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The European Union as a whole has 36% less income than the United States, and yet beats the US not only on life expectancy but on virtually every other indicator of human welfare.
What’s remarkable about these figures is that they are well below the world average GDP per capita $17,600 PPP. In other words, in theory we could achieve all of our social goals, for every person in the world, with less GDP than we presently have, simply by organising production around human well-being, investing in public goods, and distributing income and opportunity more fairly.
it’s clear that the relationship between GDP and human welfare breaks down after a certain point. But there is also something else interesting about this relationship. Past a certain threshold, more growth actually begins to have a negative impact.
the continued pursuit of growth in high-income nations is exacerbating inequality and political instability,18 and contributing to problems like stress and depression from overwork and lack of sleep, ill health from pollution, diabetes and heart disease, and so on.
This means that the US economy could in theory be scaled down by a staggering 65% from its present size while at the same time improving the lives of ordinary Americans, if income was distributed more fairly and invested in public goods.
the United States, happiness rates peaked in the 1950s, when GDP per capita was only about $15,000 (in today’s dollars). Since then the average real income of Americans has quadrupled, and yet happiness has plateaued and even declined for the past half-century. The same is true of Britain, where happiness has declined since the 1950s despite a tripling of income.
People who live in unequal societies tend to be more frustrated, anxious, insecure and discontent with their lives. They have higher rates of depression and addiction.
The data on this is clear: people who live in highly unequal societies are more likely to shop for luxury brands than people who live in more equal societies.
In 2014, the political scientist Adam Okulicz-Kozaryn conducted a review of existing data on this question. He found something remarkable: countries that have robust welfare systems have the highest levels of human happiness, when controlling for other factors.
When people live in a fair, caring society, where everyone has equal access to social goods, they don’t have to spend their time worrying about how to cover their basic needs day to day – they can enjoy the art of living. And instead of feeling they are in constant competition with their neighbours, they can build bonds of social solidarity.
We humans are evolved for sharing, co-operation and community. We flourish in contexts that enable us to express these values, and we suffer in contexts that stifle them.
People living subsistence lifestyles in rural Costa Rica enjoy longer, healthier lives than people in the richest economies on Earth. North America and Europe may have highways and skyscrapers and shopping malls, huge homes and cars and glitzy institutions – all the markers of ‘development’. And yet none of this gives them a shred of advantage over the fishermen and farmers of Nicoya when it comes to this core measure of human progress.
Over and over again, we see that the excess GDP that characterises the richest nations wins them nothing when it comes to what really matters.
Consumer research shows that because Denmark is more equal than most other high-income countries, people buy fewer clothes – and keep them for longer – than their counterparts elsewhere. And firms spend less money on advertising, because people just aren’t as interested in unnecessary luxury purchases.
Rich people have a much higher ecological footprint than everybody else. The richest 10% of the world’s population are responsible for more than half of the world’s total carbon emissions since 1990. In other words, the global climate crisis is being driven largely by the global rich.
any policy that reduces the incomes of the very rich will have a positive ecological benefit. And because the excess incomes of the rich win them nothing when it comes to welfare, this can be accomplished without any cost to social outcomes. This position is widely shared among researchers who study this issue. The French economist Thomas Piketty, one of the world’s leading experts on inequality, doesn’t mince his words: ‘A drastic reduction in purchasing power of the richest would therefore in itself have a substantial impact on the reduction of emissions at global level.’
Trying to run a household on $30,000 in the United States would be a struggle. You can forget sending your kids to a decent university. But the exact same income in Finland, where people enjoy universal healthcare and education and rent controls, would feel luxurious.
By expanding people’s access to public services and other commons, we can improve the welfare purchasing power of people’s incomes, enabling flourishing lives for all without needing any additional growth. Justice is the antidote to the growth imperative – and key to solving the climate crisis.
Take the United States, for example. Real GDP per capita in the US has doubled since the 1970s. One might assume that such extraordinary growth would have delivered decisive improvements to human lives, but in fact the opposite has happened. The poverty rate today is higher, and real wages are lower, than they were forty years ago.
The poorest 60% of humanity receives only about 5% of total global income.42 Over the course of the past four decades since 1980, their daily incomes have increased by an average of about 3 cents per year.
To put these sums in perspective, consider this: to bring everyone in the world above the income poverty line of $7.40 per day, and to provide universal public healthcare for every person in the global South at a standard equivalent to that in Costa Rica, would require about $10 trillion.45 That’s a significant sum, on the face of it. But notice that it’s only half of the annual income of the richest 1%.
Those who insist that aggregate growth is necessary to improve people’s lives force us into a horrible double-bind. We are made to choose between human welfare or ecological stability – an impossible choice that nobody wants to face. But when we understand how inequality works, suddenly the choice becomes much easier: between living in a more equitable society, on the one hand, and risking ecological catastrophe on the other. Most people would have little difficulty choosing.
we can fund the transition quite easily by directing existing public resources from, say, fossil fuel subsidies (which presently stand at $5.2 trillion, 6.5% of global GDP) and military expenditure ($1.8 trillion) into solar panels, batteries and wind turbines.
it’s important to remember that many of the most important innovations of the modern era, including truly life-changing technologies we use every day, were funded not by growth-oriented firms but rather by public bodies. From plumbing to the internet, vaccines to microchips, even the technologies that make up smartphones – all of these came from publicly funded research.
When Simon Kuznets introduced the GDP metric to the US Congress back in the 1930s, he was careful to warn that it should never be used as a normal measure of economic progress. Focusing on GDP would incentivise too much destruction. ‘The welfare of a nation can scarcely be inferred from a measure of national income,’ Kuznets said. ‘Goals for more growth should specify more growth of what and for what.’
US politician Robert Kennedy conveyed this same message during a speech at the University of Kansas: ‘GDP measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country … it measures everything, in short, except that which makes life worthwhile.’
New Zealand’s Prime Minister Jacinda Ardern captured headlines in 2019 with her promise to abandon GDP growth as an objective in favour of well-being. Nicola Sturgeon, the popular First Minister of Scotland, quickly followed suit, along with the Prime Minister of Iceland Katrín Jakobsdó
Countries like Bhutan, Costa Rica, Ecuador and Bolivia have all taken steps in this direction. And in 2013 the Chinese President Xi Jinping announced that GDP will no longer be used as the key metric of progress in China, reversing longstanding policy.
It’s naïve to imagine that if policymakers stop measuring GDP, capital will automatically cease its constant pursuit of ever-increasing returns, and our economies will become more sustainable. Those who call for a shift towards well-being as the sole solution tend to miss this point. If we want to release our society from the grip of the growth imperative, we have to be smarter than that.
We like to think of capitalism as a system that’s built on rational efficiency, but in reality it is exactly the opposite. Planned obsolescence is a form of intentional inefficiency. The inefficiency is (bizarrely) rational in terms of maximising profits, but from the perspective of human need, and from the perspective of ecology, it is madness: madness in terms of the resources it wastes, and madness in terms of the needless energy it consumes.
Firms like Google and Facebook are worth more than companies like BP and Exxon, purely on the promise of advertising. We think of these companies as innovators, but the majority of their innovations appear to be focused on developing ever more sophisticated tools to get people to buy things.
Research reveals that advertising expenditures have a direct and highly significant impact on material consumption.9 The higher the spend, the higher the consumption. And right now the global advertising spend is rising fast: from $400 billion in 2010, to $560 billion in 2019, making it one of the biggest industries in the world.
The average American today purchases five times as many garments each year as they did in 1980. In the UK, textile purchases surged by 37% in the four years from 2001 to 2005, as ‘fast-fashion’ techniques exploded into the mainstream.
There is another inefficiency that’s built into capitalism. A lot of the stuff we consume is necessary but rarely used. Pieces of equipment like lawnmowers and power tools are used perhaps once a month, for maybe an hour or two at most, and for the rest of the year lie idle.
Ending food waste could in theory cut the scale of the agriculture industry in half, without any loss of access to the food we presently need. That would allow us to cut global emissions by up to 13%, while regenerating up to 2.4 billion hectares of land for wildlife habitat and carbon sequestration.
Nearly 60% of global agricultural land is used for beef – either directly for cattle pasture or indirectly for growing feed.16 It’s one of the most resource-inefficient foods on the planet, in terms of the land and energy it requires per calorie or nutrient.
beef accounts for only 2% of the calories humans consume. In most cases the industry could be radically scaled down without any loss to human welfare.
Switching from beef to non-ruminant meats or plant proteins like beans and pulses could liberate almost 11 million square miles of land – the size of the United States, Canada and China combined.18 This simple shift would allow us to return vast swathes of the planet to forest and wildlife habitat, creating new carbon sinks and cutting net emissions by up to 8 gigatons of carbon dioxide per year, according to the IPCC.
A study of French households found that longer working hours are directly associated with higher consumption of environmentally intensive goods, even when correcting for income.31 By contrast, when people are given time off they tend to gravitate towards lower-impact activities: exercise, volunteering, learning, and socialising with friends and family.
In 1930, the British economist John Maynard Keynes wrote an essay titled ‘Economic Possibilities for Our Grandchildren’. He predicted that by the year 2030 technological innovation and improvements in labour productivity would free people to work only fifteen hours a week. Keynes turned out to be correct about productivity gains, but his prophecy about working hours never came true. Why not? Because gains in labour productivity have been appropriated by capital. Instead of shortening the working week and raising wages, companies have pocketed the extra profits and required employees to keep
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while capitalism has produced the technological capacity to provide for everyone’s needs many times over, and to liberate people from unnecessary labour, it deploys that technology instead to create new ‘needs’ and to endlessly expand the treadmill of production and consumption. The promise of true freedom is perpetually deferred.
In 2017, Steve Easterbrook, the CEO of McDonald’s, earned $21.7 million while the median full-time McDonald’s worker earned $7,017. That’s a ratio of 3,100 to one. In other words, the average McDonald’s employee would have to work 3,100 years – every day from the advent of ancient Greece until now – to earn what Steve Easterbrook received in his annual pay cheque.
Researchers at the University of London have demonstrated that a full range of what they call Universal Basic Services could be publicly funded (with progressive taxation on wealth, land, carbon, etc.) at costs much lower than we presently spend, while guaranteeing everyone access to a decent, dignified life.
Capitalists enclose commons (‘public wealth’) in order to generate growth (‘private riches’), forcing people to work more simply to pay for access to resources they once enjoyed for free.
Ending planned obsolescence, capping resource use, shortening the working week, reducing inequality and expanding public goods – these are all essential steps to reducing energy demand and enabling a faster transition to renewables.
Inequality stimulates a sense of inadequacy. It makes people feel that they need to work longer hours to earn more income to buy unnecessary stuff, just so they can have a bit of dignity.43 In this sense, inequality creates an artificial scarcity of well-being.
The British Prime Minister Boris Johnson once stated that ‘inequality is essential for the spirit of envy’ that keeps capitalism chugging along.
Since the 1980s endless waves of privatisation have been unleashed all over the world, of education, healthcare, transport, libraries, parks, swimming pools, water, housing, even social security. Social goods everywhere are under attack for the sake of growth. The idea is that by making public goods scarce, people will have no choice but to purchase private alternatives. And in order to pay, they will have to work more, producing additional goods and services that must find a market, and thereby creating new pressures for additional consumption elsewhere in the system.
Austerity (which is literally a synonym for scarcity) is a desperate attempt to restart the engines of growth by slashing public investment in social goods and welfare protections – everything from elderly heating allowances to unemployment benefits to public sector wages – chopping away at what remains of the commons so that people deemed too ‘comfortable’ or ‘lazy’ are placed once again under threat of hunger, and forced to increase their productivity if they want to survive.
Over and over again, it becomes clear that scarcity is created, intentionally, for the sake of growth. Just as during the enclosures in the 1500s, scarcity and growth emerge as two sides of the same coin.
