Our recovery from this crisis must put people and environment ahead of economic growth
Two workers in face masks pass the Bank of England in the City of London. Caroline Lucas and Clive Lewis call for a 'post-growth' economy
As we rebuild after the pandemic, it's time to embrace a post-growth economy and build a fairer, healthier, happier and greener society, write Green MP Caroline Lucas and Labour MP Clive Lewis
With new figures from the Office for National Statistics this week expected to show the unprecedented impact of coronavirus on UK GDP, the government will undoubtedly come under renewed pressure to accelerate the easing of lockdown measures in order to get economic growth going again.
Calls to drop emergency public health measures will be driven by the idea that their impact on GDP will do even more harm than the virus itself. This is a dangerous argument – lockdown measures are necessary to save lives, and there is no simple relationship between economic growth and mortality rates. Rather, whether or not mortality will decrease or increase depends on what measures the government takes to protect the most vulnerable.
Moreover, as a new report from Positive Money explains, thinking of policy-making in terms of GDP growth in general is deeply misguided, and does no good for people nor planet.
Despite what proponents of GDP argue, a proper look at the evidence shows that, after a certain level, its growth does not enhance life satisfaction and eradicate poverty. Instead, judging the economy in terms of GDP distracts from the structural changes governments need to make to reduce poverty and inequality directly.
It also keeps us locked into an unhealthy economic system which will lead us to irreversible climate collapse. Global GDP is still tightly linked with global carbon emissions and the exploitation of the natural world. There is no example anywhere in the world of absolute decoupling of emissions from growth at the scale and speed necessary that can alter this. As should be obvious by now, it is not possible to have infinite growth on a finite planet.
So why are we in love with growth? According to the report, ‘it’s the economy, stupid’ – or more specifically, deep-seated structures within capitalism. It argues that, in a laissez-faire market economy, the absence of growth generally means crises, which lead to unemployment and deepening inequality. So if we are to escape the growth trap driving us towards an early grave we need to overcome the structures which force us to rely on it.
As the report sets out, a good place to start is the money and banking system at the heart of our financialised economy, which requires growth in order to pay off ever-expanding debts. Positive Money has put forward some bold proposals to ensure the transition to a post-growth economy increases wellbeing and reduces inequality. These include ideas that are gaining traction more widely, such as a universal basic income (UBI), monetary financing, wealth taxes and modern ‘debt jubilees’.
A UBI would allow people’s basic needs to be provided for without relying on the market and an ever-expanding economy to provide employment. The report suggests that such a policy could be carried out most effectively through a central bank digital currency – a digital version of cash – and funded with monetary financing.
According to their proposals, monetary financing would involve using the Bank of England’s power to create new money to fund public spending, reducing the government’s reliance on borrowing from private creditors. The Bank of England has already been offering to fund public spending during the Covid crisis, but it could be institutionalised and used permanently to reduce the debt burden. Deep reform of our tax system is also necessary to minimise excessive concentrations of power, with proper taxation of high pay, wealth, financial transactions and land.
Modern debt jubilees refer to the practices of the ancient Middle East, where debts were periodically cancelled because of the ruinous social impact of high indebtedness. A modern debt jubilee could see household debts being partially or fully written off, reducing the need to grow the economy to pay off an ever-expanding debt overhead.
Talk of going ‘beyond growth’ may sound utopian, but it is in fact a fiercely realist perspective. The impact of the Covid pandemic, which follows a decade of anaemic growth, means that we look to be heading towards a post-growth economy whether we like it or not.
We now have a choice of whether we attempt to resist a world without growth by pumping out more emissions and locking ourselves into even deeper crises down the line, or whether we embrace it as an opportunity to build a fairer, healthier, happier and greener society.
We can’t afford to go back to more of the same. Our recovery from this crisis must put lives, wellbeing, and our environment ahead of economic growth.
Caroline Lucas is the Green Party MP for Brighton Pavillion. Clive Lewis is the Labour MP for Norwich South. They will both be speaking at the launch of Positive Money’s new report, ‘The Tragedy of Growth’, which will be taking place online from 12-2.30pm on Monday 11 May. Register here.