But, the argument goes, we wouldn’t be as prosperous as we’re now if it weren’t for those CEOs. So what. Maybe we wouldn’t be facing a financial crisis and climate change either. The blind focus on selfish enrichment to the detriment of the common good has created much more harm than good. We’re exploiting the commons, ignoring that there are limits. Growth is limited. All of our resources are limited. What is mostly absent in the current conversations around the financial crisis are the questions we really need to ask: Is the greed and consumerism that underwrote the bubble really something desirable? Is growth at all cost something that is sustainable in the long-term? Instead, the focus seems to be to do whatever it takes to return to our way of life, the way of life that brought us into this mess in the first place. There are systemic reasons that enabled the bubble that are not being addressed. And the fanciful pursuit of growth is one of those systemic problems.
Let’s take a look at the stock market, the favorite example of phenomenal growth. The S&P 500 has been around since 1950. If you look at the return from 1950 until 1980, the annual return was 6.63% with a CAGR of 5.34% (period Jan 1, 1950 – Dec 31, 1979). A dollar invested in 1950, would’ve been about $4.75 by 1980. We can’t look at the next 30 years yet but if we look at growth from 1980 to 2008, the stock market just took off: Average return of 9.14%, CAGR of 7.64%. A dollar invested in 1980 would have grown to almost $8.50 by the end of 2008 that’s almost $4 more than in the prior 30 years. Was the economy really that much better from 1980 onwards than it was before 1980? Or could this larger, more rapid – and maybe ultimately unsustainable – growth have something to do with Reagan taking office in 1981? His Reaganomics introduced an era of deregulation, among other things. Either way, it seems like the value of the stock markets was largely inflated. Granted, the GDP also shows a phenomenal growth after 1980. How much of that is a reflection of the financial services industry growth, though? Is this real growth? “GDP covers the goods and services produced by labor and property located in the United States,” says a guide. What about a measure without property? If we’re looking at a measure of the economy that factors in the sustainability, things look rather grim. Using the Genuine Progress Indicator, for example, we see a decline in quality of life. We are so focused on growth, we fail to realize that we’re on a train that is quickly approaching an abyss – and there’s no bridge. There still is time to stop the train and work on building a more sustainable economy. The first step in reversing course would be to give up the idea that growth is something worth pursuing.