Labour

When the growth model fails

In this rather metaphysical piece, Daniel Cohen grapples with the constant search for economic growth. He suggests we, as a population, “set aside greed and fear” and invest in the economy without worry. Unfortunately, he notes that most of us are driven by capitalism into a constant need for a higher salary. The environment of constant competition produces the inaccessibility of contentment. Wealth hoarding by the rich, and constant worry about the future by the poor means hardly anyone invests in our economy, leading to stangnation. Cohen also tackles the question of labour in am increasingly mechanized world. He observes that unhappy workers don’t invest in economy, and thus, the happiness of workers is essential to economic growth.

Read an excerpt of the article written by Daniel Cohen:

PARIS — Economic growth is the religion of the modern world, the elixir that eases the pain of conflicts, the promise of indefinite progress. It is the solution to our perennial worries about not getting what we don’t have. And yet, at least in the West, the growth model is now as fleeting as Proust’s Albertine Simonet: Coming and going, with busts following booms and booms following busts, while an ideal world of steady, inclusive, long-lasting growth fades away. In the United States, 80 percent of the population has seen no growth in purchasing power over the last 30 years. In France, annual per capita growth has dropped steadily from 3 percent in the 1970s to less than zero in 2013. In the interim, the political class has been flummoxed by stagnation, a hesitation that has opened the doors to populists of various stripes. But in its desperate search for scapegoats, the West skirts the key question: What would happen if our quest for never-ending economic growth has become a mirage? Would we find a suitable replacement for the system, or sink into despair and violence? John Maynard Keynes, writing at the outset of the economic crisis of the 1930s, warned against misdiagnosing the situation. In his famous article ‘‘Economic Possibilities for Our Grandchildren,’’ he declared that a period of exceptional prosperity was at hand and that the world’s ‘‘economic problem’’ would soon be resolved — just as, in the preceding century, strong growth and food safety arrived on a wave of technical innovation. To wring all we can out of the economic growth model, he said, the world must set aside greed and fear, outdated characteristics of a bygone era of misery. Instead, we must learn to enjoy ourselves — and above all to consume, without restraint and without worrying about tomorrow. Ultimately, Keynes believed that we would end up working only three hours a day and after turn to the truly important tasks of art, culture and religion. Sadly, such metaphysical pursuits have not come to be the world’s priority at this point in history; instead, we still live in fear of poverty, inequality and joblessness. The perpetual quest for material wealth remains our primary goal, despite the fact that we in the West are six times richer than we were in the 1930s. Thus it must be said that Keynes, an intellectual giant of economics, erred: The vast accumulation of wealth hasn’t at all satisfied or moderated the appetites of our materialist society. The so-called Easterlin paradox helps explain Keynes’s mistake. According to the economist Richard Easterlin, wealth does not correlate to happiness. A higher salary is obviously always desirable, yet once we’ve reached that target it is never enough: We fall victim to a process of habituation of which we are largely unaware. Similarly, as we each set goals for ourselves driven by our current desires, we fail to take into account how our desires change over time and in new circumstances. This explains why economic growth, more than pure wealth, is the key to the functioning of our society: It provides each of us with the hope that we can rise above our present condition, even though this dream remains ever elusive. Which brings us to the fundamental question: Will economic growth return, and if it doesn’t, what then? Experts are sharply divided. The pessimists, led by the economist Robert Gordon, believe that the potential for economic growth is now much lower than in the last century. The new industrial revolution may have given us the smartphone, but that hardly compares, in his thinking, to the great advances of the 20th century: electricity, the automobile, the airplane, movies, television, antibiotics. On the other hand, optimists like Erik Brynjolfsson and Andrew McAfee tell us in their book ‘‘The Second Machine Age’’ that Moore’s Law is going to allow ‘‘the digitization of just about everything.’’ Already, Google is experimenting with driverless cars, and robots are caring for the elderly in Japan: Another burst of growth appears to be at hand. To decide who is right, one must first recognize that the two camps aren’t focusing on the same things: For the pessimists, it’s the consumer who counts; for the optimists, it’s the machines. ...Read more