History of the Future of Economic Growth

Historical Roots of Current Debates on Sustainable Degrowth

Iris Borowy, Matthias Schmelzer

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781134866762
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The future of economic growth is one of the decisive questions of the twenty-first century. Alarmed by declining growth rates in industrialized countries, climate change, and rising socio-economic inequalities, among other challenges, more and more people demand to look for alternatives beyond growth. However, so far these current debates about sustainability, post-growth or degrowth lack a thorough historical perspective.

This edited volume brings together original contributions on different aspects of the history of economic growth as a central and near-ubiquitous tenet of developmental strategies. The book addresses the origins and evolution of the growth paradigm from the seventeenth century up to the present day and also looks at sustainable development, sustainable growth, and degrowth as examples of alternative developmental models. By focusing on the mixed legacy of growth, both as a major source of expanded life expectancies and increased comfort, and as a destructive force harming personal livelihoods and threatening entire societies in the future, the editors seek to provide historical depth to the ongoing discussion on suitable principles of present and future global development.

History of the Future of Economic Growth is aimed at students and academics in environmental, social, economic and international history, political science, environmental studies, and economics, as well as those interested in ongoing discussions about growth, sustainable development, degrowth, and, more generally, the future.

1 Seventeenth-century origins of the growth paradigm

Gareth Dale

The growth paradigm, as I understand the term, refers to the idea that ‘the economy’ exists as an identifiable sphere of society, that it possesses an inherent tendency to grow, that its growth is imperative, continuous (even, essentially, limitless), and that growth is an acknowledged social goal and a fundamental social good – even indeed the principal remedy for a catalogue of social ills.¹ One may question one or the other element of this formulation but there is little doubt that a set of ideas of this type has been profoundly influential, across the world and for a long time. This invites the question: how long? When did the growth paradigm come into being? Out of what materials was it fashioned and by whom?

These are the questions explored in this chapter. It begins by surveying a sample of civilizations, including ancient Mesopotamia, India’s Mauryan Empire, Tang-dynasty China, and fourteenth-century Maghreb, in each case parsing documents and other evidence that provide insight into behavioral and ideological phenomena that, prima facie, resemble the modern growth paradigm. In each case, it is suggested, the differences outweigh similarities. The chapter then moves on to propose that, in close connection with the rise of capitalism and Europe’s colonial land grab, a set of socio-economic, cultural, and ideological changes conducive to the growth paradigm arose during the middle of the last millennium – roughly speaking, the sixteenth through eighteenth centuries. It charts the advent of a new conception of time: abstract, infinite, and uniform, locked to the metronome of capital investment and increasingly connected to a social concern with quantification. It then examines the interconnections between three major developments that were unfolding in seventeenth-century western Europe – maritime-colonial expansion, the scientific revolution, and the rise of capitalism (including, crucially, the ascendancy of the ‘market paradigm’ in economic thought) – and explores their relationship to early scientific economics and to the ‘Eden project’: the crusade to create paradise on Earth by means of ‘improvement’ and colonial plantation. These processes put wind in the sails of the idea of Progress and, simultaneously, facilitated the discursive construction of ‘the economy’ as an entity subject to law-governed dynamics of growth. Clearly, in this short chapter I cannot analyze these transformations in detail. Instead, I shall attempt to sketch them in broad brush strokes.

From Mesopotamia to the Maghreb

If one searches for evidence of the growth paradigm in documents from the ancient civilizations one comes away empty-handed. Consider for example Bronze Age Mesopotamia. One could be forgiven for thinking that all ingredients were present necessary for the emergence of something that would at least bear a resemblance to the growth paradigm. There were rulers who drove their subjects to work harder, as immortalized in the Epic of Gilgamesh (Sedlacek 2011, 21). There were markets and trading, acquisitively minded individuals and the ability to amass wealth and to pass it on to one’s heirs. There were sophisticated accounting techniques and a form of money, enabling different types of wealth to be rendered commensurable and their dimensions measured. Technological and scientific genius were evidently not in short supply. The Mesopotamians are credited with inventing agriculture, animal domestication and the seeder plough, glass, and of course the wheel (for pottery, later for chariots), as well as complex writing and arithmetic (to keep inventories of the secular and religious elite’s possessions). They came up with the concept of zero, and the minute. They were, arguably, the first to construct towns, not to mention countless inventions and innovations in irrigation and sanitation techniques, in architecture (the arch, column, and dome), and in politics (the state, including two of its basic forms: the city state and the empire). This was in many respects a bustling and innovative society – but of the growth paradigm? No sign.

Skip forward to what the philosopher Karl Jaspers designated the Axial Age, the period from 800 to 200 BC that witnessed, more or less simultaneously in China, India, Greece, and Persia, a flourishing of philosophical thought – broadly defined as the application of principles of systematic reasoned inquiry to the great questions of existence. What was it that occasioned this momentous eruption of critical inquiry? Greater literacy was one factor. Another, argues Richard Seaford (2013), was the spread of coinage (in India, China, and Greece), and markets. These developments, David Graeber conjectures (2011, 237–239), fostered a “habit of rational calculation, of measuring inputs and outputs, means and ends” which found an echo in a “new spirit of rational inquiry.”

Something of this spirit can be seen for example in documents from Greece and India in the fifth century BC. In India, the age of Buddha saw thriving urban economies, with merchant classes trading the agricultural and artisanal surplus, and the rise of the Mauryan Empire, initially under the leadership of Chandragupta Maurya. The Mauryan monarchy maintained a colossal standing army and a vast bureaucracy that enabled it to sponsor a major expansionary drive, constructing irrigation projects, founding new settlements, and encouraging sudras to settle as farmers on state-granted land (Thapar 1987; Harman 1999, 49–50). Chandragupta’s advisor and minister, Kautilya, is thought to be the main author of a remarkable text, the Arthashastra.² Although normally translated as “manual of statecraft,” in that it consists of advice to rulers, a more literal translation would be “the royal road to wealth.” “Artha” means worldly success in terms of power and wealth, and the Arthashastra is restricted to a special aspect of it: the enhancement of royal power and revenue (Habib and Jha 2004, 46). Much of it is devoted to spelling out the techniques of maintaining the royal household (such as revenue collection, and accounting), and certain passages have an arrestingly modern resonance. Kautilya (1962, 76) advises that the ruler should “facilitate mining operations,” “encourage manufactures,” promote the “exploitation of forest wealth, […] construct highways both on land and on water, … and plan markets.” In agriculture, he should confiscate lands that are left uncultivated and should “give to cultivators only such farms and concessions as will replenish the treasury and avoid denuding it” (Kautilya 1962, 75). Some passages are concerned with productivity. In mineral extraction, the ruler is advised that the best mines are those that “can be exploited with least expenditure of resources, yielding valuable products and commanding easy communications” (Kautilya 1962, 130). Other passages offer a guide as to which activities bring prosperity to the exchequer and which represent a drain. The former category includes “reward for enterprise, suppression of crimes, economy in administration, prosperity of harvest, growth of trade, conquest of adversity and crisis, reduction of tax-remissions, inflow of precious metals.” The latter includes defalcation and individual trading with state funds, “investment,” and “extravagance” (Kautilya 1962, 86).

One should think twice before taking the Arthashastra at face value. It is not always easy to ascertain which passages are descriptive and which are normative or strategic. Some were added by later authors, and translations from the Sanskrit may have introduced a modern gloss. Is it nonetheless a ground-breaking text? Certainly, its recommendation of the single-minded pursuit of “artha” broke dramatically with traditional Brahminic codes (Habib and Jha 2004, 46, 156). But it is not an exemplar of the growth paradigm. That investment is categorized as a drain on the exchequer, next to the misappropriation of funds, is perhaps a hint of this, and so too is Kautilya’s suspicion of merchants and his vehement opposition to permitting prices to rise and fall in line with supply and demand (Boesche 2002, 99). These are not in themselves necessarily antithetical to the growth paradigm but they are symptomatic of a fundamental point: the acquisitive projects that Arthashastra describes belong strictly to the royal household (not to “the economy” in general), and its purpose is specific: to ensure the royal treasury is full to the brim. Neither did Arthashastra advocate a theory of progress, or anything remotely resembling one. Instead, Kautilya’s theory of history is cyclical. Kingdoms come and kingdoms go; they undulate continuously and ceaselessly through three phases – decline, stability, advance – and so on ad infinitum (Boesche 2002).

Following the passing of its most celebrated leader, Ashoka, the Mauryan Empire entered terminal decline. Ashoka had elevated Buddhism to a state religion and sponsored its missionary outreach. In China under the Tang dynasty (seventh to ninth centuries AD), Buddhist monasteries established themselves as dynamic centers of economic activity. A striking instance was the “Three Levels” movement. Its monasteries presided over a remarkable process of accumulation, in so-called Inexhaustible Storehouses. Their “inexhaustible” wealth, the sinologist Jacques Gernet explains (1995, 169), referred to that portion of the monastery’s assets that was dedicated to the provision of credit at interest. The historical records tell of astonishing scenes, as devotees vied over who could donate the most to the Inexhaustible Storehouses. From across the empire they streamed to the central headquarters in Chang’an (Xi’an) – then the biggest city in the world – at the gates of which they would deposit cartloads of silks and silver (Hubbard 2001, 154, 198). The fortune was disbursed in the form of alms, harvest loans, and investment in the monastery’s religious infrastructure and commercial enterprises.

Buddhist communities, with the Three Levels sect to the fore, “introduced a form of modern capitalism into China,” Gernet argues (1995, 228), with “consecrated property, constituted by an accumulation of offerings and commercial revenues.” Graeber (2011, 264–268) makes a similar claim, linking it directly to the growth paradigm. The Inexhaustible Storehouses, he argues, manifested “the quintessential capitalist imperative of continual growth; the Treasuries had to expand, since according to Mahayana doctrine, genuine liberation would not be possible until the whole world embraced the Dharma.” This was “something very much like capitalism,” in that it embodied “the need for constant expansion. Everything – even charity – was an opportunity to proselytize; the Dharma had to grow, ultimately, to encompass everyone and everything, in order to effect the salvation of all living beings.” But how comparable to the capitalist growth imperative is the commitment, however fervent, to the growth of dharma? It is worth recalling that the bulk of the wealth contained in the Inexhaustible Storehouses consisted of offerings of the faithful (Gernet 1995, 211). Their gifts were a monetary form of confession: giving absolved the karmic debts one incurs in this life and in previous lives (Hubbard 2001). The term inexhaustible, writes Gernet (1995, 214), “far from signifying an endless accumulation of interests, refers to the psychological mechanism that motivates the gifts. A gift invites a gift in return, and giving is contagious.” This was the secret of the sect’s success. Charitable disbursements “constituted a form of investment that was highly advantageous” because they elicited “new offerings in turn” (Gernet 1995, 217). Quite unlike a capitalist economy geared to infinite accumulation and the imperative of continuous growth, this was an economy of gift-giving based on the principle of tithing (Hubbard 2001, 153). (Tithes are used by churches for the pursuit of religious goals, including self-preservation and propagation.) Thus, the function of the Inexhaustible Storehouses was to gather together small donations into a common treasury, the better to redistribute the goods received by channeling them into charitable works, liturgical services and above all the infrastructure of religious establishments themselves: stupas, temples, and sanctuaries, the casting of bells and statues, and so on (Gernet 1995, 214). Whereas the modern growth paradigm holds that accumulation proceeds “inexhaustibly” on the basis of continuous increases in productive capacity and corresponding increases in consumption, the inexhaustibility of the storehouses consisted in something else: first and foremost in their ability to persuade followers to part with goods, and secondarily in revenues from interest payments. It was, Gernet concedes (1995, 93), concerned more with returns on loans, and with acquisitions, “than with production.” Its purpose was not the “accumulation of goods” but principally “their redistribution and circulation.” It sought to expand not profits but expenditure – expenditure geared above all to ensuring the continuity and prosperity of the storehouses and the sect itself (Gernet 1995, 217).

The economic efflorescence of Tang China resumed under the Song. The Song dynasty’s celebrated culture of invention and innovation contributed to surges in productivity growth in agriculture and manufacturing. This same period, from the seventh to the thirteenth century, also saw significant economic growth in the Arab and Islamic world. Not unlike China, the Abbasid caliphate unified a vast sweep of relatively rich territories, from Persia to the Maghreb (Harris 2003, 28). The caliphates of the southern Mediterranean presided over intensive commercial and martial activity, with organized slave raiding deep into sub-Saharan Africa, luxury trade routes stretching eastward to China and Japan, and a sophisticated financial sector. A succession of dynastic regimes in the Maghreb – the Fatimids and Almoravids, the Almohad caliphate and the Marinids – gained economic and cultural dynamism from their crossroads location: between mountain tribes and lowland towns, between Andalusia and the Atlas, the Sahara and the sea. It was into this world that a pioneer of economic growth theory, Ibn Khaldun (1332–1406), was born.

Ibn Khaldun’s Muqaddimah, his Prolegomena to the history of the world, includes a sophisticated analysis of growth dynamics. Prosperity, he argues (1950, 84), rests on “the intensity of human efforts and the search for gain,” as well as an increase in population, which affords greater scope for cooperative labor and specialization. Rising prosperity generates a virtuous circle, based upon private and public consumption creating a stimulus that feeds into the wider economy through multiplier effects. The development of new wants leads to “the creation of new industries and services,” and the rising level of demand and incomes contributes to “a rise in the income and expenditure of the whole community” (Ibn Khaldun 1950, 93–95). Together, these stimuli give rise to further increases in prosperity and economic activity, in a self-reinforcing process.

In his theorization of growth, Ibn Khaldun forms an exception to the thought of his age, but it is one that proves the rule. For one thing, his ideas on growth did not become hegemonic. For another, they were embedded in a cyclical theory of development, in which population and commercial expansion synergize with benevolent rule and minimal taxation to yield an upward curve, following which, “at the end of two generations, the dynasty approaches the limit of its natural life. At that time, civilization has reached the limit of its abundance and growth” (Ibn Khaldun 1950, 33). With prosperity comes a demanding citizenry, and luxury, which saps the martial spirit. Together, these put upward pressure on taxation, which suppresses trade. As living standards rise and former fighters “begin to enjoy more than the bare necessities, the effect will be to breed in them a desire for repose and tranquility” (Ibn Khaldun 1950, 87, 117–118). Ibn Khaldun’s thesis on growth is equally a thesis on decline, and is nested within a historical-sociological account of the movement from agriculture to industry, which, in turn, rests upon a Platonic philosophy of civilizational rise and fall. As an analysis of growth dynamics it is strikingly sophisticated for its times, but nowhere does it exhibit the sense of linear historical progression that was essential to the growth paradigm as it gained shape in the following centuries.

Clockwork rhythms

In sifting the ingredients from which the growth paradigm came to be constituted, one could do worse than begin with the transformation in the social construction of time and space. The middle of the second millennium witnessed a tendential shift from ‘enchanted’ time and territory to measurable, linear, gridded conceptions. A potent early lever of the transformation of time was the invention (by a Buddhist monk in Tang China) and diffusion (in fourteenth-century urban Europe) of the mechanical clock. To Europeans of the early modern period the presence and sophistication of church and town clocks came to symbolize the level of a country’s mechanical capacity and material well-being (Heller 1996). Striking equal hours, they facilitated the measurement and quantification of time, and its re-conception in linear and abstract terms. In the words of Lewis Mumford (in Gimpel 1976, 169), mechanical clocks “brought a new regularity into the life of the workman and the merchant. The bells of the clock tower almost defined urban existence. Time-keeping passed into time-saving and time-accounting and time-rationing.” When one thinks of time, he continues (in Mathai 2013, 23), “not as a sequence of experiences, but as a collection of hours, minutes and seconds,” it can be added, rationed, and accounted, enabling it to assume the character “of an enclosed space: it could be divided, it could be filled up, it could even be expanded by the invention of labor-saving instruments.” Time slipped, so to speak, from the numinous to the numerical.

As with time, so with space. In the sixteenth to eighteenth centuries the development of the sciences of geometry and cartography, which were experiencing a renaissance courtesy of the European “voyages of discovery” and associated colonial ventures, encouraged the tendency to see territory as emptiable and fillable, and space as abstract, infinite, and apprehendable in the form of quantitative data. Roman law had conjured the possibility of absolute property and thus the imposition of hard spatial demarcations, a grammar of territoriality that was radically deepened and universalized by the revolutions of commerce and capital...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of figures
• List of contributors
• Acknowledgments
• Introduction: the end of economic growth in long-term perspective
• 1. Seventeenth-century origins of the growth paradigm
• 2. Growth unlimited: the idea of infinite growth from fossil capitalism to green capitalism
• 3. The end of gold? Monetary metals studied at the planetary and human scale during the classical gold standard era
• 4. Gross domestic problem: how the politics of GDP shaped society and the world
• 5. Development and economic growth: an intellectual history
• 6. Economic growth and health: evidence, uncertainties, and connections over time and place
• 7. An incompatible couple: a critical history of economic growth and sustainable development
• 8. Sustainable degrowth: historical roots of the search for alternatives to growth in three regions
• Index