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Delivering higher levels of prosperity is one of the government’s key priorities, and rightly so. We all want to live prosperous lives, and one way to deliver a better standard of living is to increase people’s financial means. The steady economic growth since the end of the Second World War has seen living standards soar, right across the board. Absolute poverty is almost a thing of the past in developed countries, and our health, education, and leisure opportunities are probably the best in history.

Given our successes, it’s no surprise that we’re have decided to keep on pursuing economic growth, in the hope that it will continue to deliver higher levels of prosperity. The problem is that growth is subject to the law of diminishing returns, and recent research has shown that while GDP has continued to rise, we’re no happier than we were in the 1970s.

Nobody wants to be poor, and faced with high levels of poverty the economy needs to grow. The evidence shows that once our basic needs are met however, further increases in wealth make little difference. As the graph on the left shows, wealth is just one factor in human happiness, and we are in danger of pursuing that one factor at the expense of other things.

In fact, the very conditions needed to maintain growth may begin to work against our happiness. How many people do you know who work long hours at the expense of their families, or who have no time for their friends? Many of us sacrifice community and relationships or even our own health in exchange for financial rewards, and what we do on an individual level is true of us as a society too.

It goes further than that, because disatisfaction, stress, or loneliness are not just side-effects of busy lives. They may actually be necessary and deliberate. For the economy to grow, we need to keep spending, and for that we have an advertising industry to convince us that we need more things and better things. While some of this might be useful, much advertising makes us feel inadequate and inferior, with a promise of redemption through consumption. Economic growth is dependent on us being disatisfied with what we have.

Not many people have the nerve to come out and say it, but keeping us unhappy is actually essential to continued growth. South African economist J L Sadie did have the nerve, and explained it quite openly in 1960 in the Economic Journal:

Unhappiness and discontentment in the sense of wanting more than is obtainable at any moment is to be generated. The suffering and dislocation that may be caused in the process may be objectionable, but it appears to be the price that has to be paid for economic development: the condition of economic progress.

For Sadie, “community-centredness and absence of individualism” were a problem to be overcome if African tribes were to begin shopping. Similar policies apply to developing countries, and Sadie was not the first to talk about ‘retraining’ people to spend more. Paul Maser, of Lehman Brothers, put it this way in 1924:

We must shift America from a needs to a desire culture. People must be trained to desire and want new things even before the old are entirely consumed. We must shape a new mentality… man’s desire must overshadow his needs.

It is ironic that while every advert promises satisfaction and fulfilment with the next purchase, the economy would collapse on the spot if we were all satisfied. Nothing is so dangerous to the economy as contentment. Instead, all kinds of things that make us unhappy are tolerated or even encouraged, if they lead to economic growth. Conversely, things that can’t be bought and sold are ignored, even if they are proven to improve wellbeing. Wouldn’t it be better to gear a society around education, equality, or happiness?

Some politicians think so. Nicolas Sarcozy has brought it up in France, and leader of the UK opposition David Cameron said this in 2005:

It’s time we admitted that there’s more to life than money, and it’s time we focused not just on GDP, but on GWB – general well-being. Well-being can’t be measured by money or traded in markets. It’s about the beauty of our surroundings, the quality of our culture and, above all, the strength of our relationships.

Perhaps there’s hope for politics beyond growth yet. There is a growing awareness of the limits of GDP as the sole arbiter of a nation’s success. According the the new economics foundation, 81% of Britons say the government should make happiness its priority, rather than wealth alone.

2 Comments leave one →
  1. zoky permalink
    January 17, 2010 5:26 pm

    This is well-reasoned and thought-provoking. I intend to use much of it in an English Conversation lesson with Chinese students at Glyndwr university. I’ll be intrigued to see how their assessment of values affecting subjective well-being differs from that shown in the pie chart.
    ‘’ looks good so far!


  1. Happienss or Bust? | Deep Economy

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