“We need to grow the pie so that everyone has a bigger slice”, said Liz Truss recently in an attempt to explain her economic vision during her time as prime minister.
This ‘growth at all costs’ thinking has been the economic orthodoxy for centuries, shared across the political spectrum through all types of economic phases, shocks, successes and failures. But why?
Clearly, it alludes to an expanding amount of resources that can be used to support people’s needs and aspirations, but it says little about what benefits will be achieved, or how.
Loosely defined, ‘growth’ is an increase in economic output measured in financial terms. But is all financial output useful or beneficial? ‘Imputed rent’ (value derived from the ownership of land or other monopoly assets) makes up around 10 per cent of UK GDP. If rents are doubled, GDP could increase by 5 per cent, but would those now paying twice as much in rent be happy because the ‘pie’ is bigger? Obviously not. What about if we increased the output of CO2, or asbestos, or guns, or gambling? Blanket growth is meaningless as a measure of success, and can often make life worse for many people. So, why is it still such an effective political ploy?
The reason is that, while it’s not much of an economic vision, it is a very effective negotiating position.
In their global best-seller ‘Getting to Yes’, Harvard Law School professors Roger Fisher and William Ury set out their blueprint for successfully negotiating an agreement. Central to their approach was to ensure that any proposal achieved mutual gain, and served interests that were common to each party. And the metaphor they chose to explain this approach: ‘To increase the size of the pie’.
In negotiations, if the size of the pie is fixed, any change in how it is carved up will always leave one party in the negotiations worse off. They will then likely reject the deal and agreement will be impossible to achieve. So promises of growth are mainly intended to show that everybody can gain and, therefore, nobody needs to oppose the deal. It is designed to release political deadlock, regardless of how well (or not) it delivers.
But the economic growth argument is powerful and enduring because it also meets the three other key requirements needed to reach an agreement and ‘Get to Yes’:
- It separates the people from the problem thus diffusing personal and political conflict: ‘neither party is the problem – we just need a bigger pie’.
- It focuses on interests and not positions. We all have an interest in having more – few people demand less – and nobody has to change their position to achieve it.
- It uses objective criteria and measurement (GDP in £s), so everyone can see whether it is being achieved or not. Nobody has to rely on arbiters they might dislike or see as opponents, so they can have faith in the outcomes
Arguing that economic growth might not be that great after all, and so we need less of it, without providing something else that meets these requirements, is a recipe, not for success, but for the breakdown of negotiations entirely.
The Tory government, of course, is in the process of collapsing the entire political negotiation because it has demonstrated its inability to deliver any growth at all. Within weeks of her promise to ‘grow the pie’, Liz Truss had in fact shrunk it by about £300bn and lost her position as leader of the Conservative Party as a result.
The Green pie is a doughnut
Why is this a problem for the Green Party? Why don’t we just join in and find more effective ways to bring about economic growth?
Of course, many commentators do talk about ‘Green Growth’ in an attempt to attach principles of sustainability to economic expansion. But, while not entirely without merit, it sort of misses the point.
The Green economy requires balance between the needs of all humans and the natural world. Our cause is not just to have more ‘stuff’ but to have the right amount, in the right places and at the right time. Achieving this sweet spot of production and consumption is articulated brilliantly in Kate Raworth’s book ‘Doughnut Economics’. In it, she calls for us to be ‘growth agnostic’ and instead focus on achieving the right balance across all economic, social and ecological systems, flows and structures.
But, what message can we create to get across the benefits of such an approach? As much as I get the concept of the ‘doughnut’ (and love actual doughnuts), I think we might have reached the limits of our baked goods-related metaphors.
To develop our own clear message we need to understand what it is we want our Green economy to achieve and understand how ordinary voters view that offering.
Economies, like all systems, need to do more than just grow. They need to offer security, stability and resilience while providing people with a sense of purpose and empowerment.
It’s not enough to shout at people for not doing the right thing. We need to propose a negotiating position for that sustainable economy that meets our key criteria:
- There is potential benefit for everyone.
- It separates the people from the problem.
- It promotes interests, without threatening positions.
- It can be measured objectively so we can all have faith in the results.
The Green economic agenda does tick all these boxes. Who doesn’t want a planet that is inhabitable? Ecological and economic systems can be fixed without pointing the finger at individuals. We can all take our different positions within an economy that is stable, secure and resilient (in fact it enables us to be far more autonomous than the current unstable mess). And we already have multiple standard measures for this stability and security (health, crime, poverty, educational attainment, price stability, housing tenure etc etc).
Our challenge as a party is to distil that agenda into simple messages that all voters can accept. That is how we move the economic discussion towards the ‘Green Doughnut' and away from the ‘Growth Pie’.
We must appeal to voters' desire for greater financial security and stability, improved health and wellbeing outcomes, better use of their time, improved quality of experiences and increased life opportunities. None of this is tied to growth, but it must all be articulated within an approach to negotiation as simple and irrefutable as ‘growing the pie’.
I will explore some of these potential approaches in the next instalment…