Below are some notes that I made from a talk at the Hay Festival 2010, by Professor Tim Jackson of Surrey University. Jackson has published a book “Prosperity without Growth” based on the report by the Sustainable Development Commission (the SDC was disbanded after the coalition government came into power). It’s interesting to note that for his holiday reading in summer 2011, the Labour party leader Ed Milliband had that book on his list.

For further information on steady-state economic ideas, see CASSE – the Center for the Advancement of the Steady State Economy

Notes from Professor Tim Jackson’s talk, and question and answer session

When Jackson first presented his report from the Sustainable Development Commission “Prosperity Without Growth”, he was put under a lot of pressure by the government. When he had a meeting with government officials, when he talked about changing the economic system to remove the need for growth. One of the officials commented that it was as if he had suggested that we go back to “living in caves”.
Why is there such a visceral fear of the concept of ending growth?

There is a dilemma:

• Growth is unsustainable
• De-growth is unstable

So, an alternative to these two options is to decouple growth from carbon emissions. Has this happened so far? In the period from 1990 to 2010 global carbon emissions grew by 40%. We have not decoupled yet.

How hard would we have to work to decouple emissions in the future, to deliver the necessary emission
cuts? By 2050 there are projected to be around 9 billion people on the planet, increased from the current 7 billion. In 2007 Carbon emissions per unit of output were 770g for the World, and 347g for the UK.

Assuming that per capita income grows by 2% per annum, to cut emissions by the necessary amount, world carbon emissions would have to drop to 6g carbon per unit by 2050. This is a 130 times improvement. Nothing like this has ever happened in the history of industry.

In the 1940s, Joseph Schumpeter coined the term “creative destruction”. This is how the system generates wealth. We have a desire for novelty. New things give us hope for a brighter, better future. Firms generate novelty. People consume the novel goods and sevices. Firms and people are locked together.

This system runs on anxiety. Firms are anxious in case they fall behind the competition, that their capital will flow away and they fail. Adam Smith summed up people’s attitude when he said that what people want is a life without shame. In Smith’s day this consisted of a decent shirt.

In today’s world, a life without shame means the consumption of goods and services sufficient to keep up with others. In aggregate, for the economic system to work people must consume the volume of goods that the produce. This system is locked in. The financial crash arose partly because of the increased indebtedness of the people. The desire for more consumption is implicated in this indebtedness.

Summing up of this system

• We spend money we don’t have
• On things we don’t need
• To make impressions that don’t last
• On people we don’t care about.

One reaction to the knowledge of this systemic problem is to give up. Find a piece of land on high ground, grow some food. This sounds attractive. But when you think about it, you would also need to buy weapons. When a system breaks down it gets nasty. So, it is time for a change in the system. When looked into, every impossibility theory turned out to be wrong.

Does prosperity have to mean rising incomes? No. Amartya Sen said that prosperity consists of the ability to flourish as human beings (within finite limits, hence this must be shared prosperity). Investment, meaning chasing short term returns, must be replaced with ecological investment. Firms must turn to ecological enterprise.

Some people say that these solutions are idealist, because they go against our human nature, which is basically selfish. The truth is that we have chosen a narrow vision of what it is to be human. As consumers we are individualistic, self-serving, novelty seeking. There is abundant evidence from psychology that human nature incorporates many other traits.

So, the appeal to a different side of human nature is not utopian, it is not changing human nature. It is appealing to a vision of what it is to be human.

Questions and Answers

Q. What are the top 3 barriers to acceptance of these ideas?

A.

1. Psychology. In our current society growth symbolises hope for a better world.

2. Vested interests. Those currently in power. For example, it was clear where the power lay in the
Copenhagen negotiations. We need activism. We need to explain that a change in the system is in the interests of the powerful as well.

3. Barriers to change inside ourselves. The desire to look after ourselves and our families first and not worry so much about what goes on in the world.

Q. Isn’t population growth an important aspect of our problems?

A. Over the last 50 years, population growth and income growth have been about equal in their impact on consumption. However, over the last 15 years, income growth has been dominant over population growth. The demographic transition will mean that economic growth in the future will be more important than population growth.

Q. How are governments dealing with peak oil?

A. They are only just beginning to deal with it. The peak of oil production is still arguable. The IEA say it is 20 years away, others say it is sooner. After the peak of oil, there is not a smooth transition. There are negative dynamic feedbacks that tend towards a collapse.

Q. What is the government response to Prosperity without Growth?

A. The initial reaction was heated. However, last year the Treasury invited me back to talk about it. That time the room had standing room only (in a room with 8 chairs!). At least they were prepared to have a conversation about this. Am hopeful that the politics is changing, that political space can be made to talk about this.

The model we have built our future upon is broken. People need to say, give us something else.

Q. My lifestyle is much better than it was when I was a child. I wear better clothes, and have a better standard of living. The Chinese are still relatively poor, of course they want to be as wealthy as us, how do we deal with this?

A.  My child was born with a hole in his heart. 50 years ago, this would not have been detected until it was affecting his lungs. Life expectancy would have been about 20 years. what actually happened was that modern technology was able to detect the hole and fix it with surgery, his life expectancy is now about normal. Have we done good things with our economic growth? Yes of course we have.

The first point is that we are no longer getting the gains that we used to out of it.

The second point is of equity. We cannot deliver our standard of living for 9 billion people. We are borrowing our better quality of life from the poverty of others.

Q. What about investment fund managers?

A. The investment community is interested in these matters. There are some very smart people acting as fund managers. Their reaction to this is that they understand the arguments, but they are constrained in their actions by the system in which they work.