One way that hyping growth undermines progress

The case for promoting economic growth is that it correlates really well with increases in living standards. We don’t say that ‘increases in living standards lead to economic growth.’ Why isn’t this the case? Consider this passage from Murray Rothbard:

Man has found that, through the process of voluntary, mutual exchange, the productivity and hence, the living standards of all participants in exchange may increase enormously. The only “natural” course for man to survive and to attain wealth, therefore, is by using his mind and energy to engage in the production-and-exchange process. (emphasis mine)

To get economic growth, we can either increase our productivity or increase the population. What economists call ‘human capital’ is rooted in energy, which is spent producing and exchanging. To increase our productivity, we need to get more bang for the buck when we spend our energy, which we do through technological innovations and knowledge.

When economics is framed as the allocation of energy, we see that all activity is ‘economic activity.’

It seems to me that to be able to engage in the production-and-exchange process in the first place, you would need some amount of human capital. You would need enough ‘mind and energy’ to see that producing something and exchanging it would be beneficial. Here, living standards precede economic growth.

The argument is:

  1. To get economic growth, you either increase the quality of human capital (productivity) or the quantity (population)
  2. A certain amount of human capital is required to comprehend ‘production-and-exchange’ (must be this tall to ride). Some distant ancestor was the first to ‘produce and exchange’, and the rest is history.
  3. Biology supplied the ‘seed round’ of human capital
  4. But we can observe economics throughout biology…

Saying that economic growth increases living standards is, when taken to the extreme, the same as saying that economics precedes biology. Now the point isn’t necessarily to drill down on which came first, but to illustrate how the economic growth/living standards relationship is the same as the chicken and the egg.

Of course, you still want economic growth either way. As an engine, it produces higher living standards. As a camera, it records increases in the standard of living (so long as measurements are accurate). So we should promote growth while also trying to make sure that it accurately measures what we want, just in case we’re wrong about which came first. But for the most part, we’re putting all of our eggs in the first basket. And in doing so, we saddle growth with a nasty case of scope creep.

Consider the opening of Vaclav Smil’s Growth: From Microorganisms to Megacities :

Growth is an omnipresent protean reality of our lives: a marker of evolution, of an increase in size and capabilities of our bodies as we reach adulthood, of gains in our collective capacities to exploit the Earth’s resources and to organize our societies in order to secure a higher quality of life. Growth has been both an unspoken and an explicit aim of individual and collective striving throughout the evolution of our species and its still short recorded history. Its progress governs the lives of microorganisms as well as galaxies. And growth shapes the capabilities of our extraordinarily large brains as well as the fortunes of our economies. Because of its ubiquity, growth can be studied on levels ranging from subcellular and cellular (to reveal its metabolic and regulatory requirements and processes) to tracing long-term trajectories of complex systems, be they geotectonic upheavals, national or global populations, cities, economies or empires.

When visible gains can be easily measured, growth holds up very well as both an engine and a camera. We know that a lack of resources stunts the growth of a child, who will in turn be less productive, and so on. But where gains have to be teased out, we tend to ignore growth as a camera of progress and double down on making it an engine.

In doing this, we create a vicious cycle. We treat growth only as an engine, and where we don’t observe growth we predict stagnation and conclude that progress has stalled. We devote more resources towards producing growth, find that the results are disappointing, and vow to devote even more resources. The problem is that we tend to allocate resources to areas where gains are the most obvious but where it’s not obvious that those gains are good proxies for progress and development.

If you value growth as both an engine and a camera of progress, then this concept creep should concern you. Progress relies on the hope that the future will be better. If you say that growth equals progress and end up being wrong, either because things don’t get better when there are gains or because things get better in the absence of gains, then next time you say we need growth for things to get better less people will listen.

Which brings me to critiques of Degrowth. Yes, the self-appointed label of degrowth is intentionally antagonistic and some of the prescriptions are not feasible. However, it’s possible to critique the movement without getting riled up (hint: using the emotional word ‘sacrifice’ to describe a trade-off is one sign). It’s possible that the pro-growth crowd is getting baited into inflating what growth can do and run the risk of undermining support for it. They list all of the ways that growth equals progress, all the while oblivious to the fact that they may be setting growth up to disappoint us — to fall short of our expectations of how much it improves our lives.

It seems that if you were pro-growth then it would be smart to undersell growth as a driver of progress, or at least weigh it equally with a bundle of quality of life indicators. Maybe this is the long game of degrowth. They see that growth has become a catch-all term for progress yet in many cases either fails to deliver results or delivers them haphazardly. The more we inflate growth, it’s possible that a larger number of items in the bundle suffer the same fate, undermining our faith in growth as a key component of progress. To prevent this, we can promote true but trivial instances of growth, like income gains or physical maturity, while staying away from broad and easily inflated measures like GDP and basically anything under the umbrella of ‘personal growth’.

This is the gist of a larger point I make in my Refinement book project. One goal is to convince the reader that there are other processes that act as engines and cameras of progress, and if we embrace these processes we can take some of the pressure off of growth. I argue that what J. Storris Hall termed The Great Strangulation was the driving force behind Tyler Cowen’s Great Stagnation concept. Not only did we set up growth to disappoint us, but as it did we doubled down. Our relationship with growth went from a healthy, if stubborn, attachment to full blown state of co-dependency, infatuation, obsession, and stalking.

As I said earlier, growth is valuable regardless if it’s an engine or a camera. Alternatives to growth end up being Pro-Growth, because they make it less likely that growth will over-promise and under-deliver.

Originally published at on February 1, 2022.



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