The Economics of Enough_ How to Run the Economy as if the Future Matters - Diane Coyle [127]
And yet people still want the economy to grow. It is wishful thinking to claim that economic growth doesn’t increase happiness. It would be dangerously complacent to plan policies on the basis that citizens won’t mind sacrificing growth for the sake of the environment or social cohesion. To do so would be to sacrifice any hope of gaining political traction for change. What’s more, poor countries need to continue growing to reduce poverty and satisfy natural aspirations to reach the living standards of the leading economies. Rich countries need economic growth because otherwise it won’t be possible to avoid the debt trap and create the political conditions for a less unequal and higher trust society.
However, the nature of economic growth in the advanced economies is changing; new technologies have brought about significant structural change. There is an opportunity as well as a challenge in this. The increase in productivity due to the adoption of new technologies since the mid-1990s holds out the promise of the real benefits of growth—not so much additional material benefits any more, in the advanced economies, as the variety of experience and self-fulfillment. The weightless economy is becoming more interesting and satisfying than the material economy. More consumer spending goes on things that would in the past have been outside the formal economy, and more jobs consist of activities nobody would have defined as work a generation ago. Some critics of capitalism see this as regrettable, the commercialization of previously personal activities. An alternative view is that technology-driven affluence has increased the scope for more people to engage in meaningful and enjoyable work. This in itself will contribute to well-being, given the psychological importance of “flow.”
So although the challenges governments—and people—will need to address in the next generation are enormous, the dynamism of economic growth in the Western democracies holds out some hope that they can be addressed successfully.
The second part of this book nevertheless set out some obstacles needing to be overcome on the path to addressing the difficult and interrelated policy challenges facing Western societies. Essential stepping stones for moving from the current sense of undifferentiated and impossible problems are a wider array of measurements including measures of wealth, in order to incorporate a longer time horizon for policy decisions; more thought about the nature of productivity in an economy where a rising proportion of activity consists of intangibles and the boundary between different types of activity is blurring, as productivity properly understood is the basis of value as measured by markets and an element of any wider sense of social value; and a profound rethinking of the types of institutional arrangements through which the economy—and our societies—are organized. This final chapter focuses on practical steps, taking into account the realities of changing public policy.
Getting agreement on painful changes in policies and institutions could be the hardest part of the challenge. In addition to the difficulty of analyzing the problems, there are also difficulties in finding the processes that can bring about change—especially against a background of a loss of trust in traditional political institutions. As I have emphasized in this book, modern societies, modern economies, are miracles of collective organization. “Government” is the name we give to the formal part of the framework of rules within which we live together. Other institutions, including businesses and voluntary organizations, along with norms of behavior and cultural expectations, make up the less formal or informal part of the framework. The effectiveness of the rules,