This blog is written by Professor Anne Power, Head of LSE Housing and Communities, and is the fourth in our “A Question of Growth” series. Over the next few weeks we will be posting a new piece every Tuesday and Thursday. You can read all of the previous blogs in this series here.
Growth takes many forms and we can see evidence of growth all around us. Population growth shows up in migration streams from countries with fast growing populations, devastating environmental pressures and extreme low incomes. This growth challenges governments whilst simultaneously bringing new opportunities for growth.
The explosive growth of technology threatens many existing but it can also help solve some of our most challenging problems, for example by helping save energy through smart grids, advanced battery storage and many other high-tech devices.
Traffic growth is a clear example of hard-to-manage and climate change-inducing growth, turning congestion, air pollution, health hazards, noise impact and even travel itself into serious threats to our survival. Yet without mobility the modern economy of cities simply wouldn’t function.
There are other examples. Almost all plant growth is good as it absorbs carbon dioxide, provides the world with oxygen, top soil, fuel, building materials and is 100% renewable. Growth can help.
At the same time, growth in resources which we need to tackle serious social problems no longer seems likely, partly because of slower economic growth. We often misunderstand the link between economic growth and resources to tackle problems. We need growth in order to raise taxes to fund more benign activity, more long-term investment. In other words, early action to prevent problems depends on growth and is itself a growth generator.
Early action confronts problems before they become chronic or even intractable. Crime prevention instead of prison and recidivism is a good example. But funds are being cut for youth work, adventure playgrounds, holiday programmes, and further education for those left behind at school. All of these early action investments help to reduce crime and anti-social behaviour. So we need the kind of growth that favours a long-term early action view of problem solving – help a young person now and for the next ten years and they are more likely to find work, create a stable family, and fend for themselves. This is a great investment in long-term growth through early action. The Harlem Children’s Zone works because it helps from cradle through college to parenting and onwards.
Many economists, social thinkers, environmentalists, religious leaders and politicians have applied their minds to the growth dilemma, balancing longer-term against shorter-term, prevention or cure. Will Hutton, in his recent book on how to secure growth that is benign, argues for a longer-term, more “stakeholder” approach to business investment and growth to balance our social and environmental needs with economic growth. Beneficial growth cannot be measured in profit and Gross Value Added alone nor are they the best drivers of human progress, though they have their place. We need a more shared and longer-term stake in the future. It is the longer term that motivates investors and businesses to work for a wider goal than maximising personal worth.
Catholic social teaching has become strangely fashionable in debates about business, growth and profit. A radical view of the sharing economy emerged from the blatant injustices of the Industrial Revolution and the exploitation of workers and their families for naked profit. The idea of a just wage, of workers having a stake in the enterprise they work for through unions, , of enterprises doing good while making money, is now deeply embedded in the economic structures of many organisations throughout Europe. Nationwide Building Society, a mutually owned big bank, and John Lewis Partnership, effectively a worker-owned company, are two examples. This idea is not anti-growth but pro-beneficial growth.
Nicholas Stern, one of our most influential environmental economists, argues that:
a) The risk of serious climate change with potentially catastrophic consequences for poorer communities around the globe is so significant that not taking early action is little short of reckless;
b) The economic cost of inaction is vastly greater than the cost of converting our whole economy to sustainable investment in renewable energy and energy saving to replace fossil fuels;
c) Continuing on our current path raises the serious danger of “lock-in” i.e. it’ll become harder and more costly to escape climate change calamaties resulting from urbanisation, land use and energy consumption growth;
d) Only by addressing both poverty and climate change together can we create the beneficial outcome we need if we are to survive. All of this requires strong economic activity – more jobs, more investment, more recycling, more investment – more growth.
Nick Stern concludes that if we take early action starting now, we will create a much more benign social environment, with more shared interests, better social conditions, better health, greener cities and lower costs – more jobs, more resources, and more beneficial growth.
Some argue, like Tim Jackson, that growth is inevitably damaging and that “prosperity is possible without growth”. In practise, Tim recognises that we need rapid growth in benign, non-harming activities in order to shift from a resource-hungry economy to a circular economy. Converting to a circular economy of low resource waste, low consumption requires a very different kind of growth.
For several decades now, economists such as William Rees have proposed the value of a circular economy – that extracts only what can be replaced or recycled, that operates on zero waste, that puts back or regrows what it takes out, and that directs economic activity towards meeting needs rather than fuelling wants. There are signs of this happening in the most unlikely places.
Europe’s former industrial cities have been forced through the collapse and withdrawal of major industries – coal, iron, steel, textiles, machinery, engines, vehicles, weapons – into a new economy. Starting with government-backed reinvestment in their infrastructure – civic buildings, transport, factories and warehouses, canals and rivers, neighbourhoods and communities – they are piecing together a new future. The financial crash of 2008 followed by the Euro crisis suddenly cut public resources and forced them towards a “resource-constrained” and therefore circular economy. Thus we have live experiments all over Europe in a new kind of growth, that links the environment with social conditions – tackling climate change and energy shortages, over-crowding and international migration, austerity, and a new kind of growth.
Nick Stern’s conclusion that tackling poverty and averting climate change are intrinsically linked is close to Pope Francis’ plea for us to “care for our common home”, the planet, its people and its natural environment. We must care for the poor and the planet to avoid collapse. This requires a less greedy, more socially just, more equitable and more environmentally sensitive approach to growth.
Diamond, Jared. Collapse: How societies choose to fail or survive. Viking (Penguin Group): New York.
Hutton, Will. (2015). How Good Can We Be: Ending the mercenary society and building a great country. Little, Brown Book Group: London.
Jackson, Tim. (2011). Prosperity Without Growth: Economics for a finite planet. Routledge: New York.
Pope Leo XIII. (1891). Rerum Novarum Encyclical of Pope Leo XIII on Capital and Labour. http://w2.vatican.va/content/leo-xiii/en/encyclicals/documents/hf_l-xiii_enc_15051891_rerum-novarum.html
Pope Francis. (2015). Encyclical Letter Laudato Si’ of Holy Father Francis on Care For Our Common Home. http://w2.vatican.va/content/francesco/en/encyclicals/documents/papa-francesco_20150524_enciclica-laudato-si.html
Power, Anne. (2016). Cities For a Small Continent: International handbook of city recovery. Policy Press: Bristol.
Rees. William E. ‘Achieving Sustainability: Reform or Transformation?’ in Satterthwaite, David. (ed.) (1999) Sustainable Cities. Earthscan: London.
Stern, Nicholas. (2015). Why Are We Waiting? The logic, urgency and promise of tackling climate change. MIT: Cambridge; London.
Anne Power is Professor of Social Policy at the London School of Economics and chair of the National Communities Resource Centre. She was a member of the government’s Sustainable Development Commission between 2000 and 2009. Her recent book, Cities for a Small Continent is about the need for a new and more sustainable kind of growth.