The perceived need to promote a growth economy is one of the deepest held meta-beliefs underpinning industrial civilization. Capital formation and accumulation is the highest goal of the economy, and debt is the vehicle. But whose debt? Well, just about everyone’s.
The vast majority of citizens must take on debt to own a car, a home, and from the mid-twentieth century to participate in the consumer economy, primarily because they are not allowed to share in the wealth they created. One key value of the business elites is to keep the costs of labor down. That is the job of technology. With the advent of AI, as long as enough energy is generated to drive it, most wage and salaried labor can be eliminated, leaving an economy of robust production with very few consumers to but the products. Growth will become death.
A classic mantra of business I have heard most of my life is, “If you want to make money, use other people’s money to do it.” Even the richest corporations borrow billions to finance their new projects—think AI—and more growth. For them, it is all about leveraging what they can borrow to make a larger profit and add to their collection of capital.
Of course, the ideology of capital growth insists that growth is the source of wellbeing for everyone. The “trickle down” theory of achieving widespread prosperity has been promoted by the economic elites for as long as I can remember, and I am pretty old. My college professor teaching Econ.101, touted the ideology that asserted “a rising tide lifts all boats.” But not everyone has a boat. However, the theory has been disproven time and again, as it is routinely sustained by economic propaganda.
That economics professor bragged about having gotten in on some early land investments around the site of a new university campus before it was built, and profited substantially from the growth in value of the property around the new campus and all the economic activity that resulted. But, as they say, you have to have money to make money. You also have to have money to borrow a significant amount and generate the income to pay it back with interest. That leaves out most Americans, in large part because it assumes the existence of equal opportunity when it clearly not there.
None of that, of course, added to the wellbeing of the minimum-wage workers who contributed to that growth. The national minimum wage has remained at $7.25 per hour since 2009. Even then, it was not enough for a worker to subsist on one’s own. Most states have higher standards now, but not much higher. Some of our more progressive cities have raised their own minimum wage to $20- or so.
Yet, based on estimates of the bare minimum costs of subsistence—minimum housing, shelter, food, and transportation—a “living wage” in the U.S. today, according the MIT living wage calculator, is $28.72 per hour for a single adult with no children. I know of no city or other jurisdiction with a minimum wage that high. For a single adult with two children, it is $64.17 per hour. No employer pays you more because you have children. Under present conditions with increasingly extreme inequality, we need not be puzzled by the persistence and growth of homelessness in America.
However, at the same time, the vast majority of new revenue from economic growth is captured by the very richest individuals and corporations in the nation. Wages and salaries remain relatively stagnant, with increasing numbers of individuals earning below subsistence wages, even while holding down two jobs by working most of their waking hours. Barbara Ehrenreich’s book, Nickeled and Dimed: On (Not) Getting Along in America, clearly exposed the struggles of the most poorly paid Americans. The current wave of immigrant deportations demonstrates the economic importance of the lowest paid workers in the land. Watch the price of lettuce go up and the supply go down as the deportations continue.
What is Development Anyway?
Most economists conflate development with growth. But there is so much more to development than growth. In fact, development can even occur without growth. Development has to do with how we organize our lives, not just how big the economy becomes—to very different phenomena. Even if we look just at economic development, we find that it has to do with the structure of the economy and how and to what extent people are allowed to participate in it, not simply capital appreciation. The latter is the standard of the gatekeepers.
Then, of course, we must consider personal development, community development, and even societal development. All of these involve the structure of relations among people, and the advancement—or lack thereof—of the wellbeing of human systems at each of these levels of organization.
A healthy city, for example, is healthy not because of its size or how fast it is growing. It is healthy to the extent that all the elements that it needs to produce wellbeing for all its citizens, are fully developed. Wellbeing may be perceived in different ways by different people, but for all it involves certain basics: safety, shelter, adequate food and water, and the means to obtain each of them, as well as the opportunity to engage in social relations that result in happiness and longevity.
Social Cohesion and Development
The modern industrial-consumer economy operates on fear and desire. We are admonished to be optimistic, even as the system provides only imaginaries of achieving desires that it generates to stimulate us to buy the goods and services it promotes. The propaganda we call advertising stimulates anxiety rooted in the integration of consumerism into our identities and sense of self-worth. .If we do not have the money to buy what we are told we need, then we are admonished to sign up for that credit card with “rewards” to dampen our concern about the high interest rates and the debt it is bound to produce.
It is important to understand that the processes of industrial consumerism inherently interfere with social cohesion. We are told that we are, or should be, strong, beautiful, wealthy, independent consumers, beholden to nobody—other than to the credit card company and our employer, to keep us ‘in the game.’ What about family, neighborhood, community? Well, they are treated as imaginaries, something we might achieve if we just buy enough.
All this, of course, is meant to perpetuate the extreme individualism that feeds the industrial-consumer economy, while dashing any chance for social cohesion within families, communities, or the nation itself, all the better for controlling the consumer in as much isolation from others as is required to avoid social cohesion or solidarity, the enemies of external control by the ‘captains of industry.’
These are the conditions that promote economic growth and capital accumulation by the very few, while disrupting the human solidarity that would bring wellbeing, health, and happiness to the population.
Capital Constraints on Human Wellbeing
Economic growth is almost universally imagined to be the road to prosperity for all. During the decades of peak growth, the mid-twentieth century after World War II, that imaginary seemed validated. New opportunities arose as economic investment expanded. Raw materials and new technology were plentiful by expropriating them from others’ lands, while government paid for technological development and massive infrastructure buildout. And, for a while, it also collected enough taxes on growth to pay for all the public benefits to investors and corporations that grew under those conditions. But not for long…
After the halcyon days of the “Great Acceleration” of the American economy after World War II, things gradually began to unravel. A new term, “polycrisis” emerged to reflect the convergence of diverse economic, ecological, and societal predicaments, each of which seemed to impact the others. Way back in 1972, The Limits to Growth was published by Donella Meadows and her colleagues at MIT, who developed some of the first computer models of Earth System processes in relation to the extraction, use, and waste of natural resources, and the probable impacts they could be expected to have on humanity and the planet. Economists dismissed their findings; they simply conflicted with the ‘received wisdom’ of the dominant economic theories of endless economic growth.
Although economists still hold tightly to their belief in economic growth as the central process of any healthy society, the forecasts of 1972 for the beginning of the twenty-first century are coming true. Neoliberal economics, which has been the ideological cover story for the modern financial elite for many decades, helps keep the story of American individualism and “free” markets the dominant paradigm in society, despite the centralization of power that makes markets anything but free. It facilitates capital formation, keeps wages suppressed, and prevents the American economic system from functioning in the interests of human wellbeing. As with achieving climate-ecological action sufficient to stabilize the Earth System, the American economy will not become humanized or democratized until a very large social movement forces its transformation into a wellbeing-based ecological economy. That means making human development the highest economic priority, replacing elite profits and endless capital accumulation among the ultra-wealthy through economic growth. Reasoning with the likes of Elon Musk, Mark Zuckerberg, Larry Ellison, Bill Gates, Jeff Bezos, and their peers will never produce ‘the good life’ for the rest of us—most billionaires seem obsessed with gaining billions more, ad infinitum, as absurd as that seems to the rest of us. Only a New Great Transformation of society itself will produce a wellbeing economy.
Robert MacNeil Christie, Author 