What if the era of economic growth is over?

Economic-Growth

The justification for capitalism is that no other economic system has been so successful in generating economic growth.   While economic growth does not in itself create mass prosperity, it creates the conditions in which mass prosperity is possible.

I’ve written many posts about the era when most Americans shared in the benefits of economic growth.  But an economist named Raul Ilarji Meijer asks:  What if growth is gone for good?

Every single proposal to deal with our weakened economies, whether they address housing markets, budget deficits, overall federal and personal debt, or pensions systems, is geared towards the same idea: a return to growth. It doesn’t seem to matter how real or likely it is, we all simply accept it as a given: there will be growth. It is as close to a religion as most of us get.

And while it may be true that in finance and politics the arsonists are running the fire station and the lunatics the asylum, we too are arsonists and loonies as long as we have eyes for growth only.  That doesn’t mean we should let Jamie Dimon [CEO of JP Morgan Chase] and his ilk continue what they do with impunity, it means that dealing with them will not solve the bigger issue: our own illusions and expectations.

We allow the decisions for our future to be made by those people who have the present system to thank for their leading positions in our societies, and we should really not expect them to bite the hand that has fed them their positions.

But that does mean that we, and our children, are not being prepared for the future; we’re only being prepared, through media and education systems, for a sequel of the past, or at best the present. That might work if the future were just an extrapolation of the past, but not if it’s substantially different.

If there is less wealth to go around, much less wealth, in the future, what do we do?  How do we, and how do our children, organize our societies, our private lives, and our dealings with other societies?  Whom amongst us is prepared to deal with a situation like that?  Whom amongst our children is today being educated to deal with it?  The answer to either question is never absolute zero, but it certainly does approach it.

[snip]

All we’ve really done in the new millennium is seek ways to hide our debts instead of restructuring them.  You can throw a few thousand people out of their homes, but if you label the by far biggest debtors, the banks, as too big to fail, and hence untouchable, nothing significant is restructured.  But that doesn’t mean it’s going to go away by itself, the by far biggest debt in the history of mankind.  At some point it must hit us in the form of a massive steamroller of dissolving and disappearing credit.  In a world that can’t function without it.

The question is to what degree our economic growth depends on burning up fossil fuels at an ever-faster rate, and what happens when what’s left of those fuels becomes prohibitively expensive.  Can we find a way to increase, or even maintain, our economic well-being by using human labor and other renewable resources more intelligently?

If our current capitalist system has outlived its usefulness, what would a new and better system be like?  If capitalism is the best system for economic growth, what system would be best for a steady-state economy?  It goes without saying that it would not be like the failed Soviet system!

This is why I am interested in learning more about anarchist philosophy.

What do you think?

Click on All The Plans We Make For Our Futures Are Delusions for Ilarji’s full post on The Automatic Earth web log.  Hat tip to naked capitalism.

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2 Responses to “What if the era of economic growth is over?”

  1. Chico Says:

    I think you have a wonderful list of questions, and look forward to your reporting on possible answers. 🙂

    Like

  2. Holden Says:

    It seems to me that eventually debt forgiveness, bankruptcy, or just an all out debt jubilee will have to take place to wipe the slate clean.

    But consider this, how much of this debt (or wealth) is even real. Take for example mass amounts of money being made and lost on the stock market on a continual basis. This is all supposed money being made based on things like future, options, shorts and other financial mechanisms often times using money the investor never had in the first place.

    Is the perceived value even real. Is any of ait even real anymore or just a giant house of smoke and mirrors. I think the subprime mortgage crisis proves it sort of isn’t real.

    The question is when will the general public lose faith in the money which causes a serious collapse that results in a paradigm shift in our economy. I figure we never will 100%. Instead we’ll steadily limp along as standards of living continue to lessen over time.

    Like

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