Monday, February 16, 2009

Growth

In last week's New York Times Magazine, the Time's economics writer David Leonhardt laid out one of the more succinct cases for growth that generally and implicitly informs the near-universal agreement that getting the economy back on track means returning to positive GNP growth. Leonhardt writes:

"What will happen once the paddles have been applied and the economy’s heart starts beating again? How should the new American economy be remade? Above all, how fast will it grow?

"Yet the consequences of a country’s growth rate are not abstract at all. Slow growth makes almost all problems worse. Fast growth helps solve them. As Paul Romer, an economist at Stanford University, has said, the choices that determine a country’s growth rate 'dwarf all other economic-policy concerns.'

"Growth is the only way for a government to pay off its debts in a relatively quick and painless fashion, allowing tax revenues to increase without tax rates having to rise. That is essentially what happened in the years after World War II. When the war ended, the federal government’s debt equaled 120 percent of the gross domestic product (more than twice as high as its likely level by the end of next year). The rapid economic growth of the 1950s and ’60s — more than 4 percent a year, compared with 2.5 percent in this decade — quickly whittled that debt away. Over the coming 25 years, if growth could be lifted by just one-tenth of a percentage point a year, the extra tax revenue would completely pay for an $800 billion stimulus package."

What leaps out immediately in this summary of the positive benefits of growth are two connected arguments:

1. High levels of indebtedness are now needed to increase growth;
2. Fast growth will help repay the debt, along with solving many other problems.

The basic circularity implicit in our current moment reveals a deeply troubling truth about our current economic condition: growth is fundamentally generated by deepening and extending bad behaviors (such as indebtedness), the costs of which are to be obscured by economic growth. However, because those costs keep rising - in every sense, not only monetary, but socially, environmentally, generationally - the need for higher economic and social costs to spur greater growth, and greater growth to service and obfuscate the costs, increases exponentially. In recent years the frenetic logic of this basic truth has led us to a condition like a runner on an out-of-control treadmill, running madly to get ahead, at best standing still, at worst about to be thrown off the machine.

We need to think here broadly about the necessity of growth in modern society. Growth, we are told, is the engine of prosperity: economic growth makes possible the "indolency of the body" that was the fundamental goal of modern philosophy. Yet, if prosperity and comfort is the goal, then "growth" is potentially, and often in fact, distinct from that goal: growth becomes its own object, undermining our capacity to enjoy any such "indolency" (as Weber noted long ago about the "Protestant ethic") and feeds rather into a belief that there can never be a condition of satisfaction, but rather always the craving for more (see this video for hilarious confirmation of this basic fact). As Tocqueville came to understand, one of the central conditions of modernity was inquietude - "restlessness."

"Growth" is not necessarily, or even likely, a source of human happiness. Why is it the overarching and one univocally agreed-upon goal of our modern politics?

Economic growth is a relatively new goal for human civilization. According to Joseph Pearce in Small is Still Beautiful (who cites Angus Maddison's book Phases of Capitalist Development),

"during the thousand years between AD 500 and 1500, gross domestic product (GDP) grew on average by only 0.1 percent a year. As such, the volume of economic activity in 1500 was between 2.5 and 3 percent higher as it had been a thousand years earlier. To put this in perspective, the Western economies grew as much in percentage terms in the twenty years between 1950 and 1970 as they had done between the thousand years between 500 and 1500.... Today the growth of world GDP regularly exceeds 3 percent per annum" (p. 11).

What changed?

Economic growth became one of the fundamental imperatives in modern society in part because of a change in philosophic, theological, and, correspondingly, economic orientation. Before the advent of early modern philosophy - broadly speaking, liberal political philosophy combined with early iterations of capitalism, represented above all by the combination of John Locke and Adam Smith - society was conceived as an organism in which the work of individuals was understood consciously to contribute to the good of the broader society. Ancient and Christian thinkers spoke often of society in terms of a body, and its members as parts of a broader whole whose vocation - 'calling' - oriented their work toward the achievement of communitas. Such a sentiment is captured with clarity and force in Paul's First Letter to the Corinthians, 12:12-26:

"For as the body is one, and hath many members, and all the members of the body, being many, are one body; so also is Christ. For in one Spirit were we all baptized into one body, whether Jews or Greeks, whether bond or free; and were all made to drink of one Spirit. For the body is not one member, but many. If the foot shall say, Because I am not the hand, I am not of the body; it is not therefore not of the body. And if the ear shall say, Because I am not the eye, I am not of the body; it is not therefore not of the body. If the whole body were an eye, where were the hearing? If the whole were hearing, where were the smelling? But now hath God set the members each one of them in the body, even as it pleased him. And if they were all one member, where were the body? But now they are many members, but one body. And the eye cannot say to the hand, I have no need of thee: or again the head to the feet, I have no need of you. Nay, much rather, those members of the body which seem to be more feeble are necessary: and those parts of the body, which we think to be less honorable, upon these we bestow more abundant honor; and our uncomely parts have more abundant comeliness; whereas our comely parts have no need: but God tempered the body together, giving more abundant honor to that part which lacked; that there should be no schism in the body; but that the members should have the same care one for another. And whether one member suffereth, all the members suffer with it; or one member is honored, all the members rejoice with it."

Conceived of as a body, members of society were oriented toward understanding their work as partial and contributory toward the good of the whole. Such an understanding was not easy or automatic - we "see through a glass darkly," Paul tells us shortly - but it becomes part of our work to strive to understand our work in this way. We are always and everywhere tempted to think of ourselves as parts of a body that can live independent of the whole - this is a fundamental part of our nature (as the ancients would hold), or a consequence of the Fall. Social solidarity is a hard-won, carefully cultivated achievement, attained through "caritas" - love - against some of our deepest inclinations toward self-centered, prideful belief in our self-sufficiency. Combating and in part overcoming our pride, too, is part of our nature - or a Christ-like achievement - but one that comes with great effort and difficulty.

A body "grows," but organically, slowly, and at some point achieves a fullness that does not permit greater expansion. Like a body, a society that grows excessively is considered diseased, repugnant and horrific to behold. Ancient philosophy and theology stressed the need for small communities as the best settings for achieving the full measure of virtue. Small settings encourage solidarity while discouraging belief in self-sufficiency. In such settings we see more clearly our bonds and obligations, understanding our place in the work of the community and our connection to past and future generations. At the same time, smaller communities make it far less likely that we pursue (or successfully achieve) worldly glory or wealth, those solvents that undermine solidarity and virtue. There is watchfulness against luxury, gluttony, greed, profligacy, and the pursuit of material plenty, and rather an imperative to live modestly, within limits, fully cultivating the virtues of thrift, frugality, and temperance.

Seeking to liberate the individual from the restraints of such settings - restraints that were legally, culturally, and personally enforced - early modern philosophers understood that they faced a profound challenge: how to replace the hard-won achievement of social solidarity? What "glue" would hold together a people who were encouraged to indulge precisely in what had once been considered to be vices: self-interest, concupiscence, luxury, worldliness, the belief in self-sufficiency? Cognizant that society was fragile and even easily destroyed - given the human propensity toward individual self-aggrandizement - early modern philosophers sought a kind of "replacement" for the cultivation of virtue in and through society. It was Locke and Smith, above all, who understood that economic growth could become a replacement for solidarity and virtue.

The liberation of the individual from the restraints of a culture based in virtue and solidarity was necessarily based upon the central goal of the conquest of nature. Unending and unlimited growth required the studied capacity to extract - by force, if necessary (or, to use Francis Bacon's preferred analogy, by torture) - the bounties of a natural world that, without productive human intervention, was to be viewed as both niggardly and simple "waste." This became the core of the modern project, a replacement source of solidarity that especially displaced religion and worship of the divine as a source of meaning.

(We have sought to repeat the unsuccessful experiment of the men of the land of Shinar, who - while they spoke the same language - nevertheless sought to build a tower to heaven in order to "make a name for ourselves lest we be scattered over the face of the entire earth." (Genesis, 11:4). Lacking cohesion attained through self-governance, they sought its replacement by means of a project so ambitious that it sought to scale the walls of heaven itself. In a sense, God's curse of many languages was a just punishment that only confirmed the existing truth of the situation of those meant who built Babel Tower.)

While many defenders of a materialist order defend it on the grounds that it represents a departure from the destructive and faith-based violences of a religious age, we should notice that it is in fact premised upon the unleashing of human destructive powers upon the world and the faith-based belief that the benefits of future economic growth is always within reach for everyone. Perhaps one conclusion to be drawn is that humans are always prone to sin, division, destruction and self-delusion, but one of belief system is better at insisting upon and recalling this truth, while the other believes that this human condition can be transcended through prosperity.

Thus modern philosophy sought to liberate us from any conception of society comparable to that of a "body": revealingly, Adam Smith argued that the achievement of the functional equivalent of solidarity - the market, in which laws of supply and demand replaced conscious considerations of how our work contributed to the good of the whole - was to be conceived in terms of a part, namely an "invisible hand." There was to be no more "whole," only parts which themselves would be unconsciously contributory to a part. In our separation, we were to pursue our individual goods and thereby increase the overall wealth of society.

One of the main aims of early modern philosophy was to liberate people's fullest capacities for personal and individual self-fulfillment, meaning that individuals needed to be liberated from what could otherwise be restraining demands of virtue and solidarity. The social separation that was to be achieved by thinking ourselves primarily and naturally as individuals was necessarily a threat to the incipient order. Growth in productivity would give rise to significant inequalities in wealth and situation. The loss of our self-understanding as parts of a whole meant that individuals who achieved material success were able to consider their achievement as fully their own. By contrast, those who happened to be counted among the "lazy and contentious" (Locke's term) were understood to have failed on through their own fault alone. A society riven by self-congratulation and resentments was a likely outcome of this philosophical, economic and theological transformation.

What was viewed as the replacement for solidarity was growth. A wealthier and productive society could serve as a salve for those who failed to achieve comparable material success as "the industrious and rational," and would give protection to those whose accumulations might otherwise be an object of envy in a more static society comprised of self-understood monadic individuals. Locke is quite clear on this point in his justly famous Book 5 of The Second Treatise, in which he writes that the the day-laborer in England must understand that he is better off than the greatest and wealthiest King of the Indians in the America. As a consequence of living in a dynamic economic order, even the poorest person is wealthier than the most prominent member of a static economic order. Anticipating in theory, if not explicit words, Reagan's adage that "a rising tide raises all boats," the poorest person in a wealth-generating society psychically agrees to have potential resentments replaced by the creature comforts and the prospect for more, whether or not he is personally successful. Growth replaces virtue; material comfort stands in for solidarity.

This has worked well in theory, but it has of late confronted a great material fact: there is no infinite growth within a closed system. Lately we have accumulated growing evidence of the rising costs of our pursuit of limitless growth, whether most evidently in resource depletion, devastation of plant and animal life, growing mountains and oceans of waste, the race to pursue growth through increased borrowing from the future, and even less measurable but no less evident features of our age that doubtlessly result from excessive vice (a.k.a. prosperity), such as rampant irresponsibility and immorality in nearly every facet of life.

If economic growth is most fundamentally the capacity to use and harness energy in more "productive" or "efficient" ways, then the accelerated use of energy must occur in spite of the fact that there is no actual increase in the overall daily input of energy from the sun. Energy utilization must therefore depart from a basis upon annual usage (based in a circular conception of time, in which our lives are structured in accordance with the daily rotation of the sun and the passing of the seasons, and the respective bounties that are possible within a constant and unchanging inflow of solar energy) to a geologic usage (and, hence, a change in conception of time from a circular to a linear mode). In particular, the utilization of fossil fuels beginning in the early years of the 19th-century was the catalyst for an explosion and acceleration of economic growth, largely unbroken for the past 150 years. Those concentrated accumulations of pre-modern sunlight permitted - for a time - the transcendence of limits otherwise imposed by daily and seasonal energy inputs and humankind's efforts to live within those limits that the natural world imposed. It permitted, in turn, greater degrees of personal liberation than might have been imaginable by even Smith and Locke, ever more radical declarations of individual independence from society, from one another, from God.

Yet, growth was the imperative of the age, and had to be attained even if it was built on false foundations of debt impossible to repay. Now we have a deflationary cycle that returns us to a basis in reality - and our response is, we must return to a "healthy" condition of economic growth. Mere months ago we bemoaned the depletion of the earth's bounty and imminent confrontation with energy shortages. Now we seek to return to growth - ignoring, for now, what awaits us in that case. We have no choice: the only basis for our civilization is economic growth. We think of it as an economic condition while neglecting that it is the meaning of life itself for moderns.

Leonhardt rightly notes that "growth" allows us redress of innumerable problems, but doesn't really get to the half of it: maintaining growth has rested on the need to generate ever greater problems that we have relied upon more growth to solve, or at least to obscure the consequences. Above all, our reliance upon economic growth allows us to ignore the deepest challenges of achieving and sustaining social cohesion and personal and social virtues, to unlearn any lessons that previous generations had to learn. As we face a shrinking economy, our incapacity to deal with the innumerable problems that now face us bluntly and profoundly will not in essence be the result of declining growth, but in fact because of conditions that were necessary in the first place to achieve growth - especially the evisceration of capacities for solidarity and virtue. If we are indeed entering a new Depression, it is without the advantages of higher degrees of social solidarity and personal and social virtue that was a matter of inheritance during our last Depression. We may yet learn them - of necessity - but not before some of the worst consequences of our social separation and absence of virtue will manifest themselves baldly in circumstances of want and deprivation.

If we are indeed confronting the limits of a theory that was always doomed to failure - given that there can be no infinite growth (short, that is, to becoming the creatures portrayed in the film "Independence Day" that ravages planet after planet, having made their own uninhabitable) - and I think there is considerable evidence gathering that this is the case - then we face times far more trying than even our current dire economic prognostications would suggest. For, we have simultaneously premised a society based on the abandonment and rejection of virtue - thereby having made it almost impossible to re-learn all that has been forgotten - while undermining the hard habits of solidarity that lie at the heart of pre-modern teachings. Desperate to avoid the consequences of our decision to abandon the hard discipline of freedom attained through self-government, we insist upon our birthright to freedom attained through nature's conquest and a society of social separation and avoidance of virtue. How long we can continue this self-delusive belief is in question, but one can hazard to guess that it will be until the last possible moment - that is to say, until it is too late.

5 comments:

Steve From Virginia said...

Virtue isn't dead, nor is it forgotten ... read this article by Patrick Deneen:

http://patrickdeneen.blogspot.com/2009/02/growth.html

HanZiBoi said...

What if the secret to more employment for people is less employment for machines? What if we were no less committed to “the least among us” than we are passionate about our vaunted economic and political theories? What if we really did put people first, firmly above climbing over others to get ahead ourselves?

If healthy, fulfilling, honorable work for everyone was our top priority, would tens of millions of Americans know – and a hundred million or more fear – that their fellow countrymen have no further need for their services?

What if more Growth for those of us who already wallow in a surfeit of stuff leads us away from true prosperity? What if a tide of material consumption that rises even further would drown humankind beneath depletion and ruin long before it lifted the leaking dinghies of the poorest of the poor? What if Edmund Burke’s warning is true: we are qualified for civil liberty in exact proportion to our disposition to put moral chains upon our own appetites?

Because the choice today – indeed, the choice for all time – remains very simple: to love and serve one another; or abandon ourselves to the pursuit of the lowest prices, the highest rates of return, and the opportunity to die with the most toys.

Robb Davis said...

Naming the "tower of babel" we have created is painful and frightening. It is difficult to envision a way of being that is so at odds with our received understanding of "how the world works". Still, I take heart in the fact that we can identify models of community praxis that exist within our society. Though often scoffed at and written off as "out of touch", groups like the Amish, Hutterites and the Bruderhof community provide models to consider. Though perhaps too patriarchal for some, they display a commitment to being in community in practical ways that has enabled them to stand as a light many times when the surrounding world seemed to be going mad.

One example: in 2006 after the Nickel Mines School shootings in Lancaster County the Amish community in which the school was located reached out the family of the shooter, demonstrated empathy, showed how to use ritual to make way for internal healing and moved ahead despite deep pain. I was in Lancaster at the time and recall people contacting the Amish (and Mennonites) to learn from them about their response. There was a deep hunger in the many requests that came in--a hunger for an alternative narrative about how to live in solidarity, in forgiveness, in community.

Let us draw on this rich resource as we move ahead to redefine our collective future.

Paul Noeldner said...

Very insightful. Put in a shorter form, we abandoned the 'public ethics' of the enlightenment - a civil framework for decisions beyond the scope of individual and group - and put all our bets on 'personal values' - whatever benefits the individual drives all choices. The result was predictable. The antidote is a return to multilateral institutions of public ethics trumping unilateral personal and group values when they conflict. This is a difficult transition for values-based thinkers who assume supporting different public ethics than personal and group values is hypocracy. Nothing could be further from the truth. Mature citizens and leaders love both public ethics and strongly held personal values, and recognize that these must often be different in a secular society with different values to sustain a civil democracy (as opposed to a clubhouse democracy or worse). This choice is at the core of almost every significant societal and environmental issue for the last 500 years, and our ability to differentiate personal values from public ethics determines our ability to implement and support multilateral, sustainable solutions. - Paul Noeldner, http://ethicalguidebook.com

Edwin J. Wyant said...

This is exactly what economist should be teaching to our students in high-school. Re-constructing our society needs to start at a lower level because many of todays adults are never going to give up the struggle to beat the rest of us down. As is made evident (clearly) by the bank (Heads) collecting there "inheritances" from the taxpayer.
Thanks for the thoughtful blog.