221
Eventually these tax reductions took their toll in increased national debt and
large annual deficits which precipitated major austerity initiatives in the mid-1990s
by both the federal and provincial governments to balance budgets. Political leaders
were informed by neoliberal leaders in America and Britain that tax increases to
reduce deficits were not an option. Other neoliberal policies of the 1980s in America
included increasing government subsidies to businesses, increasing demand for
business products and services by means of privatizing government operations,
reducing regulations on businesses and reducing regulations on financial institutions. These, together with tax reductions, represent what Thomas Piketty describes
as the “forces of divergence” meaning the forces that concentrate wealth in the
hands of a few citizens (Piketty 2014, pp. 21–22). They are the forces that are prominent in oligarchic regimes.
6 A Short History of Economic Growth
6.1 How Economic Growth Became a Paramount
Policy Objective
Around the end of World War II, policies of full employment were adopted by several governments of the developed economies in the West. These included Britain’s
wartime government, the Australian Government, the Canadian Government and
the government of the USA. Following John Maynard Keynes’s analysis in the
1930s, Britain’s Roy Harrod and E Domar of the USA developed the Harrod Domar
model of economic conditions for generating sufficient economic growth to achieve
full employment in 1946. Starting around 1950, economic growth was identified as
a government policy. By the end of the 1950s economic growth had been thrust to
the top as apparently an overriding objective of government policy. Economic
growth was a major campaign issue in the contest between Kennedy and Nixon in
1960 after which faster economic growth became a central objective. By the end of
the 1960s, the case for economic growth as an over arching policy objective in
developed countries around the world had matured. Economic growth was apparently popular among political leaders as it came to be regarded as a remedy for all
of the major current ailments of western economies: under employment, inflation,
balance of payments difficulties, the dollar shortage and the Soviet challenge in the
Cold War (Victor 2008, pp. 13–14).
At the same time as economic growth was reaching the pinnacle of policy objectives in the 1960s, several prominent economists began to question the validity of its
measure, per capita GDP, as an indicator of social welfare or societal progress.
These included the following and their authored works (Victor 2008, p, 15):
John Kenneth Galbraith, The Affluent Society (1958)
Kenneth Boulding, “The Economics of the Coming Spaceship Earth” (1966)
Ezra Mishan, The Costs of Economic Growth (1967)
The Political Economy of Managing Without Growth
Eventually these tax reductions took their toll in increased national debt and
large annual deficits which precipitated major austerity initiatives in the mid-1990s
by both the federal and provincial governments to balance budgets. Political leaders
were informed by neoliberal leaders in America and Britain that tax increases to
reduce deficits were not an option. Other neoliberal policies of the 1980s in America
included increasing government subsidies to businesses, increasing demand for
business products and services by means of privatizing government operations,
reducing regulations on businesses and reducing regulations on financial institutions. These, together with tax reductions, represent what Thomas Piketty describes
as the “forces of divergence” meaning the forces that concentrate wealth in the
hands of a few citizens (Piketty 2014, pp. 21–22). They are the forces that are prominent in oligarchic regimes.
6 A Short History of Economic Growth
6.1 How Economic Growth Became a Paramount
Policy Objective
Around the end of World War II, policies of full employment were adopted by several governments of the developed economies in the West. These included Britain’s
wartime government, the Australian Government, the Canadian Government and
the government of the USA. Following John Maynard Keynes’s analysis in the
1930s, Britain’s Roy Harrod and E Domar of the USA developed the Harrod Domar
model of economic conditions for generating sufficient economic growth to achieve
full employment in 1946. Starting around 1950, economic growth was identified as
a government policy. By the end of the 1950s economic growth had been thrust to
the top as apparently an overriding objective of government policy. Economic
growth was a major campaign issue in the contest between Kennedy and Nixon in
1960 after which faster economic growth became a central objective. By the end of
the 1960s, the case for economic growth as an over arching policy objective in
developed countries around the world had matured. Economic growth was apparently popular among political leaders as it came to be regarded as a remedy for all
of the major current ailments of western economies: under employment, inflation,
balance of payments difficulties, the dollar shortage and the Soviet challenge in the
Cold War (Victor 2008, pp. 13–14).
At the same time as economic growth was reaching the pinnacle of policy objectives in the 1960s, several prominent economists began to question the validity of its
measure, per capita GDP, as an indicator of social welfare or societal progress.
These included the following and their authored works (Victor 2008, p, 15):
John Kenneth Galbraith, The Affluent Society (1958)
Kenneth Boulding, “The Economics of the Coming Spaceship Earth” (1966)
Ezra Mishan, The Costs of Economic Growth (1967)
The Political Economy of Managing Without Growth