Increasing pile of coins
Exponential growth of money

Economy, health, happiness and the environment. Bigger is not always better.


 Why a continually growing economy can reduce your health, happiness and damage the environment.

Increasing pile of coins

Why this article?

This post is about the economy and how it affects our happiness, health and environment. I am not an economist; in fact, environmental economics was my least favourite course during my master’s degree. The fact is that for better or worse the economy has the ability to touch every aspect of our lives.

The more I observe and learn about the drivers behind much of our discontent in consumer cultures, the sources of chronic disease and the continual damage to our natural environment the more I see this is a side-effect of our economy.

A really brief history

The standard of living and the size of the economy did not change much for a very long period of time for the majority people until the steam engine was invented. Lives were almost entirely fuelled by the sun in the form of plants, trees and animals.

Suddenly, in the 18th century with the invention of the steam engine we were able to cheaply mine coal and use the energy of fossil fuels to do a lot of work cheaply for us. The industrial revolution was born and our lives started changing much faster. The discovery of oil and natural gas followed, their ease of use and transportation helped fuel even more growth. The economy started to grow quickly as we were able to produce and make things with less labour and cost. In many ways the quality of life increased for many people, disposable incomes increased and lifespans and population increased too.

In the 20th century we found more ways to consume fossil fuel energy to cheaply produce more and more products. This allowed further increase in average lifespans and reduction of working hours for many people. The economic growth that had been seen from the industrial revolution until after the Second World War was significant and produce large real benefits for almost everyone.

After the Second World War policy makers and economists started becoming fixated on growing the total size of the economy. We became focused on more for the sake of more.

In the 1970s due to oil price shock and pollution there were concerns about the environmental and health impacts of all this growth. This was quickly replaced in the 1980s with the political fixation that there was no alternative but to continually grow the economy. This political fixation has largely remained in place.

What are we really growing?

The measure for growth is the Gross Domestic Product (GDP) or Gross National Product (GNP). Statistics Canada defines the GDP as the total unduplicated value of the goods and services produced in the economic territory of a country or region during a given period.

The big problem with this measure, especially when we become fixated on it, is that it does not tell us whether this growth is related to things that benefit us.

Is the economic growth making real improvements to our lives or have we lost track of what really matters?

Are we living high quality lives? Do we have meaningful work? Are we healthy? Are we happy? Are our communities and families that support our health and happiness strong? What about our local and global environments?

The overall measure tells us about the country or region as a whole but does not tell us how the value of the goods and services is produced is distributed. If the economic growth comes from extracting non-renewable resources or from destroying natural environments there is no taking into account the things we have lost in the process of producing goods and services. The economic growth also does not tell us how any wealth generated is distributed.

The other really big problem with continual growth, especially on a global scale is that it relies on ever increasing consumption of goods and services.

Why over-consumption is a problem

In order to satisfy the growth economy we must always want more. This famous quote from an economist Vicotr Lebow in 1955 sums it up. “We need things consumed, burned up, replaced, and discarded at an ever-accelerating rate. We need to have people eat, drink, dress, ride, live, with ever more complicated and, therefore, constantly more expensive consumption.”

We all know what happens if we regularly eat more than we need. We don’t feel good and we gradually start getting bigger and then we feel like moving less and gradually our health and often our happiness decreases.

To me this is the point we are at in many wealthy nations. We have all the food, and materials things in excess of what we need but we just keep consuming more. We spend valuable time and personal energy to manage all the information and belongings we have. From the time online getting ideas of what to consume, shopping, buying, unpacking and throwing out the packaging to cleaning, storing, maintenance and finally disposal of those items.  How much does this consumption really add to our lives?

The other huge issue that has not been mentioned yet is the environment. We all live one planet, one beautiful, blue planet with only a finite amount of non-renewable resources, a finite capacity to renew some resources and a limited amount of solar energy striking its surface. There are politicians who talk about the economy and the environment going hand in hand, I disagree. Without a healthy environment we do not have life.

Life on this planet depends on complex systems of geological, chemical and biological cycles. As our human global economies and populations grow, we are disrupting more and more natural cycles and we do not include the prices of these as we grow our economy. Without the resources and services our planet and its living inhabitants give to us our economy cannot exist, but we discount them from any calculations. When a forest is stripped to mine a material, the animals and people are often displaced, there may be wealth, perhaps some well-paying jobs for a while, but the bulk of the money often goes offshore and then is shared only amongst a few wealthy people. Pollutants that travel off the site can affect the people and animals downstream and when a mine closes there is clean-up required which frequently falls to taxpayers or local residents. The question again becomes, what is this growth for?

What are the alternatives?

The proponents of continual economic growth would say that all we have to do is to decouple (separate) growth from the flow of resources such as materials and energy. We just use less energy, less materials to produce this growth. The problems is that although we may have done this in a minor way we have tended to move manufacturing to countries based on price not on efficiency of material use. It is highly unlikely we can ever fully decouple economic growth from the material and energy cycles.

The circular economy

The idea of the circular economy has been adopted in Europe and within some large companies but it is still seen as a means to growth. The Waste Resources Action Programme in the UK defines the circular economy as:

The circular economy is an alternative to a traditional linear economy (make, use, dispose) in which we keep resources in use for as long as possible, extract the maximum value from them whilst in use, then recover and regenerate products and materials at the end of each service life.

Another description of the circular economy is:

A future where every product is designed for multiple cycles of use, and different material or manufacturing cycles are carefully aligned, so that the output of one process always feeds the input of another. Instead of emissions, manufacturing byproducts, or damaged and unwanted goods as ‘waste’, in a circular economy they become raw material, nutrients for a new production cycle.

This is a great idea in theory but will take a huge adjustment to how we operate now to implement fully. In a global economy we extract materials in one country, process somewhere else, manufacture in another part of the world, and assemble them somewhere else before selling the same product all over the world. In order to recover the goods at the end of their life cycle and get them somewhere to be reprocessed it takes energy. How we fuel our continually growing energy consumption is part of our environmental and economic problems. The only way this system will work well is within local and regional economies.

The steady-state economy

The idea of a steady-state economy has been proposed by some ecological economists.

A steady state economy is an economy with stable or mildly fluctuating size. The term typically refers to a national economy, but it can also be applied to a local, regional, or global economy. An economy can reach a steady state after a period of growth or after a period of downsizing or degrowth. To be sustainable, a steady state economy may not exceed ecological limits.

I love this idea and I think it is where we ultimately need to be. This is a huge shift from where we are now and the big question is how do we do it and how do we transition to this system without huge instability and disruption? No one has the complete answer to this but there are researchers that have shown in their computer models that it is possible.

The big question that we really need to answer is “What do we need to live a happy, healthy life within the ecological limits?”

Hands joined above green ground

What we want from the economy

Imagining a new type of economy is not new. Some very influential works on this topic were written in the 1970s including Small is Beautiful by E.F. Schumacher, Steady-state economics by Herman E. Daly and Limits to Growth by Donella Meadows, Dennis l. Meadows, Jorgen Randers. More recently Tim Jackson, a well-known economist from the UK wrote a book about Prosperity without Growth. Within the book he examines in detail what wealth and flourishing really means. His list of qualities that an economy should provide is:

  • Capability for flourishing
  • The means to a livelihood
  • Participation in the life of society
  • A degree of security
  • A sense of belonging
  • The ability to share in a common endeavour and yet to pursue our potential as individual human beings.

Another simpler but similar list for a high quality life is:

  • Health
  • Happiness
  • Secure employment
  • Leisure time
  • Strong communities
  • Economic stability

So how do start creating this economy that make ourselves healthier and happier and to regenerate our home (the natural environment)?

Building the economy for a high quality life

Building an economy that make ourselves healthier and happier and regenerates the natural environment is not likely to happen from the top down. Governments, politicians and large corporations are not going to be the ones that start the transformation to a new economy because for the large part the leaders of these groups are the “winners” in the current system.

We cannot magically disentangle ourselves from the existing economy but we can start making a transition with our wallets, our actions and voices. We need to rebuild strong local economies and community connections. When you spend money in your local community, particularly in locally owned businesses the money recirculates more within the community rather than instantly being sent away.

Actions to Build Strong Local Economies and Communities

The most important parts of our economy to transition, in my opinion are the basic products and services that we need on an ongoing basis. We need strong local food, water and energy systems as well as strong community support networks and we need to have fun too.

Powerful Actions to Build Strong Local Economies and Communities

Graphic showing actions to grow local economies

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