Remarkable BBC Report “Growing Pains” Questions the Benefits of Economic Growth

Growing Pains

About this programme by Peter Day

Professor Angus Maddison died last April at the age of 83 leaving a legacy stretching back – oh – at least one thousand years. British-born Angus Maddison taught at the University of Groningen in the Netherlands; his speciality, no his obsession, was economic growth.

He produced a 60–year stream of papers, graphs and books, attempting to pin down the history of this thing which is central to the way we think about our world. When the numbers ran out, he would look for other evidence of the growth rate: wills, or lists of the membership of different religions in 16th century Japan.

Like most interesting things, growth is both very complex and very straightforward. For example take the pace of global economic growth over the past 1,000 years.

It is pretty flat in the 10th 11th and 12th centuries, stretching out to the 17th century. And then – so the experts say – growth suddenly leaps skywards.

Water power, steam, then oil ushered in a huge increase in human productivity – and economic growth – first in the Western hemisphere and Japan, now newly underpinned by Asia, India and even Africa.

Now what is the main component of growth? Transport, you might think, as railways, began to redefine whole countries, followed by roads.

Fashion

But the historian Niall Ferguson points out that the activity that becomes the most significant component of developing growth wherever it happens is textiles.

Released from agricultural drudgery into the urban cash using environment, people seem to want clothes … and then more and more of them. Fashion is a great driver of economic activity.

In a way that is not really surprising.

Consumers – a new group of people invented by the industrial revolution – soon buy most of the semi-permanent goods they required. They are satisfied.

But there is no limit to the apparent lust for shoes and tights at many points in the income scale. The fashion industry soon finds new ways manipulating those appetites.

And clothes are made with cheap labour, so wave after wave of industrial revolution in country by country begins with the loom and the sewing machine.

Relating to all this, I’ve been asking a simple question: Why is economic growth still regarded as a central human purpose, desired by politicians, vital to companies, craved for by individuals?

Resonance

Why is growth “good” and no growth “bad”? After a crisis, how can we heap such hope on revived economic growth when we know that that is what got us into the mess in the first place?

How can growth be the norm when we know that nothing goes on forever?

Yes of course we hear from the environmentalist economists who argue for a new sort of system that severely limits our need for carbon and other raw materials.

But it is the canny author and Financial Times columnist John Kay whose words have a lot of resonance for me, as he deftly disposes of the idea that Gross Domestic Product or its sibling Gross National Product really matter – or are measurable.

John Kay says there is certainly one thing that continues to grow, and that is human ingenuity. It is certainly a resource without readily comprehensible limits.

Of course, human ingenuity may need other more finite resources in order to implement its ideas.

But it is nice to know that thinking still matters … and that (in spite of the heroic efforts of Angus Maddison) nobody really knows how to measure it.

This commentary is complemented by a 30 minute audio podcast that can be found in BBC´s IPlayer section at http://www.bbc.co.uk/iplayer/episode/b00w228b/In_Business_Growing_Pains/ . It featues well known figures such as Andrew Simms from the New Economics Foundation, Prof. Tim  Jackson (author of Prosperity without Gowth) and others.