The myth of economic growth

Certain politicians are fond of telling us how ‘important’ economic growth is. Some will use growth as a means of defining themselves culturally and some will try and claim that it is the alpha and omega of a healthy economy.  In neoliberal discourse,  growth is essential to create wealth; the wealth is created at the top and ‘trickles down to the lowest on the income scale’ at least, this is what they want us to believe. What these economists (often presented by news channels as ‘experts’) fail to tell us is who really benefits from economic growth: the already wealthy.

Here is a classic example of how politicians use economic growth to make the puerile claim that ‘we’ are better than ‘them’ because of ‘our’ rate of growth is ‘superior’. It is an excuse to attack, in this case France, for having a better organized labour movement. Here GDP is held up as the means by which a nation’s growth is calculated but GDP is a flawed method of measurement because the parameters of its remit have been deliberately constricted to favour one set of economic arguments over another.

David Korten, author of When Corporations Rule the World wrote that there are 6 economic myths,

  • The myth that growth in GNP is a valid measure of human well-being and progress.
  • The myth that free unregulated markets efficiently allocate a society’s resources.
  • The myth that growth in trade benefits ordinary people.
  • The myth that economic globalization is inevitable.
  • The myth that global corporations are benevolent institutions that if freed from governmental interference will provide a clean environment for all and good jobs for the poor.
  • The myth that absentee investors create local prosperity.

Those who defend the current  economic model promote the idea of growth as necessary for happiness; people will buy more consumer goods and thus become happier human beings. But this is a facile argument that relies on the specious notion that the consumption of meaningless objects equates to happiness which is, itself, notoriously difficult to measure – though they will try. Even war-torn Iraq has a ‘happiness index’; which was used to present a picture to the world of a country ‘turning the corner’. The real picture was much more horrific. This is the political economy of the sign where a set of signs is presented as a form of truth that is based entirely on representations. In this case, it is the representation of happiness being used to inform the world that Iraq is ‘normal’. Neoliberals trust in signs and have no concept of reality.

Growth provides justification for the arguments of the wealthy who have little idea of how the poor and the low-waged live. For them, anyone who is unemployed is a serious ‘drain on the economy’; they are referred to as being ‘economically unproductive’ and those who are ‘economically productive, that is to say, those who have the disposable income to buy the latest consumer items, are held up as model citizens. This perversion is redolent of a Heinleinian world where only those who serve in the military are offered full citizenship. Indeed those who are unemployed are considered less than full citizens by the policy wonks of Whitehall and the ‘scholars’ who work for the various think-tanks.

Growth is also seen as a measure of progress; the Republic of Ireland was depicted as a Celtic Tiger; a powerhouse of economic growth. But this growth occurred on the back of speculation; there was no real wealth being created; the country had no manufacturing base to speak of and remains a service economy that is heavily reliant on tourism. The money people that had in their pockets was loaned to them or came from a credit card.

4 days ago, the BBC ran this story of how Britain’s economic growth was “slowing”. The key to this slowing was identified by the British Retail Consortium as a lack of ‘consumer confidence’,

“We’ve now had six straight months of low growth thanks to persistently weak consumer confidence and worries about the future,”

Because mainstream politicians have no original ideas on how to advance society, they have become over-reliant on the words of economic sages. To whit, they are in hock to the finance houses and the money men who operate them: the money men receive tax breaks for providing certain economic conditions and when they fail, they are given a slap on the wrist and told off. The banks after having been given their slap are now paying themselves bigger bonuses and higher wages while the rest of us are told to take pay cuts. Why? Because they tell us that they are ‘creating wealth’. Well, yes, they are creating wealth – for themselves.

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Filed under Economics, Growth

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