We need new form of economics

The economics profession has lost its way. The traditional way to solve our economic problems has always been growth. But despite the best efforts of all concerned, the Irish economy refuses to grow. Lower interest rates, quantitative easing, and strict austerity are failing. GDP is now lower than when the crisis began.

It’s time to abandon the pursuit of growth in wealthy nations and consider a new strategy — an economy of enough. Suppose that instead of chasing after more stuff, more jobs, more consumption, and more income, we aimed for enough stuff, enough jobs, enough consumption and enough income.

Economic growth is causing a number of global environmental problems, ranging from climate change to biodiversity loss.

At the same time, economic growth is no longer improving people’s lives in wealthy nations like ourselves. To continue to pursue growth for growth’s sake is simply irresponsible.

Our main indicator of growth, GDP, is a measure of economic activity — of money changing hands. It doesn’t tell us anything about what kind of activity is occurring. If the gardai came to your door and said that “activity” in your neighbourhood had increased by 3% last year, you’d want to know what kind of activity. Was it more children playing in parks, or more break-ins?

We need to ask the same kinds of questions about GDP. Did it grow because our society became wealthier, or did it grow because we ran up huge debts and liquidated our natural assets?

We have to start thinking outside the box to develop economic policies that improve quality of life without expanding consumption. These policies include methods to reduce resource use, limit inequality, fix the financial system, create meaningful jobs, and change the way we measure progress. Perhaps the biggest fear that most people have when they hear “no growth” is “no jobs“, but the evidence for a relationship between economic growth and job creation is much weaker than you would expect and varies remarkably between countries.

What we do not need is unrelenting austerity. We need an economic model that prioritises people and planet over short-term profits. It’s time to embrace a new form of economics.

Sean Ruddy

Carndonagh

Co Donegal