My recent post, Choice of Economic Systems: A Conditional Preference for theMarket—what does that mean?,
attracted
a spirited response from one of my colleagues.
Concerning our economic system, he asks:
How can we have continual growth in our economy when we are dealing with a finite creation? When we have continual growth in the biosphere, it creates serious effects - cancer, habitat destruction, pollution, and so on. Is our economic system not fundamentally wrong when it depends on continual growth?[1]
At
a time when oil prices have dropped by half, Canadian and U.S. energy companies
are drastically cutting future capital spending and reducing their work-force
and governments are facing consequent tax revenue reductions, it may seem
strange to talk about too much growth. Economic decline looms ahead.
Nevertheless, my colleague’s concerns must be taken seriously in a blog which pretends
to look at political-economics as God’s steward.
Reservations about economic growth are not new. They
were put forward, for example, by Bob Goudzwaard who wrote a whole book
entitled Schaduwen van het Groei-Geloof[2]
which can be loosely translated as “the shadow side of the
growth-religion. On the other hand another Christian author, Calvin Beisner,
argues that “Significantly slowing the rate of growth of wealth...serious
downturns in growth are more dangerous to material economy than any other likely
man-made disaster.”[3]
What are we to make of that stark difference of opinion? Can we as
Christians support the prevalent goal of increased economic growth? To answer
that question, both the negative and positive aspects of growth will be
reviewed in this post.
The Negative Aspects of Growth
Economic growth, as a goal in
itself, is to be rejected. That has been well-recognized by Christian
economists. Tiemstra, for example, wrote, “The notion that growth is always a
good thing is based on the materialistic principle that more is always better,
which is clearly unbiblical.”[4]
But, the basic issue of materialistic idolatry is not the only concern.
In the post-war period an unbridled faith in the virtues of growth tended to
form the basis of economic thinking. Goudzwaard, especially, pointed to the
dangerous character of this "growth religion" which saw growth and
progress as the medicine against all ills.[5]
However, the negative aspects of growth are now reasonably
well-recognized--although the willingness to adequately deal with them may at
times be insufficient.
In the secular world, the limits of
growth were brought to the forefront by the work of the Club of Rome with
reports in 1972 and 1974. Though these reports were justly criticized in many
respects and their dire predictions did not come to pass, they did open the
eyes of the world to the problems of population growth, food scarcity,
pollution and the depletion of natural resources. Christian authors also have
signalled the threat of extinction of many animal and plant species, the
congestion and air-pollution that make many areas unliveable and the use of
God's creation as a garbage dump.[6]
Donald Hay, for instance, provides a useful review of the secular critics of
growth and concludes that "from a Christian standpoint...their critiques
do not go far enough"[7]
and, that "economic growth leading to ever-increasing consumption is not
an objective for the economy which a Christian can espouse.”
Nevertheless, we also need to be
careful not to overstate the negative aspects of growth. All the noted negative
aspects of growth are not exclusive to a growing economy. A stable or declining
economy would, unless other action is taken, still be a polluting one! Moreover,
a complete doomsday mentality is also not appropriate for Christians. This was
recognized by Nijkamp when he criticized the first Club of Rome report because
it did not reflect "the conviction that God created the world with an inconceivable
potential, and that mankind has received many gifts and talents from God."[8]
The Cornwall Declaration on Environmental Stewardship also notes:
Many people ... ignore our potential, as bearers of God’s image, to add to the earth’s abundance. The increasing realization of this potential has enabled people blessed with an advanced economy not only to reduce pollution, while producing more of the goods and services responsible for the great improvements in the human condition, but also to alleviate the negative effects of much past pollution.[9]
We certainly do not need to fear an
abrupt halt in economic activity due to the using up of specific resources. In
fact, the market has a beneficial part to play. If prices are allowed to
reflect true scarcity, the market has an amazing capacity to encourage the
utilization of the potential God has provided. The oil industry, for example,
illustrated the impact of higher prices on availability. As prices increased,
it became increasingly profitable to develop the vast deposits of “oil sands”
in Canada’s northern Alberta, the “off-shore” deposits of oil beneath the oceans
and large deposits of “shale oil” in various countries. Remote gas deposits can
now be liquefied and transported by ship when the price is high enough. Rather
than fearing “peak oil”, we are now faced with a surplus! The market has the
ability to reduce the use of scarce resources and encourages the development of
more expensive sources and substitutes–if prices are permitted to rise freely
as resources become scarce.
Positive Aspects of Growth
The necessary recognition of the
negative effects of growth has, moreover, lost some of its earlier
one-sidedness. Economic growth is now, no longer, seen as a source of all
misery but also as a means to deal with other problems such as unemployment and
poverty. A general reassessment of the benefits of the free market process has
no doubt contributed to this more positive emphasis. The essence of a free
market economy is that businesses, seeing a need in the market for certain
goods and services, organize themselves to meet those needs. They acquire the
necessary facilities-- factories, offices, shops, machinery, etc. They employ
workers and provide necessary training and begin the production process. As
needs and wants change, existing businesses adapt or new businesses arise to
meet the new needs. The result of this constant striving to adapt is growth.
Without growth, there would be less adaptation to meet the needs of a changing
society[10].
Therefore, we cannot ignore, as Klay has accused some Christians of doing:
the contradiction between their dislike of growth and their outspoken support for the goals of low unemployment and more equitable income for the poor people of America and the poor nations of the world.[11]
Not only is growth an inevitable result
of a well-functioning free market it can also be justified by our stewardship mandate.
Development of the earth so that man can glorify God, is likely to include
growth. As Nijkamp has noted, if one
condemns all further economic and technical growth, "Then one would
neglect the command to develop the earth and ignore the good things God has put
into creation which one may, unquestionably, enjoy."[12]
Groenewold has noted that the command to develop the earth and its potential
will "surely mean inventing new ways of doing things and more efficient
production."[13]
The Cornwall Declaration, notes that
Human beings are called to be fruitful, to bring forth good things from the earth, to join with God in making provision for our temporal well-being, and to enhance the beauty and fruitfulness of the rest of the earth. Our call to fruitfulness, therefore, is not contrary to but complementary with our call to steward God’s gifts.[14]
In a follow-up essay, the Catholic
leaders involved in drawing up this declaration note,
the good steward does not allow the resources entrusted to him to lie fallow or to fail to produce their proper fruit...Rather, he uses them, develops them, and, to the best of his ability, strives to realize their increase so that he may enjoy his livelihood and provide for the good of his family and his descendants.[15]
Stewardship, then, appears to
contradict a general restraint on growth.
People and nations are materially poor because they are not producing and exchanging valuable surpluses with others. Consequently, virtually the only way that the poor can find their way out of poverty, without displacing others, is to find a niche for their skills and other resources in an expanding domestic and world economy.[18]
The American “founding fathers”,
Novak noted, understood
that an economic system without profit is merely spinning its wheels, providing neither for the unmet needs of the poor nor for progress...A growth rate averaging just 2 percent a year was sustained in Great Britain from 1780 until 1914, and made that tiny nation the world’s leading power. [19]
Moreover, adaptation is an essential
part of a productive market system. Adaptation requires that both financial
resources and people be drawn out of obsolete, less efficient activities into
more necessary, productive ones. "Without economic growth, which increases
the total number of jobs available to individuals and communities, the problems
of dislocation and long-term unemployment increase."[20]
That is not to say that this adaptation will not cause dislocation and
job losses in the interim. Christians must support government efforts to ensure
that harm caused to individuals and families through this process is adequately
alleviated (e.g. through employment insurance).
Nevertheless, we need to recognize
with Beisner that:
Significantly slowing the rate of growth of wealth for many people, can mean drastically slowing long-term improvement of their material well-being. Serious downturns in growth are more dangerous to material economy than any other likely man-made disaster. If we care about our neighbours near and far, present and future, we must care about the future of economic growth.
To improve the lot of the poorest
countries, economic growth is necessary not only in those countries--so that
productive jobs can be created there--but also in the developed countries so
that we are able to import from the less developed ones. We must, therefore, be
fully aware that stopping economic growth will hurt the poor much more than the
rich[21]--both
in the third world and at home. US experience, for example, suggests that
middle class lobbying against pollution has been successful in holding up some
developments of mining, industry and nuclear power, as well as slowing down the
building of new highways. But, as Hay notes, "the costs of development
foregone have often fallen on lower income groups."[22]
Although increasing living standards
should by no means be a goal in itself, the improvement in the lot of mankind
that economic growth has generated over time is not to be ignored. Indoor
plumbing as opposed to outhouses, modern medicine rather than application of
leeches, our varied food choices compared to “turnips, fried onions and dried
bread” and automobiles and aeroplanes instead of horse and buggies are only a
few examples[23]
that none of us would care to give up.
Growth is also important because it
makes it easier to solve other economic and social problems. For example,
growth will help us deal with the looming burden of health and retirement
benefits of an aging population[24].
Growing economic prosperity also more readily permits individuals to spend on
helping the disadvantaged. Moreover, it is much easier to find support for
necessary public spending on such things as environmental cleanup and
assistance to the poor, when the cost is merely a slower growth in
private consumption than when the cost is a cutback in that consumption.
While, in principle, restraints on consumption may be appropriate, everyone
will recognize that it may be very difficult to take a step backwards. Debates
about redistributing a constant total income rather than a growing one tend to
become very contentious[25].
Growth is, thus, likely to generate a more harmonious society--also a Christian
virtue.
A healthy, growing economy is
probably also essential if industry is to do its part in, for example, fighting
environmental pollution. A modern, progressive industry is necessary to come up
with the needed technology. Industries that are doing well can afford and
justify pollution abatement equipment more readily than those that are just
making ends meet. Moreover, installation of such equipment as part of new
investments is usually cheaper and more effective than rebuilding of old plants. Moreover, technology can be used to
get more food and timber out of our land thus leaving more room for wildlife. “The
deliberate halting of growth rates, either in the West or the Third World is
incomprehensible”. Rather, “our most feasible option is to employ wealth and
technology to preserve nature with human tools”[26].
Various studies, in fact, have shown that, up to a point at least, countries
with higher per capita incomes have better environmental results. Panayatou has
recently noted that with higher incomes citizens are more likely to demand
action to improve the environment. Moreover, economic growth makes the
resources available for such action.
Conclusion
Growth as a goal in itself is
to be rejected as materialistic striving. Economic growth is not the solution
to all economic ills. The negative effects of such striving have become
painfully obvious in terms of such things as food scarcity, pollution and
garbage problems, and inadequate concern for the impoverished third world.
Nevertheless, growth, as such, is not wrong and does have significant positive
elements.
Growth can be justified on the basis
of stewardship. It is essential to provide jobs for increasing populations and
reduce unemployment--the best way to assist the poor. Economic growth also
makes it easier to find support for necessary but costly public action. Rather
than arguing about the division of a shrinking pie, the increase in the pie can
be devoted to necessary causes. In fact, a healthy, growing economy is probably
required to enable industry to make a contribution to such things as the
environment.
We may well advocate growth for the sake of
the benefits it brings. However, to avoid misunderstandings it is better to
focus on those benefits--e.g. to strive for full employment through a healthy
industry--rather than to call for growth as such. To explicitly seek to reduce
growth is highly questionable. If a factory that produces necessary goods is
found to be unsafe, the solution is not to run it at a reduced pace. Rather,
the safety deficiencies should be rectified! It is, moreover, unclear how one
would implement a decision to “halt growth” in a representative democracy. It
is easy to call for reduced growth but what instruments would be used to effect
them–increase interest rates? Increase taxes? Prevent business from adding new
equipment, building new factories? All of these are politically unattractive
and would be hurting the good as well as the bad.
Instead, we need to work to reduce the
negative effects of growth--particularly those on the environment. If that
results in reduced growth, we should, to the extent necessary, be prepared to
accept that--and we need to encourage the government to educate all people to
do so. However, we must explicitly count the cost of the potentially serious
side-effects--on the employment picture and on the weak in our society
throughout the world. Government measures will be necessary to foster stable,
long-run sustainable growth and to mitigate the negative effects of that
growth.
In any case, to argue about the
question of whether growth should be intentionally reduced is futile. Let us
not waste our efforts by fulminating against growth as such. Rather, we need to
identify and prioritize the greatest domestic and global challenges and decide
how to deal with them.[28]
Let us humbly seek to create employment opportunities for all to exercise their
cultural mandate. Let us seek to help the poor and weak. Let us, then,
responsibly seek to counter the negative effects of growth and seek to repair
the damage done to creation in the past. The result may well be a lower growth
rate. Growth should be seen only as a means to achieve basic Christian goals.
Fostering long-term sustainable growth, while fighting the negative effects, is
the appropriate Christian response.
Related Posts
[1] I
would note that the economic system as such does not depend on continued
economic growth. Achieving societal goals such as creating sufficient jobs,
necessitate continued economic goals.
[2] B. Goudzwaard, Schaduwen
van het Groei-geloof [Shadows of the growth faith], Kok, Kampen, 1974. See
also K.B. (Benne) Van Popta, “De onbeheerste welvaartsmaatschappij’ [The
uncontrolled affluent soicety], Radix, Vol. 7, 1981, p.50
[3] E. Calvin Beisner, Prospects
for Growth: A Biblical View of Population, Resources and the Future,
Crossway, Westchester, 1990,p. 171.
[4] John P. Tiemstra,
"Christianity and Economics: A Review of the Recent Literature," Christian
Scholars Review, 1993, Vol. XII, 3, p.232
[5] B. Goudzwaard,
op.cit., Economie en Vooruitgangsidee,
[Economics and the idea of progress], Bohn, Haarlem, 1972 and Goudzwaard &
de Lange, 1994.
[6] For example, Nijkamp
op. cit., p.16 and Van Popta, op. cit. p.50
[7] Op. cit., p.292. See
also Nick Groenewold, "The Economy: is Australia in a Mess?" Newsletter, ARCP/CPSA, Dec. 1990 and
Robin Kendrick Klay, Counting the Cost: The Economics of Christian
Stewardship, Eerdmans, Grand Rapids, 1986,
op. cit., Chapter 9.
[8] 1976, p.32. See also Grudem in Chewning, Vol.2 1989, p.38. God's bountiful
providence is also stressed by Beisner, 1990, pp.21,22. Beisner also reviews
the so-called "population problem" showing that various scary growth
projections have been significantly overstated. He concludes (p.64) that
"From a Christian perspective of faith in a God of providence, we can be
confident that human population will never present an insuperable
problem."
[9] Barkey, Ed., op. cit., p. xii. The Cornwall
Declaration, agreed upon in February 2000, was the work of clergy, theologians,
economists, environmental scientists and policy experts who included “many of
the nation’s leading Jewish, Catholic, and Protestant minds.
[10] In theory, the change from producing unwanted goods to
wanted ones can take place in a stable society. Resources can be switched to
alternative uses. However, without growth this process is likely to be slower
and more painful.
[11] Op. cit., p.156.
[13] Dec. 1990, op.cit.,
p.5.
[14] Barkey, op. cit. p.
xiv.
[15] Ibid, p. 32.
[16] Of course, jobs could be created by destroying capital
(machines) and doing things more laboriously by hand but that would be
unstewardly.
[17]A 1992 report (The
Globe & Mail, Dec. 30,1992) noted that "for three decades,
economists generally held to the rule that an annual growth rate of 2.5 to 3
percent for the US economy was sufficient to absorb nearly everyone seeking
jobs..with companies shrinking staffs and reorganizing to become more
competitive, economists think it will require...perhaps more than 3.5 percent
on average during the next two or three years.". In March 2003, Edward
Gardner, a Division Chief in the International Monetary Fund’s Middle East
Eastern Department, estimated that reducing unemployment in 7 middle East
countries (Algeria, Egypt, Iran, Jordan, Pakistan and Tunisia) from an average
of 15% to half that, would require a leap in GDP growth of 2% a year over the
recent trend of 3.7%–while maintaining some improvement in prosperity. See
Eward Gardner, “Wanted More Jobs”, Finance & Development, March
2003, p.20. Some debate exists, however; see, for example, Roland Hoksbergen.
“The morality of economic growth”, The Reformed Journal, Dec. 1982,
p.11.
[18] Op. cit., p.158
[19] Michael Novak, The
Spirit of Democratic Capitalism, American Enterprise Institute, Simon &
Schuster, New York, 1982, p121.
[20] Op. cit., p.159
[21] See Griffiths, 1984,
p.12 and Vickers, 1982.
[22] Op. cit., p.287.
[23] See Stapleford, op.
cit, p. 76.
[24] See Jason Clemens and Brian Lee Crowley, “Solutions for
an Aging society”, National Post, Mar. 2, 2012, p.A13
[25] While redistribution is easier politically during
periods of growth, such redistribution may itself reduce the rate of growth.
[26] D’Souza, op. cit.
pp148-150.
[27] Benjamin Friedman, The Moral Consequences of
Economic Growth, 2005 as reviewed by
John E. Stapleford in Faith & Economics, Spring/Fall 2006, p.144.
[28] See Claar &
Klay, op. cit..p.43ff.,141.
