Good Idea: Hamster horror

Baby hamsters (awww!) double in weight every week, the New Economics Foundation reports. Which is kind of interesting, and kind of cute, but perhaps not the most obviously pertinent fact to the field of economics.

Actually, the important point as far as the NEF is concerned - mummy hamsters might disagree - is not that the babies grow, but that they stop after puberty. If they carried on doubling in size, within a year each little hamster would reach a less-than-adorable body mass of nine billion tonnes. "There is a reason that in nature things do not grow indefinitely," the authors of Growth Isn't Possible note drily.

Endless growth may not be what we want from our rodents, but when it comes to the economy, the NEF points out, we have come to believe that unchecked expansion is always a good thing. The theory goes that rising GDP increases wages, reduces unemployment and raises tax revenues, leading to better public services and lower deficits. So everybody gets richer and therefore happier. Right?

In fact, as the NEF says (and as Richard Wilkinson and Kate Pickett show in their book The Spirit Level), Britain is already well past the point at which raising incomes leads to a proportionate increase in living standards.

And anyway, the NEF explains, economic growth can't eliminate poverty. Its benefits are weighted towards those who account for the greatest proportion of consumption; so the rich are required to consume ever more, while those on the lowest incomes receive ever-dwindling benefits. Meanwhile the world's distinctly finite resources are quietly being stripped bare, a task that will be completed long before dwindling returns could ever seriously affect poverty: if every country used resources as fast as the UK, we'd need 3.4 planets to meet demand. Growth promotes inequality, which, as Wilkinson and Pickett argue, is what really holds society back.

First popularised during the 1930s, growth-based accounting helped to measure government efforts to fund its way out of depression, then later aided increased production for the war effort. But what it cannot do is measure anything about an economy except its size. It reveals nothing about quality of life, for example, or non-monetary parts of the economy, such as family and community care. It breeds an approach to resources that, as the world mutters about its emissions targets, is untenable.

The NEF offers an alternative: resizing the economy by reskilling, urban agriculture, shorter working weeks, local currencies and, hardest of all, getting politicians to accept that endless boom is neither feasible nor desirable. It's a radical plan, if not downright utopian. But as any nine-billion-tonne rodent could tell you, big problems call for big solutions.

This article first appeared in the 08 February 2010 issue of the New Statesman, Nightmare on Cameron Street