Beyond Economic Growth

The philosophy of continuous growth in an economy began in the 17th century, but economists and social philosophers are questioning its ongoing value. Perpetual economic growth not only defi es the fi nite laws of life, it also encourages overconsumption at the expense of things of intrinsic value such as the environment. “Degrowth” and “steady-state economics” are approaches aimed at taking us beyond the inherent limitations of chasing ongoing growth.

- Martin Oliver

In the 2016 Australian federal election, the Coalition campaigned under the mantra of “Jobs and Growth”, one that may have played a role in their victory. This tendency to elevate the economy above other considerations is a modern phenomenon common to many industrialised countries.

While growth is generally considered to be an intrinsic element of any economy, it’s the result of choices that were made in the late 17th century when the Bank of England was being established. The goals behind organising the financial system in this fashion were to foster competition and encourage development. It was only in the 1930s that a system was drawn up for measuring economic performance: this was the birth of Gross Domestic Product (GDP) that is ubiquitous today.

A desirable level of growth is considered to be positioned at around 2–3 per cent annually, one that is sufficient for large companies to make profits. If it rises too high, it risks “overheating” the economy and later sending it backwards into a recession. Below this level is considered to be weak and unhealthy. If its performance drops too far, the resulting lowering of the national currency value could trigger instability and even panic if investors scramble to remove assets from the country.

Despite enjoying the support of the large body of orthodox economists, growth has come in for some criticisms. While a continuous 3 per cent annual growth rate is considered healthy, it implies an economy that doubles in size every 24 years. This exponential growth is an uneasy fit on a finite planet. Interestingly, the words “economy” and “ecology” both derive from the Greek word for household, oikos, proving an insight into how both have a common interest.

Economic growth & population growth — the hidden link