Why the government's growth fetish is bad for Australia's democratic health

No issue more preoccupies the modern political process than economic growth. As never before, economic growth is the touchstone of policy success. Countries rate their progress against others by their income per person, which can only rise through faster growth. High growth is a cause of national pride while low growth attracts accusations of incompetence in rich countries and pity in the case of poor countries.

A country that experiences a period of low growth goes through an agony of national soul searching in which pundits of the left and right expostulate about "where we went wrong" and whether there is some tragic fault in the national character.

Every newspaper, every day, quotes a political leader or a commentator arguing that we need more economic growth to improve the level of national well-being and build a better society. The release of the quarterly national accounts unfailingly receives extensive coverage. Picking out growth in gross national product (GNP), journalists write as if they have an infallible technical barometer of a nation's progress. Derived by some of the best statisticians using the internationally agreed system of national accounting, GNP appears to provide a measure of prosperity that is immune to argument.

If GNP growth reaches or exceeds expectations, government leaders crow about their achievements. If it falls below expectations, the opposition parties seize on the figures to attack the government for its ineptitude. Throughout history national leaders have promised freedom, equality, mass education, moral invigoration and the restoration of national pride; now they promise more economic growth. If at any time there were doubts about the ends to which a nation should aspire, they are no more.

In the thrall of growth fetishism, all of the major political parties in the West have made themselves captives of the national accounts. While they may differ on social policy, there is an unchallengeable consensus that the over-riding objective of government must be growth of the economy. Parties fight elections each promising to manage the economy better so that economic growth will be higher.

The answer to almost every problem is "more economic growth". The problem is unemployment; only growth can create the jobs. Schools and hospitals are underfunded; faster growth will improve the budget. We can't afford to protect the environment; the solution is more growth. Poverty is entrenched; growth will rescue the poor. Income distribution is unequal; more growth will make everyone better off.

For decades we have been promised that growth will unlock possibilities of which previous generations could only dream. Economic growth will deliver a life of ever-increasing leisure, more free services, devices to relieve the drudgery of household work, opportunities for personal enrichment, exciting space travel, and cures for the diseases of humankind. The lure of growth is endless.

But in the face of all of the fantastical promises of economic growth, at the beginning of the 21st century we are confronted by an awful fact, a fact that stands as an immovable obstacle to further progress. Despite high and sustained levels of economic growth in the West over a period of 50 years - growth that has seen average real incomes increase several times over - the mass of people are no more satisfied with their lives now than they were then.

If the purpose of growth has been to give us better lives - and there can be no other purpose - then it has manifestly failed. The reader can simply ask this question: Do I believe that on the whole people are happier now than they were 40 or 50 years ago? When asked this question, almost everyone says "no".

The more we examine the role of growth in modern society, the more our preoccupation with it appears to be a fetish, that is, the worship of an inanimate object for its apparent magical powers. Economic growth purports to be a very ordinary activity, no more than an increase in the volume of goods and services produced each year. But closer analysis reveals that it "abounds in metaphysical subtleties and theological niceties".

The product of growth - which for ordinary people takes the form of its universal equivalent, money income - represents, of course, much more than a greater ability to consume. Increase in income is the very object of life in modern society, in which all of the hopes and schemes of men and women are invested. Indeed, increasing income has become pivotal to the creation and reproduction of self in modern society. Thus growth takes on significance not because it multiplies the pile of goods and services available for consumption but because of the excitation it produces in people - the promise it holds to attain bliss.

Growth fetishism is not confined to advanced countries. While the case for economic growth is much stronger in countries below a certain level of average income, developing countries are also obsessed with it, perhaps the last and most potent legacy of colonialism. They have little choice. Were developing countries to deviate from the single-minded pursuit of maximum economic growth, we can be sure that if the markets did not exact instant retribution, then the IMF and the World Bank would.

The 'Asian miracle' was a miracle of growth. Determined to beat the West at its own game, the little tigers learned to roar by sustaining growth rates of eight, nine and even 10 per cent per annum over a decade or two. In one of the great reversals of history, Western commentators and market pundits in the 1980s began to berate their governments for failing to match the growth performance of East Asia; the strategies of the Asian tigers became the model to be emulated. This usually meant faster trade liberalisation, lower wages, labour market 'flexibility' and deep cuts in taxation and social security. The little tigers of East Asia had apparently learned their lessons from the industrialised countries so well that they had become the teachers, and political leaders in the West became the dutiful students. Why? Because eight per cent is higher than four per cent.

Socialist countries, too, were smitten by growth. The ideological divide of the Cold War that threatened to destroy the world was not over the desirability of economic growth. On that all agreed. They disagreed over which system of economic organisation, socialism or capitalism, could generate more of it.

There can be little doubt that in recent decades the most evangelical promoters of growth fetishism have been the economists, the profession that since the 1970s has achieved a position of unrivalled dominance in public debate and policy formation throughout the world. One particular school of economists has achieved uncontested control, the neo-classical, neo-liberal or free-market school.

Today, the benefits of growth are taken to be so self-evident that one has to search hard to find any reference to them in the economics texts. Open any university text and the subject is immediately defined as the study of how to use scarce resources to best satisfy unlimited wants. These "wants" are assumed to be those that consumption satisfies, and the text is occupied with the analysis of the behaviour of consumers in their quest to maximise their "utility". By subtle fusion, human beings have become "consumers" and human desire has been defined in terms of goods; it follows that the only way to make people happier is to provide more goods. In other words, the objective is growth.

Governments of all persuasions are now mesmerised by economic growth and find it awkward to think about national progress more broadly. Growth, investment, development, competitiveness, free trade - these aspects of the market system are powerful political symbols, before which political parties of the left and right kneel.

In the past 25 years politics in the West has been marked by the ideological convergence of the main parties. The process has been one in which social democratic parties abandoned their traditional commitments and converged on the free-market policies of the conservatives. It is now commonplace to observe that the conservatives, seeing their political ground occupied by the parties of the left, purified their neo-liberalism, discarded the old ideas of social conservatism and shifted further to the right.

This process is now starting to turn in on itself. In New South Wales, for instance, when the Liberal party replaced a right-wing leader who had lost two elections with a moderate, one party official observed that they had not been able to outflank the Labor Government from the right, so it was time to try to do so from the left.

The political implications of this ideological convergence through the 1980s and 1990s have been profound. Under the impact of these changes, and especially the convergence of the political parties, the political culture of Western democracies has been transformed. People no longer know what the parties of the left stand for. Their policies have no resonance with ordinary people. Party loyalty has been eroded because the sense of class solidarity that once defined the parties of the left has evaporated.

The more the parties converge in substance, the more they must attempt to differentiate themselves through spin. The politics of spin are the politics of falsity and there is a popular belief that the democratic process has become an elaborate charade. The major parties, now dominated by careerists who stand for nothing, whip themselves into frenzies over matters that are trivial, lashing out at their opponents with declarations of outrage, while tacitly agreeing not to break the neo-liberal consensus on the things that really matter. No wonder people are alienated and political space is created for the emergence of parties of the far right. The irony is that, instead of blaming the system and those who benefit from it, some of those who become alienated turn their bitterness on those least able to protect themselves - single mothers, immigrants and Indigenous people.

Growth fetishism and its neo-liberal handmaiden therefore assail democracy itself. Social democracy is being superseded by a sort of market totalitarianism. When older people speak bitterly of the corruption of modern politics, they nevertheless feel that it is an historical aberration on the constancy of democratic rights and that in the end the people can still have their say. Disturbingly, younger people hear only the accusation that the system is incurably corrupt, and they believe it.