The paradox of growth

The paradox of growth

Capitalism is predicated on the proposition that economies will grow. Up to now that has broadly worked. Possessions, the reason for growth, have intrigued man from way back. ‘The next acquisition will make me happy’ is a mantra we all grew up with or adopted on the way. It takes great wisdom to recognise the liability that goes with possession, great age to see the advantages of discarding rather than acquiring. We come into the world with nothing. Is the winner the one that has the greatest number of toys when s/he leaves?

For the deprived it is true that possessions make their lives more comfortable and more secure. As people get a little extra to spend on luxuries they become Middle Class. Luxuries soon become necessities and then New Luxuries have to out-pace the old. They do so by consuming more of the planet’s resources. In the end there may be no resources left – as those who already have plenty of them remind the less well-off daily. Sometime growth has to stop. It is unlikely that this will happen methodically. A major catastrophe will probably occur, perhaps wiping out a lot of people or destroying many resources in a single blow.

People may just stop breeding. Modest wealth and belonging to the Middle Class leads to smaller families. Much of the world’s population is ageing anyway and the practice of the middle-aged supporting the rest of the world won’t work if there are no middle-aged left. The other possibility of our being supported by robots will lead inexorably to our becoming robots. Who knows, we might even be happy as robots – if robots can be happy.

Meanwhile the life we grew up with continues despite increasingly rapid changes. If we are to be serious about the planet we need to plan for less, and eventually no, growth. On the journey to this Valhalla we will run into a strange paradox. While we may plan for no growth overall, organisations that want to survive must continue to grow. Why? For two reasons.

First, their existing products and services will quickly become out of date. If they have not grown they will have nothing with which to replace them. Moreover, if they have failed to grow they will not be importing the new thinking, the up-to-date technologies, the sparkling creativity that is now essential to survival. I have seen this at first hand.

A company I worked for had grown too big, too sprawling, too financially sloppy. It set about ‘rationalising’ the business – a seemingly logical, indeed essential, step. My colleague who was in charge of doing this in the UK described it as ‘taking pictures down from the wall’. He described me – developing Asia – as someone who put pictures up on the wall. In fairness I must say that he described himself as being able only to take them down, not put them up.

The parent company sold the Asia-Pacific development; because it needed the cash, which it used to pay back borrowings. Once debt free it immediately got taken over. The parent business has struggled to make a profit in the twenty-five years since that time. In its rush to rationalise it forgot to put up some new pictures on the wall. Soon there were too few to survive. Talk about creating a sunset business!

There is another reason why a company must grow to survive. I’ll discuss it in my next Daily Paradox which I call “The Leadership Morale Button”.