G20 growth targets and growth model offer more problems than they solve

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Balancing Money and the Earth

At the recent G20 in Brisbane, member countries agreed to accelerate growth to an additional 2% on top of current trajectories. But ongoing public sector cuts, asset sales, and reducing workers’ rights indicate that at least part of the growth model is at the expense of the workforce, public investment and the environment.

Economic growth is the unquestioned solution to unemployment, deficits and even world hunger. It wins elections for politicians. It helps us pay off our debts and gives young people jobs. So how come we’re all even more indebted, the gap between the rich and poor has widened, and living standards for many have declined?

There’s a saying that infinite growth is the ideology of the cancer cell. Anything that just keeps growing will ultimately suck its host dry. Unlimited growth and a finite planet can’t coexist. We’re already seeing the limits to growth with depletion of resources and intolerable pollution of sinks. Despite the hallowed status of the growth objective, it’s not benign or benevolent in its effects. Growth doesn’t necessarily lead to a more equitable society or an equal distribution of benefits for all. There are many problems with “growth” per se, that lie beneath the surface.

For a start, there’s a democratic problem with the G20 pursuit of a +2% growth target – the nation state becomes more beholden to international peers and the global capital system than to its domestic electorate – as we see with the TPPA.
To support the growth model we have to consume more. That’s economically unsustainable since growth plans don’t include higher wages or the creation of quality jobs. But it’s also environmentally unsustainable to dig up limited resources to ‘stimulate the economy’. Growth depends on creating markets for stuff we don’t necessarily need, with resources we can’t sustainably expend, using money we don’t have. Emerging markets are expected to ‘buy into’ the growth dream – as producers and consumers. That effects domestic policies, cultures, ecologies, economic conditions – and usually not for the better.

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Some of the G20 members made concessions to helping developing countries tackle climate change at the Brisbane meeting. But a fossil fuel based, growth economy is actually incompatible with addressing climate change, or any other sort of pollution or planetary degradation. The way economic expansion is shackled to energy use, more growth can only exacerbate environmental damage. Short term growth targets prevent governments and industry from thinking long term in the interests of a more sustainable model or more sustainable investments and manufacturing.

And of course more growth won’t automatically lead to a more equitable society just in itself, as we’ve seen from recent history. If the spoils of growth concentrate in the hands of the few, societies become more unequal, not less. A rising economic tide won’t just automatically raise all ships to the same extent. More growth doesn’t equate to more public good. After all, there is already enough food, wealth and resources to satisfy world hunger – it’s how its controlled and distributed that causes poverty and starvation. And even for the wealthy, more money doesn’t just lead to more happiness or wellbeing.

The challenge is to find a compelling alternative ideology that offers the apparent benefits of growth, without the unsustainable economic, social and environmental costs. But we won’t find that from any contemporary western state where the interests of growth and capital are incorrectly seen as intrinsically linked the interests of all.

7 COMMENTS

  1. completely agree. Unfortunately, until people really start to think “outside of the box’, nothing is going to change. The only possible solution does exist (NLRBE) and is undeniable, when the broad context is understood – but people do not know about it because of their truncated frame of reference.

    Unfortunately the sad reality is that the structural mechanics required to keep the market model operational simply will not allow a drop in consumption, without total disorder and social destabilisation. But educated, intelligent people blinker this reality out 🙁

    The entire market system is based on the assumption that there will always be enough product demand in society – which can move enough money around at a rate – that can keep the consumption process going. And the faster the rate of consumption – the more economic growth is assumed – and so the machine goes. And we’re now in a state of exponential growth, and it has been estimated that we actually need 27 planets by 2050 JUST to keep this waste machine going.

    Sadly, the fact is, there is no structural incentive built into this model which seeks to preserve, reduce waste, or reduce resource consumption or biodiversity loss. If you slow down consumption > then “economic growth” slows > people lose jobs > purchasing power declines > and things become destabilised, and so forth. “Consumers”, as they are called, have to keep being conditioned into buying things they don’t need.

    The system can not operate any other way, It is an anti-economy. Efficiency, sustainability, and preservation are the enemies of our economic system. There’s absolutely no method of using money to create efficient sustainability on this planet. There’s no permutation – don’t bother looking for one. It doesn’t exist. The paradigm is over.

    If you want to understand the only true possible scientific unifying operational ‘ideology’ as the solution, please see the following talk by Peter Joseph given in Berlin last year (much data and supporting evidence provided):
    http://youtu.be/K9FDIne7M9o

      • A good talk, interesting ideas, but no, not the ONLY solution.

        I would counter that the solution may be simpler. The structure of how our money works (interest bearing debt) is I think the basis for the requirement for perpetual growth. The system must keep growing to meet the demands of interest + principal repayments.

        Simply changing how our money is created and how it works would make massive quick changes to our economic system.

        1. remove interest, money must be interest free
        2. return creation of new money to the public, our RBNZ, take it away from private commercial banks
        3. introduce a “demurrage” which does three interesting things:
        a) reintroduces the incentive to make loans (which is removed by removing interest on loans)
        b) keeps the supply of money in the system stable, and this amount must be calculated per head of population
        c) facilitates faster circulation of money in the system

        After a change like that, from an interest bearing debt based system to an interest free demurrage system where money is created for productive purposes and not as debt, behaviour would change. Instead of focussing on maximising money held at any one time (because interest means money held grows by simply being held) focus would move to being a nexus of exchange, to maximising money flowing through ones hands. In order to keep the money flowing the source must be maintained. Whatever that is, be it a farm or a manufacturing plant, to maintain flow the resources must be maintained. This means our behaviour would change to ensuring our environment can sustain us.

        Its neat, its simple and its been tried before. Worgl in Austria is the best example.

          • Bernard Lietaer is brilliant isn’t he!

            As a senior economist with literally decades of experience in the specific field of money, he really is quite an authority. He helped set up the Euro.

            Once of his biggest points is that we shouldn’t have just one currency to use, we should have more than one. Just like a monoculture is at greater risk, a single currency is at greater risk of world fluctuations.

            An alternative currency alongside our NZD/USD would benefit NZ enormously. An interest free demurrage currency. Created by RBNZ not as debt, spent into existence in a controlled manner, to a total of about $24,000 per head of population. Demurrage reduces the amount in supply quarterly, to no more than a total 15% per annum. Government creation increases the amount in supply. As long as the supply remains stable this would work.

            If this was tried I expect that within a couple of years our unemployment would be so low only the unemployable would remain unemployed. And we would have funds to help them gain skills or find their niche.

            We would stop discounting the future, and have a clearer understanding of the need to look after our environment.

            Because at the end of the day, most people operate in self interest. If it is in their interests (to keep their incomes flowing) to look after their environment, they will.

            It could be presented and spun as offering NZ “choice”. Neo libs love that word. That might do it.

        • Sorry Lara. It would be nice to believe that there is a simpler solution, but there is not unfortunately. Any new monetary permutation – whatever it may be – is only going to be a stop-gap, I’m afraid. You’re missing the broad point, from an Earth Management systems perspective. If the labour-for-income system is not removed, then the system mechanics demand infinite growth and consumption just to keep a growing population employed – regardless of our individual intended behaviour or of the functional utility of the labour roles created, or even the quality/utility of the goods produced. A fundamental underlying governing principle of this model is that Nothing produced can maintain a lifespan longer than what can be endured in order to continue cyclical consumption. Our behaviour is dictated by what these system mechanics require in order to keep the system operational. Period. There is no structural incentive to reduce resource use, bio-diversity loss or conserve or be truly technically efficient. These values are inverse to what the model requires in order to function. Artificial wants need to be continually and perpetually imposed on the population just to keep the system going. That’s the sad truth of how it works. Simply changing the permutation of the money/debt supply does not fix the fatal flaw of this inherent requirement for perpetual cyclical consumption to move money between Consumers > Employers > Employees > Consumers…ad infinitum. It’s a continuum. There is no monetary permutation that will resolve this issue. And coupled with that, as Global unemployment is now only rising, as technological mechanization is being applied across all industries as the exponential cost decrease of machine automation accelerates, the system will continue to wear itself down into an ever weakening slump as purchasing power declines, people lose jobs, and social destabilisation results. It is inevitable – and is already happening. The labour for income system is structurally obsolete. Most people out there do not understand these structural mechanics of the market model and what is in fact required to keep it operational. This reality is blinkered out. Again, there is no monetary permutation that will create efficient sustainability on this planet. The only logical, responsible thing to do is to remove the labour for income system and evolve to a new type of economic interaction. Not doing so, is nothing but pure ecocidal insanity. And in fact, at this point it is actually socially irresponsible not to mechanise/automate intentionally on every level we can, as productivity is now inverse to employment in most sectors. Not doing so is the deliberate withholding of social efficiency, just to preserve the insane status quo. And in a world where one billion people are starving, I think that’s extremely despotic. If you disagree with my assertions, then please explain exactly how a new monetary permutation can fix this intrinsic flaw of the market model . I’m all ears.

          Image of the structural mechanics of the market model can be found here:
          https://synergyshift.files.wordpress.com/2014/11/structural-mechanics.jpg

  2. Good article – and supporting comments. The symptoms of the ‘economic growth on a finite planet’ are the likes of climate change, environment destruction, inequality, ….. the list goes on. Many have been warning of our ‘pyramid’ financial system, the latest in Naomi Klein’s book “This Changes Everything”.

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