Wednesday, 23 November 2011

The necessity of growth

Chris Dillow had a thoughtful post recently on why governments, and by extension the rest of us, really want economic growth. This post, indirectly, reminded me of Tim Jackson's 2009 book: Prosperity Without Growth. I didn't like it, even though I think that many of its conclusions are probably sound, the analysis is very weak.

In particular, Jackson sets up a straw-man of a conventional macroeconomics in which GDP growth is necessary, and then shows that this is not ecologically sustainable. However its not clear that conventional macroeconomics does require this: disappointed growth expectations may lead to recessions etc due to frictions, but if the central expectation of economic growth was zero (and debt levels etc were consistent with this expectation) then in what way would our conventional macroeconomics require a positive growth rate? (I link back to Chris Dillow's post for some thoughts on why there may be such a requirement - but you won't find any such thoughtful analysis along these lines from Tim Jackson).

I think that the postulate of a conventional macroeconomics is just a disparaging line of attack from someone who chooses not to engage with economics and wants to portray it as monolithic and wrong. See these links for other complaints along these lines.

It is clear that ultimate limits exist but its in no way clear that this precludes a capitalist system, because it is in no way clear that a capitalist system requires growth.

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