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Nathan Hunt: This is the Essential Podcast from S&P Global. My name is Nathan Hunt.

Growth is fundamental to our understanding of capitalism. We measure the health of an economy by the growth in GDP. We measure the prosperity of a country by the growth in real incomes.

Ambition and the drive for profit are the engines of growth. Growth pays the interest rates and covers the deficits. We think of capitalism like it is a shark, either it is growing or it is dying. But what if growth is the problem?

Attempts to decouple growth from carbon emissions have not thus far been successful. Growth has led to greater inequality in many countries and a sense of discontentment in many individuals. What if we should be thinking about prosperity and not growth?

My guest today is Tim Jackson. Tim is an ecological economist and writer. Since 2016, he has been the Director of the Centre for the Understanding of Sustainable Prosperity. He is also author of several books, including Prosperity without Growth and his latest book, Post Growth: Life after Capitalism.

Tim, welcome to the podcast.

Tim Jackson: Thanks, Nathan. It's a pleasure to be here.

Nathan Hunt: Tim, I'm going to start by asking you a question that perhaps I should be asking myself. Well, I was reading Prosperity without Growth and Post Growth. I found myself instinctively rebelling against your ideas.

Every time you would make a point on climate or inequality, I would find myself nodding my head, but I struggled with the idea that thinking beyond growth was the answer. So tell me what is it about growth that causes me to cling to it like a security blanket?

Tim Jackson: You know I think there's a little bit of a biological metaphor, if you like, or at least an element of human biology that we want our kids to grow when they're young. And there's a sense also that when things are growing, they're not decaying. And decay is kind of frightening to us. So we cling, in that sense, to a concept of growth as being one that indicates progress.

In the sort of Internet meme that line goes up is a positive thing and line going down is potentially frightening one. So there's a number of reasons, I think, for that instinctive resistance to questioning growth. But there's also a kind of sense in which we're living inside a cultural myth.

And that myth has growth at its heart. So we can't entirely trust our instinctive aversion to questioning growth as being something that really belongs to either us or the world. To some extent, it belongs to our culture, and our culture tells us growth is good.

And of course, sometimes it is good. Sometimes it's good in biology. Sometimes it's very bad in biology. Most things that don't, at some point, stop growing tend to be very bad for individual organisms and indeed for ecosystems as a whole.

So there's a limit to those metaphors. But its power as a cultural myth has us, to some extent, in its grasp. We're conditioned, in a sense, to believe that growth is good.

Nathan Hunt: I'd like to talk a little bit about growth and carbon emissions. This is something you cover at some length. And the fundamental argument is that while we wish to decouple economic growth from the growth in emissions, that has not been the historical pattern.

As we have grown, our emissions have grown. But again, I struggle with this. Could we be one big breakthrough in cold fusion away from just happily growing our way to eternity? Is there a way out of this?

Tim Jackson: Again, I think to some extent, we're subject to a kind of cultural story that we're very clever as a species. We've solved lots of problems technologically and that there are good technological ways out of climate change.

I mean most of the technologies are already available. Some of them are economic. Lots of them stand in a slightly difficult relationship to financial markets because they're quite complex. Others of them do lead themselves, lends themselves to investment.

But that sense in which we cling to another belief, which is that technology can save us is also potentially a dangerous one because it stops us looking at the realities. And the historical realities are quite profound that we have not decoupled our carbon emissions anything like fast enough in human history in terms of what we have to achieve now in the climate transition to net-zero carbon.

In fact, interestingly, the advanced economy -- the fastest that the advanced economies decoupled the carbon intensity of their economic activities was way back in the 1970s during the energy crisis of the 1972, 1973 and then 1979, 1980. And around about that time, the trend rate of decarbonization of the economy peaked in the advanced economies, and it's actually been declining since that point.

For all the talk about climate change, we're actually only decarbonizing at the global level, largely to the efforts of countries like China, which are currently decarbonizing quite fast. But even the rate at which they're decarbonizing, even the rate at which we decarbonized back in the 1970s is nothing like the rate at which we need to decarbonize in order to meet our climate change objectives. And that's the point, I think, when we have to be skeptical of that cultural sense that we are a very clever species and we can solve all our problems through technology.

Nathan Hunt: What about inequality? It seems like an ongoing challenge of modern capitalism is that inequality is on the increase. Is it the only way to solve for this problem to sort of raise all boats through continued growth?

Tim Jackson: Well, the difficulty with that is that it hasn't worked. The evidence on this is really interesting. There was a period in time in which that what was called trickle-down economics was kind of working. We had growth rates which were in the region of 4% and 5% a year in the advanced economies.

And what was most interesting is that the benefits of that growth were mostly going to poorer people in society. In other words, that was the idea of trickle-down. We had those fast growth rates, and they were benefiting -- mostly benefiting poorer people and benefiting richer people less. And then 2 things happened.

One was that those growth rates began to slow down. We don't fully understand the reasons for that. It could be about the maturity of economies, the shift from fast labor productivity growth sectors like manufacturing towards slower labor-rich sectors like the care economy. It could be a number of factors to do with financial markets and the lack of investments in productivity. It could be actually physical limitations to the scale of labor productivity growth that's achievable in the economy. But the reality is that, that growth rate began to slow down.

The second striking feature of those decades, and they're largely the decades between -- about the mid-1960s, 1970s to the present time, is that inequality began to grow. And to my mind, those 2 things are kind of related to each other. As labor productivity growth slowed down, the margins available to producers were squeezed. And that squeezed 2 things. It squeezed the investment potential from the revenues for production, but it also squeezed the wages of the people working in those production facilities.

And as those things happened, an era of financial regulation came in to try and stimulate growth back into the economy. And through that deregulatory process, it ended up creating a kind of speculative bubble which burst with the financial crisis. And in that period, with growth slowing down, speculative investment increasing, wages being suppressed, the result was that, that trickle-down theory went into reverse, wealth trickled up towards the richest in society. They became the beneficiaries of what growth there was in the economy, and the poorest in society actually saw themselves looking at stagnant or even declining wages.

And that's a social tragedy, really. And it's a social tragedy that was driven by an unreflective process of chasing after headline growth by processes such as the deregulation of the financial sector, which only allowed for certain elite elements in our population to benefit from whatever growth was left in the economy.

Nathan Hunt: To that point, there is this historical sense that economies that don't grow are locked into a kind of stasis that is profoundly unequal, like feudalism. How do we create mobility and equality in a post-growth economy?

Tim Jackson: Well, that is very much an open question. I think that's where we find ourselves, in a way. It's not an easy territory because we haven't any obvious comfortable examples. We have some fascinating examples from history in which actually economies that have been subject to quite severe economic shocks have, in fact, improved their prosperity in certain definable ways, improved health outcomes, for example, despite those shocks.

And some really interesting case studies from Cuba to Japan to the U.K. through the second world war, a number of places where actually a degree of reining in of our economic appetites led to investments in the health and the strength of communities that, in its turn, led to positive health outcomes, better health under those circumstances than under economies that were growing very fast. So this is -- that's fascinating evidence.

But it doesn't entirely answer all of those questions about the conditions under which we can maintain both prosperity and equality when our economies may not be growing as fast as we would like them to. And I think that's partly a failing of economics because economics hasn't studied those situations. It hasn't believed that they were important.

It's largely taken as read the idea that the aim of economics and economic policy is to understand how to get the economy to grow as fast as possible. But under circumstances in which that growth may be either undesirable or unachievable, we're missing economics.

The economics of the post-growth economy has kind of gone missing in the last 70 to 80 years, and it's one of the aims of some of the research that we're doing. So the answers aren't all available, but there are indications. There are sets of evidence which suggests some of the ways in which we may be able to navigate what otherwise looks like a very tricky situation.

Nathan Hunt: Tim, as I mentioned earlier, I struggled with the books because I had this instinctive reaction growth is good. But one of the moments in your book that stopped me cold was when you talked about the Baumol effect. Can you explain the Baumol effect, whether we might see that today in the developed Western economies?

Tim Jackson: Yes. I think there is a chance that, that is some of what we're looking at. And I alluded to it earlier when I was talking about the possible slowdown that comes from a transition from a materially based, production-based economy towards one that's based on services.

And the argument goes to an economist, a fascinating economist called William Baumol, and he had a very long career. He was still writing books in his 90s, which is something that I kind of do aspire to as a growth model or a longevity model, let's say, is to continue to be thinking. And his contribution to economics, which I think has been overlooked largely, and he began when he was looking at the 1960s and interestingly looking at the creative sector, at the theater in particular.

And he wrote a paper with a guy called Bowen at that time, where he pointed out that in those sectors where labor is an inherent part of the value proposition, where it's really people's time that gives value to that sector, they suffer from what he called the cost disease. And he analyzed it as follows.

He sort of said, if you're manufacturing stuff, you can introduce machines to replace people. And that makes your labor productivity grow. It means that the wage cost of producing your goods gets lower and lower and lower each year. And that has an effect in the economy of raising everybody's wages because people can move from one sector to the other. So the wages in the economy as a whole tend to grow.

But in those sectors which depend inherently on labor and where there aren't labor-saving devices where you can't just substitute the time that a carer spends with their client, for example, an older patient, looking after their everyday needs. Time is inherent in that activity, and you can't just replace it with machines.

In those sectors, the rising wages put an ever-increasing pressure on producer margins. And you either have to have government spending a bigger and bigger proportion of its tax revenues on those sectors, those health care sectors, for example, or if they're left to the devices of the private economy, the market economy, then they become increasingly unprofitable. So all of these areas which are labor-intensive tend to become punished by this dynamic of labor productivity growth in the fast economy and the production-based economy.

Now Baumol was very interesting. He came up with this wonderful study in the 1960s around the theater. And he developed that over time. In his last book, which he wrote when I think he was about 94 or something, which was called The Cost Disease: Why Computers Got Cheaper and Health Care Didn't (sic) [ The Cost Disease: Why Computers Get Cheaper and Health Care Doesn't ]. And he makes some really fascinating observations in that book.

The point that he comes to, and it's a point that, interestingly, I and many people who think about sustainability had also come to previously is that it's precisely those slow sectors, the sectors without labor productivity growth built into them that constitute both the most important sectors of the economy in terms of our quality of life and the most sustainable sectors of the economy because they're not built around continual production of material goods. They're built around services.

So here you have, if you like, a kind of what I've called sometimes an economic sweet spot, a set of economic activities which we want to be growing, we want to be the basis of our economy. They provide satisfying jobs without huge environmental impacts, which improve the quality of our lives. They really contribute to prosperity, and yet they are economically disadvantaged because of the way that we drive our economic and financial goals through labor productivity growth in the fast sector.

They become penalized over time because they don't behave like fast sector. They don't behave like manufacturing. You don't look after elderly people or young children in the same way that you produce widgets in factories. And your capital structure is different. Your labor intensity is different, and the way that you organize those activities doesn't respond to profit in the same way that it might do in the manufacturing sector. So it's a really fascinating set of ideas.

And one of the predictions that Baumol came up with is, as you shift away from this materially based sector towards the service-based sector, that has the impact ultimately of slowing down your growth rate overall. And that may be one of the reasons for this secular stagnation that we were talking about before.

Nathan Hunt: I have heard the argument before that if you remove the pharmaceutical industry from GDP calculations that the U.S. has been experiencing negative or flat GDP growth for several decades. Is it possible that we are already in a post-growth economy and it's just the peculiarities of our way of calculating GDP that blind us to that fact?

Tim Jackson: I think that's very possible, and that ultimately is my position on where we are and on the need for a post-growth economics. In the U.K., it's quite profound. When labor productivity growth reaches 0, you are essentially not in a growth-based economy anymore. You can increase your GDP. Of course, you can if you have people working longer hours in the economy, if you have more people working in the economy. But that doesn't really contribute to the idea.

It's not consistent with the idea that increasing growth is increasing our quality of life. We're just having to work harder and harder to create more and more output without having really the benefits of that in terms of the enjoyment of our family, the luxuries of our community, the strength of our friendships and so on. So there is, to me, when you look at the stagnation of labor productivity growth in the economy, that is the point at which I think we have to say we are already living in a post-growth economy, in a post-growth world.

And that's more true for the poorest in society than it is for the richest. And that makes it to me, that makes it an even more important place for our inquiries into how that economy should work, how it should contribute to prosperity in the long run.

Nathan Hunt: When I look at society today, I see a great deal of apocalyptic thinking across the political spectrum. There is the popularity of dystopian fiction, zombie movies, et cetera. It's a kind of fatalism beyond the personal.

Do you think that the "consolations of consumerism", as you term it in Post Growth, have ceased to console us? Or to put it in another way, are we dealing with a crisis of confidence in growth?

Tim Jackson: Yes, to some extent. I mean I like the way you put it the first time, a little better than the way that you put it in the second time because we still seem to have a lot of confidence that growth will save us, but we do seem to have moved beyond the constellations of consumerism. And I think that's for 2 reasons, really.

One is that people recognize the social and environmental impacts of that. But another equally important, perhaps more important reason is that those constellations were falsely constructed in the beginning. And let me just give you an example of that, that one of the constellations of consumerism is that you can continue to have newer, more exciting things forever and that you can go on with that process forever. And these things, these new exciting innovations that you can buy, you can go out and spend your money on things which will make you happy.

And here's one of the extraordinary things about consumer capitalism is that it relies not on making us happy, but on leaving us dissatisfied. Because if the purchases that we had from this consumer society made us happy, we would be much less inclined to go out and buy new stuff. And it's buying new stuff that keeps that economy going, that consumer capitalism going. So consumer capitalism is a strange kind of beast in a way. It's something that its only means of being successful is, spectacularly, to fail.

It has continually, not just accidentally, people talk about post-purchase dissonance. You go out and buy something you think is going to change your life. You realize 5 minutes later that it's going to fall apart soon. It wasn't quite you wanted. And anyway, that's not what happiness is. And that's well-recognized in psychology and consumer psychology. But what's not recognized, I think, is that, that systemic necessity to dissatisfy consumers is actually the only thing that keeps consumer capitalism going.

And that starts out by being a sort of arbitrary point about how consumers might not feel that they bought something that was worthwhile. But it goes into a sort of depth that can take us to extraordinary places about what it means to be happy, about what it means to be fulfilled, what we really need as human beings to flourish. And I think that's a conversation that's deeply challenging to a simplistic vision that having more and more is the route to happiness.

And it was one of the things, I guess, I was exploring in Post Growth that idea, that sense of who we are and the constellations that lead us towards a sense of human flourishing. The ideas on that are very, very deep. They have a long, long pedigree, even from some quite astonishingly well-known economists like John Stuart Mill struggling with that fundamental question in his economics and not quite coming to a resolution of it.

And I think it's our biggest challenge, in a way. Today, our biggest social challenge is to resist that myth that we were talking about before, that myth of growth, that myth that having more and more makes us inevitably better and better off and engaging in a much more nuanced understanding of who we are as human beings.

Nathan Hunt: You end the book Post Growth with a chapter talking about Emily Dickinson and hope. Sort of a two-part question here. Why Emily Dickinson, and what is it that gives you hope?

Tim Jackson: I continually get asked in these kinds of conversations about hope and whether I'm hopeful, whether I'm optimistic, whether I'm pessimistic. And I've tended in the past to answer that in all sorts of slightly different but perhaps reinforcing ways. One of them is, well, if you're in the final 5 minutes of the football game and you give up in those final 5 minutes, then the chances are you've given up on that process of winning, that it's not over until it's over. And so optimism of the will, as Gramsci once said, even if you have a lot of pessimism of the intellect. And I was never very satisfied with the answer. You can tell now I'm sort of struggling with it.

And then I read Emily Dickinson and she said about hope. The book as a whole is full of literary references and stories and narratives and characters who have not just informed me but inspired millions, I think. And she has this wonderful poem about hope, where she says hope is the thing with feathers that flutters, that perches in the human soul, and sings the tune without the words and never stops at all. And it's just this little nugget of wisdom that hope actually is a human quality.

It's an almost inevitable human quality that we try to maintain that's there continually for us, that doesn't go away, and we don't actually have to think too hard about. And that ultimately, hope in a sort of fairytale way is not an antidote to the despair that we might otherwise feel because of the difficulties of the situations that we're in.

And that the antidote to despair, in fact, is action, is doing things, is finding a route towards a different world, is engaging with that world in the process of change. And I think that's a very -- it's a much more empowering way of thinking about our situation than one that sort of says, you know we've got to have a hopeful story. We've got to keep everyone hopeful. We've got to tell everybody how wonderful the future is going to be so that they believe us and retain their hope.

And I think this perspective tells us something different. It tells us actually that engaging with who we are, the nature of the human condition, facing the circumstances that we're facing and taking action for ourselves and on behalf of others, actually, that is in itself the antidote to the despair that we might otherwise feel.

And I suppose I kind of just end by saying that, in a sense for me, that's what this most recent book Post Growth was about. It was about setting aside that vision of despair and pointing out that in our journey towards a better world, there are constellations for us as individuals and as a society that go way beyond those false gods that we have been conditioned to believe are our only benefit from a consumer capitalism that's rapidly destroying the world. In finding a way out of that conundrum, out of that dysfunctionality, we return ourselves to who we are as human beings.

Nathan Hunt: That book, once again, Post Growth: Life after Capitalism. Tim Jackson, thank you so much for joining me today and answering my questions.

Tim Jackson: It's been a pleasure. Thanks, Nathan.

Nathan Hunt: The Essential Podcast is produced by Kurt Burger, with assistance from Kyle May and Camille McManus.

At S&P Global, we accelerate progress in the world by providing intelligence that is essential for companies, governments and individuals to make decisions with conviction.

From the majestic heights of 55 Water Street in Manhattan, I am Nathan Hunt. Thank you for listening.