Overcoming growth by focusing on social integration

Inclusive Economy06 Oct 2011Henk Molenaar

We are indeed in need of a new development paradigm, Henk Molenaar argues. Compared to the simplicity and intuitive clarity of the concept of growth, the ever more sophisticated indices we are developing to measure wellbeing are not going to do the trick of overthrowing growth as the central paradigm of development. Instead, we need a single concept that captures the crucial social dimension of development and wellbeing.

The debate recently started by The Broker on the promotion of human wellbeing and the transformation towards an inclusive economy is very welcome. In these times of frantic attempts to meet the debt crisis by kick-starting renewed growth, I applaud the pleas to free ourselves from growth fetishism and to develop different tools for measuring development than the gross domestic product. But to overcome growth as a central development paradigm, it is necessary to dwell on the characteristics of growth and the reasons why it has such a strong appeal.

Demystifying growth

Money, credit and interest are central to economic growth and the dynamics of capitalism. Early capitalism emerged with the invention and refinement of interest-bearing monetary instruments. Credit and interest inspire systematic competition for scarce money. They necessitate the continuous pursuit of profit. They facilitate the accumulation of capital and the dynamics through which capital is continuously reinvested in the development of new means of production. In taking the form of interest-bearing credit, money needs to be used and re-used all the time. Thus, capitalism manifests an inner pressure for growth. Growth is a built-in necessity of the monetary system of modern societies. As we know, it comes with a historically unprecedented creation of wealth.

This built-in pressure for growth necessitates increased consumption and evokes dynamic needs. Supply creates its own demand through creative and aggressive marketing. Capitalism has institutionalized greed, rivalry, egoism and the craving for more, leading to ever higher levels of consumption and consumerism. We feel that economic growth allows us to satisfy these needs, rather than it forcing these needs upon us. Yet, the experience of scarcity in relation to unlimited needs is the historical creation of capitalism. General scarcity is not a natural phenomenon, nor is it widespread in the history of culture. It arises when man develops unlimited needs.

Once it has emerged, scarcity affects perception. In modern societies, growth is a lived experience of satisfying ever more new needs. This experience appears as a continuous escape from relative poverty. It makes us look back upon the past as a period of austerity and frugality. We have internalized scarcity and this distorts our understanding of the past and influences our subjective feeling of wellbeing.

Values of freedom and progress historically spring from the highly monetized economy of capitalism. In a sense, money liberates because it recognizes no hierarchy. It frees individuals from the obligations of feudal bonds, communal solidarity or ethnic affiliation. It opens up a world that allows for self-realization and taking initiatives. The multiplication of our needs reflects our increased autonomy. The concepts of freedom and progress—and in their wake the notion of development—express this and therefore are tightly associated with growth.

Realizing this, we begin to understand the lure of growth and the powerful hold it has on our minds. In experiencing growth as the way to escape from debt and to satisfy our needs, we fail to see how growth is instrumental in entering into ever more new debts and evoking unlimited needs. We turn a blind eye to the detrimental effects of unrestrained growth. The monetary system we have adopted forces a compulsory economic growth upon us, resulting in generalized scarcity and ever expanding needs.

Growth compulsion unavoidably creates and increases inequality. Interest concentrates wealth in the hands of a minority. It causes an endless flow of funds from the hands of the have-nots to the hands of the haves, from those who are in need of money to those who have money to spare. Growth, then, not only results in unprecedented wealth, but equally in unprecedented poverty. Capitalism generalizes commercial competition and opens up the entire world for economic exploitation. In the process, scarcity is globalized and poverty shifts to wherever people are most vulnerable to the effects of relentless competition. Growing inequality weakens community life and reduces trust. Meanwhile, planetary natural resources are being depleted and biodiversity dwindles.

But while demystifying growth let us be wary not to fall into the pitfall of demonizing it. Growth in itself is not necessarily a bad thing. Creation of wealth can certainly contribute to human wellbeing, especially in poorer countries. It is unlimited growth, forced by growth compulsion and the pressure to multiply needs, that makes the current system unsustainable, not growth as such. Nevertheless, beyond a certain threshold of material welfare, further growth does hardly add to human wellbeing. Material standards are like drugs. One needs more and more to attain the same level of satisfaction. For that reason, for large parts of this globe growth should no longer be taken as the central goal and main component of development. There is indeed need of a new paradigm.

Measuring development

The discussion on how to measure development departs from the idea that what we measure is important for the policies we develop and the decisions we make. What we measure shapes what we pursue. In measuring the economy, the GDP is a very one-sided yardstick, its shortcomings well known. It captures all market activities, no matter whether these are beneficial or detrimental to human wellbeing. It disregards everything that is not valued in the market and it is blind to distribution.

Despite these shortcomings, economists and policy makers are reluctant to let go of the concept. The reason is that the GDP adequately grasps what it seeks to measure. The GDP measures the extent of the economy in terms of money and therefore relates well to the driving forces of economic growth. It uses a unit of value to measure value, just like we use a unit of length to measure length and a unit of duration to measure duration.

Compared to this, alternatives that have been proposed to try and measure development are complex and heterogeneous amalgams of various components, aggregate indices that mix a grain of health with an ounce of sustainability and a few grams of governance. It is usually the very purpose of these alternative instruments to reflect the multi-dimensional nature of development or wellbeing. In doing so, they try to complement and correct the one-dimensional focus on growth.

And this is precisely their weakness. By adding on all sorts of components to the dimension of material welfare, we end up with a vague composite that is neither this nor that, but that is nevertheless supposed to somehow measure development. Intriguing as these attempts are, in my mind they fall short off the mark. Rather than indicating what they seek to measure, they reflect that we lack a single powerful notion of development. It is therefore no wonder that we find it so laborious to measure.

Compared to the simplicity and intuitive clarity of the concept of growth, this is a sorry state of affairs. These conceptual constructs will never do to overthrow growth as the central paradigm of development. I therefore propose that rather than constructing ever more sophisticated composite indices, we should try and look for a single concept that succeeds to capture a crucial dimension of development or wellbeing other than growth.

Focusing on the social

The best way to start is to look at elements of society that are not ruled by the mechanisms of the market place, that do not follow the logic of accumulation and competition, that are not based on the pursuit of self-interest. Indeed, we should focus on those aspects of social life that are disregarded or even negated and rendered invisible by market ideology.

Neurosciences have recently confirmed what was already well known in the social sciences: the human being is a social animal. Individuals do not create society; it is society that creates individuals. Our brain is socially responsive and capable of empathic resonance. Suffering of others resonates in our brain, leading to compassion. Social intelligence covers non-cognitive elements. Emotions play a central role in social life. Not only are we able to know one another’s feelings, we can actually feel those feelings and respond to someone’s distress with compassion. Our behavior is strongly governed by the inner compass of social and moral emotions such as shame, guilt and pride. Through empathy we transcend ourselves and relate to one another. Without empathy there would be no human society. Intelligence, speech and culture are all based on compassion and our ability to empathize. Moreover, empathy makes altruism possible and altruistic behavior evokes altruism in others. We are all familiar with the experience that giving brings more satisfaction than taking. Conferring a benefaction leads to more benefactions, enhancing mutual trust.

All this is a far cry from the rational pursuit of self-interest by homo economicus. This perspective, therefore, holds the promise of pointing at what may be a truly alternative paradigm of development. It implies a search for a social parameter that is substantially different from a material or monetary variable. Our failure so far to conceptualize a single catching notion of development other than growth, is related to our tendency to see development as something individuals benefit from or have access to rather than as a social phenomenon as such.

A lot of research on social capital, for example, or on trust, approaches these phenomena as individual capabilities, perspectives or even assets, disregarding their social nature. It explores how social capital or trust contributes to economic growth without even conceiving of social cohesion as a development goal in itself. It is individuals who are seen as the subjects and owners of development. But people who act and live together bring forth a dimension that is different from and more than the sum total of the separate individuals and their consciousness. The focus on the individual that is so prominent in the growth paradigm hides from view the special character and own weight of social connections. It renders invisible the separate dimension of societal structures with their own nature and characteristics, the special substance of the social texture of society. For that reason, I do not feel that measures of subjective (individual) wellbeing or happiness really add much to our understanding. They do not at all grasp this social nature of development.

Empathy allows us to be responsive to others and this makes it possible for trust to arise. Showing one’s trustworthiness is the best way to gain trust. And the best way to show one’s trustworthiness is to empathize and to put one’s trust in the other. There is a mutuality in play that transcends the individuals. It is the relation that affects the individuals rather than the other way around. Trust is a social rather than a psychological phenomenon. Only those who are able to trust have the capability of knowing the trustworthiness of others. Indeed, what trust measures is precisely trustworthiness.

Trust builds on trust. It both requires and inspires confidence. Giving trust means acting unselfishly without demanding something in return. It implies adopting an open and vulnerable attitude while believing that others will show respect and honesty. This attitude inspires reciprocity without demanding it. Trust is the crucial component of social cohesion. High levels of trust make people feel secure and see others as co-operative. Communities with extensive social networks have more individuals who behave in a trustworthy manner. Not only do members have more, and more diversified, possibilities to practice the mutuality that allows trust to grow, also the reputation of untrustworthy members travels fast in well-connected communities. This results in generalized norms of trust in societies that are highly integrated socially.

Social interaction is essential for our wellbeing. Socially well integrated people live happier, longer and healthier lives. That what makes life worthwhile results in feelings of wellbeing, happiness and fulfillment. Good relations are the most important source of such feelings. Quality of life can only be realized collectively. Reciprocal connectedness is a precondition of wellbeing. A lot of social life consists of non-zero-sum interactions that contribute to collective wellbeing. And the stronger social integration is, the more widespread and intense the feelings of wellbeing. Social cohesion, then, is an important dimension of development. It lies in the relations and networks that exist between people. It varies with the multiplicity and density of the networks and the strength of the ties. Strong social cohesion fosters trust and reciprocity.

An enhanced understanding of development likely lies in the interplay of individuality and sociality, of individual initiative and social integration, of individual autonomy and social cohesion. But in order to fully grasp this we need a sharper understanding of this social dimension and instruments to measure it. Trust could be such an indicator of social integration, a marker of the cohesion of society. But how should we measure it? Trust is unlike a commodity to be exchanged in the market. Trust arises within the relationship. There is an element of mutual reciprocity in play, but it is instantaneous and the essence of trust lies in the relation rather than in the individuals involved. If we want to measure the strength or depth of trust, we need to focus on the sociality of it and somehow capture its emotive power.

All of this requires more reflection and research. We may need to rethink earlier work on social capital and trust. And we may want to revisit the various toolkits, instruments and indices that have been developed. But a focus on the social as a separate dimension, on the strength and resilience of the social texture of society, and on trust as a marker of social cohesion, holds the promise of shifting our mindset and reimagining development.


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