Russia, Cardboard Cutouts & The Dogma Of Infinite Growth
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A century ago Russia was fighting in Ukraine. By the end of the year thousands were dead. Ukrainians lost their independence for the next seventy years.?
The fall out from the 1922 war in Ukraine changed the face of world politics.
At home Russia was in serious trouble. Vladimir Lenin, was dying. Famine was widespread. Russia was going broke.?
"Over the past year we showed quite clearly that we cannot run the economy,"
Lenin conceded.
To stop the rot he appointed a 'strong man', Russia's aggressive leader in the Ukraine, as general secretary of the newly forming 'Soviet Union'.?
Commander Josef Stalin.
It was a decision he quickly came to regret.
In Lenin's Final Testament he wrote that the party must
"think about a way of removing Stalin"
But it was too late.?
Stalin set out on a ruthless plan of territorial and economic expansion, a policy of Growth at all Costs that led to widespread famine, gulags, and multiple wars, ‘purges’ and invasions across the region.
Under Stalin’s leadership the Soviet Union suffered arguably more deaths and hardship through than any other country in history, with an estimated 25 million lost in the 6 year period of World War 2 alone.?
Yet today Stalin is still seen by many in Russia as a hero.
After all, he oversaw a spectacular period of territorial and economic 'Growth' that transformed Russia from failing state to global superpower.
The 1922 war in Ukraine also changed the face of economics.
It led to a metric that has arguably greater impact on global 20th century economics and politics than any policy, war or doctrine. It was also rooted in the Growth at all Costs thinking. Over the course of the 20th century it became our guiding light, filtering through to every area of society.
This measure still defines our societies 100 years on. A calculation, so taken for granted as an axiomatic fact that we almost forget it’s our choice to use it.?
What started as a measure to help countries rebuild after war has defined our monetary, financial, political and business policies. It gave rise to the 20th century anthropocene explosion in emissions.
Let's look at the history and impact of this calculation, how it changed the world and changed us as people. The ways we could leave it behind, and change ourselves for the better.?
One stat to rule them all
In 1922, fleeing the war, Stalin, purges and famine in search of a better life, an unknown economics graduate from Kharkiv University, Ukraine, Simon Kuznets, bought a one way ticket for a ship to America with his family to start a new life.?
Roaring 20’s boom-time New York was a long way from the Soviet Union Kuznets left behind. He studied BA>MA>Doctorate at Columbia university in quick succession and flourished.
Kuznets went on to devise a unified method to "capture all economic production by individuals, companies, and the government in a single measure, which should rise in good times and fall in bad."?
Gross
Domestic.
Product.
As its more commonly known. GDP.
By the Bretton Woods conference at the close of the Second World War, GDP was adopted as the primary metric of progress for the fledgling United Nations. Kuznets was later awarded the Nobel Prize for his efforts. The GDP doctrine was held up as an effective route out of poverty.
The GDP doctrine is the ‘growth forever, at all costs' model we live with today. By and large, as consecutive nations dragged themselves out of poverty it was an effective measure. As ‘The West’ rebuilt, the 'king of all statistics' led to careful monitoring and investment in post war Europe and America, it later defined the path of poor countries around the world a backbone to their ‘development’.
In simple terms.
???GDP % Growth = Good.
GDP % Contraction = Bad.
But today, what started out as an economic GDP doctrine has morphed into a political Dogma of Infinite Growth At All Costs.?
The Stupid Economy
To James Carville, strategist in Bill Clinton's successful 1992 presidential campaign against incumbent George H. W. Bush, election winning had one golden rule.
?"It’s the economy, stupid."?
And the primary measurement of ‘the economy’: GDP growth.?
Two quarters of contracting GDP is known as ‘a recession’- The death knell for any political campaign.?
In modern democracies you simply can't win without growth.?Donald Trump's recent meteoric rise and catastrophic crash in popularity in step with a growing and tanking economy demonstrates the importance of the GDP growth rule.
Despite a host of criminal proceedings, mismanagement and broken promises it was the pandemic triggered recession which ended Trump's Presidency.
In practice a President's pursuit of relentless GDP growth matters more than any other factor.
History corroborates this.? In the United States for the last century, for example, no President has won reelection when a recession occurred on their watch.?
GDP has trapped politicians in a paradigm of infinite GDP growth on a finite planet.?
We too, are trapped.
All of our secondary metrics are geared towards the primary metric of GDP.
The dogma of infinite growth is how we measure our 'best' companies.??
Share price up = Good.
Share price down = Bad.
And it percolates down to our schools.?
Exam grades up = Good
Exam grades down = Bad
GDP, Share Prices, School Exam Results.
Each is a key indicators for performance in their domains. Each charts ‘growth’ in their prospective field and each was useful when data collection was manual, methodical and time consuming.?
In each case one metric that starts out as a well intentioned barometer, balloons in importance while excluding two critical ‘externalities’
In each case it sending us mad and burning the house down.
Externality #1. Wellbeing. ???
The Dogma of Infinite Growth is sending us mad.?
Across the S&P 500 13 companies where the CEO makes at least 1,000 times the salary of their typical employee while at any one time multiple companies in the 500 are under investigations for human rights violations, Under US law a corporation has the same rights and protections as an individual.?
But as the psychological assessment of the 2004 documentary ‘The Corporation’ made plain, if businesses were held to the same standards as humans in terms of what they have done to us they would be sectioned as psychopaths.?
In education, the unending cyclical pressure of exams has been proven to have detrimental effects on students. In a recent UK survey 79% of secondary school leaders have noticed an increase in fear of academic failure,At the same time? 53% noticed an increase in eating disorders, and 59% noticed fear for the future amongst the pupils. The number of A&E attendances by young people aged 18 or under with a recorded diagnosis of a psychiatric condition more than tripled between 2010 and 2018-19
The dogma of infinite growth has changed how we view ourselves as adults too, leading to “professional self objectification” as Arthur C Brooks explains.?
“You become a heartless taskmaster to yourself, seeing yourself as nothing more than 'Homo economicus.'
Love and fun are sacrificed for another day of work, in search of a positive internal answer to the question Am I successful yet? We become cardboard cutouts of real people.”
Kuznets spotted this trap early on warning against focusing exclusively on GDP...?
"the welfare of a nation can scarcely be inferred from a measure of national income..."
but that hasn't stopped us falling in to the trap. And its hurting us.
Externality #2 Planet.?
The Dogma of Infinite Growth burns the house down.?
Today there are 20 ‘energy i.e. fossil fuel extraction companies in the S&P leading 500 companies. When financial firms are included, all of whom invest in fossil fuel extraction companies, this total jumps to 86
Indeed between 2016-2020 at least 33 of the financial institutions actually increased fossil fuel financing
This means that almost a fifth of the S&P 500 is actively working toward climate breakdown to retain its place on the list and of these at least half are increasing their efforts.?
Those countries with highest GDP per capita tend to have higher emissions, and they are rising. All the world's biggest emitters also have a system of government subsidies in place to support those most damaging industries.?
The pre-pandemic climate strikes around the world were an attempt by children to draw attention to the danger.
But the dogma of infinite growth is so pervasive to us adults, so baked into the human condition, has sent us so mad, that it seems to us as if there is no alternative but to burn the house down.
What Matters?
In the 20th century GDP % growth served a useful purpose. It was an especially useful metric for devastated economies to measure and recover quickly from war. And it is still useful as a poverty reduction metric. ? But 100 years on from Kuznets departure from Ukraine, we find ourselves with a different planet.?
Today, in business terms, GDP is a vanity metric, it breaks with John Dooers axiom as it no longer ‘measures what matters’ The problems we face in the developed world are those of equity and sustainability, not for now, building Western economies from the ruins of war.?
Our Domestic Product is Gross
GDP is an all can eat buffet that never closes.? The developed world has been feasting since the closure of the second world war.? But it's increasingly unhealthy and wasteful. We have put on so much weight, the kitchen is nearly empty, the restaurant is a mess.
Expenditure on nuclear warheads, or cigarettes, or rebuilding after the recent storms ripping through UK, a desolate planet rife with war and famine that kept making money somehow, that would all count positively towards GDP while ignoring the 'externalities' that harm us and the root causes of problems.
As Robert Kennedy said GDP? “ measures everything in short, except that which makes life worthwhile.”
Critically, GDP assumes the infinite. But our planet is finite.
Limits to Growth made this plain 50 years ago.
Today as species go extinct, the wildfires rage and the sea levels rise, it's starting to become real and we are looking up from the buffet to the mirrored wall in the restaurant and we don't like what we see.
We are beginning to ask the question.
What is the point of ‘growth’ on a planet where nothing will grow?
Fortunately, new paradigms are emerging to help us adapt to our new reality.?
The five D's. Five compelling 21st century alternatives to the Dogma of Infinite Growth.?
Degrowth.?
This movement imagines a world where our ability to lead dignified lives on an inhabitable earth are valued over GDP growth.? The first serious academic journal on the topic, free and independent, is launching soon.?
Decentralisation?
Each of these communities devolve technical power away from an autocratic profit making centre toward a human and planet oriented community. Today, with blockchain and awareness of our plight it is not enough to work for an organisation, we should have a stake in it.?
The Donut is the most compelling wholesale alternative to the GDP doctrine I have seen. Putting the planet and the individual before the economy and state, Kate Raworth posits a new doctrine of enough, where we recalibrate to exist between an economic foundation and an ecological ceiling.
An ongoing collaboration of companies and researchers to bring “the point in the future when levels of greenhouse gases in the atmosphere stop climbing and start to steadily decline, thereby stopping catastrophic climate change—as quickly, safely, and equitably as possible.”
Democracy
An oldie but a goodie. At the same time that GDP growth was enshrined at Bretton woods so too were the IMF, World Bank and the UN. These were new kinds of multinational organisations, nationalist projects, alliances and pacts of the past had failed us. They were there for the rebuilding effort after the Second World War and they were there for Russia once the communist project had failed.
These international organisations promoted mutual dependency and collaboration over tit for tat and escalation. While they have come under fire in recent years they stand out as remarkable examples of mutual dependence, of long-termism and collaboration. They show that in times of crisis we can overcome our differences for the sake of a better tomorrow.?
Who picks up the Tab?
Today, a century after Ukraine was absorbed in to the Soviet Union, Simon Kuznets arrived in America,? and Josef Stalin became party leader, another strong man is asserting his authority in Ukraine. Russia has stockpiled weapons for the war and stashed billions to ride out sanctions. Where did the money come from?
As Jason Furman points out in the New York Times.
“Russia is essentially a big gas station” Who shops at this gas station?
Well… us.? The engine of GDP runs on Russian energy.?
We are complicit. Through our dependence on Russian fossil fuels and 'donations' any sanctions we implement are likely to bounce back on ourselves. Our major alternatives for oil (Qatar and Saudi Arabia) also are rife with the moral hazard of doing business with oppressive regimes.??
How to Win Wars Peacefully
These could be the stated targets of today's democracies using the tools above, alongside GDP to help us transition to safe, sanity.
We should make the short term sacrifices both for the people of Ukraine and the Planet we live on.
Doing the right thing now helps us feel better about ourselves today and gives our descendants a chance for tomorrow. It's not about fighting 'The Russians' it's about winning the war of ourselves.
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