THE ECONOMIC system is “not remotely capable” of guaranteeing the world a prosperous, sustainable future, an influential economist has said.
Prof Tim Jackson, author of Prosperity without Growth, said the explosion in public and private debt which preceded the financial crisis was a direct result of the economic model which demands continually expanding consumer markets.
The money supply increased and debt expanded so that consumers would “keep buying stuff” and stop the system from crashing. Net savings in the UK were below zero in 2008.
The central premise of his book, which has gained precedence as a result of the economic collapse, is that the traditional model of prosperity being about economic growth is at odds with the ecological limitations of a finite planet.
Prof Jackson said that even if the world was to enjoy relatively modest growth of 2 per cent per year until 2050, the level of carbon intensity would have to be 130 times less than it is today.
Prof Jackson told the TEDGlobal (Technology, Entertainment, Design) conference in Oxford that our economic system depends on our “appetite for novelty” and that conspicuous consumption derives from “one narrow quadrant of the human soul”.
“We are being persuaded to spend money we don’t have on things we don’t need to create impressions that won’t last on people we don’t care about,” he told the conference on new ideas.
Consumers were now retreating, leading to the “paradox of thrift” – when consumers save, the economy hurts. This was another consequence of the economic system that we currently pursue, he said.
Prof Jackson said prosperity without growth did not mean the overthrow of capitalism or standing in the way of development. It was about an economics fit for purpose, which recognised that there was more to human beings than consuming.
“It is a more credible, more robust, more realistic vision of what it means to be human,” he said.
Prof Jackson said investment was the key to economic growth, but investment in the future needed to be a form of “ecological altruism”.
It would not be about the “relentless, mindless pursuit of consumption growth” but about “protecting and nurturing the ecological aspects on which our future depends”.
None of this would be achievable without redefining a meaningful sense of prosperity that would be less about materialism and dwelling on the growth rate.
Prosperity ought to have social and psychological aims with family, friendship and commitment to participating in the life of that society at its heart, he explained.
This would require investment in gardens, public parks, libraries, museums and places of joy and celebrations.
When questioned afterwards, Prof Jackson said that when he first put forward the idea of prosperity without growth he was accused by a UK treasury spokesman of “wanting us all to live in caves”– but politicians have become more receptive to his ideas since the financial crisis began in 2008.
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