Economic Growth is bad in many ways – this excellent, concise 2015 article sums it up:
- Growth is efficiency, which means less jobs
- Growth makes the rich richer – trickle down has never happened
- Growth means more harm to the environment
And Economic Growth good in only one way – modern economies do not work without growth. If you take away growth:
- Share prices plunge
- A highly leveraged society falls apart
- Investment based on diminishing returns is impossible
- Less growth means greater unemployment
- Less growth means less taxes to support the unemployed
It is virtually a death spiral based on how things currently work. So if we stop growth, we have to change the system.
Well, the death spiral might not be so bad. Nobody will starve, we will just be forced to adjust to a new way of being. But it will be a terrible shock to the system, and many people won’t cope. So we need to predict those adjustments, and work out a plan to change things.
PROSPERITY ISN’T BETTER FOR MOST
Australia has had continued economic growth for decades. At the latest federal election (2019), the LNP got back in because people preferred economic stability over social reform. Detractors would say that the LNP achieved the growth on the back of high immigration rates (more people equals economic growth in western countries), an on-going resource boom (which they have no control over) and a growing national debt.
It is easy for a political party to persuade voters that the economy is in good shape by using figures like GDP and increased tax receipts that help balance the budget.
But are things improving in tangible ways for regular citizens? No, things are actually getting worse. What we are seeing throughout the richer nations are:
- Increased unemployment & under-employment
- The rich are getting richer
- Longer working hours
- Higher rates of obesity, addiction and suicide
- Reluctance to fix environmental issues, especially climate change
But if the numbers are good, there is a national feel food factor, perhaps divorced from personal experience.
THE END OF POPULATION GROWTH
Global population is predicted to peak around 2040-2050. For the first time since capitalism began. Economic growth will become more difficult to achieve with less people, and even harder with a greater percentage of people in retirement.
The decrease in population will obvious occur in the richest countries first, as the predicted decline is based on wealth. Richer people have less need for multiple kids, and those kids cost more to raise in advanced economies.
If the capitalist system that we know and love is to be under threat, it will be seen first in Europe, USA, Canada and Australasia.
This is not being addressed or discussed at present. It certainly isn’t something that governments that have 3-5 year terms are interested in. It is looking likely that the end of economic growth will occur before anything is done about it.
A country that is proactive about this could avoid major societal upheavals.
A NEW MODEL
Capitalism cannot survive in its current form without “growth”. Jobs and businesses won’t change, but how they are funded and how results are measured will need to change.
Sharemarket – people buy shares for only two reasons: dividends from profits, and capital gains. If, in general, neither of these is normal, investors will have no interest in owning shares.
Scaling Down – when a business is doing well and needs to expand by investing in more staff and capital items, that is an easy and enviable situation to be in. Managing less staff, less capital items and less revenue/profit doesn’t work at all.
It seems impossible to change…
THE HISTORY OF GROWTH
- Everyone hunted/cooked/made shelter. It took the energy we had to just survive
- Agriculture / permanent settlements. Not everybody was needed for survival. We had the freedom to make little figurines, or clothing. So some people tended to crops, some cooked, some made things. No ownership, everybody shared the fruits of their labour
- Ownership. Some people spent time on things that were mostly valuable to them. Their own homes, primarily. They built it, for themselves, they owned it.
- Value. Trading with other towns, they soon realised that they had things others did not, and vice versa. Relative values were determined.
- Debt. People wanted something they couldn’t afford, so they owed for it.
- Kingdoms. Instead of being a local leader for the good of others, a few people gained power for their own benefit.
- Corporations. The same as kingdoms, still elitist, but for the good of many rich people.
- Share markets and modern nation states. Because currency and shares have variable values, the notion of growth was introduced as one way of valuing them
But here’s the thing. The vast majority of us, throughout history and now, are stuck at 2. We essentially all help each other out to get the things we want. We do have 3 (ownership), but it isn’t the same as the when it first came into being, And it is saddled with 4 and 5, which are unfair and detrimental respectively.
Though we are stuck at 2, things have changed since 10,000 years ago (some say 5,000). Because we have witnessed 6,7 and 8, we now have greed, desire and envy. We want the riches and the success. We think that striving for them is all we need to do, but unfortunately that is almost always never enough. Fame and fortune comes from luck, circumstance and inheritance (and a bit of being attractive).
In early civilisation we all helped each other out. Some provided food, some cooked, some made things. And that is still what half of us do today. We have cooks, builders, farmers, as well as new, beneficial jobs like doctors and teachers.
The other half of us have jobs that have mostly risen due to greed – police, military, accountants, lawyers, banks, marketing, sales people…
And we are working more than ever. While we could all work less and collectively get by, we want more, so we strive to achieve even though it is almost always futile.
IN REVERSE
If growth unravels 7 and 8, and 95% of us are still basically at 2, then it looks like things will unravel in reverse order for the rich. But it a long, twisted, unpredictable way.
If we remove greed from the equation (impossible?), and factor in technology that pretty much provides all the basics we need for survival for free, then we could return to a better version of 2.
Historically 2 was quite clearly defined – you worked all your life and merely survived. We have nicer survival these days, but the poor are getting relatively poorer. We are getting less of the collective achievements than the rich. Much less. For example, we still work a lot.
We have an opportunity to return to 2, but a far better version. And at the roots of 2 has been socialism. We just need a version of socialism that works for everyone – good luck with that!
THE START OF A SOLUTION
Giving everyone a modern version of 2 is easy, most idealised versions of socialism provide it. The Scandinavian models clearly work best, and authoritarian communism works worst.
The modern version means that we all keep doing what we do, with a bit more of the pie, and work a bit less.
The cost of that is what happens to the wealthy, and to corporations.
Social Growth
Negative growth might be too hard. So perhaps we can shift growth from economic to social. That will mean putting a value on social growth, that replaces economic growth.
Example:
- A company makes disposable shopping bags that sell for 5 cents each
- Society demands a more environmentally-friendly solution
- They make multi-use bags that sell for 50 cents each
- Because this is a solution, they end up using less resources, needing less staff, and the new bags last much longer than 10 old bags = less income
So they are left with less income, and too many staff. They use the staff to create a social outcome, and they receive income from society.
If those staff remain, their social benefits become profit for the employer. Or alternatively, they could work directly for society instead.
Job losses averted.
Quality Products
Less waste means better quality products. Shirts that last 10 years instead of 10 months. Toasters with replaceable elements.
Because such products are more efficient, we can offer an incentive for their manufacture. A rebate from the government. But that is hard to do with declining tax revenue. So the incentive cannot be monetary.
A Social Currency
The future economic model is a combination of fiscal and social currencies. Fiscal will decline as social rises until a natural mix is arrived at. They will be labelled differently, but will hold a relative tradable value, like cryptocurrencies of today.
A social currency can be combined with Universal Basic Income. Each person can receive $1,000 fiscal dollars per month, and $1,000 social dollars.
An idea that never really took off is that if we pay tax, we should be able to decide how it is spent. We do that indirectly by voting for governments. But what if we could directly say here is my tax, please spend it more on health and less on war? An article on this is here
Social dollars will need to be spent. There could be some kind of mechanism for deferral, but ultimately it has no other use but public good. Deferred dollars might lose value with time.
Social dollars can only be spent on certain things. For sure, things that are primarily good for society.
There will arise some situations where social and fiscal dollars need to be traded. That will establish a relative value, that will be useful for comparing how the different systems are performing.
Consumers Choose
I get $1,000 in social dollars every month. I pretty much have to spend it. It has a relative value to fiscal dollars, but ultimately can only be redeemed by benefiting society. Once used to benefit all, it can be converted into fiscal dollars.
i can give it directly to charity, easy.
Or, if I have the opinion that a company, say Amazon, is abusing their powers or the environment, I can choose to fund some/all my of purchase from them with social dollars. They can get real dollars back only if they spend it for the good of all.
The ratios of who gets what can be adjusted to make the model work best for all. It can start slow and grow as we learn how things work out.
We already do this, essentially, when giving to charities. We are simply broadening the scope and forcing it upon people. For their own good.
Control
Because this is brand new, results will be unexpected. For all we know, everybody might flood a particular business with social dollars and cause them to fail (although people should realise they actually like that business existing, because they like the product or service).
The beauty of it being social currency is the government can make adjustments, like interest rates:
- The amount of social dollars each person receives
- The redemption value of social dollars
- The limits of how many social dollars any business can receive if they don’t want them
We can literally make it up as we go along.
SUMMARY
Instead of user pays, we have user gives
Economic growth slowly transitions in the direction of social growth
Employment is maintained, but with less hours, as we shift from fiscal work to social work
Wealth distribution improves
