Economic growth is no longer enough

The growth rate of a nation’s gross domestic product, or GDP, has long been heralded as the automatic solution to all of society’s ills.

The concept is simple enough to grasp: employment usually increases in tandem with economic growth, with labour being required to drive such growth. With increased employment and a competitive labour market, wages increase, as do living standards.

This has largely proven true for nations transitioning to and developing industrialised economies, with relative affluence spreading amongst the population, establishing the exalted middle class.

However, for today’s most developed nations, economic growth is increasingly becoming a facile obsession for those who extol free market ideals with little substance. The standards of living that we, in the developed world, have rightfully come to expect, are no longer being met by the automatic effects of growth.

Instead, society is becoming stagnant. Wealth inequality shows no sign of receding from its horrendous level, the megre minimum wage leaves millions of workers earning less than the living wage, and dismal zero-hour contracts have proliferated in many sectors of the economy.

The combination of a meagre minimum wage which is nowhere near the living wage and the ascendance of workfare policies which in essence force the unemployed out of the welfare state and into underpaid jobs produces a situation worryingly analogous to a modern, subtle, concealed and quasi-voluntary form of slavery.

I am aware that such an assertion, with all the very negative historical connotations of the term “slavery”, sounds strong. But, take a step back for a moment and think about the lives of the lowest paid in our society.

Their jobs often entail menial and demoralising tasks. They are paid well below the living wage. There is often minimal prospect for finding a higher paying job in the future. They suffer the stress and anxiety incurred as a result of high living costs for food and bills, the continuous spectre of overwhelming debt, and the disheartening position their life is placed in. Further, the state, stung by the misguided populist stigma of “scroungers and skivers”, has effectively abandoned them.

Clement Attlee’s welfare and public services consensus established following Allied victory in the Second World War has done much to counter many of the societal imbalances caused by dizzying wealth inequality. But, short of the state paying all citizens the living wage they deserve, there is little more the state can fiscally or institutionally do to offset the inequitable wage realities of millions of citizens.

While Ed Miliband’s concept of predistribution hardly struck a chord with people outside academic circles, it is highly apposite to the problems described previously which modern society faces. The idea of predistribution, put simply, is that fundamental changes can be made to the way in which the economy functions, which in turn builds a fairer society, even before redistribution provides more tangible effects such as public services and the welfare state.

We must maintain and continue to advance the idea of strong public services such as the National Health Service. Additional public services, such as trains and utilities, should also be integrated into the public sector. However, we must equally recognise that within a capitalist system, the capitalists must also play a role in improving the quality of people’s lives, as oxymoronic as such a proposition may sound. The state should not in effect subsidise and tacitly approve of people being underpaid for the labour they provide to businesses. Instead, government should be much firmer on the rights of employees and more statutorily active in ensuring not just the volume of jobs, but the quality.

Labour’s Chuka Umunna recently recognised the systemic issues of employment, by stating that “any old job won’t do“, in response to the government’s pursuit of raising employment regardless of the quality of employment.

The value of a job should not be seen from a purely macroeconomic standpoint, but rather from the perspective of the person occupying that job. In a developed society such as ours, the mere fact that someone is employed does not automatically translate into higher living standards for them, far from it.

Finally, we must also pay much greater attention to the happiness of the nation. In recent times, it has become increasingly clear that a distinct chasm exists between the economic productivity and happiness of the nation. This touches upon the need to transform not merely wages, but also the conditions in which people work, in order to reduce stress by building more relaxed and productive workspaces.

To summarise, while in the past economic growth has automatically led to an increase in living standards and the establishment of a burgeoning middle class which enjoy high living standards, in a developed nation such as ours it is no longer enough for growth to be the primary source of the reduction of wealth inequality and the advancement of people’s living standards. Instead, we must shift our attention as a society towards people’s wages, working conditions and happiness, and then act to combat the issues which arise from these metrics, rather than relying upon traditional conceptualisations of growth trumping all else and being the panacea for all of society’s ills.

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