by Charles Siegel
Until the industrial revolution, 200 years ago, the typical standard of living had changed little throughout history. Today, the United States and the other developed nations have affluent economies, with only a small fraction of their output devoted to subsistence. Environmentalists say that we are reaching the limits of growth due to ecological constraints. But the fact is that we are also reaching the limits of human needs.
Growth is no longer improving the average American's well-being. Since 1960, per capita US Gross Domestic Product and per capita personal consumption more than doubled after correcting for inflation, yet most Americans feel economically worse off today.
The Daly-Cobb Index of Sustainable Economic Welfare (which corrects the Gross National Product by subtracting environmental costs and the extra spending on healthcare, education, commuting and urbanization that is needed to support growth) concluded that economic well-being in the US increased substantially during the 1950s and 1960s, but leveled off at the end of the 1970s and has been in decline since 1980.
Counterproductive Growth
Ivan Illich was among the first to talk about the "counterproductivity" of growth - a state in which additional growth brings diminishing benefits while causing increasing social and environmental costs.
Growth creates social and environmental costs, whether the products produced are useful or not. A powerplant causes the same environmental problems whether the energy powers something useful (street lighting) or something useless (electric toothbrushes).
As people become more prosperous, they move from consuming necessities to consuming conveniences to consuming luxuries. The US reached this final point when Americans began throwing away empty soda bottles and driving to work one-per-car.
During the last 40 years, US spending on healthcare soared - from 5.1 percent of the GDP in 1960 to about 14 percent of the GNP today - but life expectancy virtually stopped increasing. The reason that life expectancy almost stopped, despite unprecedented economic growth, is a perfect example of counterproductivity. With a rising standard of living, affluence became a major health threat, as Americans ate more meat and snack foods, became less active physically, breathed polluted air and drank chemically-tainted water.
During the early 20th century, the move to lower-density housing initially helped control the spread of infectious disease. By the 1960s, Americans moved to even-lower-density suburbs built around the automobile. These suburbs did not prove significantly better at reducing infection, but they did increase the number of automobile accidents, which became a major new cause of injury and death.
Today's most common ailments - heart disease, cancer, emphysema, obesity and hypertension - are the products of economic "progress."
Heart disease, the greatest cause of death in the US, increased by 2000 percent between 1930 and 1960, paralleling the growth of cigarette smoking, lack of exercise (at a time when walking almost disappeared as a form of transportation) and the increased consumption of processed foods and fatty meats.
The second greatest cause of death is cancer. Most scientists now agree that the National Cancer Program's main achievement has been to show that cancer is less a medical problem than an environmental problem, caused by carcinogens in tobacco, air, water and food.
In the 1970s, life expectancy began to increase but not because of a higher standard of living or more medical care. The main cause was a general trend toward physical fitness. Better diets cut blood cholesterol levels by 5 to 10 percent and smoking by middle-aged men dropped 25 percent. During the 1970s, the US also adopted stricter environmental standards.
Consumerism versus Education
By making people passive, the consumer economy undermines the character traits essential to learning. Teachers in suburban schools say that the children treat them as performers and expect them to make the classes interesting enough to hold their attention - the opposite of prior models where teachers demanded satisfactory performance from the students. These children expect to be educated by the schools, just as they are entertained by television and sated by prepared foods.
The consumer economy also works against families, by requiring two full-time wage-earners to maintain a decent standard of living. At the beginning of the 20th century, only the poorest of the poor could not afford to take the time to raise their own children.
In 1950, the typical family was supported by one parent working 40 hours per week. As women entered the work force, we could have had families where both parents worked 20 hours per week and had free time for their children and for productive activities in their homes and communities. Instead, we have families where both parents work full-time and have no time for their children.
The fact that parents are forced to rely on day care facilities is one of the worst possible indictments of economic growth.
Neighborhoods at the Limit
Growth has made our neighborhoods less livable. In the 19th century, cities were built as "walking cities." Because most people got around by foot, cities had to be very dense. People lived in three- to six-story apartment buildings and narrow row houses, often with shopping on the ground level facing narrow streets.
Beginning in the 1870s, horsecars on steel tracks, cable cars, and electric trollies let the middle class move to "streetcar suburbs" - the classic American neighborhoods of free-standing houses with sizable backyards, small front yards and front porches looking out on tree-lined streets. Houses were commonly built on one-tenth acre lots.
The most important form of transportation was still walking. Streetcars were used for commuting to work and for occasional trips to other parts of town, but everyone lived within walking distance of Main Street or of a neighborhood shopping street with stores, doctors' offices, and other services. People nodded to passersby while sitting on their porches and chatted with their neighbors at local shops.
After World War I, middle-class neighborhoods were made up of bungalows on one-sixth acre lots. Neighborhood stores were no longer close enough to walk to easily, so people drove a few blocks to buy their groceries.
After WWII, the federal government actively promoted suburbanization to stimulate economic growth and create jobs, and middle-class suburban neighborhoods were characterized by suburban homes on quarter-acre lots. The city was rebuilt around the freeway. To buy groceries, you had to drive on high-speed arterial streets.
Increased automobile use has only made neighborhoods noisier, more congested, and less safe. The sense of community disappeared as local shopping streets were replaced by anonymous regional shopping centers.
Jobs and the No Growth Economy
The automobile and suburbia have been mainstays of the economy for decades. Post-war planners knew the car-and-cottage complex was wasteful, but they considered this a good thing. In his book Megalopolis: The Urbanized Northeastern Seaboard of the United States Jean Gottmann, one of our most authoritative urban planners, said that we were right to rebuild our cities around the automobile, because "A certain kind of planned waste is healthful for an economy of abundance." He speculated that, in the future, when automobile use reached the saturation point, personal helicopters might become the new mainstay of economic growth.
For many decades, Americans believed that we needed growth purely to create more jobs. Economists call the relationship between growth and unemployment "Okun's law," which states that an extra percentage point of growth causes about a half percentage point drop in unemployment. Under Okun's law, it takes an annual growth rate of about 2.5 percent just to stop unemployment from rising. (Even if per capita income reached $1 million per year, Okun's Law would still prescribe economic growth to avoid unemployment.)
Early in the 20th century, economists argued that growth would end when people had all the goods and services they wanted. When basic needs were met, they reasoned, growth would end because people would choose to shorten their work hours rather than to consume more. In his famous essay, "Economic Possibilities for Our Grandchildren," John Maynard Keynes observed that there had been no great change in the average person's standard of living until sustained economic growth began in modern Europe and America. As technology improved, Keynes predicted, "a point may soon be reached ... when these [economic] needs are satisfied in the sense that we prefer to devote our further energies to non-economic purposes." With scarcity no longer a problem, "man will be faced with his real, his permanent problem - how to occupy the leisure which science and compound interest have won for him."
The Shrinking Work-Week
Early in the 19th century, most people worked 12 hours a day (or more), six days a week. After a long campaign by unions, the traditional six-day week was shortened to five days by the 1930s.
In the 1930s, it was a truism among economists that greater affluence would bring shorter work hours. But during the Depression, economists began looking for ways to promote growth and reduce unemployment. There was a struggle within the Roosevelt Administration over whether to fight unemployment by reducing work hours or promoting growth.
Initially, Roosevelt supported the Black-Connery bill, which reduced the work-week to 30 hours to combat unemployment through work-sharing. Labor supported the bill, but business resisted fiercely. Business leaders argued that the US should fight unemployment by promoting what they called "the new gospel of consumption."
As a compromise, the Roosevelt administration backed the Fair Labor Standards Act, which reduced the work-week to 40 hours. Roosevelt also promised funding for public works projects to stimulate the economy and provide everyone with a 40-hour job.
In post-war America, that compromise became the conventional wisdom. Everyone believed that we should actively promote growth to provide more jobs. The average post-WWII work week leveled off at 40 hours. The long historical trend toward shorter work hours stopped dead from 1945 until the 1960s, during a period of rapid economic growth, rising wages and widespread affluence.
In her book, The Overworked American: The Unexpected Decline of Leisure, Juliet Schor points out that the number of hours the average American works has increased by more than 10 percent since 1969.
Individual Choice of Living Standard
It is reasonable to work enough to produce things that you actually want and then to stop. It is irrational to produce things you do not want just to create more work for yourself. But how can we end growth without creating unemployment? The answer is obvious. We can either consume more products or work fewer hours.
According to market theory, we should let each worker choose how many hours to work. If workers choose shorter hours, it is because they get more satisfaction from free time than they would get from more income. But in today's economy, most good jobs are full-time, and most part-time jobs offer low wages and no benefits.
In the Netherlands, where the government and labor unions actively encourage part-time work with comparable wages and benefits, the proportion of part-time workers has increased from 21 percent in 1983 to 36.5 percent in 1996. As a result, the Netherlands has one of the lowest unemployment rates in Europe.
If the US adopted similar policies, we could eventually have enough good part-time, flexible-hour jobs to let people decide how many hours they wished to work based on how much income they need. Once people could choose their own standard of living, they would begin to think more carefully about spending their money. Before buying a second car, people would consider that they could work a day less every week or two if they did not have to support that car.
If people took productivity gains in the form of fewer work hours rather than in the form of greater goods and services, there could be a no-growth economy without rising unemployment. People could work just enough hours to buy what they wanted.
Political Choice of Living Standard
To end growth, we must make the political decisions to reform healthcare, limit suburban sprawl, halt discrimination against part-time workers and end all forms of mandatory consumption.
The market fails to end growth because people continue to consume more if it has any personal benefit, regardless of social and environmental costs. People use jetskis, snowmobiles, off-road vehicles and small planes for recreation, even though the noise disturbs everyone else's recreation and causes resource depletion, pollution and habitat destruction.
During the past few decades, the environmental movement has fought against motorized recreation, throw-away containers, resorts in the wilderness, road construction, suburban development and other growth issues. This sort of mass political movement never existed in the past. These issues have become important now, because we have reached a point where many things that we consume bring only trivial benefits - smaller than their social and environmental costs.
After Economic Growth
Endless growth does not make sense in human terms, any more than it makes sense in ecological terms. Once growth ends, the economy will not be stagnant and unchanging: There will still be technological change as existing products and methods are continually replaced by new ones.
There is probably a limit to how much work-hours can decline. Some services can never be automated: We will always want people raising children, producing art and literature and making laws.
What will people do with their free time? Rather than working to earn more money to spend on healthcare, education and suburban housing, people will spend more time exercising to improve their health, more time raising their children, more time working in local governments or community groups to improve their neighborhoods.
The world economy has reached the point where we must decide how much is enough. Growth should end when economic needs are satisfied. Like a living thing, the economy should stop growing when it has matured.
If people consume less and work shorter hours as their wages rise, there is clearly less chance of ecological disruption. If people work shorter hours, the labor supply will dwindle, and wages will go up more quickly. However, businesses will try to use advertising and government policy to stimulate global consumer demand in order to maintain their profits. Business won this battle in the US in the 1930s, they will fight it even more fiercely in the next century when the world's future is at stake.
The most likely prediction for the future is that rising resource prices, global warming, and other ecological problems will prevent most of the world from emerging from poverty. There will be pockets of uneasy affluence in the US, Europe and parts of Asia, and there will be a series of crash programs to get the world economy back on track and deal with ecological catastrophes.
The more we do to limit wasteful consumption among the affluent, the better chance we have of creating a future where growth ends - not because of an ecological crisis, but because everyone has enough.
A Preservation Institute Policy Study © 1998 by The Preservation Institute. "The End of Economic Growth" is available for $7.95 from The Preservation Institute, 2140 Shattuck Ave., No. 2122, Berkeley, CA 94704, (510) 848-7827, info@preservenet.com.
Three Possible Futures
The world population is projected to level off during the 21st century at about 11.6 billion. But before the rest of the world tries to imitate US-style consumerism, economic planners should consider whether we would be better off if growth ended at a lower income level.
Scenario 1: Endless Growth
Imagine that the entire world promotes development and stimulates demand to create more jobs, as the US did after WWII.
To absorb extra purchasing power after everyone has cars, governments and industry might promote the production of helicopters. At first, helicopters would be a luxury: People who owned them could live in the country and vacation in the unspoiled wilderness. Once they become more common, helicopters would become a necessity. Businesses would locate in Nevada, knowing they could hire employees who could commute from California by helicopter. Couples could take jobs hundreds of miles apart. New housing, shopping and workplaces would be built to accommodate helicopter commuting. The wildernesses would fill with campers in their recreational helicopters. To avoid accidents, the helicopters would be guided by centralized computer systems, reducing a once-exhilarating form of travel to just another boring commute.
Helicopters would only absorb excess purchasing power for a few decades. Once everyone had them, it would become necessary to invent some new expensive habit so growth could continue, even after per capita Gross World Product (GWP) is $15 million per year.
Meanwhile, there would be a constant race to develop technologies to provide more raw materials and more energy, to control new pollution threats, to restore the environment, and to manage new forms of social breakdown. The faster the growth rate, the more likely that we will lose this race.
Scenario 2: Growth Ends in Consumerism
Imagine that present US-style growth does not end until everyone has the income that more affluent Americans have today. Imagine that everyone owns a house in suburbia and drives at least two family cars (one of them a sport utility vehicle). This would require a GWP of about $600 trillion (in current dollars). At the 1970-1995 growth rate, the world will reach this level in 2103.
The world would be less livable in this scenario than in the last. About 5.2 billion acres would have to be suburbanized (compared with about 700 million acres for streetcar suburbs). In densely populated countries, low-density suburbs would eat up virtually all the open space. Any open space preserved as park land soon would be filled with jetskiers, snowmobilers and off-road vehicles. There would not be many quiet places left in the world.
Scenario 3: Growth Ends in Comfort
Imagine that people decide they have enough at the economic level of the US in 1960, before our economy was geared toward waste. Imagine that individuals chose additional free time rather than more income.
This is not an austere future. When America's per capita GDP reached this level in 1960, the nation was calling itself "the Affluent Society." If people rejected consumerism and shortened their work hours, the same per capita income would be enough to let everyone live well. Children could all get a good education. Everyone could have healthcare. Families could own their own homes. Most families would not need to own cars, though they could rent them for vacations and day trips. People would vacation at local beaches rather than at high-rise resorts on tropical islands.P
To give everyone in the world basic middle-class comfort with the per capita GDP that Americans had in 1960 would require a Gross World Product of about $150 trillion ($13,000 in 1995 dollars times 11.6 billion people).
The US would need a period of negative economic growth to get per capita GDP back down to 1960's level - half what it is today. Most people could begin reducing their work hours and doing less shopping. Transportation policies and zoning laws would be changed to encourage car-free, pedestrian neighborhoods. Negative growth would have to be gradual: It would take many decades to re-invent car-free neighborhoods.
We would still have to solve many technical problems to make the world economy sustainable, but if there were a strong effort to design non-polluting manufacturing processes, to redesign products so they could be fully recycled, and to develop solar power and other renewable sources of energy, we could all afford to live comfortably without resource depletion or serious global warming.
The End of Economic Growth: The Limits of Human Needs