Sunday, September 12, 2010

Negative growth: literally inconceivable

“Anyone who believes that exponential growth can go on forever in a finite world is either a madman or an economist.” – Kenneth Boulding

To a large degree, the very idea of something called "the economy" is coextensive with the idea of economic growth. When John Maynard Keynes wrote his General Theory, there was no reified entity called "the national economy." Adam Smith never used the phrase; neither did Karl Marx; nor did any of the neoclassical economists. Rather, the word "economy" refered simply to the process of individuals allocating scarce resources.

In fact, the first effort to analytically and statistically instantiate "the economy" as a holistic and unitary object probably occurred in 1928, with the first Soviet "National Accounts," which formed the basis for Stalin’s first Five Year Plan—arguably the first full-spectrum "national economic growth" plan ever put forth by a government. For capitalist economies, the idea of national income accounting was developed in the late 1930s by Simon Kuznets as a way to test the efficacy of Keynesian theories for generating aggregate economic growth.

Here's the key point of this mini-history: as a body of positive theory, modern macroeconomics is built around the normative assumption that what economies are supposed to do is grow. (And it’s not just economics: modernization theory in political science and sociology also assumed the viability of endless growth.)

This fundamental theorical assumption in the social sciences in fact merely reflects a similar set of assumptions at the core of modern politics: in a nutshell, modern politics in all countries in the world over the last century or so have been built around the normative assumption that endless growth is not just the solution to overcoming distributionist conflict, but also sustainable in perpetuity. In other words, the macro-political problem the planet now faces is underpinned by a fundamental theoretical problem: the very notion of "the economy" takes for granted the idea of an endless "more." Political will aside, political officials and policy intellectuals (to say nothing of businesspeople) literally don’t know how to think about an economy predicated on principles other than expansion and growth.


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Jan B. said...

Dr. Gilman, I came across an interview on not long after reading this post of yours. Because I enjoyed the juxtaposition, I thought you might, too.

The interviewee:

The book prompt:

World of Giving by Jeffrey Inaba and C-Lab: Reasons why we give; how giving works; Aid Capital and more.

PonyLuna said...

Dear dr Gilman
sorry to use these comments to contact you, but I didn't find any other way.
My name is Matteo Bortolini and I am an assistant professor in sociology at the University of Padua, Italy.

I am writing a sociological biography of the American sociologist, Robert N Bellah, and I have read your book, "Mandarins of the Future", with great interest and pleasure. I found the book, and especially its chapter of the Department of Social Relations, a goldmine of informations.

I am writing to ask you if you may send me a copy of the essay "Involution and Modernization: The Case of Clifford Geertz." I would be very useful for my present work (I'm writing a chapter on Bellah and modernization theory), but no Italian library holds the book. Also, I will be ver happy if you would like to read and comment upon a first draft of my paper.

Looking forward to hearing from you soon
best regards
Matteo Bortolini