Economics, Heresies
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Kicking the Growth Economy

Oil refineries fuel the growth economy

[T]he ideas of economists and political philosphers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.
                                                                                                    — John Maynard Keynes

What is the purpose of each human life? 

Thanks to the ideas of a group of financially incentivised academics, a lot of spin as well as the support of some carefully nurtured think-tanks, politicians and journalists, we now have the answer to this age-old question: the duty of all is simply to generate ever-greater economic value, whatever our skills or desires.

Humanity’s purpose is to spend money and build businesses for the benefit of the economy. People need to consume ever more, even if we have to borrow because that will bring economic growth. We must all fulfil our duty as citizens, as economic humanoids driven by the invisible hand of good fortune. And we must do that regardless of what it means for others or for nature. Destroy the planet if necessary. The economy must come first.

How did we get here, and how can we escape such a meaningless, divisive and destructive lack of purpose? 

The Invisible Hand

To suggest that stubbornly high levels of unemployment, poverty, inequality, ocean pollution and the ravages of climate change—including melting ice caps and species loss—are all directly linked may seem strange. They are all however the result of how today’s societies are managed—a consequence of a chosen system of human development known as free market economics. Free market economic thinking is built around a simple idea: the market should be as lightly regulated as possible; it should be free.

In reality of course there is no such thing as the market. It is simply a term that societies use when they talk about the way business is conducted. Someone supplies or sells and someone else demands or buys. That is the market. It is a human construct, a highly simplified description of a complex process.

Behind the notion of the market are many other free market ideas, though they are often rather opaque. An example is the notion that wealth trickles down, that the free market will nourish everyone, rich or poor, thanks to the magic of the invisible hand. When the rich spend their money, it is supposed to flow into the pockets of the poor, fortifying all. Free market advocates make much of this invisible hand, a notion first introduced in 1759 by the famous Enlightenment economist Adam Smith in his book The Theory of Moral Sentiments. As the concept is presently deployed, people are believed to make decisions—some rational and successful, others reckless and unsuccessful—and by virtue of the invisible hand, all those individual decisions combined are said to promise the best collective outcome. Consequently individuals should be mostly free to act as they desire. It is the collective wishes of millions of individual consumers acting in their own self-interest that propels humanity forward, goes the thinking.

Adam Smith, contrary to popular belief, did not admire the "invisible hand" and saw it as an ironic joke to criticize the destructive greed of business elites
The ‘Muir portrait’ (c. 1795) of Adam Smith, National Galleries, Scotland.


Photo Credit: Antonia Reeve

In an essay for the Journal of Business Ethics, John D. Bishop, retired professor of Business Administration at Trent University, illustrates how the business world today misunderstands what Adam Smith meant by the “invisible hand,” citing “numerous passages in The Wealth of Nations in which Smith directly states that the interests of business people…are in fundamental conflict with the interests of society as a whole, and that business people pursue their personal goals at the expense of the public good.” Further, according to Harvard economic historian Emma Rothschild, “[t]here is a more famous invisible hand in Anglo-Scottish literature, with which Smith was almost certainly familiar…invoked by Macbeth, who asks the night, ‘with thy bloody and invisible hand,’ to cover up the crimes he is about to commit.” Rothschild argues that Smith “did not particularly esteem the invisible hand and thought of it as an ironic but useful joke” to skewer the rapacious, destructive greed of business elites.

Another idea is that the market and the ethereal hand should decide social outcomes, and often alone. It is the free market which should determine the price of land or natural resources, or decide where transport services are provided and at what cost. Although the free market is a man-made concept and so it can be controlled or changed, it is allowed to determine the fate of communities facing decline and the continued use of scarce natural resources when they near exhaustion.

Democracy and the free market system are also seen as complimentary. They are thought to work together, like partners on a dance floor. In truth of course democracy and the free market are mortal enemies. No business wants to be answerable to inconsistent whims of the democratic majority.

To understand how the free market belief system has become so all-encompassing and also why it is so destructive, is hard because people first need to question their basic world view. Harder still, they have to accept that much of what they believe is not true and never was. 

The Invention of the Free Market

Perhaps surprisingly, given its wide influence, the free market system is not the result of some fundamental intellectual discovery. There was no Crick-and-Watson moment when someone shouted, “Ah-ha!” Nor is the system natural, though it is often presented as if it were. The free market is not like the basic human needs for sustenance, companionship or shelter. Before the Second World War, free market thinking was barely known. 

It was in the late 1940s that this changed, when a group of people set out to modify the way economics and society were viewed. The group featured some of the 20th century’s most famous economists, including Friedrich Hayek, Ludwig von Mises and Milton Friedman. They were the founders and leaders of the Mont Pelerin Society (MPS), an organisation established to spread free market economic thinking and what the group believed were the “central values” of civilisation. Named after the mountain in Switzerland where they first met, members of the MPS saw government expansion and the welfare state as dangerous while the unregulated market was viewed as something close to divine.

Thanks to generous corporate funding, the group came to great prominence in the late 1970s when Ronald Reagan and Margaret Thatcher embraced its ideas. Of Reagan’s 76 economic advisors, 22 were members of the MPS. Thatcher’s Chief Economics Advisor as well as many other economists who were close to her, were members of the MPS too.

Margaret Thatcher and Ronald Reagan embraced the neoliberal, free market economic ideas of the Mont Pelerin Society
In this June 23, 1982 file photo, President Ronald Reagan and British Prime Minister Margaret Thatcher speak to reporters at the White House in Washington. (AP Photo/File)

Despite the claims of some advocates of Reaganomics and Thatcherite economics, unemployment rose dramatically under Thatcher and stayed high after she left office. Meanwhile Reagan saw unemployment rise hugely after he was elected though it then fell back to a lower level—but still higher than the average in the post-war years.

This is a complex phenomenon to explain though. Reagan and Thatcher’s period was matched by many of the baby-boom generation entering the workforce and so increasing the number of jobs which were needed, contributing to unemployment. Meanwhile Reagan and Thatcher reformed many sectors at the start of their time in office and this also contributed to unemployment. Supposedly these reforms also led to new investment and so to new jobs. Ultimately lots of jobs were created, most notably in the US, and these are often attributed to Reaganomics. But most of them were down to the normal boom and bust cycle, usually 7-10 years long. Over the long term, their ideas led to the high levels of unemployment we find today and the widening gap between rich and poor.

Today the MPS’s members include many past heads of state (Germany, Italy, Czech Republic, Sri Lanka) and Ministers of Finance, Economics and Trade (UK, US, Belgium, Hong Kong), as well as several ex-heads of the US Federal Reserve, members of the US Supreme Court, officials from the Bank of England and a US Secretary of State. Nine Nobel Laureates in Economics are, or were, members of the MPS—though that is hardly surprising. The MPS helped create the Nobel Memorial Prize in Economics (it is not a proper Nobel prize) specifically to legitimise free market thinking.

Mont Pelerin’s members have also been responsible for the establishment of a large number of prominent think-tanks tasked with spreading free market economic thinking. These include the Institute of Economic Affairs (IEA), the Institute for Humane Studies (IHS), the Heritage Foundation, the Centre for Policy Studies, the Fraser Institute, the Cato Institute, the Manhattan Institute for Policy Research, the Adam Smith Institute and the Pacific Institute for Public Policy.

Many prominent journalists are members of the MPS too, including several Pulitzer Prize winners. The group has also worked hard to reform the teaching of economics in universities and schools, and ensure that those articles that are published and cited in academic journals support its ideas. As a result, most university economics departments only teach the free market model of economic development today.

The campaign to change the way people think has been so successful that free market ideas are no longer questioned by most. They believe that a focus on economic growth coupled with light-touch business regulation is all that is needed to sustain healthy social progress. 

Yet this belief is mistaken. While free market thinking has generated record rates of economic growth in the last 30 years and reduced the influence of the state, it has not boosted living standards for the majority of people in many countries.

This can be difficult to see because living standards are not commonly defined or measured and also because so much additional wealth has been created. Superficially it has seemed that the system has been on a good trajectory.

Yet especially in the English-speaking world, while nominal GDP has risen hugely, many other measures of social progress have not improved. Many have deteriorated.

Having been the poster child of enlightened social progress in the 1960s, the US now has the rich-world’s second highest level of poverty. The number of poor people has grown by at least two-thirds since the 1970s. More people may have mobile phones and cable TV, but more people have to access food banks too.

Oakwood Heights in Detroit is a classic example of an American suburb with a very low "standard of living" and "quality of life"
Oakwood Heights, Detroit
Photo credit: Notorious4life

In a 2016 Youtube video entitled “Principles of New Urbanism,” architect Andrés Duany draws a vital distinction between “standard of living” and “quality of life” by comparing these two conditions in America to other countries in the developed world: “America wins categorically with standard of living: our houses are bigger, they have more bathrooms, they’re newer; we have more cars, we have more roads, we even have more money. [That’s] standard of living. Quality of life? [America is] way at the bottom… So one of the things we’re gradually doing is coming up with metrics that actually measure indices of happiness or contentment. We’re not measuring standard of living which are hard metrics (your house is bigger, et cetera), but quality of life: it’s a softer metric, it has to do with, ‘Do you think life is getting better? Are you more satisfied?'”

One consequence of this rise in poverty is that standards of nutrition have fallen, with much more obesity and ill-health. Access to healthcare has also declined for many people with the result that infant mortality is higher and life expectancy lower than in the majority of rich countries. Maternal mortality has also increased, reversing a centuries-long trend.

At the same time, educational standards have fallen, with the US now having below-average levels of literacy in the OECD. The prison population has increased as have levels of violence. Although unemployment has fallen in the last few years, real wages have stagnated or fallen for many workers while job security has declined. The average wage paid to young college graduates has been falling for nearly 20 years, with many trapped by high levels of college debt while being dependent on the ‘gig economy’ for an uncertain income.

The statistics on employment have also become less reliable as many people are no longer counted. As well as those being forced to work part-time because they cannot find a full-time job, those no longer eligible for welfare are excluded from the published jobless rate too. Partly as a result, levels of personal and national debt have risen while infrastructure spending has declined.

“The wages of (US) middle-wage workers were totally flat or in decline over the 1980s, 1990s and 2000s, except for the late 1990s. The wages of low-wage workers fared even worse, falling 5% from 1979 to 2013. In contrast, the hourly wages of high-wage workers rose 41%.”

Economic Policy Institute

The story in the UK and much of southern Europe is the same. (In Japan, Canada, Germany, Austria and Scandinavia, living standards have not deteriorated to the same degree and in some cases they have improved. This is partly due to state intervention in the economy and different social priorities.)

The reason for these negative trends is easy to misunderstand because the rise in living standards in the rich world in the decades following the Second World War is often attributed to free market economic ideas. And so it is easy to think that growth and greater liberalisation will solve these problems.

Yet rising living standards in the post-war era were not the result of free market thinking.  They were greatly due to pre-war economic policies which sought social balance through state intervention. The state was much stronger than today, with spending on healthcare, public pensions and the jobless widely supported. Companies were regulated, especially in the finance sector while firms with dominant market positions were often broken up. Power, transport and other utilities tended to be in public control. They were expected to provide a service, not make a profit. 

The change in thinking came about because the MPS successfully discredited these pre-war ideas, leading to a weakening of the welfare system and a decline in the state’s counterbalancing effect on the private sector. At the same time, the power and influence of corporates has grown, underpinned by the promises of these economists that this would lead to the best long-term outcome for all. 

These promises were always hollow however, because the free market economic approach actually widens inequality everywhere. This is because it only serves the interests of the rich. It also increases joblessness in mature open economies and does very little to address poverty elsewhere. This means that the free market system eventually leads to social division and then to political extremism—as can be seen in the US as well as much of Europe today. A further consequence of free market thinking is that it causes widespread environmental destruction because the needs of the private sector are put before those of the planet.

Growth Is Destructive

How has free market economic thinking achieved all this? 

At the core of free market ideas is the notion that economic growth is not just desirable, but essential. People are encouraged to believe that economic growth creates jobs. More jobs mean that more people will have the chance to earn an income. So economic growth is thought to reduce inequality and poverty. 

In the rich world, none of this is true.

Economic growth is mostly the result of a rising population and improving efficiency. It is because more people demand more goods and services. And it is about increasing efficiency (what economists call rising productivity) to boost output. Despite what many people believe however, economic growth is not the result of rising consumption. Higher consumption is a consequence of economic growth. Goods need to be produced before they can be consumed.

In countries with largely stable populations, including most of those in the rich world, economic growth is almost entirely the result of rising productivity. It comes from businesses investing to increase output.

This means that a system focussed on boosting growth inherently favours greater mechanisation. It actually promotes the elimination of workers. Unless more work is created elsewhere, the result is rising joblessness.

Although it is hard to say exactly how many jobs have been lost to date, PWC estimates that 44% of low skill jobs could be lost to new technology by the mid-2030s with 30% of all jobs at risk.

It was the desire for higher productivity through mechanisation that drove people off the land in the 19th century. It was mechanisation that boosted factory output in the 20th century and pushed people into services. And it is mechanisation—computerisation and artificial intelligence this time—that is forcing people out of the service sector today.

In the decades following the Second World War, there was plenty of work to go around and so the people who had been displaced by machines could easily find another job. 

For the last 30 years however, new jobs in the rich world have been much harder to find. This is partly because the new industries, such as those in hi-tech, employ many fewer people than the heavy industries of old. But it is also because free market thinking has encouraged politicians to sign free trade agreements that make it easy for companies to shift production abroad without penalty. Societies could protect workers facing redundancy if they so chose. But most don’t because they believe—wrongly—that the system, the invisible hand, will fix the unemployment problem for them. The free market can’t fix the problem though, because it is the cause.

The free market push for economic growth explains why much of the rich world has experienced stubbornly high levels of unemployment for more than a generation.

This chart by the IMF shows how in a free market economy, as GDP rises, so does unemployment, which shouldn't happen
Source: IMF1990199520002005201020152017
Unemployment % rate5.7766.38.36.86.1
GDP 2005 = 10072.384.681.3100108.2115118

With more people looking for work, wages have stagnated or fallen in many countries while job security has declined. This has led to falling standards of living, especially in those countries where free market ideas have been most enthusiastically embraced.

“In most OECD countries, the gap between rich and poor is at its highest level in 30 years. Today, the richest 10 per cent of the population in the OECD area earn 9.5 times the income of the poorest 10 per cent; in the 1980s this ratio stood at 7:1 and has been rising continuously ever since.”

Organization for Economic Co-operation and Development

The drive for economic growth has also widened the gap between rich and poor because, under the free market system, the rewards flow upwards to the rich. The trickle-down effect is a myth. Those with money earn more by investing their wealth and receiving dividends and asset appreciation in return. They also earn money by lending through the banking system and receiving interest. These sources of income are not available to the poor. Rather, they are the ones who borrow and so pay the interest.

As a result, the gap between rich and poor in the developed world is wider today than it was in 1914. The gap between the rich world and the poor world has widened too, and is almost three times greater than it was in 1820, nearly 200 years ago.

An OECD chart showing the Gini coefficients of within-country and between-country inequality, from 1820-2000

“The Gini index or Gini coefficient,” according to Investopedia, “is a statistical measure of distribution developed by the Italian statistician Corrado Gini in 1912. It is often used as a gauge of economic inequality, measuring income distribution or, less commonly, wealth distribution among a population. The coefficient ranges from 0 to 1 (or 100), with 0 representing perfect equality and 1 or 100 representing perfect inequality [that is, ONE person has all the wealth or income].”

The focus on economic growth over the last 30 years has not lifted a billion people from poverty in the poor world either, despite the claims of the World Bank and others. If inflation is properly taken into account, the number of people living on $1 a day (in 1980 terms) has actually increased slightly.1Graeme Maxton and Jorgen Randers, Reinventing Prosperity (Greystone Press, 2016)

“World Bank estimates indicate that the number of absolute poor (that is, those people consuming less than $1.25 per day in Purchasing Power Parity terms) in China declined by more than 600 million from about 835 million in 1981 to 173 million in 2008.”

Alan Piazza, Rural Development Economist

The only exception to this is in China, where hundreds of millions of people have experienced a vast improvement in living standards. Over 35 years China has moved from having a largely agriculturally based economy to being a major supplier of manufactured goods and services. Average incomes have risen from $263 a year in 1986 to more than $5,000 today (though inequality has also grown). The number of Chinese living with access to sanitation and clean water has grown markedly, as have life expectancies. The country’s infrastructure has been overhauled too, with tens of new ports, high-speed railway lines and roads. This transformation is not the result of a push for economic growth alone however; China’s progress has been greatly state-directed.

The pressure for ever-more economic growth has proved especially destructive to the environment. As growth requires more raw materials, to dig these up, process them and transform them into goods needs more energy. As this energy has been mostly fossil fuel-derived for the last 200 years and remains 80% fossil fuel-derived today, the push for growth has increased the concentration of greenhouse gases in the atmosphere. These are trapping some of the sun’s heat and causing the planet to heat up. Put simply, the economic system is driving climate change.

Climate change is by far the most serious consequence of free market thinking. If humanity continues emitting these gasses at the current rate, it will kick off a chain reaction in the early- to mid-2030s that will be impossible to stop. The resulting change in the atmosphere will last for centuries and is likely to reduce the human population to a fraction of its current level.2Ian Dunlop and David Spratt, “Disaster Alley: Climate Change, Conflict and Risk” (2017), Dunlop and Spratt, “What Lies Beneath: The Scientific Understatement of Climate Risks” (2018), Hans Joachim Schellnhuber and Stefan Rahmstorf, “Climate Change” (2018), Graeme Maxton, Change! Warum wir eine radikale Wende brauchen (Komplett-Media 2018)

Alternative Solutions

Is there an alternative to this free market economic belief system? 

Despite what is (not) taught in universities today, there are many other ways that humanity could choose to develop. Some alternatives, such as monarchies, theocracies and state-directed control have been tried before and most have failed; though all things considered, many have endured for centuries, much longer than the current free market system will last.

If humanity really wanted to adopt a truly sustainable system of progress however, what would that look like?

A sustainable system is hard to imagine partly because there is no clear definition or understanding of what the word sustainable actually means. Sustainable over what period of time? A century? A millennium? Almost nothing societies do today is truly sustainable because almost everything is dependent on the use of non-renewable resources. While wind turbines, electric vehicles and solar panels might reduce the demand for fossil energy, they are not really sustainable because they still require vast amounts of non-renewable resources. Even something as apparently resource-free as a mobile phone app needs energy as well as a vast network of interconnected computers to function.  

“Ecological Footprint measures the ecological assets that a given population requires to produce the natural resources it consumes (including plant-based food and fiber products, livestock and fish products, timber and other forest products, space for urban infrastructure) and to absorb its waste, especially carbon emissions.”

Global Footprint Network

To be truly sustainable, a development system would need to be designed to last for generations. Once it reached the maximum sustainable level, the human ecological footprint could not rise even if the population increased. The needs of future generations as well as all other species, would have to be treated as equal to those living. This would mean almost zero consumption of non-renewable resources while all pollution would need to be limited to what nature could easily absorb.

A NASA photo of earth, where a sustainable "equlibrium" economy is possible only under certain conditions, such as with a fixed maximum human ecological footprint, and very low levels of pollution
Photo credit: NASA

 

A sustainable “equilibrium” economy would have to include the following characeristics: 1) long-term, with the capacity to endure for centuries; 2) within the bounds of nature; 3) capable of satisfying people’s needs fairly, as well as those of other species and future generations; 4) fixed maximum human ecological footprint, regardless of the population; 5) highly restricted use of scarce resources; 6) very low levels of pollution limited to that which can be absorbed quickly and easily; 7) progress measured differently from today—growth could not be the goal; 8) planned leisure time to offset efficiency gains; 9) free and universal access to contraception; 10) no weapons that could cause lasting pollution or that require non-renewable resources; 11) no boom and bust, to maintain social stability; 12) low levels of inequality; 13) restrictions on individual economic freedom.

Boom and Bust

For centuries, economies have developed following a 7-10-year cyclical pattern of boom and bust. Growth creates rising prosperity—a boom—which eventually gets out of control, perhaps because of rising asset prices causing inflation or debts growing too quickly. This eventually leads to a collapse (as in 2000 and 2008)—a bust. Throughout history, governments have tried to control this cycle because it creates so many social problems—at various parts of the cycle—too few jobs, inflation, debt, poverty, among other consequences. A sustainable economy would need to avoid this cycle if it was to be stable.

Farmers would need to put maintaining the health of the land for future generations ahead of food production. Urban organic waste cleaned of chemical residues would be the main source of soil nutrition. Products would need to be designed so that they could be re-manufactured, recycled and repaired without the use of complex non-renewable equipment and without generating any lasting waste. As manufacturers became more efficient, the gains would need to be offset by reducing capacity and by giving more leisure time to workers so that resource use did not rise.

A sustainable economic system would require creativity, flexibility and self-discipline. Innovation and new technology would be needed to reduce waste, improve the rate of recycling and cut energy use. Societies would want to extend the lifespan of products, find new ways of capturing solar power and increase harvests without the use of chemicals. 

There are two further essential conditions. First, an enduring economy must meet everyone’s requirements for food, education, safety, purpose, mobility, communications and shelter, and it must achieve this fairly. This is not just to sustain life but also to reduce risks of conflict.

Once a sustainable society has met citizens’ basic needs, rewards for individual achievement could be given as long as the gap between rich and poor was kept small, and as long as achievements were justly recognised. As well as a guaranteed minimum living standard, there would need to be a relative maximum standard too.

Second, economic freedom would have to be restricted along with free use of resources and the means of production. People would need to respect the limits required to maintain an equilibrium state for all.

Despite such restrictions, humanity could develop healthily in a wide range of social areas (though not in ALL areas—the defence industry could not develop, for example) because it would be released from the values imposed by the so-called free market. Rather than boosting product output, as we find at present, it could grow artistically, culturally, intellectually and technologically. It could focus on improving well-being, life expectancies, health and happiness. Sports and religion could flourish. It is only the resource flow that would need to be kept in a low and constant state, so that scarce raw materials were not depleted and environmental degradation never breached nature’s limits.

While such a development system might seem utopian, especially today, it is well within human capabilities. It does not require anyone to invent anything. The challenge is not technological. It is social and organisational, requiring a deep philosophical and psychological shift in perspective, a change in mindset.

Economics as World View

“Economics” was originally intended to be about how businesses and households function. It was concerned with managing resource use and budgets, the study of how humanity ran part of its society, mostly the money-based part.

Free market economics is much more than that. It is a world view, a philosophy, and it lies at the core of humanity’s current development model, defining the boundaries of social progress. Free market economics is not just about corporations, consumption and trade. It is an all-encompassing guide to thinking, the lens through which almost everything is viewed. Free market economics determines not only what is valued in business, but also what is thought worthy in science, the arts, the legal system and wider society.

The School of Athens (1511) by Raphael, depicting the ancient philosophers contemplating "Oikonomia," an ideology that "sought to identify rational design in nature and culture"
The School of Athens (1511) by Raphael, Vatican Museum, Rome.

In his essay “What Did the Ancient Greeks Mean by Oikonomia?“, Dotan Leshem, senior lecturer in the School of Political Science at the University of Haifa, reveals that in the ancient Greek world “whatever people did, wherever they turned, they were seen as economizing. Both bodily functions and ethical choices were conceived as ‘economized’—that is, seen as rationally managed…even the cosmos itself was conceived by the Stoic philosophers as rationally economized by Nature.” Leshem suspects that “the rise in the popularity of the word ‘oikonomia’ in the Hellenic and Roman Empires” was due in part to a “contemporary ideology that sought to identify rational design in nature and culture.”

The greatest scientific efforts and the finest minds of The Current Age do not follow in the footsteps of their Enlightenment forebears. Their focus is not on trying to make sense of the world around us by discovering new elements or testing the principles of physics. While a tiny number are devoted to the exploration of space and finding the top quark, the great majority are entirely focussed on the development of new products. They design new drugs for those who can afford them, razors with five blades and internet-connected refrigerators. They are devoted to the creation of economic value. 

Similarly art, poetry, music and literature are today considered first for their revenue potential, not for how they might stimulate the human spirit. Ideas that might advance understanding of the soul or deepen inner contentment are superseded by the production of data, images, sounds and information that can be fed into social media streams and boost economic performance. 

Companies seek out opportunities to monetise almost anything for which there is demand, regardless of the impact on the quality of what is produced or the interests of the artists. So those who run music-streaming websites like Spotify, for example, focus on collecting and profiling its users. What the music subscribers hear is secondary and almost none of the revenue created goes to the artists who provide the content.

Further, in free market economics the Earth is viewed not so much as a rare planet and giver of life, but as a provider of economic goods to meet the needs of one species. Nature is redefined as “eco-system services.” The air we breathe, the water that means life, as well as the trees, plants, fish, birds and animals are all said to have a monetary value. This means that a rainforest can be cut down if it can be shown to be worth less than a sawmill, and sources of drinking water, Alpine meadows or seams of coal can be bought and sold, with their destiny decided by those who own them.

Many parts of the judicial system have been subsumed by the free market economic system as well, as businesses have pushed for greater self-regulation and corporate lobbyists have grabbed more influence over public policy. To support faster economic development, companies now greatly define the legal framework in which they operate. They determine how the international trade system functions. Free market thinking also guides much of the democratic process, with party financing often dependent on corporate funding and politicians competing to be more market-friendly.

What’s more, the free market economic system greatly decides what makes people happy. Contentment and reward are not derived from an understanding of inner purpose or from individuals playing a chosen role in a wider society. They are delivered by what people buy and own. Satisfaction comes from acquiring the money needed to buy a house, car or phone. Journeys to far off lands are taken not so much to explore and understand others but to tick boxes off bucket-lists and post the evidence on social media. They are mostly to encourage others to consume more too.

There is surely more purpose to human existence. There certainly was once and there can be again. But what should that purpose be, if it is not to be the endless acquisition of more stuff and the glorification of the self at the long-term cost to nature and our own future? 

That is surely a difficult question. We can be sure though that past societies and empires have had more useful goals, visions and ideals than now. It is hard to think of any past civilisation which had been focussed so single-mindedly as ours on the pointlessness and destructiveness of endless narcissistic material acquisition.

The European Enlightenment is an example, which sought to move humanity onto a higher level of understanding and thought. It wanted to improve the lot of the majority and our understanding of everything. The Renaissance achieved something similar. At times in the past, the arts and literature have flourished—in China for most of the Ming and Qing dynasties, in Japan for many centuries and under many ancient civilisations, from the Egyptians to the Khmers and others. 

Immanuel Kant was an Enlightenment philosopher who believed it was the duty of citizens to support those in society who could not support themselves, and even believed the state should have the power to arrange for this help
Portrait of Immanuel Kant (c. 1790), Artist unknown.

One of the most significant contributions of the various thinkers of the Enlightenment (1650-1800) was their development of the concept of ‘progress’. For example, as the Stanford Encyclopedia of Philosophy explains, German philosopher Immanuel Kant believed that a federation of republics spanning the globe would usher in the final stage of human development when world peace would be achieved. Each republic would be based on the rule of law and composed of free and equal citizens, while the federation would enforce rules of peaceful conduct in their mutual relations, the “domestic and international features of this institutional correlation” mutually reinforcing each other. Kant also “advocated the duty of citizens to support those in society who could not support themselves, and even gave the state the power to arrange for this help.”

Building a better future needs a representative group of people from across the world to come together and work towards the creation of a better goal—be that understanding the universe, eradicating conflict or simply living within the bounds of nature as best we can. They might start by trying to redefine meaning, purpose, ownership and freedom.

A new enlightenment needs to be led by those with a clear long-term vision; who can understand the spirit of the current age and who can move humanity beyond the purely materialist, utilitarian and hollowed-out version of progress promoted by the free market ideologues. Humanity needs a future which incorporates creative, intellectual and spiritual development with a renewed sense of purpose if it is to successfully make the very difficult transition to an environmentally benign economy that can endure.

That will take time. Perhaps many generations. In the meantime, societies need to stop destroying the environment around us. That is the more urgent challenge. But it does not stop us planning a better future at the same time.


Graeme Maxton is an economist and best-selling author. He was the Secretary General of the Club of Rome from 2014-2018 and was previously with The Economist Group, Booz Allen Hamilton and Citibank. His latest book, Change! (Komplett-Media) was published in 2018.

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