It's not the custom of people my age to go back and re-educate themselves on economics and I know why - ugh! I thought I understood economics from three or four Econ courses I did in undergrad (psst, I did really, really well on them too). I was wrong.
Here's the thing. In universities around the developed world they're still teaching the same orthodoxy they taught me - and it's wrong. We didn't see it in my student days but you have to work hard not to see the contradictions, omissions and outright fallacies in classical economics in the context of today's reality.
Traditional economics is heavily based on concepts of growth. It views the economy (macro, micro, global) in isolation. It specifically does not consider the economy as a subset of the environment. There's a reason for that. The Earth is finite. The Earth's resources and its environment are finite. Thus, once you accept the economy as existing within our planet's environment, it too must become finite. The economy must have very real limits to growth. It is confined by walls just like all those other walls mankind keeps slamming into these days. Real economists like Stephen Harper just don't wish to see these walls. They prefer to keep the pedal to the metal.
It's no accident that the IMF has been trimming growth forecasts lately. We find slumps in growth alarming, but why? There is a simple reason. We don't know how to live without it. You can't live the way we live without it, can't be done. We're locked in even though we also hold the key to our lock. Prisoners of choice, I suppose. The default option.
There's an article in today's Guardian about a study that shows the age of growth is over.
"...evidence has emerged that the era of booming economic growth is over, and that we are entering an age of permanently slow growth - at best.
"A new paper in the journal International Productivity Monitor finds that underlying the US recession is a long-term decline in productivity growth, interrupted briefly by the "dot.com revolution" for eight years, followed by a slump "to 1.47 in the past eight years."
"Study author US economist Prof Robert J Gordon of Northeastern University concludes:
"... we face a significant possibility that the disposable income growth for the bottom 99% of the income distribution could be as low as 0.5% per year, or perhaps even 0.2%.""This conclusion complements Gordon's previous prediction last year that by 2100, the US economy would return to an annual growth rate of 0.2%. He describes the second industrial revolution as the core driver behind rocketing growth experienced over the last 250 years, noting that the main factor behind the continuing slump since 1970 - escalating over "the last eight years", was a lack of sufficient industrial innovation capable of fundamentally "changing labour productivity or the standard of living."'
Now, take a deep breath, relax. This doesn't mean we're going back to live in caves and kill our food with a stick. Depending on how we go about aligning how we're organized to conform to the limits of our environment, life could be about to get a lot better.
Here's an example. Growth in terms of gross output may decline but that doesn't necessitate curbing growth in terms of the quality of that output. Knowledge-based growth will remain unrestrained. We'll learn to make things better - more meaningful, more helpful, more lasting... more enjoyable. Psychotic consumerism and built-in obsolescence will falter and fade away. Inequality, unless we're restored to some new form of feudalism, will be rectified.
We, or at least our great grandkids, will live in balance with their world knowing when they don't, they die. That's one hell of an incentive.
I have become convinced that the way forward, or at least the best way forward, depends on accepting and adjusting our organization and institutions to "steady state" or "full Earth" economics. That's basically living within our environmental means in the context of resources and population. The question is how we make that transition to maximize the benefits and minimize the negatives. To get an idea of what lies ahead - and may block our path - my summer reading begins with former World Bank economist Herman Daly's "Beyond Growth" and a few other books I've got stacked up. I'll be back to share what I've learned.