Skip to main content

Can an economy be ‘big enough’?

CRAIG DALZELL asks how long the ‘growth at all costs’ mantra can be sustained by the main political parties

THOSE of us on the left have rarely been truly excited by the prospect of the Establishment crowning their next temporary placeholder, though I don’t know about you but this upcoming general election seems to offer even less in the way of actual choice or a chance for change than usual. 

The Conservatives are in freefall, ejecting ballast as fast as they can (personnel as well as policies), Keir Starmer’s “changed Labour Party” seems to be trying to do as little as it can to uphold the traditions of the middle word in that catchphrase and even in Scotland, where for the last several elections, the SNP provided some sense of counterpoint (either as a credible voting option or at least as an anchor against rightwards triangulation), that party seems to have hit the end of its road in terms of ideas. 

This time around, all of those parties (and several others) have congregated on a single line when it comes to how to manage the economy. Growth at all costs, no matter who profits from it or how much damage is done to the planet in the process.

At the start of June, Labour’s shadow chancellor Rachel Reeves travelled all the way up to Scotland to tell us that a Labour UK government would “unleash Scotland’s economic firepower to deliver growth” by boosting financial services, including by turning the UK into a “global hub for green finance.”

Underneath the slightly arcane framing, this will have an inevitable result — a continuation and expansion of profit extraction from the Scottish and UK economies and into the pockets of shareholders largely based oversees.

As I say, she’s not the only one promising this. The SNP Scottish government makes it a point of pride that Scotland attracts proportionately more “foreign direct investment” than any other region of the UK outwith London and even proportionately more than many EU countries.

There’s a reason for this, though. Many EU countries have protected their resources and vital economic sectors by not selling them off to foreign investors. They kept assets like energy in the hands of their own public-owned energy companies (many of which own substantial chunks of our energy sectors here), they kept things like public-sector infrastructure “in house” rather than building schools and hospitals via tax haven-owned PFI schemes (which often meant Scotland buying one hospital for the price of five), and they even kept investment itself local — Germany’s local and regional investment banks are the backbone of local economies throughout the nation, whereas Scotland’s National Investment Bank seems more interested in courting tech companies for their IP and giving money to New York hedge funds to ask them to plant trees for us.

The result of all of this from the current Scottish government and from its predecessors going back to the dawn of devolution has been the massive extraction of wealth from Scotland. As detailed in Profit Extraction, my recent paper for Common Weal, around £277 billion, or £50,000 per person, has been extracted from Scotland since 1999 as a result of “foreign direct investment.”

The alternatives are clear. “Growth at all costs” economics is easily debunked by anyone with a bucket and a tap — we simply cannot fill the bucket and grow our economy indefinitely without spilling over and wrecking our a finite planet and if the last 40 years of constant growth haven’t fixed our problems (it, in fact, has been the cause of many of them) then when will it? 

Are we even allowed to ask the question of when the economy will finally become “big enough”? We should — the economy should be considered “big enough” when everyone in it has enough to live decently and no-one is overconsuming their share of the planet’s resources. 

According to folk in Degrowth circles, we hit that point some time ago … the problem is an excess of the latter point rather than the former. A lack of growth isn’t the problem, the distribution of who benefits from that growth is.

Which brings us to responsible investment. We will, of course, need plenty of investment as we transition to a sustainable economy but rather than just begging and bribing the global markets to shovel money in our direction then turning away as they extract their profits, we should be looking at the benefits of that investment in the round. Rather than just asking about the rate of return, ask where that return is going. 

The economy should serve those who live in it and contribute to it, and so if the returns of an investment are leaving the community or country that created those returns, this is a sign that something is going wrong. It’s time that politicians with their fingers on economics policies recognised this and offered us a different choice.

Craig Dalzell is head of policy & research at Common Weal (commonweal.scot).

OWNED BY OUR READERS

We're a reader-owned co-operative, which means you can become part of the paper too by buying shares in the People’s Press Printing Society.

 

 

Become a supporter

Fighting fund

You've Raised:£ 6,227
We need:£ 11,773
19 Days remaining
Donate today