The economics of enough

It's been over five years since the global financial crisis began, and yet we are still no closer to ending it. George Akerlof, a Nobel Prize–winning economist, has provided a good analogy for the uncertainty facing economists. "It's as if a cat has climbed this huge tree—the cat of course is the crisis. My view is 'Oh my God, the cat's going to fall and I don't know what to do'." Nor is he alone in this uncertainty. The IMF's chief economist, Olivier Blanchard, warns: "We don't have a sense of our final destination."

The economics profession has lost its moorings. The traditional cure to our economic ills has always been growth. But now, despite the best efforts of all concerned, the UK economy refuses to grow. The economic tools that have been applied – lower interest rates, quantitative easing, and strict austerity – are failing. GDP in the UK is now 2% lower than when the crisis began.

In our new book, Enough Is Enough: Building a Sustainable Economy in a World of Finite Resources, Rob Dietz and I argue that it's time to abandon the pursuit of growth in wealthy nations and consider a new strategy – an economy of enough. Suppose that instead of chasing after more stuff, more jobs, more consumption, and more income, we aimed for enough stuff, enough jobs, enough consumption and enough income.

Abandoning the pursuit of growth may seem like a radical idea, but there's a strong case to be made for it. Economic growth is causing a number of global environmental problems, ranging from climate change to biodiversity loss. At the same time, economic growth is no longer improving people's lives in wealthy nations like the UK. To continue to pursue growth for growth's sake is simply irresponsible.

Our main indicator of progress, GDP, is a measure of economic activity—of money changing hands. It doesn't tell us anything about what kind of activity is occurring. If the police came to your door and said that "activity" in your neighbourhood had increased by 3% last year, you'd want to know what kind of activity. Was it more children playing in parks, or more break-and-enters? We need to ask the same kinds of questions about GDP. Did it grow because our society became wealthier, or did it grow because we ran up huge debts and liquidated our natural assets?

The blueprint that we describe in our book is based on the contributions of over 250 economists, scientists, NGO members, business leaders, politicians, and citizens. Some call the blueprint the "new economics", some call it "degrowth", and some call it a "steady-state economy". No matter what you call it, the key idea is to develop economic policies that improve quality of life without expanding consumption. These policies include methods to reduce resource use, limit inequality, fix the financial system, create meaningful jobs, and change the way we measure progress.

Perhaps the biggest fear that most people have when they hear "no growth" is "no jobs", but the evidence for a relationship between economic growth and job creation is much weaker than you would expect and varies remarkably between countries. In the US, for example, a 3% increase in GDP tends to be accompanied by a 1% fall in unemployment. In France, the same amount of GDP growth reduces unemployment by only half a percent. In Japan, there is no relationship whatsoever. Clearly it is possible to break the connection between economic growth and unemployment; we just need the right economic policies.

What we do not need is unrelenting austerity: the best way to save the cat is not to cut down the tree. If we're serious about achieving a better life for the vast majority of people in Britain then we need a new approach – an economic model that prioritises people and planet over short-term profits. It's time to embrace the new economics and say "Enough Is Enough!"