The global economy is not a hamster

08Feb10

You may have seen this little viral video that is doing the rounds, from the New Economics Foundation*.

There is also a report called Growth Isn’t Possible which goes with it.

I am all for accessible and pithy ways of highlighting issues and opening up debate, and the report makes a couple of important, if not new, points – that GDP is not the be all and end all of a healthy society, and that economies can not outgrow the physical limits of the planet.

But, you know what, economies are really nothing like outsized rodents.

A hamster is born a hamster, and dies a hamster, it comes ready supplied with a hamster-master plan in the form of hamster DNA driving each of its cells to do their own particular job, selflessly, in pursuit of the greater hamster good. Hamsters don’t grow beyond a certain size because they are not designed to. Their little hearts or their little feet would give out before they got to King Kong proportions. Hamsters have a certain amount of smarts – but its fairly limited. Some are better than others at escaping from cages or running assault courses, but you don’t see hamsters (or hamster cells) inventing the internet.

If anything economies are more like a colonies of MRSA bacteria, rapidly evolving in response to their environment. Economies change and innovate and evolve, hamsters don’t. Eric Beinhocker, in the excellent Origin of Wealth, argues that evolution is not just a powerful metaphor for the way economies work, it really is how economies work – through the evolutionary processes of variation, selection, and amplification, acting on designs for technologies, social institutions, and business models.

So is continued growth within environmental limits possible?  The key question is can our capacity to innovate outrun the closing in of environmental limits – not just of the carbon cycle, but of other natural ecosystems that we depend on and that are in danger of destruction. In terms of climate change, logically, the Kaya identity tells us that growth can continue only if there are dramatic changes in the energy and carbon intensity of the global economy. The precedent is that carbon efficiency  (the amount of value produced for every tonne of CO2 generated) is improving , but slowly (and it is getting slower), so that efficiency gains have been offset by growth.

The NEF report therefore concludes that “At a time where never before has there been so much financial and intellectual capital directed towards innovation to improve the carbon and energy intensity of the economic system, this slowdown of improvements implies that we may be reaching the practical limits of efficiency.”

Or maybe, just maybe, we are not investing enough?

Of course relying on historical precedents and received wisdom about what is possible is a sure way to be proved wrong (…they all laughed at Christopher Columbus, as the song goes…). But I have more confidence that the world’s businesses and governments could innovate and compete their way out of this, than that they could agree to put a stop to growth, and then peacefully and equitably get on with the business of redistributing the stock of wealth. Look at Copenhagen for an example of how that’s not going to happen.

Many governments are already working on plans to enable low carbon growth. I can’t think of any precedent for a progressive government actively working to stop growth. What would be the policies? Reducing investment in education, particularly science and maths? Taxing R&D? A ban on new building? Increasing trade barriers? Stopping building much needed infrastucture for clean water, sewage and power supplies in countries where access to these essentials is limited? These seem precisely the wrong ways to go about ramping up investment and capacity for a new industrial revolution.

The NEF report describes a no-growth economy as a happy future of cooperation, localisation, community, make-do-and-mend and fulfilling manual labour. I think it would be a lot uglier. A no-growth economy is a zero-sum game, where one person’s gain is another’s loss. It  implies that the big-man, not the innovator wins in any contest over resources. It implies an acceptance of the view that we’ve reached the limits of human thinking on how to do things better and smarter. It ensures that any upstart with ideas therefore directs their energies towards working local power politics or gaming the system. It is not a vision around which to mobilise the necessary political support, forward thinking investment and technological innovation that we need to solve climate change.

[* Declaration – I started my career working at the New Economics Foundation]



One Response to “The global economy is not a hamster”

  1. 1 Maya

    There are a couple of good critiques of the ‘stop growth’ argument from insiders in the UK progressive policy wonk scene Duncan Green at Oxfam, and Mathew Lockwood from IPPR.

    Makes me wonder whether we are going to see a more US style of gloves-off debate on the best way forward to meet the planet and people challenge, amongst European NGOs.

    Here is a comment I left at political climate, in response to Mathew Lockwood’s piece.

    ____________________________

    I agree on your critique of the growth isn’t possible analysis. It is conservative and parochial, and is fundamentally looking in the wrong place.

    The reality is that it isn’t future growth that is unsustainable, but the current situation – both in terms heavy environmental footprint of the prosperous, and the continued exclusion of so many from prosperity.

    Calling ‘freeze’ at this point is makes no sense, either politically or economically, when what we need is a revolution in carbon productivity.

    I can’t imagine the government that could stay in power on a policy platform of economic stagnation, austerity, unemployment and massively increased aid that this would entail (ok, I can imagine it – its not going to be a democracy).

    And as you say, viewing growth only as the rising gradient of a single graph (the ever expanding hamster) ignores the whole question of what drives growth – knowledge, innovation and the creative destruction of evolution in the economy. What we need now, more than ever is to accelerate these processes, to dramatically increase the productivity of our use of finite biosphere resources and expand prosperity, while keeping within environmental limits.

    Given the obvious flaws in the GIP argument as you’ve pointed out, I half suspect it is a campaigning tactic, rather than a serious proposal, but I think it is a nightmare of a tactic.

    It is mistake and a trap to bracket GIP as representing the consensus of ‘environmental thinking’. This, I think, is real danger – prospects for securing broad support for the ‘green’ argument that “current patterns of development are unsustainable, we need to switch to clean technologies, and this is an economic opportunity” are undermined by the green argument that “we need to switch to clean technologies, and put a stop to growth”. It is only a small step from there to “policies and regulations to drive transition to clean technologies and renewable energy are going to hurt the economy”…. and you know how that story will end.

    Not really wanting to get into a ‘People’s Front of Judea’ situation, but I wonder whether it is not time for a more clear distinction in the ‘green and progressive movement’ between the localisers and degrowthers, and those who can imagine a bright green future.

    Is that what you are seeing?


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