from the way it was. Or rather, what its models capture of the way the economy
was. Most influential in this respect are the GDP growth predictions derived from
the registered and aggregated monetary transactions. As long as these extrapolations are positive the future looks positive. But if GDP growth is low, financial
markets get ‘nervous,’ investors ‘lose trust’ and politicians their jobs.
We have discussed the shortcomings of this measure above but what is important
to add when thinking about the future is that calculating GDP trends is an exponential function. This means that zero growth, often perceived to be an equivalent
to economic standstill, equals operating at the same level of output as before. And
each successive percentage of growth is nominally bigger than the one before: the
baseline is higher. Thus, if GDP increases by, for example, 7 % in poorer countries
it is likely to indicate a far smaller increase in real production output than 1 %
growth in a rich country. Many historically aware experts thus argue that high
growth rates should be anticipated as temporary phenomena and not the norm.
In practice, zero growth does create several problems for the institutions behind
today’s capitalist market societies. But this is the result of the way they are set up
and not some kind of natural inevitability. Much of the data presented above
suggests that positive growth everywhere on the planet is not very likely to continue
much longer. Yet, mainstream economics can by definition not imagine a positive
future in which societies operate steady-state economies in which the throughput
stays at more or less the same level. The idea of or need for constant growth is a
natural law in any scenario or model for potential policy solutions.
This mental iron cage (Weber) is so strong that arguing for a no-growth or even
degrowth path in rich societies is often conflated with attacking the ethical
imperative of putting the needs of the poorest people first. Homo economicus
cannot share existing wealth without flipping his hedonic calculus into the red. The
Brundtland Report found that this would cause too much political resistance: The
matter-of-fact assumption was that, “in most situations redistributive policies can
only operate on increases in income” (WCED 1987: 47). Existing wealth is
sacrosanct:
The number of years required to bring the poverty ratio down from 50 to 10 %
ranges from:
• 18–24 years if per capita income grows at 3 %,
• 26–36 years if it grown at 2 %, and
• 51–70 years if it grows only at 1 %.
In each case, the shorter time is associated with the redistribution of 25 % of the
incremental income of the richest fifth of the population and the longer period with
no redistribution (WCED 1987: 47).
This no-net-loss justice definition has been, and still is, a taboo. It dovetails
nicely with the liberal Enlightenment ideas behind the mainstream economic
paradigm. Goal 8 in the SDGs, in particular its first target, reiterates the imperative
of growth for everyone, even the super-rich:
3.3 How Mainstream Economics Anticipate the Future
99
was. Most influential in this respect are the GDP growth predictions derived from
the registered and aggregated monetary transactions. As long as these extrapolations are positive the future looks positive. But if GDP growth is low, financial
markets get ‘nervous,’ investors ‘lose trust’ and politicians their jobs.
We have discussed the shortcomings of this measure above but what is important
to add when thinking about the future is that calculating GDP trends is an exponential function. This means that zero growth, often perceived to be an equivalent
to economic standstill, equals operating at the same level of output as before. And
each successive percentage of growth is nominally bigger than the one before: the
baseline is higher. Thus, if GDP increases by, for example, 7 % in poorer countries
it is likely to indicate a far smaller increase in real production output than 1 %
growth in a rich country. Many historically aware experts thus argue that high
growth rates should be anticipated as temporary phenomena and not the norm.
In practice, zero growth does create several problems for the institutions behind
today’s capitalist market societies. But this is the result of the way they are set up
and not some kind of natural inevitability. Much of the data presented above
suggests that positive growth everywhere on the planet is not very likely to continue
much longer. Yet, mainstream economics can by definition not imagine a positive
future in which societies operate steady-state economies in which the throughput
stays at more or less the same level. The idea of or need for constant growth is a
natural law in any scenario or model for potential policy solutions.
This mental iron cage (Weber) is so strong that arguing for a no-growth or even
degrowth path in rich societies is often conflated with attacking the ethical
imperative of putting the needs of the poorest people first. Homo economicus
cannot share existing wealth without flipping his hedonic calculus into the red. The
Brundtland Report found that this would cause too much political resistance: The
matter-of-fact assumption was that, “in most situations redistributive policies can
only operate on increases in income” (WCED 1987: 47). Existing wealth is
sacrosanct:
The number of years required to bring the poverty ratio down from 50 to 10 %
ranges from:
• 18–24 years if per capita income grows at 3 %,
• 26–36 years if it grown at 2 %, and
• 51–70 years if it grows only at 1 %.
In each case, the shorter time is associated with the redistribution of 25 % of the
incremental income of the richest fifth of the population and the longer period with
no redistribution (WCED 1987: 47).
This no-net-loss justice definition has been, and still is, a taboo. It dovetails
nicely with the liberal Enlightenment ideas behind the mainstream economic
paradigm. Goal 8 in the SDGs, in particular its first target, reiterates the imperative
of growth for everyone, even the super-rich:
3.3 How Mainstream Economics Anticipate the Future
99