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Friday 14 September 2007

Daniel Ben-Ami

Towards an age of abundance


Why we must tackle the critics of economic growth, and finish off the war against scarcity.

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This review is republished from the August 2007 issue of the spiked review of books. View the whole issue here.

Imagine an egalitarian world in which all food is organic and local, the air is free of industrial pollution, and vigorous physical exertion is guaranteed. Sound idyllic?

But hold on… Life expectancy is 30 at most; many children die at or soon after birth; life is constantly lived on the edge of starvation; there are no doctors or dentists or modern toilets. If it is egalitarian it is because everyone is dirt poor, and there is no industrial pollution because there are no factories. Food is organic because there are no pesticides or high technology farming methods. As a result, producing food means long hours of back-breaking physical work which may end up yielding little.

There is – or at least was – such a place. It is called the past. And few of us, it seems, recognise the enormous benefits to humanity of escaping from it. On the contrary, there is a pervasive culture of complaint about the perils of affluence and a common tendency to romanticise the simple life.


Cover illustration by
Jan Bowman

From the 1790s onwards, in the aftermath of the French Revolution, the prospect of a world without scarcity seemed like a realistic possibility (1). Humans strove for a day when they could have a guaranteed food supply at all times. It should be remembered that the famous clause in Christianity’s Lord’s Prayer – ‘give us this day our daily bread’ – was meant literally. Our ancestors struggled for a world where we could take abundant food, clean water and adequate shelter for granted. Not only have we achieved these goals, at least in the developed world, but modern technology and economic organisation have improved our lives hugely.

Yet in the midst of contemporary abundance, there are vocal criticisms. The gains of modernity are under attack. Cheap food, one of the great achievements of humanity, is frequently derided as a curse rather than a blessing. Our houses are said to be too large. Cars and aeroplanes are seen as both destroying the planet and wrecking communities. Although we travel more than ever before, the local is being exalted at the expense of wider horizons.

Of course most people get on with their lives and enjoy the benefits of affluence. They eat plentiful food, travel abroad for their holidays and go to the doctor if they become ill. But the pervasive cynicism towards popular prosperity still has a negative effect. It makes it harder to enjoy or make the most of what we have got. It is also a barrier against making things better still. In this context, it is important to remember that there are still many billions of people in the world who live in poor countries. And yet the prospect of everyone having access to the best the world has to offer is commonly seen as an environmental nightmare rather than a worthwhile goal.

Attacking prosperity

Deep Economy is one of the most articulate recent assaults on popular prosperity. Bill McKibben, an environmental writer and campaigner based in the American state of Vermont, follows a pattern typical of such works. He grudgingly admits that mass affluence has advantages. For example, he concedes that we are richer and healthier than a few hundred years ago. Then he introduces numerous caveats to call the benefits of prosperity into question. This is an outlook I have previously described as ‘growth scepticism’, as it represents an indirect attack on growth rather than an overt rejection of its benefits (2).

McKibben puts three main arguments against growth. First, he argues that it increases inequality and insecurity. He does not spend much time on these objections as he sees them as widely discussed and the least fundamental criticisms. Second, he argues that there is not enough energy in the world to maintain growth at its present level or deal with the inevitable pollution. Finally, he argues that economic growth no longer makes us happy.

In relation to the environment, McKibben quickly concedes that some kinds of pollution can be solved by greater affluence: ‘Eventually those riches translate into a desire for the new “luxury” of clean air and the technological means to achieve it: England’s air is relatively fresh now, and even in Beijing planners are busy figuring out how they’ll move enough industry and install enough smokestack scrubbers and catalytic converters to have sparkling skies for the 2008 Olympics.’ (3) But he goes onto to argue that some kinds of environmental degradation cannot be solved by greater affluence. A chronic water shortage and global warming are his two examples.

Yet it is hard to see how McKibben’s distinction between two types of environmental degradation can hold. Both are susceptible to a combination of more resources generated by economic growth and improved technology. Certainly it is hard to see why there should be any fundamental shortage of water. Even if fresh water is scarce there are vast volumes of seawater in the oceans. Technology for desalination and irrigation already exists, even though, no doubt, it could be made better still. Nor should there be any problem in generating the energy to convert seawater to fresh water.

spiked has dealt with the question of climate change in numerous articles (4). But it seems clear that if we put our minds to it, the challenge can be met. There are already technologies, such as nuclear power and hydroelectric power, that do not emit greenhouse gases. There are also ways to adapt to the effects of climate change by such means as modern flood defences. Further into the future it may also be possible to find more high-technology ways to modify the climate for the benefit of humanity. Although it is not possible in advance to say for sure what will work best, there is no reason to believe that climate change should be an insurmountable problem.

The happiness caveat

McKibben’s arguments on happiness draw heavily on the work of Richard Layard, a professor of economics at the London School of Economics. Layard has observed, like others before him, that beyond a certain threshold, economic growth does not seem to generate more happiness (5). McKibben also emphasises Layard’s arguments on how economic growth can destroy communities. Deep Economy places great importance on the need to promote local communities for everything from food to entertainment.

There are numerous reasons to object to the happiness agenda. For a start, economic growth should be advocated for its objective benefits. It has given us the ability to lead longer and more prosperous lives. It gives us more leisure time. It is a key factor in the development of science and culture. The question of individual happiness is a separate one.

It is also questionable that, as Layard has advocated, happiness should be a goal of public policy. There are plenty of things that are worthwhile but do not necessarily make people happy: bringing up a family, learning a foreign language, excelling at sport or producing great art, to name a few. Although those involved in such activities may experience brief moments of elation, these are far from guaranteed. And for much of the time, what they experience is likely to be hard work and sometimes even misery or physical pain. But this does not mean that such goals are not worth striving to achieve. On the contrary, the contemporary obsession with individual happiness has a narcissistic edge.

Perhaps worst of all is McKibben’s emphasis on local communities. Although this is presented as somehow humanistic, it is the very opposite. It means downgrading our common humanity in favour of privileging those who happen to live close by. In practice it seems to mean favouring such things as farmers’ markets and community radio stations over supermarkets and the global media. It also means condemning Wal-Mart for exporting ‘American jobs’ abroad (6). McKibben’s vision of a healthy community is primarily one that consumes goods and services that are produced locally. It is a depressingly parochial vision for the twenty-first century.

Haves and have-nots

Although McKibben pays little attention to the discussion of inequality, it is the main focus of Falling Behind. Robert H Frank, a professor of economics at Cornell University in New York state, has developed a sophisticated attack on economic growth in relation to inequality. Frank’s argument is built on the distinction between positional goods and non-positional goods first made by Fred Hirsch, a British economist, in the 1970s (7). Positional goods are ones whose consumption strongly signal someone’s rank in the wealth hierarchy – for example, the size of their house, the quality of their suits or the fanciness of their wristwatches. Non-positional goods are those that are weakly associated with social rank, such as time spent on vacation.

The drive for economic growth, in Frank’s view, unleashes an unhealthy Darwinian battle for positional goods. There are ‘positional arms races’ in which people strive for ever-larger houses, ever-more expensive suits and ever-fancier watches. Not only does such competition yield little or any benefit, it also diverts resources from non-positional goods. People work longer hours and get into debt so that they can afford luxury items they do not really need. The effect of such positional arms races is made even worse by the steadily rising inequality in American society.

There are two main ways to respond to Frank’s arguments. One is to show, empirically, that despite a trend towards widening inequality, Americans are generally getting better off as a result of economic growth. For example, Stephen Rose, a respected labour economist, has argued that most Americans have benefited from productivity growth in recent years (8). And Brink Lindsey (who will be discussed later in this review) has argued that even poor Americans are in many respects better off than the average American in 1971 (9). There are also debates to be had about whether American working hours have increased in recent years, and whether household debt levels really are excessive.

A more fundamental objection to Frank is to the character of his reaction to inequality. It is clear that, to a greater or lesser extent, capitalist societies tend to be unequal. But the response to that quandary should surely be to demand more rather than less. Everyone should have the resources to have a large house and, if they so wish, expensive suits and elaborate watches.

Indeed, for all of Frank’s apparently intricate theory, his proposed solutions are strikingly mundane. He proposes a consumption tax to deter individuals from spending too much of their income on positional goods. And he favours voluntary simplicity in which people forsake some luxury goods for the sake of an emotionally richer life.

Life in ‘Richistan’

Richistan is primarily a journalistic account of the lives of the burgeoning class of the super-rich rather than a thesis on inequality. Its author, also called Robert Frank, has reported full-time on the lives of the new rich for the Wall Street Journal since 2003. Before that he was, among other things, a foreign correspondent in London and Singapore.

For those of us unfamiliar with the super-rich, the book yields some insights. ‘Richistan’ is itself a highly unequal place with its population of lower Richistanis (net worth $1million to $10million), middle Richistanis ($10million to $100million) and upper Richistanis ($100million to $1billion). The most affluent of all live in Billionaireville. If Frank is to be believed, the different levels of Richistanis have contrasting tastes, attitudes and political opinions.

Frank’s description of a butler training school provides an interesting take on the new rich. Unlike the original Jeeves, today’s butlers evidently have to manage multimillion-dollar household budgets using Excel spreadsheets and Quicken financial management software, run sophisticated home electronic systems and security systems, and book flights around the world.

More striking still are those areas which butlers are taught are BYJ – Bet Your Job – issues: germs, pets and collections. Apparently germs are a massive issue in Richistan. ‘They’re health freaks’, Raymond Champion, a chief instructor at a top butler training school, is quoted as saying. ‘These people are very successful and guess what, they want to live forever. Get used to it. Germs are huge in this world.’ (10)

But although Richistan is mostly reportage, the author finds it hard to avoid editorialising at some points. Frank the journalist cites the other Robert Frank, the Cornell professor, on how the rich promote a ceaseless competition for luxury goods. Frank the journalist also seems to endorse Professor Frank’s argument that wealth does not necessarily bring happiness.

Towards the ‘realm of freedom’

The Age of Abundance is by far the most interesting of this crop of books on the growth-sceptic theme. Brink Lindsey, vice president for research at the Cato Institute think tank in Washington DC, is broadly in favour of affluence. His aim is to examine how what he sees as the advent of a post-scarcity society in America since the 1950s has affected politics and culture.

Lindsey’s starting point, with deliberate irony, is Karl Marx’s distinction between the ‘realm of necessity’ and the ‘realm of freedom’. In the first, humanity lives under the tyranny of scarcity, while the second refers to a post-scarcity society. Although the terms were seldom used by Marx, he was certainly an ardent believer in the need for humanity to overcome scarcity (11).

Lindsey argues that America became a post-scarcity society in the 1950s. Only it achieved this objective not through socialist revolution, as Marx had predicted, but through capitalist development. As a result, says Lindsey, the class struggle is over. For Lindsey the historic victory over scarcity unleashed tremendous changes in American society, which he sees as, on balance, positive. Whether Lindsey is right to characterise America as ‘post-scarcity’ is debatable. But it has certainly achieved levels of prosperity that previous generations would have found hard to imagine.

In the political sphere, The Age of Abundance argues that the newfound prosperity unleashed the civil rights movement, the sexual revolution, environmentalism, feminism and gay rights. The victory over scarcity made it easier for people to focus on these issues rather than everyday survival. Lindsey broadly favours this shift in values, although he argues it sometimes goes too far in undermining necessary restraints. If taken to an excessive extent, he argues, it can undermine families, encourage crime, promote drug-use and create welfare dependence. However, he also opposes the evangelical right, which he sees as too zealous in its opposition to libertarian freedoms.

In the economic sphere he welcomes the rise of market economics. He sees the demise in the 1970s of the cosy relationship between big government, big labour and big business as a triumph. Lindsey welcomes America’s deregulated, globalised and computerised economy.

Overall, Lindsey sees himself as close to the mainstream of middle America. He rejects the excesses of those involved in the ‘Culture Wars’ and welcomes the new tolerance of freedom and of the market. For him the gains are in large part the result of the transition from a scarcity society to an age of abundance. The most valuable element of Lindsey’s argument is his reminder that the shift away from scarcity has a substantial impact on society. His characterisation of an ‘age of abundance’ may be an exaggeration, but it is true that few Americans live on the edge of existence. Under such circumstances, it is hardly surprising that many human preoccupations are different from those in the past. Yet many social commentators, with their bleak view of the present and romantic view of the past, miss this simple fact.

A post-scarcity society?

Lindsey goes too far in attributing important social shifts to economic factors. For example, broader social forces were eroding the appeal of traditional conservative thought long before the counterculture of the 1960s. The experience of the Second World War, and the Holocaust in particular, discredited the politics of race and empire that was widespread until then (12). It became virtually impossible for conservatives to uphold a belief in racial superiority. The rise of several of the social movements that Lindsey refers to, such as environmentalism and feminism, should also be related to the demise of the left.

In contrast, the ideological victory of market economics came about in the late 1970s and 1980s. The defeat of the left and the subsequent end of the Cold War discredited socialist alternatives. It seemed that there was no alternative to the market – the only debate worth having was between different forms of market system. It is true that the unexpected resilience of capitalism played a role in the historic defeat of the left. But there were other factors involved in the battle between right and left. Certainly in America, to the extent that there was a ‘left’, by the 1970s it had largely become identified with big government and discredited unions.

It is therefore insufficient to characterise America as a post-scarcity society. American politics is shaped by the defeat of the right on social issues and the defeat of the left on the economy. As a result, there is a peculiar amalgam among the mass of the population of broadly liberal social attitudes with a pro-market take on the economy.

It is a pity that Lindsey does not take the growth sceptics head on. The likes of Bill McKibben and Professor Robert Frank would probably accept the characterisation of America as a post-scarcity society. Only for them the erosion of scarcity has substantial costs as well as benefits. It is time to launch a counter-attack against the critics of popular prosperity. The forms that growth takes in a market economy may be far from perfect, but there are enormous advantages to prosperity. It has the potential to make our lives longer, healthier and more fulfilling. It can help promote the development of culture, science and technology. And it can allow us to overcome parochial divisions to make the world less local and more global.

We should be looking forward to a true age of abundance rather than romanticising a world in which we felt we had to pray for our daily bread.

Daniel Ben-Ami is a journalist and author living in London. Visit his website here.

This review is republished from the August 2007 issue of the spiked review of books. View the whole issue here.

Richistan: A Journey Through the 21st Century Wealth Boom and the Lives of the New Rich by Robert Frank is published by Piatkus. (Buy this book from Amazon(UK).)

Falling Behind: How Rising Inequality Harms the Middle Class by Robert H Frank is published by University of California Press. (Buy this book from Amazon(UK).)

The Age of Abundance: How Prosperity Transformed America’s Politics and Culture by Brink Lindsey is published by Collins. (Buy this book from Amazon(UK).)

Deep Economy: The Wealth of Communities and the Durable Future by Bill McKibben is published by Henry Holt. (Buy this book from Amazon(UK).)

(1) See chapter 1 of An End to Poverty?, Gareth Stedman Jones, Profile, 2004

(2) See Who’s afraid of economic growth? by Daniel Ben-Ami, 4 May 2008

(3) Deep Economy, p21.

(4) See, for example, A man-made morality tale by James Woudhuysen and Joe Kaplinsky, 5 February 2007

(5) See There is no ‘paradox of prosperity’ by Daniel Ben-Ami, 5 January 2007

(6) Deep Economy, p107.

(7) Social Limits to Growth, Fred Hirsch, Twentieth Century Fund, 1976

(8) Does productivity growth still benefit working Americans?, Stephen Rose, The Information Technology and Innovation Foundation, June 2007

(9) The Age of Abundance, p282-3.

(10) Richistan, p16.

(11) The distinction is made in chapter 28 of volume 3 of Capital

(12) Mythical Past, Elusive Future, Frank Furedi, Pluto, 1992

 


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