ECONOMICS IN A MORAL MAZE: What Awaits the World After a 200-Year Cycle of Economic Growth
Photo by Luemen Rutkowski on Unsplash
How many innovations and ideas can humanity come up with? Can their number grow infinitely? What if this growth, aimed at improving human life on Earth, makes it impossible? Will we continue to grow if we make the economy moral? Economist Daniel Susskind attempted to answer these questions in his book «Growth: A Reckoning», published in 2024. Here is a brief overview of the conclusions reached by the economist.
GROWTH — AN ANOMALY, NOT THE NORM?
For many decades, the global economy has grown by 2–5% per year. We have all become accustomed to this dynamic and continue to rely on it. But can such growth continue indefinitely?
In reality, this growth is unsustainable: it has destabilized the global ecosystem by consuming more resources, destroying biodiversity, and leading to dangerous levels of global warming. Is there a way to stop this, or have the processes become irreversible?
There are ways to sustain economic growth differently, such as addressing inequality and other challenges without harming the planet. If this is impossible, should we consider unprecedented measures to limit growth or even shrink the global economy?
The answers to these questions are so complex that it is tough for people to reach a consensus on them. To tackle this, Daniel Susskind suggests first looking at the historical roots of such problems. Susskind points out an unpleasant fact for humanity: economic growth, by historical standards, is a recent phenomenon and is more of an anomaly than a rule.
For most of the 300,000 years of human history, societies were capable of sustaining themselves. They focused on survival and maintaining stability, experiencing a kind of «stasis» rather than achieving overall long-term prosperity.
Everything changed around the early 19th century. It was then that something unprecedented happened in the global economy: a 200-year cycle of rapid economic growth began.
WHY DID GROWTH BECOME THE MAIN GOAL?
Susskind tries to understand why this happened. He provides a detailed overview of hypotheses based on factors such as capital investment, technological progress, a skilled and educated workforce, and cultural and institutional conditions. However, when analyzing economic theories, Susskind admits that scholars still need a clear explanation for the explosive economic growth that began in the 19th century.
The economist highlights the importance of innovations such as medical science and breakthroughs in transportation and manufacturing. European society, being more receptive to science, was culturally better prepared to apply these innovations to the economy. However, even in this case, the perception of economic growth as some «absolute value» was formed in culture only recently from a historical perspective.
It was only after World War II that the West placed economic growth at the top of its political agenda. This shift in worldview had several reasons. First, growth was seen as the key to rebuilding the devastated European economy. Second, it gained critical importance in the competition between the capitalist and socialist systems, becoming a decisive factor in winning the Cold War.
Finally, economic growth contributed to achieving maximum employment. After the shock experienced during the Great Depression of the 1930s, no one wanted to return to its reality. Thus, growth at any cost became the main idea and goal of global politics.
THE GROWTH DILEMMA
Gross Domestic Product (GDP) has come to be viewed as a measure of societal success. For governments, it has turned into an end in itself rather than a means to an end, as many economists have advocated. This has created the so-called growth dilemma, which can be summarized as follows.
On one hand, GDP correlates with almost every indicator of human prosperity. On the other hand, the fossil fuels and digital technologies underpinning this economic growth harm the environment, create inequality, threaten employment, undermine politics, and destroy society.
Public debates on how to resolve this dilemma are contradictory and even factional. Simplified, this debate can be boiled down to two main camps. One camp advocates for green growth, believing that growth can be controlled and sustainable.
From this perspective, the benefits of economic growth have no alternatives. The second camp calls for degrowth, seeing growth as the cause, not the solution, of social and environmental problems. In this view, the only solution is a democratically agreed reduction in growth rates in wealthy countries.
TIME TO REMEMBER MORALITY!
Susskind proposes a compromise he calls «weak deceleration of economic growth». He also urges attention to the factors that enable this growth. For example, it can be achieved by reforming intellectual property laws, expanding research and development, and involving more people in innovation.
Susskind is convinced that society can and must control the direction of innovations to mitigate the negative consequences of economic growth. However, he also points out the difficulties of such control. Regulating economic development, whether decreasing or increasing it, will always affect other non-economic goals.
These include a healthy social climate, fair wealth distribution, community cohesion, and a functioning democracy. When making decisions, society will face social, political, and psychological challenges, necessitating answers to a range of fundamental questions.
The answer will lie in morality — in achieving a democratic moral consensus among the majority of citizens.
THE MORAL MAZE
Applying moral criteria to economics, Susskind believes that economists should exercise «technical prudence and minimalism» when measuring GDP. It is essential to discuss its growth only after accounting for the damage it causes, such as air pollution.
Susskind’s ideas have already sparked economic discussion and criticism from his peers, which has unfolded in the pages of the international scientific journal Nature. One particular point of contention is how to handle numerous industries that significantly contribute to GDP under such a moral approach.
Not only environmental harm but also tobacco, alcohol, gambling, social networks, and any business that benefits from monopolies or inflates prices can be considered immoral. Additionally, many indicators are difficult to measure, and the economic situation varies from country to country.
Critics also accuse Susskind of excessive optimism, as he believes humanity will always come up with something new. Indeed, if the potential for human ideas is infinite, why should there be a limit to economic growth? Unfortunately, Susskind’s critics are not as optimistic about the creative capabilities of people.
NO LONGER «GOAL NUMBER ONE»?
As far back as 2016, Robert Gordon convincingly demonstrated in his book «The Rise and Fall of American Growth» that the generation of ideas contributing to improved quality of life has slowed since the 1970s. This slowdown in economic growth is both expected and natural.
Despite the successes of modern medicine, the pace of discoveries has also slowed over the past few decades. Moreover, not all ideas are equally beneficial. Even in many high-income countries, mortality rates have increased due to drugs, alcohol, fast food, and the sale of weapons.
Critics of Susskind are also discontent with his willingness to sacrifice some growth for morally justified social goals. However, the call for a moral reckoning for growth resonates with even his critics. The question is: what sacrifices is humanity willing to make? How morally and socially acceptable are restrictions on food, transportation, consumption, or taxation?
No matter how economists debate among themselves, it is clear that fundamental discussions about society’s goals cannot ignore morality. This indicates that, for the first time since the end of World War II, there are emerging signs of a new trend – economists are increasingly doubtful that economic growth can still be «goal number one» in the modern world.
Original Study: The global economy’s 200-year growth spurt — and what comes next
