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The End Of Economic Growth

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Adam W. Parsons
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Corporate Greed

The ongoing squabble in Congress concerning CEO pay is a like an allegory to help understand the question of corporate greed; members of a powerful lobby group called the Business Round Table [13] are hotly contending proposed measures to rein in CEO compensation. The members of the Round Table, it turned out [14], received 50 percent more than even the average Chief Executive – about nine million dollars each compared to the average CEO annual salary of six million dollars – and still they bitterly fight to keep their salaries growing.

The US government, meanwhile, continues to argue that its tax policies, benefiting the top one percent of the country more than anyone else, are not adding to the widening income gap but are simply “more progressive”[15]. Higher taxes for the rich, they argue, would cause top earners to work less and take fewer risks, thereby stifling the deity of economic growth and threatening the goose that lays the golden eggs, a claim left unsupported by a shred of economic theory or empirical evidence [16]. It doesn’t require any study or national survey to comprehend the reason why corporations are so keen on maintaining the status quo; in the words of the late British economist Sir Dudley Seers, “Those with high incomes… will inevitably try to find ways of maintaining privilege, resorting… to political violence rather than giving it up[17].”

Growth Isn't Working

The pursuit of economic growth as a sole measure of national success is not, despite the dogmas of the World Bank, a foregone conclusion or an inevitable assumption. The mounting evidence is unassailable; as written in the recent New Economics Foundation report entitled Growth Isn’t Working[18], if one billion dollars in overseas aid truly lifted 434,000 people out of extreme poverty, as claimed by a separate World Bank report[19], and if the developed country governments had kept their 1970 pledge to provide 0.7 percent of national income in aid, then the world would be an altogether different place. Rather than setting the Millennium Development Goals and merely aiming to halve poverty below the one-dollar-a-day line by 2015, world leaders could instead have been celebrating its complete eradication. We would now be six years into a programme to eradicate two-dollar-a-day poverty.

The reality, of course, is far from a fairy tale ending; the shortfall of aid from the 1970 target is over $150 billion, and even in the past two years, despite G8 promises made in 2005 to increase aid by 50 billion dollars before the end of the decade, overall aid levels have continued to fall [20]. Global priorities, despite the World Bank’s disingenuous “optimism” and rhetoric, are clearly more aligned with hegemony and primacy than a sincere pledge to eradicate poverty. Patronage-aid, as concluded by the NEF report [21], mainly serves as a power tool for developed country governments and international institutions like the World Bank and IMF, thereby entrenching further “the inequitable structures of the global economic system which underlies the more fundamental problem.”

Hackneyed Metaphors

The ‘trickle-down theorists’, in no short number, argue with the same few hackneyed metaphors to illustrate their obsession with economic growth, like the rising tide that lifts all boats, or that, rather than share the cake more evenly, it is better to bake an even larger one. It is almost universally accepted amongst economists and governments that if more national and global income is created through economic growth, then a trickle-down effect will follow, thereby enabling the poorest members of society to increase their proportion of total income. As the rich man eats more cake, you might say, the poor man scrambles for a few more crumbs. What this complacent premise fails to account for is the billions of people earning less than two dollars a day who are fortunate to own a corrugated shelter, let alone a ‘cake’ or a ‘boat’ to rise in. Poverty eradication is a nice enough idea, the lesson seems to be, so long as it remains consistent with the assumption of the rich getting richer.

To plead for a redistribution of wealth, even for a one percent redistribution of the incomes of the richest 20 percent to the poorest 20 percent, is tantamount to asking for a magic wand so long as the existing macroeconomic polices drive international politics. A belief in the panacea of economic growth could be called the noumena of today’s world leaders, as without it the ideological premise of the Washington Consensus and it’s ‘ten prescriptions’ would crumble before our eyes; liberalisation and privatisation only make sense if market forces are continually unleashed in the blind pursuit of infinite expansion. Another rudimentary metaphor to add to the trickle-down theorists limited repertoire, in this sense, might be the description of a cancerous tumour.

To borrow a quote from a key U.N. paper on the ignominies of poverty reduction [22]; “There are times when the enunciation of the most elementary common sense,” said the late Keynesian economist J.K. Galbraith, “has an aspect of eccentricity, irrationality, even mild insanity.” One might hope that the Neoliberalists disavowal of those who dare to question the profit motive will one day be viewed in a similar vein to the arrest of Galileo when he affirmed that the sun doesn’t orbit the earth. The only certainty is that a paradigm shift in thinking is required if our obsession with outmoded orthodox economics is ever to be overcome, if our “failure to make what is important measurable rather than making what is measurable important”[23] is ever to be understood, and if the truly panacean solution of the principle of sharing is ever to govern economic affairs. The only question then remaining is how far we continue on a path towards disaster before the wake up call is heard.

[1] Chisaki Watanabe. 2007. “World Bank: Economic Growth Cuts Poverty.” (Forbes Magazine) 4 April.

[2] World Bank, 2007. “World Development Indicators.” Washington D.C. (The World Bank) 13 April.

[3] For example: Chakravarthi Raghavan. 2002. “World Bank poverty data, methodology faulted”. Third World Network.

[4] Sanjay G. Reddy & Thomas W. Pogge, 2005. “How Not to Count the Poor” (Colombia University) Version 6.2.3. 29 October.

[5] Chakravarthi Raghavan. 2002. Ibid.

[6] George Monbiot, 2003. “Poor, but pedicured: It appears that those at the bottom are getting richer - but sadly the maths just doesn't add up.” (The Guardian) 6 May.

[7] World Bank, 2007. “World Development Indicators.” Washington D.C. (The World Bank) 13 April.

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Adam W. Parsons is the editor of Share the World's Resources (www.stwr.net), an NGO based in London campaigning for global economic and social justice based upon the principle of sharing. He can be contacted at (more...)
 

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