The end of economic growth

What economies face now may not be solely a coronavirus-triggered meltdown. As devastating as the coming recession—or depression—is likely to be, the health crisis is exacerbating problems in a system that was already under strain.
A view of Times Square hours ahead of the implementation of 'New York State on PAUSE' executive order as the coronavirus continues to spread across the United States on March 22, 2020, in New York City. The World Health Organization declared coronavirus (COVID-19) a global pandemic on March 11th. (Photo by Noam Galai/Getty Images)
NEW YORK, NY - MARCH 22: A view of Times Square hours ahead of the implementation of ’New York State on PAUSE’ executive order as the coronavirus continues to spread across the United States on March 22, 2020 in New York City. The World Health Organization declared coronavirus (COVID-19) a global pandemic on March 11th. (Photo by Noam Galai/Getty Images)

In the past month, as the world grappled with the coronavirus, images circulated from the Great Influenza Pandemic of 1918: grainy black-and-white photographs of police in masks, hospitals with rows and rows of beds, Red Cross workers bearing stretchers. Then, as now, there was no vaccine. Schools, churches and bars closed, and quarantines were imposed. Then, as now, travel helped spread the virus globally (it was wartime); at least 50 million people died. And then, as now, economies were affected, though it’s difficult to calculate how much, as the Spanish flu began during the Great War, which had its own effects. The World Economic Forum estimates the outbreak reduced GDP per capita by six per cent.

One clear difference, though, is that the Spanish flu pandemic, as it’s known, did not arrive to a backdrop of anxiety about economic growth. That term came into more common use in the ensuing years; worry about inadequate growth was not the preoccupation it has been in the past decade.

End-of-world scenarios in science fiction and Hollywood thrillers are often announced by the emergence of a virus. And in the past few weeks, political and business leaders have expressed alarm about the threat to lives, as well as the risk of “ending the economy.” But what economies face now may not be solely a coronavirus-triggered meltdown. As devastating as the coming recession—or depression—is likely to be, the health crisis is in part exacerbating problems in a globalized system that was already under strain. “It does cleave open the fissures that were already there,” says Armine Yalnizyan, a former chief economist at the Centre for Policy Alternatives and now an Atkinson Foundation fellow, “though it also opens up brand new ones.”

Long before the novel virus emerged, the world was grappling with a slowdown. Hand-wringing over low growth has been a staple of the business pages and think-tank agendas for most of a decade. The 2008 financial crisis wiped out $2 trillion in global growth and cost 2.6 million jobs in America alone; the growth many were waiting for post-2008 never materialized. Markets did expand after 2009 but the economy overall, as measured by GDP, has not enjoyed robust growth. A business class conditioned by tech booms, housing bubbles and Asian “miracle economies” despaired as global growth settled around 2.4 per cent last year. The outlook for this year, pre-pandemic, was that Japan, the U.K. and much of Europe would see growth of less than one per cent, with the U.S. not faring much better.

In fact growth in much of the Western world has been decelerating since at least 2000. The economist Robert Gordon wrote in his 2016 book The Rise and Fall of American Growth that American invention and expansion may have peaked half a century ago. Even the secretary-general of the OECD admitted, speaking at a Montreal conference in 2016, that it’s tempting to think growth has “declined permanently” and the only question is how to prosper under the new normal. (Though he quickly urged his audience to not think this way.)

A low-growth status quo is bemoaned by economists and politicians, who see it as a precursor to financial freefall. And so, even before Washington swung into action with a massive US$2-trillion rescue plan to deal with COVID-19 fallout, growth rates had been juiced with stimulus, tax cuts, cheap money via low interest rates, and, as U.S. President Donald Trump boasted recently at Davos, “the most extensive regulatory reduction ever conceived.”

But should they have been? A pandemic-triggered recession will require unprecedented policy responses to protect citizens. Supporting a recovery is one thing, though, and resurrecting a system that prioritizes the pursuit of runaway growth is quite another. If billions of dollars in bailouts didn’t send growth skyrocketing post-2008, it’s fair to ask if that’s an achievable goal this time around, once the economy stabilizes. It’s also hard to ignore the disparate voices asking if it even should be. What exactly have years of artificially boosted growth meant for citizens in an era defined by precarious work, soaring inequality and stagnant wages? Is higher growth worth reviving at any cost? What if low growth is actually a symptom of progress—and the overall trend we’d seen these past two decades was the natural evolution that economist Dietrich Vollrath calls, in his eponymous new book, “fully grown”?

The low-growth argument is broadly familiar to environmentalists, of course. “Fairy tales of eternal economic growth” are devastating the planet, Greta Thunberg declared at a United Nations Climate Change Summit last fall, and she was only giving popular, headline-friendly voice to an argument made for decades. How do we square the need for economies to grow year after year, for more and more goods to be produced and sold, with the realities of a finite planet?

It’s one thing for environmentalists to demand slower growth, though, and quite another for economists to champion it—and for everyone else to learn to live with it. And yet the broader shift in economic thinking has been triggered by a tangle of economic and social forces, all with a longer half-life than a viral pandemic. For more than five decades, the idea of growth in an interconnected, globalized world was the best measure of economic success we had. Recently an assortment of unlikely allies—progressives and right-wing populists, globalization critics and builders of walls, economists and ecologists—has, against the backdrop of a rapidly warming planet, begun challenging the supremacy of this foundational idea.

THORNTON, CO - FEBRUARY 19: A warehouse associate checks labels on boxes before they are loaded on to trucks to be shipped out at Amazon's Fulfillment Center on March 19, 2019 in Thornton, Colorado. The facility which opened in July of 2018 is 855,000 square feet, and employees over 1500 people. The Thornton facility is a state-of-the-art facility that uses Amazon Robotics to move the merchandise around from one area to the next. Hundreds of workers perform a variety of jobs in the huge facility. Many workers stand at stations, picking items to ship from trays brought to them by robots that roam the massive warehouse floor. The robotic facility, near I-25 and 144th Avenue, distributes small- and medium-sized items and allows for quicker delivery of orders in the metro area. (Helen H. Richardson/The Denver Post / Getty Images)
A warehouse associate checks labels on boxes before they are loaded on to trucks to be shipped out at Amazon’s Fulfillment Center on March 19, 2019 in Thornton, Colorado. (Helen H. Richardson/The Denver Post / Getty Images)


The idea of growth is a seductive one, and perhaps never more so than in our era, with its broadly maximalist ethos. We like growth—material, spiritual, personal—and we push ourselves constantly toward more of it. GDP growth is just an economy actualizing itself, year after year. But there are lessons to be learned in the path that growth takes in nature and through much of human history. This is evident in decades’ worth of research on growth patterns of bacteria, whales, mosquitos, broiler chickens, trees, stalagmites, cities, nuclear energy and so on. Growth is seldom random. Newborn kittens—typically weighing 100 g—grow at a rate that’s one poetic order of magnitude faster than newborn red deer (typically weighing 10 kg). The Himalayas, guided by geotectonic forces, grow predictably at a rate of about 55 mm a year.

These studies are among the hundreds detailed in Vaclav Smil’s book Growth: From Microorganisms to Microcities, a millennia-spanning look at patterns of growth. Smil, a professor of environment and geography at the University of Manitoba, is the author of a few such rangy, intellectually dense doorstoppers; he’s perhaps best known these days because Bill Gates is an avowed fan. To the layperson, the preponderance of patterns Smil explores across an array of disciplines suggest a deceptively simple motif: Most growth follows paths that can be mapped and graphed and identified by one model or another. Few if any patterns appear to account for growth without limits.

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Economies in our time, though, are expected to behave differently. Thanks to higher growth in emerging markets, global growth—as measured by GDP per capita year to year, the only universal measure we use—averaged around 2.7 per cent a year every year for the past three decades. Globally, GDP per capita in 1960 hovered at US$452, according to World Bank data; by 2018, it was more than US$11,300.

The global economy is not the only thing that has supersized itself. American houses on average are 2.6 times bigger than they were in 1950, Smil writes in Growth—and use more lumber and furniture and heavier finishing materials. American cars in 2015 weighed 3.4 times more than the Model T. Wine glasses, he says, citing a U.K. report, have doubled in volume since 1970. Meanwhile, Smil writes, the amount of data is growing such that 90 per cent of the world’s extant information may have been created in the preceding two years. While that information may be made of pixels and stored, weightless, in a cloud, producing and consuming it requires materials and energy. Even things that have shrunk in size—computers, phones—have in a sense grown, when you consider the sheer number of components that now fit on a chip.

There have been a few doubters along this expansionist path. In a 1972 report, “The Limits to Growth,” a group of MIT researchers projected the future effects of uncurbed food and resource use, population growth, pollution and so on. The result of their computer modelling was a doomsday scenario in which human societies collapse, more or less, by 2070. A similarly glum forecast was made by biologist Paul Ehrlich in a famous 1980 wager with a business professor, Julian L. Simon. Ehrlich, who wrote The Population Bomb, bet that prices of a host of commodities would rise as population exploded. Simon countered that ingenuity and efficiency would drive prices down. Simon was proven right.

The determination of economies to keep growing has mostly continued unchanged. Free trade and then offshore manufacturing kept costs low and profits high, which boosted GDP growth, so governments and companies leaned into both. The new dogma of shareholder value that took hold in the 1980s and ’90s ushered in skyrocketing CEO pay, reduced labour costs (meaning fewer, more overworked employees), and scaled back benefits and pension plans, all of which boosted corporate profits and created the illusion of economic prosperity.

What did all this prosperity mean for citizens? Economic growth might as well be taking place in some distant galaxy, Jeff Rubin, former chief economist for CIBC World Markets, writes in his forthcoming book The Expendables: How the Middle Class Got Screwed by Globalization. Free trade, outsourcing and high CEO pay, unsurprisingly to critics, were followed by wage stagnation, underemployment, economic precarity and record inequality. “The WTO protesters in Seattle,” he writes, “pretty well got everything right.” Between 1999 and 2015, the Canadian economy lost half a million manufacturing jobs, America close to five million. In most developed nations, average wages adjusted for inflation have not increased since 1975, Rubin, who also wrote 2012’s The End of Growth, points out. No wonder anti-globalist sentiment has risen, espoused by everyone from Donald Trump (though he was ridiculed in 2016 for his stance) to Brexiters to Bernie Sanders. The idea was that growth would trickle down. For the great majority of the world’s citizens, it hasn’t.


There’s no consensus on the reasons for falling growth. Some blame a decline in ingenuity, the kind Julian Simon was betting on—though economists such as Yalnizyan and Dietrich Vollrath demur. Yalnizyan, who is working on a project on inclusive growth and the future of workers, points to several other factors, including geopolitical instability. In recent decades, the entry of emerging markets into global supply and demand chains has driven growth. The rise of nationalist leaders in Russia, America, Turkey, Britain and so on, Yalnizyan says, has interrupted this dynamic. “And there’s no indication that we have plateaued in those concerns and that we’re going back to globalization any time soon.” Pandemic-related shifts could reinforce the trend. Rubin points out that the time-honoured practice of American protectionism spiked in response to the Great Depression of 1929.

Then there is the ticking demographic bomb: the shrinking labour force, brought about by aging populations in many parts of the world. According to the UN, by 2050, one in six people worldwide will be over age 65; last year it was just one in 11. “Those people who feel that slower growth is not inevitable,” Yalnizyan observes, “are just not watching the ball. The big ball is population aging. And throughout the global north, where the money is, populations are aging. They’re aging more rapidly in China and Korea, and there’s a lot of money in those countries.”

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Vollrath, the author of Fully Grown: Why a Stagnant Economy Is a Sign of Success, adds another explanation. He started out wanting to write about what caused the problem of low growth, but discovered that slowing growth is better explained by what has gone right. Growth’s decline in the past few decades is, in his view, a symptom of progress. Growth in Western societies dropped, he writes in Fully Grown, for a rather felicitous reason: These societies were done growing. The postwar boom elevated living standards for millions. “In the U.S., even in the 1940s, only about two-thirds of homes had indoor plumbing,” Vollrath says. After the war, more homes acquired flush toilets, electricity, laundry machines, refrigerators. The production and sale of all those consumer goods translated to a massive growth in GDP. Expecting that growth to continue is, he says, absurd. “I don’t need eight or 10 refrigerators.”

Even the drop in productivity growth—a country’s ability to access and harness labour and physical resources—is explained by social progress, Vollrath argues. Higher GDP in the 1960s and ’70s led to prosperity and more choices for people. This was accompanied by the arrival of the birth-control pill, feminism and reproductive choice, and families began having fewer children. The labour force has shrunk because there are fewer workers, and there are fewer workers because families, by choice, are smaller. High growth, eventually, led to lower growth.

Global growth rates over the past two decades have benefited from a boom rolling out across the developing world. But at some point, those countries, too, will be mature societies—they will have finished growing. China used more cement between 2008 and 2010 than the U.S. did throughout the 20th century, Vaclav Smil says—a sign of an economy that is building, in every way. But the same trajectory is unlikely to continue over the next three decades. Anyone looking at China’s wondrous growth rates (six per cent) in recent years should recall Japan’s miracle growth between 1981 and 1989: the Nikkei 225 index grew fivefold, and GDP grew by more than four per cent a year every year. It’s hard to not think of Smil’s observation in Growth: Exponential growth, natural or man-made, is always temporary.

An aerial view of the Aleksinsky Karyer solid waste landfill in the town of Klin (Photo by Sergei BobylevTASS via Getty Images)
Economic growth has led to an increase in landfills and other environmental issues (Photo by Sergei BobylevTASS via Getty Images)

Economies cannot grow indefinitely on the strength of household goods produced and on consumer demand—particularly as inequality rises. “In every country,” says Yalnizyan, “the primary driver of an economy is household consumption. And everywhere, in an attempt to goose returns on investment and increase profitability, there has been a reduction in wage share. But you can’t suck and blow at the same time. If you’re not going to let wages rise, you’re going to have slowing household consumption.” There is also the reality that the growth we have enjoyed globally has other consequences, evident in the world’s landfills and plastic-bag-choked seabeds.

Yet unfettered consumer demand has remained a critical economic engine as outlined in all those reports about sluggish growth from acronymed organizations. For several years, groups like the IMF, the WEF and the OECD have pointed the finger at flagging demand. It’s a problem that goes back to the 1950s and “the idea of converting a military industrial apparatus and making it a civilian apparatus,” says Yalnizyan. “We had these mass production facilities for wartime efforts, so we moved to mass production for the consumer, for the civilian, and suddenly this idea of consumption just took over the whole thing.”

Falling consumer demand in the context of a pandemic could reflect the financial precarity of citizens. In the longer view, though, declining consumer demand in recent decades shouldn’t spell despair. Consumers in the West spend less on goods, but more on services (which represent 71 per cent of Canada’s GDP). This may be what progress looks like. The economy “figures it out,” Vollrath says, “though it’s not always a smooth transition. The U.S. economy is not 140 million unemployed farmers, right?” And services don’t all have to involve ill-paid food delivery and blow-dry parlours. Even in a pre-pandemic world, the sector presented a valuable frontier, says Yalnizyan: “How will we care for one another? Is it going to be DoorDash or is it going to be new ways of healing bodies that are ill or expanding minds young or old?”

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The coronavirus era has magnified those questions and recast how we think about what Yalnizyan dubs “the essential economy.” “When we are told we may not undertake nonessential travel or trips out of our home,” she says, “we stop and think, what is the essential part? It’s food. It’s shelter for those who don’t have it, medical supplies, health care, and access to electricity, water, communications [phone, internet, mail delivery], waste management. And essential child care.” It’s a short list. Some companies have brought in temporary pay raises and sick leave for their workers. But societies face more fundamental choices in how we value such services. Women play a key role in the essential economy, paid and unpaid—a fact we’re reminded of as thousands of retired nurses (overwhelmingly women) have returned to work amid COVID-19, and quilters and sewers around the world volunteer to make masks. “How do we pay people that are essential to our well-being?” asks Yalnizyan. “And if we choose to have women do more unpaid or poorly paid stuff, that will have implications for how the economy grows.”


In the past year or two, a small choir’s worth of unlikely voices began challenging the growth consensus. In a 2019 op-ed for the New York Times, Ruchir Sharma, chief global strategist at Morgan Stanley Investment Management, decried the “irrational” focus on GDP growth, and argued for nothing short of “redefin[ing] economic success and failure.” The Oxford economist Kate Raworth champions low growth. “Slowth” is the idea proposed by Yalnizyan.

The problem is not merely with the assumption that we should keep growing; it is with what makes up growth itself. The cult of growth has not only missed the millions of people left behind; it misses the mark on a basic accounting of the economy. For a start, GDP figures ignore underground economies, which can be as much as a third of the economy in developing countries and 15 per cent in countries like Canada. GDP growth doesn’t get at whether citizens are doing better or worse financially. When national growth rates are compared with real GDP per capita, they don’t always match up; Smil notes that Americans sometimes fared better in low-growth periods than in high-growth periods.

GDP cannot differentiate between the quality of goods and services produced in one year versus another. An $800 TV in 2015, as Dietrich Vollrath points out in his book, was bigger, of higher quality and had more innovative features than an $800 TV in 2005, yet added the same value to GDP. The measure doesn’t account for innovation or efficiency, just price. And it does not account for energy used to make products, or pollution created as a by-product. “GDP takes a positive count of the cars we produce,” Amit Kapoor and Bibek Debroy wrote in the Harvard Business Review, “but does not account for the emissions they generate; it adds the value of the sugar-laced beverages we sell but fails to subtract the health problems they cause.”

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The limitations of GDP as a measure of economic well-being were evident even to GDP’s inventor, the American economist Simon Kuznets. Kuznets was tasked in 1932 by the National Bureau of Economic Research (NBER) with devising a way to measure the needs of his Depression-wracked nation. The tool he came up with was a valuation of all the goods and services produced by a country. He was frank about what Gross Domestic Product left out: domestic work, unpaid work, anything that wasn’t a measurable financial transaction. John Maynard Keynes’s finessing of GDP eight years later added government spending to the mix, but didn’t tackle its other blind spots. It’s the model we still use. Since then the gap between a country’s economic life and what GDP captures has only grown. “To borrow the wonderful English phrase, GDP does what it says on the tin,” says Vollrath. “But we’ve put all these connotations around GDP that it’s not built for.” GDP goes back to a time when “well-being and GDP were lined up. And so we’ve got it in our heads that GDP is a really good indicator of overall well-being.” It’s not.

Certainly GDP is agnostic on where all that domestic product goes—not into citizens’ pockets, it’s clear. And it says nothing about the changing nature of the labour that generates it. The proportion of national GDP contributed by retail sales doesn’t reflect, for instance, how millions of jobs in shops or malls have given way to long, physically demanding shift work in logistics warehouses. Nothing about GDP reflects the precarity of modern work, or the way jobs have intensified as employers have slashed labour costs over the past 35 years. Six in 10 American workers in the mid-1980s told the Conference Board they were content with their jobs; in 2010, only four out of 10 said the same.

GDP, like Oscar Wilde’s cynic, knows the price of everything and the value of nothing. As Jonathan Rowe, a writer and activist in California, told a U.S. Senate subcommittee in 2008, “The what of the economy makes no difference . . . The money in the big pot could be going to cancer treatments or casinos, violent video games or usurious credit card rates. It . . . could be the $20 billion or so that Americans spend on divorce lawyers each year, or the $41 billion on pets, or the $5 billion on identity theft . . . All you want to know is the total amount.”


In March, as COVID-19 ravaged societies around the globe, one note of hope began sounding on traditional and social media. Satellite images showed plummeting nitrous oxide levels in the air over China. The BBC reported that carbon monoxide levels in New York dropped by 50 per cent. People shared heartening images from a forcibly slowed world: clear water in Venice’s canals, dolphins swimming off Italy’s coast. It was a powerful counter to the grim facts of forest fires and disintegrating coral reefs, and a bolster to arguments demanding a consideration of environmental costs in growth discourse.

If the human costs of growth account for one source of the backlash, the other is what untrammeled growth has done to our environment. It’s hard to ignore the link. According to World Bank data, high-income countries produce more than double the carbon dioxide emissions of middle-income countries, and 10 times the emissions of low-income countries. A 2017 study in Nature suggests that the yearly growth of global emissions per capita (2.1 per cent) was not far behind the rate of GDP growth (2.7 per cent) over the past three decades. Natural consequences have largely been uncoupled from measurements of growth.

This is a relatively recent blind spot, according to Christopher Jones, a professor at the University of Arizona who specializes in energy history and is writing a book about how such calculations came to ignore the natural world. Until about 75 years ago, economists considered natural limits; they had to. Growth was tied to land, and land yields were necessarily finite. “The founding fathers of economics—luminaries including Adam Smith, David Ricardo and John Stuart Mill,” Jones wrote in the New Republic, “shared a belief that growth was finite.”

Armine Yalnizyan (Courtesy of Anna Lisa Sang)
Armine Yalnizyan (Courtesy of Anna Lisa Sang)

Mounting evidence of anthropogenic climate change now reminds us of that relationship. “Extreme climate disruptions, whether they’re floods, fires, earthquakes or rising sea levels, also slow down economic production,” says Yalnizyan. A 2019 study from the NBER, Kuznets’s erstwhile employer, predicted rising temperatures will affect an array of business sectors and hurt global growth.

In a sign of the times, one week in January saw the completion of an internal JPMorgan report on climate change, and the publication of The Ahuman Manifesto. The book, a serious work by a British academic named Patricia McCormack, makes a disquieting proposal: The best way to correct the havoc wreaked by population and economic growth, McCormack contends, is for humans to stop reproducing.

In advocating for “the deceleration of human life” and an end to the Anthropocene, the book marks something of a leap in climate change activism. But the world it aims to fix is not all that far removed from the one in the leaked JPMorgan report. “We cannot rule out catastrophic outcomes where human life as we know it is threatened,” its economist authors write—less cheerfully than McCormack, it must be said. It was quite an admission from a firm that pumps billions of dollars into fossil fuel projects. (JPMorgan joined Goldman Sachs soon afterward in withdrawing support from Arctic exploration projects.)

The coronavirus has presented one draconian way to slow global warming. Disasters often have this effect—in the short term. The Spanish flu pandemic and the Great Depression both did, as did the 2008 financial crisis. But a transition to a non-carbon world also isn’t helped by bargain oil prices or by the drop in green investments that a slowdown could trigger. And the conditions are not exactly reproducible in normal times. The question is whether the large-scale policy changes that would have the same impact are compatible with continued growth.


Scrapping the pursuit of growth has its own costs. The ability of governments to spend shrinks with slowing growth, argues Yalnizyan. (The trillions in emergency fiscal measures we’ve seen in recent weeks are the exception to angry rhetoric over deficits.) “The closer you get to zero growth,” she says, “the more the economic game seems like a zero sum game, even if it’s not. Slowing growth leads to hotter temperatures among people, too—to growing levels of factionalism, fractious behaviour that itself will be disruptive.” The American economist Ben Friedman, in his book The Moral Consequences of Economic Growth, explored what growth does for already rich countries. “When economic growth increases material living standards for a majority of the population,” he told the World Economics Journal, “it also tends to promote social and political progress.” The values nudged along by growth—fairness, tolerance, equality of opportunity, social mobility—are likewise threatened by stagnating growth, he notes. It’s not been an accident that political polarization has arrived in lockstep with rising inequality, economic precarity and falling growth.

The microbial catalyst that triggered the present economic crisis has, along with geopolitical standoffs and the spectre of climate change, created a perfect storm of perils. But it has exposed more than our global problems. “We’re just starting to have the veil lifted from our eyes about the profound ways in which we’re interconnected,” says Yalnizyan. “This epidemiological model offers a way of understanding economic interconnectedness as well.” And that, she believes, could help people see that when one group suffers, or one part of the economy sags, there are ripple effects for everybody. History has shown that crisis-time interventions to keep economies afloat have the potential to reconfigure patterns to serve citizens better. Growth will always matter, but it’s possible for economies to settle into more reasonable and meaningful growth that considers people and the planet at the same time. There may not be a happier alternative.

This article appears in print in the May 2020 issue of Maclean’s magazine with the headline, “The death of growth.” Subscribe to the monthly print magazine here.