Where does obsessive growth come from? Well, not consumerism, that's for sure

Contemporary society is widely described as consumerist, and when politicians and pundits are asked how we can control the endless expansion of the economy, their first hand-wringing response is that what ‘the consumer’ (a group that seems to have superseded ‘the voter’ as the arbiters of political policy) want is simply ‘more and more’. So growth is the only game in town.

The environmental implication of this frozen staring into the contemporary economy is simple: nothing can be done. Nothing can be done to prevent us driving right over the CO2/ resource/ ecosystem cliff, because ‘the consumer’ is king and ‘the consumer’ would not stand for not having more stuff, more holidays abroad, more everything.

This is mythology at its most deceitful – and, given its environmental implications, most disastrous.

Look at how the economic process that links consumers to the economy really works. Somewhere out there is someone – some billionaire, some bank – with a lot of money to invest. They build/buy a factory that makes some consumer goody – iPods, perhaps, or ‘designer’ jeans’, or the latest ‘taste sensation’. The new owner invests millions, maybe billions. They’ve invested millions in creating the product, millions more in setting up production, millions more paying managers and production line workers, millions more for natural resources and energy, millions more to create the supply chain that gets it into the shops.

The sole reason all this investment takes place is to make money – lots of money, and certainly more than the millions invested. Otherwise there is no profit. So they need people to buy their product. You and me. Hence the endless orgy of marginally differentiated goods and services, the interminable and increasingly in-your-face advertising, marketing, the lobbying, the focus groups, the viral messages.

Consumerism exists not because consumers want to buy but because companies need to sell. If they don’t invest more and more in manufacturing, services, energy, transport, and so on, there will be no returns on their capital. They go bankrupt. But if they do invest, then there must be sales. It is not consumerism that drives growth but capital’s need for a return - endlessly.

But why does this lead to growth rather than simply a ‘steady state’ economy in which we can continue to have what we have now? Or if we must expand, why can we not expand in directions that contribute to the sustainability and equity so many commentators – Nicholas Stern, Jonathan Porritt, George Monbiot, and many more - insist must be the goals of the 21st-century economy? The answer is quite simple: there are plenty of mechanisms built into the contemporary economy that enforce growth - whether or not we want it - but none of then involve doing anything for developing countries – unless, that is, they can pay as well as developed countries can.

Ironically, one of the key mechanisms for ensuring that growth will happen is the very efficiency improvements that so many pundits are relying on to reduce future growth. From society’s point of view it makes sense that, if we can produce the same goods and services by using less energy, less resources, with less damage to the atmosphere and the environment, then surely this is the way we should be going.

But from a capitalist perspective, there reverse is true. If I – just me, rather than my rivals – can use the same resources to produce more, then I will. I will not – could not – simply produce the same in a more environmentally benign way - the assumption of the pundits – because the goals of investment is to maximise profits, not minimise total costs. Given that I have already invested hugely in plant, resources, supply chains, marketing, and so on, many of my costs are already fixed, regardless of how much I actually produce. As a result, if I want to maximise my profits the only rational thing to way to exploit improved efficiency is to use the same investments still more intensively.

After all, I will still be paying fixed rent on my factory and offices, still paying the same fixed interest on my loans, and so on. The main variable costs come from the inputs (labour, materials, energy, transport, and so on) that I use to create actual goods and services. So if I want to maximise the profit I make from this enterprise, simple arithmetic dictates that I should increase the amount of stuff I make (i.e., increase my investment in resources, labour, energy, etc.), because the same fixed costs will now be spread over more units. That will minimise my unit costs, and so (other things being equal) increase my profits. Hurrah!


This logic becomes more compelling the more capitalism matures. History as a whole can be seen as humanity building and rebuilding society with more and more fixed capital – roads, education systems, hospitals, technology, and so on – so that each generation is blessed with a greater stock of means to its ends. In a rational universe this would lead to societies in which, having satisfied its ‘basic’ wants, humanity might not ever quite lose its appetite for progress, but it would at least be able to decide exactly what progress meant.

In our present position, this would surely mean the very commitment to sustainability and equity referred to above. But again, capitalism bucks the trend. As the level of fixed investment needed even to join the game grows – the size of a new car plant, the cost of R+D, and so on – the more fixed costs dominate, the more units that must be sold to cover them, and the more compelling the need to grow becomes.

There are whole countries devoted to this model. China, for example, has put overwhelming emphasis on manufacturing for export – feeding the West’s addictions before developing its own. But there is little reason to believe that even China’s authoritarian government will be able to resist the logic of capitalist investment. And no doubt the boys from Goldman Sachs – or whatever their Chinese incarnation turns out to be – will, for a handsome fee, show them how to lock the handcuffs on themselves.

So growth won’t be ending any time soon. On the contrary, there is only acceleration ahead. Our despoliation of the planet won’t be quite as rapid – those efficiency gains are real (because they are profitable) and neither public nor governments are quite helpless. But until we recognise exactly what the link between capitalism, growth and our all too unpleasant environmental fate is, there is no turning back.

Welcome to the machine.