It is the best of times, but only in material sense

For many centuries, Western civilisation was largely defined by a belief in Christianity and the possibility of a heavenly afterlife. In recent centuries this belief system has been superseded by the concept of “progress”. But heaven and progress share a key characteristic. Both are vague in their definitions. Heaven is apparently full of harp-playing angels, pleasant cloud formations and dull but nice people who never discovered the joys of occasional sin. Eternity in such company could be a very long time.

The concept of progress seems easier to define. But on closer inspection what are we progressing towards? Perhaps a materialistic heaven on earth? Progress suggests a final destination or ultimate goal which is as hard to define as heaven.

So economists developed a welldefined concept of progress for a country: Economic growth. This is defined as an increase in the output of final goods and services. Economists say if a country is using its resources to make more stuff, it is progressing. The citizens have more stuff to consume. They are “better off”.

Economic growth is a relatively recent concept, largely developed from the 1930s with the emergence of macroeconomics. Yet it has a hugely powerful influence on modern thinking.

When a country has high levels of economic growth this is regarded as a very good thing. It means higher real incomes for people because they can buy more stuff with their money. Economic growth should create more jobs because to make more stuff, firms must employ more people. But in recent decades there has been growing concern that improved technology has reduced the link between economic growth and increased jobs and incomes for most. This could prove a serious problem if more people do not benefit from economic growth.

For much of human history, economic growth was virtually non-existent. Most people lived short, nasty and brutish lives. But in the 17th and 18th centuries came a remarkable development, “the industrial revolution”.

Its crucial impact was an increase in economic growth. We developed the ability to produce more stuff with the resources available.

The result has been that most of us live much better lives than our ancestors. We are healthier, live much longer, have better houses, food, healthcare, education. We have smartphones, cars, electricity, airplanes, microwaves, computers, the internet, fridges, air conditioning, heat pumps and other stuff that make our lives much easier, safer and healthier. In a material sense, it is the best of times.

But economic growth has downsides. It is not a magic bullet for all human woes.

Studies show that beyond a certain point, having more stuff does not dramatically boost happiness. Happiness is not directly correlated to the amount of stuff we consume. Human existence is not just about consuming stuff despite what many standard economics textbooks say.

There is a serious risk that our collective obsession with making and consuming more stuff could be damaging our planet. It could be risking our extinction.

Politicians frequently quote the need to sustain economic growth as justification for adopting certain policies or not adopting others. Consciously or not, many nod when a politician says a policy will be “beneficial for growth”. Yet most probably have little understanding of economic growth. It simply means a country is making and consuming more stuff.

So when media reports say economic growth rates have exceeded expectations, most economists feel a stirring of excitement. A warm tingle down their collective hairy spines.