One of the saddest things about the lurch to extremism and the right wing of the political spectrum over the past few years—and especially these last few months—has been that attention has been taken away from the significant problems with capitalism and its reliance on continued growth that the 2008 crash had exposed.
The Classical Economists, in particular Adam Smith and John Stuart Mill, had already theorised centuries ago that growth could not go on forever and that eventually states would enter the condition of being a “stationary state”. John Stuart Mill wrote that the “increase of wealth is not boundless….the end of growth leads to a stationary state”. In addition, John Maynard Keynes thought that economic growth should not be infinite and that eventually we should reach a place where we could focus on more spiritual issues.
A steady state economy is an economy made up of a constant stock of physical wealth (capital) and a constant population size. Though the term typically refers to a national economy of a particular country it can also be applicable to the economic system of a city, a region or the entire world. The beauty of the thinking behind the theory of the steady state economy is that it broadly recognises that the world we live in is one of scarce and finite resources and uses other metrics than GDP to measure true value in any society.
Arguably countries such as Japan and maybe even the UK, Italy and other developed European countries are approaching becoming stationary states. In the case of Japan it has been shown that citizens have been able to get by well on no or low growth for well over two decades. By contrast, one European state, Germany has actively been pursuing economic growth by using immigration policies to halt population decline and fend off stasis, Angela Merkel describing immigration as “an opportunity” https://www.theguardian.com/world/2015/dec/31/merkel-urges-germans-to-see-refugee-arrivals-as-an-opportunity-in-new-year-address.
However, politically, putting forward policies that would bring about a steady-state economy here are difficult and there is no doubt that the Conservatives would not and could not support such policies. Progress is not in their DNA but the pounds, shillings and pence of business and banking transactions is in their DNA, so the leap required to get to this point of thinking so differently about the economy is quite literally beyond them. Also, many of their number are climate change sceptics who clearly think that we live on a planet with inexhaustible resources.
But it should be a naturally liberal policy, as a more equal society where we consume less, have more leisure time and use more sustainable energy all attest to our strong and basic liberal values and heritage.
Also, there is evidence at the edges to show that it is state we are heading towards anyway. In particular, the fact that this generation of young people will earn less than their parents is already a sign that growth in our economy is destined to be on the wane: https://www.theguardian.com/society/2016/jul/18/millennials-earn-8000-pounds-less-in-their-20s-than-predecessors. There is also evidence that this generation is consuming less than the older generation: http://www.if.org.uk/wp-content/uploads/2013/01/Spending-Power-Across-the-Generations-Report.pdf . Finally the sharing economy is here and looks destined to stay. This combined with the gig economy means that consumption will be decreasing over time as people brought up in this new world begin to outnumber those from the “old world” of unending growth and “consumption for consumption’s sake”.
Finally, this new state we find ourselves in is almost certainly one of the reasons why more and more politicians, think tanks and academics are considering the Universal Basic Income as a serious policy.
There is a strong reaction to the way that things are going in much of the developed world, and it is no wonder that the extremists on the right wing are having a field day. Change is scary, especially fundamental change that shakes up norms. But it is also an opportunity to move to a sustainable way of living that we as liberals should be embracing and advocating.
This blog first appeared on Lib Dem Voice on 9th December 2016, libdemvoice.org.