Our current economic system bases on growth. Triumph of free trade and capitalism over Soviet communism accelerated the search of cheaper production sites in far-away countries.
As environmental standards in industrialised countries tightened, contamination was exported to countries, that started of industrialisation as in the west – using the air, the rivers and lands to dump toxins. Cheap and out of sight – except in the growing megacities of China and India.
Attributing the photographer: By Janak Bhatta – Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=79175450
The idea of growth is built deep into our societies – not only to business. Governments plan and justify their national budgets using GDP – Gross Domestic Product – as one vital tool. It is generally accepted, that in stable societies development is on a decent track, if the annual growth is on 1,5%-2% level. In business growth can be achieved
1) by producing more or
2) by being more efficient – improving productivity.
On national level economic growth comes from 1) making the societies more favourable to economic activity (“state level productivity”) or 2) by having population to grow on yearly basis. Continuous population growth* also would make it easy for societies to take care of their elders, as there would be constant supply of slightly larger younger generations.
*Population growth is a state level equivalent to producing more goods – in this case “goods” is citizens, people.
Owing to innovativeness of a modern man population growth has been exponential – not 1,5% – past 100 years. More about that at “Population growth”. This has created endless possibilities for corporations, but puts many societies under pressure.
This pressure can be seen for example in rising political unrest and mental health issues.
GDP was not intended to be used to measure human wellbeing, but to guide in planning national economics. After less than hundred years of service, there is a call for new metrics, that brings in both global and planetary perspectives – along with the social and mental well-being. In other words “sustainability”.
Post WWII (2nd World War) we have followed paths of continuous growth – of global population and economics. Related processes (use of fossil fuels, excavation, deforestation, free trade) have led to acute planet wide climate crisis and extinction. On the way corporations have overgrown national boarders and ministries of finance.
Few decades long push in economic well-being has brought many improvements internationally, but brought the ecosystem to the brink of collapsing.
To fix this, those who started the globalisation and industrialisation and have had longest time to enjoy the benefits – “the Western World” – must co-operate and be examples in bringing the global (economic) activities to a sustainable level.
Consider:
Idea of constant economic growth and GDP have guided treasuries less than 100 years. It has served well, as have many other tools in the history. To evaluate its usefulness for future generations, let us take concrete example. To simplify, let us use personal wages as a measurement, instead of less tangible GDP.
Germany is a leading European industrial country. According to Wikipedia the average net salary there 2023 was 3 118 € / month. Excluding any benefits, annual salary would be twelve times that, 37 416 €. Net income means, that any costs and taxes has already been deducted from the gross earnings.
Or if calculated from the data of the German Federal Statistical Office for a single working man without children and living in the old “West Germany”, his average 2021 net earnings would have been: 4 275 € / month * 0,61 (removing taxes and other side costs of salary) * 12 months =
2 607,75 € * 12 = 31 293 € / year.
Data in above calculation is taken from German Federal Statistical Office:
Average gross monthly earnings in Germany:
Proportion of net to gross earnings in % in Germany:
Tasks:
Let us use 2021 annual salary figure calculated above: 31 293 €. On state level 2 % yearly growth is considered to be decent in developed economies. Using that expectation – so if this salary would rise 2 % every year, it would double in 35 years, triple in 56 years, quadruple in 70 years and it would tenfold in 117 years.
In 175 years, average wage would be over one million euros per year.
Does this development sound reasonable?
This is one way to evaluate the prevailing idea of continuous growth.
NOTE! GDP is not same as salary. Here the comparison is done just to concretise what 2% growth yearly means in bit longer run.
Think, what 2 % annual increase in earnings would mean for the following aspects:
1. National 2023 “overshot day” for Germany was May, 2nd. So, Germans used their proportional share of Earth’s resources three times (122 / 365 days). What do you think would happen to the date, if average Germen would have 1,5 times more money to spend?
Would it be good, if Germans would use “only” two Earths? Or would it be better if they used four? Consider also long term – regarding economics and ecology.
2. Challenge your mindset. Our current way of life is destructive – for us and the planet – so, we need to change our ways. Look at some solutions. What do you think?
Scroll down the link and click deeper. Think and/or discuss what would some given suggestions mean in practise.
3. Take a look at the National overshot days. How are the “developed” countries positioned in comparison to “Global South”?
What do you think about that? Have we followed the right models – in economics and politics? Where are the environmentally most sustainable societies? What could we learn from that?
4. Check the definition of the Bhutanese GNH – Gross National Happiness. How does that sound?
Could you reconsider your values? What really is important in life and what does it take to get closer to that?
TIPS
Click the bolded heading by the triangle to open the drop-down TIP.
Tips – National overshot day:
For some decades the economists have dictated the decision making and consuming more has been the target. However most value chains are interlinked to ecosystems and as ecosystems are failing, the grounds of economics are crumbling. So, it will be challenging to keep cutting more forests and opening new mines and fishing waters – and still to hold on to 2OC Global warming target.
Links – read more about climate change:
European salaries: https://en.wikipedia.org/wiki/List_of_European_countries_by_average_wage
Origins of Gross domestic product (GDP): https://en.wikipedia.org/wiki/Gross_domestic_product#History
Gross national happiness: https://en.wikipedia.org/wiki/Gross_National_Happiness#Definition
Long article: https://en.wikipedia.org/wiki/Economic_growth
Take action:
National overshot days: https://overshoot.footprintnetwork.org/newsroom/country-overshoot-days/
Actions to change our consumption trends: https://overshoot.footprintnetwork.org/solutions/
United Nations: https://unstats.un.org/sdgs/report/2023/Goal-12/
Stories:
Stories and tasks about economic growth
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Article by Toni Niiranen, 2024