We Are Moving Towards a New Kind of Growth 

The industrial revolution started with James Watt’s invention of a commercially viable steam engine in 1776.

Over the roughly one million years of human development, the industrial age constitutes only 233 years.  Were we to force that time span into 24 hours, we would only have been industrialized for 20 seconds.

In nature, it seems that everything either grows or dies. But nature is not simple. Farmers know that for a field to regenerate, it must be allowed to fallow. For the farmer, fallowing forsakes current income in order to produce higher future yields. That is actually a definition of investment. The problem is that we confuse no-growth fallowing with lack of progress — because continuous growth has also become synonymous with progress in the public mind.

But much happens during fallowing. Farmers plow the ground so that weeds can be brought to the surface and removed and the soil structure improved so that it can better absorb water and nutrients.  Earthworms enrich the soil, microorganisms flourish, and when the fallow field is planted again, rising yields more than compensate for the pause.

For 235 years, we have harvested more from the Earth than we did over the entire period prior to the industrial revolution.  We have learned some important lessons from that experience:

1.      Not all growth is good for us.

There used to be abundant water, abundant breathable air, abundant fisheries, and abundant energy for our daily needs.  New scarcities have emerged relating to groundwater, fossil fuels, world fisheries and recently, world harvests.  And in many cities, breathable air is still lacking.

2.      New scarcities emerged because we have been consuming beyond our means.

Starting in 1973 growth in wages fell below our growth in consumption. Household debt between 1973 and today increased 13 times, government’s debt increased 20 times, but wages grew by only 1.86 times.  We became overextended, and the only way to finance the debt was by hoping for continual increases in the prices of the assets that we had acquired at a time when we thought we could afford them.  The private savings rate turned negative in 2005. Asset prices entered a free fall in 2007: Prices of housing, stocks and commodities all dropped dramatically.

3.      The economy was like a field that had been exploited without pause.  To meet our needs, we even consumed part of the seed corn: What we should have invested, we consumed.

A real field is restored through fallowing.  So is the real economy.  The pause that is now imposed on us forces the regeneration that is needed.

How does a real economy fallow?

We see it all around us:  People cook at home instead of eating out.  People are going to the library again.  People are staying home rather than vacationing in distant and expensive places.  People are repairing their shoes, mending their clothing, remodeling their homes, going for walks, shopping at local farmers’ markets, attending school at night, staying healthy, postponing cosmetic surgery — maybe canceling it altogether.

But does not all this make us poorer?

No.  The Gross National Product is a poor measure of our wealth.  The early economists measured our wealth in satisfaction, and satisfaction in the U.S. peaked in the fifties.  Beyond the necessities of food, clothing, shelter, education and health, satisfaction does not increase with additional wealth accumulation.  In fact, our current stress and insecurities largely stem from the very possessions we accumulated at a time when we lived beyond our means.

What is the New Growth referred to in the headline?

It will be a shift of focus from investing to meet human needs rather than human wants.

There is no limit to human wants.  Human needs, however, signal when they are met.  Meeting these needs often doesn’t cost any money.

So — what are the human needs that also increase human capital? How can we improve our yield of life satisfaction by forsaking excessive consumption?

The first priority is to increase our ability to contribute both to the satisfaction of others and to that of ourselves.  This could happen through serving as volunteers in organizations we support, learning new skills, teaching others the skills we have, and helping people in need.

Then, take care of our own health so that we do not become a burden to others: A healthy diet, long walks, attending to weight and blood pressure, and dropping unhealthy habits would all do wonders for our health.

Keep in mind that the eternal scarcities are time, space and human interaction. An economist’s advice to you would be to allocate your time so that it maximizes satisfaction with life, organize your space so it is not an obstacle to what you need to live, and be with people who make you happy.

None of this is measured and included in the GDP.  We have only the vaguest idea of how much human capital we add to our collective wealth each year.

But we know it when we are investing in our own human capital.

We know it, because we see how we can contribute more, how we can help more, and how we can build a richer community life.

One day some bright scientist will find a good way of measuring our increased capacity, our increased human capital, and make it visible to all.

In the meantime, let the economy fallow for a while.  Let us bring back the sense of security of living within our means.  For those who may be laid off for awhile: Rethink what you most would like to do on this Earth.  Then start it.  You will find a way.  And for all the rest:  Find out how you can help!

During World War II, Norwegians were healthier than ever.  They could not buy tobacco, and sugar was in short supply. Refined flour was severely rationed.  But the ocean teemed with fish, vegetable gardens flourished on city lots, and people picked fruit and berries to preserve them for the long winters.

We certainly had become poorer measured in money.  But I cannot recall a time when the community was more united, friendships and will to sacrifice were stronger, and ingenuity in making do with what we had was more prevalent.

Now Norway is one of the richest countries in the world in per capita income. Norway also has no government debt and owns the third largest sovereign fund in the world.  What could they work on now in that beautiful and well-run country?  Well, Norway ranks No.27 in freedom, No.9 in safety, No.12 in justice, No.13 in competitiveness, and No.19 in happiness compared to other nations.

It is a challenging agenda to make every citizen freer, safer, more justly treated, more competitive, and happier.  Economists can estimate the wealth increase that will follow from moving forward all these areas, except maybe happiness.

Happiness is elusive.  It is summoned by reaching out rather than turning inward.  What we do for others is more strongly satisfying than what we do for ourselves.  From an evolutionary perspective, that is what helps us survive as a species — whether it is barn raising on the North Dakota prairie or fighting disease in Africa.

In our final hours we are not likely to focus on our possessions — we shall probably think about what made our lives richer and more fulfilling.  We shall remember those moments when we experienced what Thomas Hood described as ‘a happiness that made the heart afraid’. We shall visit memories of both happiness and sorrow, both victories and defeats, and we might ponder how we could have lived an even better life.

But if we have learned, and grown, and loved, and contributed, I know the feeling we would all have: What a splendid ride! What a glorious life!

But why did life put us through all these tests before we had learned life’s lessons? And could we not have learned those lessons before we faced the tests?

I think we could have. That is precisely what would have changed our lives, and the world, for the better.

How about acting on life’s lessons now? Before it is too late?

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