussed GDP. At other times or in other geographies we could do so, for example, with life expectancy. We have to interpret and measure growth in terms of the expansion of dimensions relevant to well-being. We now care about things that the Romans could not have imagined. Who knows what will matter to those who come after us.

Thus understood, I believe that growth means that the economic and technological environment would in principle, and preferably de facto, allow the whole world to improve. This world must include a very special subject: Nature. Incidentally, for thinking subjects, improvement means refusing to return to the situation from which one has "improved".

I conclude optimistically: it seems to me that all the evidence of the last 300 years tells us that growth, as I have just described it, is possible. It is possible by continuing to unleash and control the progress of knowledge and technology. Twenty years ago the idea of decarbonising energy generation was a dream within the reach of a few. Now it is the dream of the vast majority and we see it as possible in a matter of decades. We have a limitation: the laws of physics, but also a very favourable factor: the ultimate source of energy, the sun, is for all practical purposes inexhaustible. Nature and humanity are not in a zero-sum game.

Andreu Mas-Colell is an economist, UPF and Barcelona GSE professor emeritus and BIST president.

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