Tuesday, October 29, 2013

Are Growthism And Capitalism Really Different?

This article on the Harvard Business Review blog looks at many of the bad things that are happening in our economy and in our society and it argues that capitalism has morphed into "growthism".  It is a rather strange argument, since there is no capitalism without growth, but the comments that follow the article are much better than the article.  It has succeeded in raising an interesting discussion about growth itself by a well informed readership.  We have a finite planet that cannot sustain infinite growth so we may have to deal with limits on growth.  But limits on growth may imply limits on prosperity.  That raises questions about our definition of prosperity.  We seem to have identified prosperity with mindless consumerism which is one of his criticisms of "growthism".  He seems to hold two contradictory arguments at the same time.  Clearly, prosperity would be more widely shared in a good society, and he agrees that this is one of the problems of "growthism". We have been experiencing rising inequality and less social mobility than we have had in the past.  On the other hand, one of the problems of rising inequality is that consumption by the poor is also very limited.  That includes the consumption of necessities as well as the consumption of the "trinkets" that he identifies with consumerism.  It is not clear that "growthism" is responsible for rising inequality and poverty or whether changes in our system of capitalism have been responsible for rising inequality.

At a deeper level we get back to the distinction that is made between "growthism", which is bad, and capitalism which he does not define.  One implication is that a more pure form of capitalism would be better than "growthism" but he does not bother to define the pure capitalism that has somehow morphed into "growthism".  Some have argued that capitalism had been transformed into corporatism, and others believe that capitalism, within a well functioning democracy, could provide for shared prosperity without many of the bad things that are associated with rampant consumerism.  Its quite possible that we have a failure in our democratic system that has either abetted its transformation into corporatism or has failed to align capitalism more effectively with social welfare.  Frankly, it is impossible to discuss any abstract economic system in the absence of a system of governance.

In any case, the questions raised in this article would provide good material for discussion in MBA programs as well as in economics courses.  A stronger form of informed citizenship may be the medicine that we require.

1 comment:

  1. The world is physically finite, and any attempt to rationalize away that fact (like pretending that shale oil has the same potential as liquid crude) is foolish and shortsighted, yet all too common.