“Humankind is in a box. For the 2.7 billion people now living on less than $2 a day, economic growth is essential to satisfying the most basic requirements of human dignity. And in much wealthier societies, people need growth to pay off their debts, support liberty, and maintain civil peace. To produce and sustain this growth, they must expend vast amounts of energy. Yet our best energy source — fossil fuel — is the main thing contributing to climate change, and climate change, if unchecked, will halt growth.
We can’t live with growth, and we can’t live without it. This contradiction is humankind’s biggest challenge this century, but as long as conventional wisdom holds that growth can continue forever, it’s a challenge we can’t possibly address”.
The global economy is entering into a period of recession, deleveraging and degrowth - in the short-term fuelled by shocks introduced to the system by necessary responses to a pandemic - but in the longer-term influenced by a combination of factors including resource depletion, energy availability, the debt burden and the effects of environmental degradation including climate change. Recessions cause hardship for many with a reduction in material wealth and difficulties meeting our most basic needs such as food and shelter. However, there are many upsides to a forced simplification in our way of living and limitations to our material consumption.
The Problem with Growth
There is a legend about a King who, pleased with the inventor of chess, offers him any reward of his choosing. The inventor asked that a single grain of rice be placed on the first square of the chessboard, two on the second, four on the third, doubling each time on all squares on the board. In this legend the king is not able to pay the inventor - following those rules, by the time he had got to square 64, there would have been over 18 quintillion grains of rice on the board - more than existed in his kingdom (or the world). This legend demonstrates that humans aren’t wired to understand the effect of exponential growth and also why such growth cannot be perpetually sustained.
Continuous exponential economic expansion is both central to modern economic thinking and a mathematical impossibility. The planning of modern economies aims for a minimum of around 3% economic growth per year. Any system that experiences a percentage increase year-on-year is on an exponential growth curve. You can estimate the length of time a system takes to double in size under exponential growth by dividing 70 by the percentage growth (e.g. if house prices are rising by 5% a year it will take 14 years for house prices to double).
Economies that are growing exponentially need a corresponding exponential increase in the consumption and production of things (i.e. cars produced, concrete poured, oil consumed, dentist visits, movies watched etc). On a finite planet, it is not hard to see why the continuous doubling of resource use over time will soon run up against the mathematical and physical limits to that growth.
For most of history, most of the Earth's population owned very little; the clothes they wore, a few cooking and cleaning utensils and, if lucky, a few farming tools. The ‘economy’ did not grow from year to year, and by and large people lived with little in the way of material goods. There were surges and pulses of expansion and contraction in societies and their economies that occurred, but these were part of natural cycles related to food production and availability.
A shift from this relatively steady-state of societies and economies began in north-western Europe from the early 18th century, when economies began a period of continuous expansion with wages rising. Many people who until now had no coinage beyond what they needed to survive, could buy items that would have previously been luxuries: a mirror, an extra pair of pants or a thicker blanket. Their spending created a virtuous economic cycle where the more they spent, the more business grew, the more wages rose.
In 1705 Bernand Mandeville published the book ‘The Fable of The Bees: or Private Vices, Publick Benefits’ which noted that what made countries rich and therefore safe, honest, generous, spirited and strong was an activity that until then had been considered unelevated and undignified: shopping for pleasure. The only way to generate wealth, argued Mandeville, was to ensure high demand for absurd and unnecessary consumer items. Mandeville's work influenced almost all English economists and political thinkers that followed and that influence continues today.
Consumer spending is the backbone of most developed economies and whether it is government policy or consumer marketing tactics we are encouraged to consume as much as we can. Marketing campaigns often promote a sense of identity in relation to products, with social standing in a society tied to the level and quality of goods an individual can purchase. Emulation is an important part of 21st-century consumerism as people seek to emulate those above them in social standing. The poor emulate the wealthy while the wealthy emulate the famous. Celebrity endorsement of products is a clear example of this emulation is used in marketing.
However, a rise in material wealth and consumerism doesn’t correlate with a rise in happiness.2 Conversely, individualistic modern industrial societies, which are the most materially rich in human history, have much lower reported levels of happiness than societies organised in more traditional ways where family and community relationships are the basis for social structures. The United Nations report ‘Defining a New Economic Paradigm: The Report of the High-Level Meeting on Wellbeing and Happiness’ explores the link between sustainability and happiness and finds that happiness is associated with living a life in harmony with the natural world, in connection with other people and communities, and in touch with our culture and spiritual heritage.
“And yet our modern world, and particularly its economic system, promotes precisely the reverse — a profound sense of alienation from the natural world and from each other. Cherishing self-interest and material gain, we destroy nature, degrade our natural and cultural heritage, disrespect indigenous knowledge, overwork, get stressed out, and no longer have time to enjoy each other’s company, let alone to contemplate and meditate on life’s deeper meaning. Myriad scholarly studies now show that massive gains in GDP and income have not made us happier.
On the contrary, respected economists have demonstrated empirically that deep social networks are a far better predictor of satisfaction and wellbeing than income and material gain.” 2
This report also states that a sustainable and desirable path for the world will require:
- a fundamental change of world view to one which recognises that we live on a finite planet;
- replacing the present goals of limitless growth and consumption with goals of material sufficiency, equitable distribution, and sustainable wellbeing and human happiness;
- a redesign of the world economy that preserves natural systems essential to life and wellbeing, and balances natural, social, human, and built assets;
- reclaiming the broad definition and goals of economics as the science, management, and wellbeing of our global household.
If we accept that the way we have organised our economy is both unsustainable in the long-term, and not conducive to our overall happiness, then as individuals we should look at ways we can minimise needless overconsumption, make connections with people, and form communities with shared cultural and spiritual values not centred around recreational shopping and the endless consumption of fripperies.
A movement which challenges the importance of consumerism to our happiness is ‘Simple Living’ or ‘Minimalism’ where people voluntarily aim to simplify their possessions to a minimum and focus on being satisfied with what they have rather than want. There is an understanding that the things we possess don’t define who we are as individuals, and that the path to happiness resides in mindfulness, living in the present moment and the importance of connections with friends and family. This movement is heavily influenced by Buddhist thinking, a fundamental tenet of which is that everything is impermanent and always changing. The craving to attain things and the attachment to possessions owned causes suffering because these things will one day be lost, stolen, broken or outdated. The more things we possess the more things we need to maintain, insure, protect and spend time, energy and resources on - eventually our possessions ‘own’ us.
Instead of unquestioned faith in limitless growth based on consumption, we can use measures of progress other than Gross National Product (GNP), which by itself does not promote happiness. By contrast, Gross National Happiness (GNH), a concept introduced by the Bhutan Government and whose principles were later endorsed by the United Nations, values collective happiness as the goal of governance and emphasizes harmony with nature and traditional values.
The foundations of Gross National Happiness are:
- sustainable and equitable socio-economic development;
- environmental conservation
- preservation and promotion of culture
- good governance
The nine domains of happiness within GNR are psychological well-being, health, time use, education, cultural diversity and resilience, good governance, community vitality, ecological diversity and resilience, and living standards.
Whether it is a voluntary choice to simplify lifestyle and habits, or a change in circumstances brought on by the vicissitudes of the global economic system, restricting the number of choices available isn’t always a bad thing. The physical distancing restrictions required to stem the Covid-19 pandemic limited people’s choices to recreate which in turn saw an increase in families spending quality time outside together. Not having to evaluate and choose between 15 seemingly identical breakfast cereal products for cost, sugar content, environmental record or other ethical consideration, or about how that cereal defines us as an individual, is arguably a good thing.
What the Covid-19 pandemic has shown us is that Aucklanders are willing to accept restrictions and limitations placed on them by their government, if it is in their collective interests, and if they trust government institutions. An Ipsos poll conducted in 14 countries in 2020 found that 71% of adults globally agree that, in the long term, climate change is as serious a crisis as Covid-19. The survey shows widespread support for government actions to prioritise climate change in the economic recovery after Covid-19 with 65% globally agreeing that this is important.3 If Aucklanders are willing to accept limitations to their lifestyles and consumption habits in order to do something meaningful as a response to climate change, there is an opportunity to change our economic paradigm so that it is less consumeristic, favours material sufficiency, equitable distribution, and sustainable wellbeing and human happiness.
Approached with the right mindset, the limitations and restrictions that effective climate change action will require (as well as those imposed by resource depletion and economic disruption) could result in lasting positive change for both individuals and societies, and might provide some upsides to degrowth. When our lives are disrupted by crisis, and when we are forced to change our regular patterns and routines, there is an opportunity to reframe what is actually important to us, and what is likely to bring long-term happiness in our lives. If happiness is found more in experiences than in material possessions, what is more likely to bring happiness - more fripperies, or more time spent nurturing relationships with friends, family, and others in your community?