Growth schmowth

The PhD continues to parasitise my brain/life/soul, but occasionally some other stuff accidentally burps out a random orifice, usually at So here's a comment on MT's reflections on Bill Gates' reflections on growth.

MT: "Which means, presuming most of this activity is worthwhile, that wealth not only accumulates but that the accumulation always accelerates."

This is interesting: I don't think it's how most economists or users of national accounts would view it, but it's an important point that's probably usually overlooked. There is - AFAIK and I could be wrong - no direct connection made between that throughput and other concepts of persistent wealth. We talked a while back about e.g. Diane Coyle suggesting a move to measuring wealth rather than GDP, but the connection between the two is murky and perhaps not as straightforward as we'd like.

An obvious counter-example (if I'm understanding your main point correctly and I may well not be): a steady-state economy. Take just the food-production sector and assume two other things: renewable inputs/closed waste loops (that's two things!) and traditional econ101 Ricardian exchange. I make falafels and you make wine. We trade. Monies are exchanged, GDP is produced - but no additional wealth. Presuming the amount we make varies little, the goods are, literally in this case, consumed over time at a constant rate. Wealth remains static, goods and money flow.

Now, that's obviously not what our current civilisation is doing at the moment: one would *hope* we were creating some form of wealth given the environmental capital we're spending. But I just wanted to make clear that it's possible to have GDP with zero-change wealth. Which, for me, makes your geeky elaboration a bit brain-hurty - possibly again because I don't get it, but also because I think you blur wealth and economic throughput and those things need more clearly separating.

I think this is right: "Growth in the conventional sense is used as a proxy for the rate at which the rate at which wealth increases increases." (update: no I don't think that, I missed the nesting!) In the example I just gave, if we found some technology that could maintain our little steady state food production system but increase output harmlessly, we'd be better off. (Note, here's a use for the idea of utility: without it, you've actually got no way to know you got wealthier. Though you might want to argue a larger quantity of falafels and wine automatically implies an increase in wealth, I don't think that stands up to scrutiny when a larger group of people who don't care for them. But that's another story.)

"If there is any sense in which economic growth in the conventional definition can be maintained indefinitely, it must increasingly be focused on symbolic rather than substantive wealth. // Nature shows us that natural wealth gradually accumulates in such circumstances. Could economies function like that?"

I mostly agree, but as usual want to note that atoms can be re-arranged in ways that can provide more value. I don't think that in a steady-state economy, development will stop. I don't think it's quite possible to separate the symbolic from the substantive. Probably being a stuck record now but I'm always reminded of Read Montague:

All computations are not created equal. Some cost more to run, and some provide better long-term payoffs to the organism. For biological computations, efficient solutions have won the competition. How do we know? Because your brain is merely warm - you can safely touch your head - while the processor in your personal computer is so wastefully hot that it heats your office and you can’t touch it with a bare finger. Why is the brain so efficient? The why is obvious; life is hard and competition fierce, so biological computers could never afford to be grossly inefficient like our personal computers. But the question is, how do biological computers achieve such efficiency?

Development in a steady state economy (and consequently wealth creation) will perhaps be equally algorithmic - not entirely physical or symbolic but the development of the link between those substrates. Cities are the prime site for that kind of development.

Though that's all a bit stoned: I don't think we're anywhere near genuinely decoupling constant material throughput increase from development.

"The obvious and widely held idea among intelligent people that indefinite growth is either meaningless or impossible makes no inroads while being met with no rebuttal."

I've been reading Enough is enough which makes much the same point. Even gone to a meeting. I'm still sympathetic but extremely skeptical. The argument is being made by people with a constellation of views inimical to most of the planet's population. I struggle particularly with well-to-do liberal elites arguing that the problem is a culture of more. That is just so obviously a doomed political platform! And it only just occurs to me, it's kind of the mirror image of what the UK tories do when they accuse the poorest of having too much money (which they're doing A LOT). So there is a long way to go before the political problem is solved, even if the mathematical case is watertight.

On finance: I'm actually a bit annoyed I have to concede this point as in lots of ways I think the link between interest and growth is misrepresented, but here we are - "when interest rates are close to the rate of economic growth/ you can run a budget deficit forever as long as the primary deficit is balanced. The debt load as a share of the economy won't increase over time. And if interest rates are lower than the pace of growth — as they are now — the load will actually shrink while you run those smaller deficits."

Which is possibly fine for a period of, say, rebuilding your shiny new green infrastructure and works out OK: borrow to grow. But at some point, things have to balance out it would appear.

Lastly: I'm just reading Red Plenty. It's AMAZING so far, a must-read. Two things strike me from it. First, steady-state folks (as well as anyone arguing that the entire economic structure of the planet must change to save us - not an unreasonable thing to claim) must not forget what all the biggest political and physical battles have been about over the last hundred years. We are discussing massive economic and political transformation. When did that ever happen consensually and without bloodshed?

And relatedly, Red Plenty does an awesome job of showing how vital growth was to the cold war. Darn, haven't got it with me, there's a great quote... something like `economic growth is the main front in the war between the superpowers'. It's perhaps ironic that, as well as on purely material terms, that battle also ended up being played out through truly astonishing amounts of public spending on things like the space programme.

But all that underscores the point: we shouldn't underestimate the scale of the stakes. The twentieth century was defined by exactly this kind of battle. Relatedly, I think it was in John Lanchester's book, he suggests (no evidence, but it's a nice idea!) that the end of cold war led directly to the financial crisis: the West no longer needed to maintain the impression for its citizens that its economic model was self-evidently superior. The economic battle for our souls was over and that changed more than we realised at the time.

One line summary then: degrowth arguments that start with genteel profs pointing out how an exponential works can quickly end up full-on political revolution territory, with everything that entails. Many of those arguing for it are, as far as I've seen, insensitive to this point - though it's very early days for the idea as a political campaign, and those people I've seen working on it are consciously setting out to test their ideas in the realm of nuts and bolts politics, in the UK at least, so we'll see.
Also: "Oh Jesus Christ, even by my standards, that was a ridiculously long comment! Sorry!"

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