Thomas Homer-Dixon: The Culture of Growth

From a talk by Thomas Homer-Dixon, entitled "The Great Transformation - Climate Change as Cultural Change" (pdf), given June 2009 in Essen, Germany:

So we need to ask: Why are we so deeply committed to economic growth? Here we come to some profound cultural issues. We have internalized four equivalencies in our cultures and our societies, in part because they are backed by a fair amount of evidence.

1. Growth equals solvency. After the Second World War, all the deeply indebted countries that had fought that war grew out of their debt. In the same way, we often use growth to ease the burden of household debt: if our household incomes and wealth rise over time, our debt becomes a smaller proportion of that wealth, and payments on the debt a smaller fraction of income. We maintain the putative solvency of our pension funds by assuming that economic growth will allow us to meet these funds’ obligations in the future. In all kinds of ways, both explicitly and implicitly, we associate growth with maintaining solvency over time.

2. Growth equals freedom. This equivalency probably dates back as far as the Renaissance with the development of modern notions of social, intellectual, and scientific progress. It became even more deeply embedded in Western cultures during the Enlightenment. Today, some conservative economists, such as Benjamin Friedman at Harvard University, cogently argue that the only way we can be truly free is to live within societies that experience continual economic growth.

3. Growth equals happiness. There’s an association in our minds between wealth and happiness: if we get wealthier, we’re happier. Researchers argue about whether this relationship actually holds. The evidence is interesting and complex, but there’s enough of it to support the claim that there is - especially at lower incomes - a strong correlation between wealth and happiness. Beyond a level of around 20.000 dollars per year per capita the relationship likely starts to weaken, as every extra dollar of income produces diminishing returns (that is, as people’s basic needs are satisfied). And then there’s what I believe is the most persuasive and culturally powerful equivalency.

4. Growth equals peace. This is a lesson we learned in the 1930s: an economic collapse leads to the rise of political extremism and horrible outcomes like the Second World War. John Maynard Keynes understood this relationship and gave us tools to maintain perpetual economic growth. How ironic that the man regarded by many people on the left as the icon of liberal economists gave us the tools to destroy the planet’s environment. And today in this time of economic crisis, the world’s central bankers and policy makers are using every single Keynesian tool in their tool kit to sustain consumption. It seems that the only way we can reduce humankinds’ load on the natural environment is to have an economic collapse.

We need an alternative to economic growth that addresses these four real equivalencies. It’s a cultural challenge because these equivalencies are deeply embedded cultural assumptions backed by lots of empirical evidence and historical experience. This cultural change won’t come easily. When we move this century to a steady-state economy – as we will – we will need to have a clear sense for where we’re going. In other words, we will need to know that we can maintain our solvency, happiness, freedom, and peace even though we don´t grow.