Introduction:
Exactly forty years ago, in 1972, the Club of Rome published a Report titled The Limits to Growth [i] . The book became an almost immediate world-wide best-seller. Despite (or perhaps partly because of) the heavy criticism it attracted from establishment economists, Limits to Growth turned out to be one of the most influential books published in the last half of the 20th Century.
Its central message: rapid growth in both population and industrialization have resulted in dramatically increased world production and consumption which, in turn, leads inevitably to unmanageable problems of resource depletion and environmental pollution. Technology can ameliorate the problem somewhat and might slow the onset of the coming crisis, but technology can't save us. The take-away message: There are too many of us and we produce too much and consume too much. Ultimately, given the finite nature of our planet, the prospect of unlimited economic growth is a delusion. The Report concludes that if we continue to pursue unlimited growth in a world of finite resources -- including, pre-eminently, a finite carrying capacity for waste - then we will face environmental collapse, and that collapse is likely to come sooner rather than later.
In 1993 the authors published a 20 year update, Beyond the Limits [ii] and then, in 2004 they published Limits to Growth: The 30-Year Update [iii] , continuing to argue that, without deep systemic changes, the industrialized world is heading for economic and environmental collapse . Not surprisingly, the Report, along with its updated versions, continues to generate controversy among economists, environmentalists, politicians and concerned citizens. Some strenuously defend the predictions of the Report(s) as a realistic description of what is happening in our world; others discount the predictions of pending environmental crisis as alarmist fear-mongering.
I was one of those whose view of the world was influenced by the publication of Limits to Growth. For me, as for many people on the left, this was the birth of our commitment to "eco-socialism". Industrialized societies of various ideological stripes were unceremoniously hauled into the court of environmental justice, charged with and then convicted of serious crimes against the future of humanity.
Then, only a few years after the Club of Rome's bombshell Report, Fred Hirsch published Social Limits to Growth. Its impact on the intellectual climate was somewhat muted but no less important. Hirsch does not for a minute deny the Club of Rome's central claim that there are physical limits to economic growth - limits which require every sensible person who cares about the future of humankind to repudiate the dangerous dream of endless economic growth. But he argues that long before we reach these physical limits we will butt heads with a different but no less menacing challenge.
Hirsch has a powerful story to tell and it's a story that helps to make sense of the world in which we live.
Are we locked on a hedonic treadmill?
As Adam Smith recognized in The Wealth of Nations [1776], economic growth is a central defining characteristic of capitalist market societies. Smith saw this as a very good thing since it is the impressive accumulation of wealth under capitalism that generates material improvements, even for the "lower orders" of society. This was especially true for those living in the imperialist heartland; rather less true for those living in the exploited colonial hinterland. A century later, for all his critical shafts aimed at capitalism, Karl Marx echoed Smith in heralding the growth-generating capacity of capitalist market societies.
In our own day, the prospect of endless economic growth seems to have come to an end, at least in the West; but, prior to the current economic crisis and recession, per capita real income had been doubling every generation for at least a century and a half. The Baby Boomer generation, for example, is roughly twice as wealthy as their parents, four times as wealthy as their grandparents, and incomparably wealthier than ordinary folk in Victorian Britain.
But would anyone argue that the Boomers are twice as happy as their parents, four times as happy as their grandparents or incomparably happier than their forebears from the time of the Industrial Revolution?
Professor Richard Layard, a leading contemporary figure in the new field of "Happiness Studies", looks at data from the wealthiest and most powerful capitalist economies and, based on these data, tells us that "for most types of people in the West, happiness has not increased since 1950.
In the United States people are no happier, although living standards have more than doubled. There has been no increase in the number of "very happy" people, nor any substantial fall in those who are "not very happy". [iv]
In Britain, Japan and Continental Europe the same phenomenon is observable: "Despite massive increases in real income at every point of the income distribution" happiness has flat-lined or has increased only marginally. Moreover, when we compare one Western industrial country to another, "the richer ones are no happier than the poorer".
In short, when studies measure the relationship between changes in income and changes in happiness what they tend to find is that extra income makes a big difference to people's happiness when they are struggling with physical poverty. By contrast, extra income contributes very little to the happiness of those who are no longer poor. This fact would not have surprised 19th century economists, who labeled it the principle of diminishing marginal utility.
So, although it might seem paradoxical at first glance, "when people become richer compared with other people, they become happier. But when whole societies have become richer, they have not become happier -- at least in the West." [p. 31]
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