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It’s now abundantly clear that the overriding priority of this Labour Government is “growth” – a word endlessly repeated by Keir Starmer, Chancellor Rachel Reeves and other senior ministers.
Opening an investment summit in London this week, Starmer urged the assembled corporate executives to unleash “the shock and awe of investment” and promised them: “We will rip up the bureaucracy that blocks investment […] and we will make sure that every regulator in this country, especially our economic and competition regulators, takes growth as seriously as this room does.”
Why? Because “it’s not just that stability leads to growth – it’s also that growth leads to stability”, Starmer said.
But is this true? As the former Green Party MP Caroline Lucas commented on X: “It’s as if none of the work on sustainable economies ever happened. Starmer bangs on about ‘growth’ but growth of what, for whom, at what cost? Not all growth is good and, as scientists concluded last week: ‘In a world of finite resources, unlimited growth is a perilous illusion.’”
Lucas was referring to a major study by an international team of scientists in the journal BioScience, ‘The 2024 state of the climate report: Perilous times on planet Earth’. Its authors don’t pull their punches, warning that “the future of humanity hangs in the balance” and that this balance is now tipping heavily towards irreversible catastrophe:
These projections paint a bleak picture of the future, with many scientists envisioning widespread famines, conflicts, mass migration, and increasing extreme weather that will surpass anything witnessed thus far, posing catastrophic consequences for both humanity and the biosphere
The 2024 state of the climate report
Endless Growth Doesn’t Create Stability
The assumed necessity for endless economic growth has been at the heart of most economic thinking for well over 150 years – and not just among economists who believe in unfettered capitalism.
In The Communist Manifesto, Karl Marx and Friedrich Engels observed that capitalism “has created more massive and more colossal productive forces than have all preceding generations together” and “rescued a considerable part of the population from the idiocy of rural life”. Marx saw this as an entirely necessary stage in the development of human societies, albeit one that contained the seeds of its own destruction.
For Marx, capitalism’s contradictions – the competitive forces that compelled capitalist enterprises to grow by constantly expanding into new markets and intensifying the exploitation of labour – were inherently unstable and would lead inexorably to communist revolution.
But the world he envisioned emerging from this was not one in which economic growth was no longer necessary. On the contrary, he believed that the revolution would only have succeeded when “the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly”.
Under Stalin, the world’s first communist government in the Soviet Union focused relentlessly on expanding these productive forces, at huge cost to the natural environment and human health.
The arguments for government intervention in the market economy made by John Maynard Keynes In the 1930s addressed precisely the contradictions of capitalism that Marx had identified, and that had led to the Wall Street Crash of 1929 and the Great Depression that followed.
Keynesian economics aimed to ensure a steadier form of growth than classical “free market” doctrine had proved capable of, avoiding the booms and busts that had caused such social and political turbulence in the period before World War Two. This approach underpinned the policies of most Western governments for more than three decades after the war, a period of unprecedented growth, until the resurgence of laissez-faire ideology in the shape of Thatcherism and “Reaganomics”.
In the wake of the 2008 financial crisis – seen by many as an inevitable result of the deregulation of the financial sector under Thatcher, Reagan and their successors – Keynesian thinking enjoyed a revival, providing the theoretical basis for the macroeconomic interventions needed to avert systemic collapse.
As Harvard professor N. Gregory Mankiw wrote in the New York Times, “If you were going to turn to only one economist to understand the problems facing the economy, there is little doubt that the economist would be John Maynard Keynes.”
The Ecological Limits to Endless Economic Growth
Through all these upheavals and reversals, however, one thing has remained constant: the assumption that unending growth is a desirable goal in itself. Yet if we are to take the increasingly desperate warnings of scientists seriously, we can only conclude that Starmer’s assertion that growth leads to stability is not just wrong – it is a dangerously false misrepresentation of the situation we now face.
This assumption was brought into question as early as 1970, when a team of researchers at the Massachusetts Institute of Technology were among the first to examine the ecological limits to endless economic growth. They created a model to test the impacts of the further expansion of population, agricultural production, non-renewable resource depletion, industrial output, and pollution, and in 1972 this research formed the basis of The Limits to Growth, a report by the Club of Rome.
The conclusions of this report were to prove prescient:
The limits to growth on this planet will be reached sometime within the next one hundred years. The most probable result will be a rather sudden and uncontrollable decline in both population and industrial capacity
The Limits to Growth report, Club of Rome
With large parts of the biosphere now dying in front of our eyes, from tropical rainforests to marine ecosystems, and evidence emerging that the natural carbon sinks that should prevent rapid global heating from further accelerating are now absorbing almost no carbon, there can be no doubt that this point has now been reached.
In the past ten years, economists such as Kate Raworth and institutions including the New Economics Foundation (NEF) and the Institute for Public Policy Research (IPPR) have developed new ways of looking at the economy that prioritise human wellbeing and environmental sustainability rather than gross domestic product (GDP).
But while these ideas have gained traction in academia and in the environmental movement, they still seem remote from the centres of economic decision-making.