Growth is a conservative idea. Progressives need their own account of how production expands and prosperity happens

So, the British economy is receding. The ‘technical’ prefix the government and its client journalists have been adding before ’recession’ is rather apt given that the economy only really counts as an economy on a technicality nowadays.

People turn up or log on for work. To-do lists get ticked. Stuff is bought and sold. Yet we are getting poorer, sicker, and less productive. The roads are full of holes, the schools are falling down, and evermore people are sleeping on the streets. We spent tens of billions on not building a railway. There’s an obesity epidemic but our children are literally shrinking (faster than our gross domestic product). The government is heavily indebted, but mainly to itself. When it comes to long-term investment, the public and private sectors are currently stuck in an I’ll-show-you-mine-if-you-show-me-yours doom loop.

The answer to all of this is of course staring us in the face: when the economy stops growing, we should simply try to… make it grow again.

The absence of growth is indeed disastrous. But the pursuit of growth as a first-order policy priority is misguided and, as I argue in this two-part post, often disingenuous. The people who tell us that growth matters above all else invariably do not themselves believe this. And these people can often be found further to the left of British politics than Liz Truss, Nigel Farage and the rest of the radical right rabble.

In this essay, I interrogate the notion that growth should be the primary goal of economic management, and the related idea that growth is necessary before socially and environmentally beneficial policies can be enacted. I then explore the ideological implications of an ostensible focus on growth, arguing that it is a product of conservative thought, as much as, if not more so, of neoliberalism.

Growth before growing

The notion that more growth is needed before the public sector can spend any money on socially beneficial interventions – a mainstay of ‘third way’ thinking – is once again dominant on the centre-left in Britain.

I do not disagree that there are clearly things that the UK could do, rather quickly, to improve economic growth. Improve public transport, reform planning, liberalise immigration, rejoin the European single market, clear NHS waiting lists. We should do each one because they are good things in themselves, irrespective of growth, but I do not mind very much if others do them primarily because of the positive growth impacts. So I am sure the next government will make progress in each area, but each one has a high cost – politically if not fiscally – so won’t actually be done quickly.

Moreover, presenting these interventions as beneficial only because they improve the rate of growth is problematic. It clearly helps to lend credibility to the growth ideal more generally, and therefore a more laissez-faire growth agenda centred around tax cuts. Cutting tax rarely has a political cost (not least because tax is seen as inherently antithetical to growth, even if justifiable for other rationales), and the fiscal costs can be concealed by forecasting spending cuts that we can pretend, doped up on Laffer fantasies, will never be needed.

Of course, those spending cuts probably won’t happen, for the most part – the impact on actual growth in the real world would be too severe – because, as ever, the libertarians will simply choose to borrow more instead. Borrowing is always the left’s fault, so the right invariably gets away with it.

At the risk of over-simplification, if you want long-term growth, you have to invest in innovation that (a) improves productivity and generates good jobs across the income distribution, and (b) enables the economy to adapt to conditions that jeopardise the sustainability of extant production methods. Public investment is needed where private investment is absent, and is in any case preferable to private investment for many aspects of this agenda.

It is a quite the moment therefore for Labour to all-but-abandon its commitment to invest £28 billion each year as part of its green prosperity plan, the centrepiece of its mission to secure the highest sustained growth in the G7. (Note that some of this amount is already in the Conservative government’s plans, and that even full implementation of the pledge would have seen public investment fall over the next five years.)

Of course, we do not know what Labour intends to do – or will do, irrespective of current intent – once elected. But in reinforcing the view must grow the economy before we can afford to do the things that will most effectively grow the economy, damage is being done.

Growth without growing

There is one, crucial thing that needs to be understood about the political elites who shout loudest about growth: they don’t really believe in growth at all. Growth can be progressive and transformative: we should worry less about making it ‘inclusive’, because genuine economic expansion almost always is.

But the growth zealots do not want a bigger and better economy in any meaningful sense. They want to create (or defend) the kind of economy that is implied by the invocation of growth, irrespective of whether expansion occurs. The construction of growth as a political idea is about much more, or perhaps much less, than the question of whether output is increasing at a healthy and sustainable rate.An economy that values growth, in this account, is one in which corporations and entrepreneurs are unencumbered, as the main instruments of growth are knowingly mistaken for the sole drivers of growth. Taxation is minimal, labour is disciplined, and all resources are exploitable. The absence of actual output growth is never a fault of the theory, but rather its mishandling by policy institutions beholden to anti-growth interests.

The welfare state in particular is seen as a drag on growth, despite evidence of the role it plays in sustaining demand (quite obviously) and in enabling innovation. Welfare provision and public services aren’t simply financed by growth – they are part of how growth is financed in the first place.

Nothing but the growth

I have two main objections to growth as a measure of economic performance or prosperity. First, its silence on distribution. The size of the pie tells us nothing about how big a slice we each of us will receive. Some rightly pointed out that, when considered in terms of GDP per capita – taking population size into account – the UK economy has already been growing more slowly than we realise since 2010, and especially since the COVID-19 pandemic. Looked at though the lens of output per person, the UK has been in a kind of recession for a while.

Yet GDP per capita only tells us about average living standards, in economistic terms, not the actual living conditions experienced by people at different levels of income and wealth. The UK is an extraordinarily unequal country compared to similar countries. Those dependent on labour income will be most affected by recessions, while those with significant financial wealth will be relatively spared (as well as benefiting from higher interest rates recently). This does not mean that we should redistribute income and wealth without consideration of the growth impacts of particular mechanisms – but nor can we assume that pie-size per person is enough.

There is little doubt many people would be better off, for example, if they could work less, so we can spend more time caring for ourselves and each over. This would probably make us more productive overall, in the short and long term; then again, it might not.

Second, the silence of GDP on ecological damage. An economy that destroys the habitability of the planet is not one that we should want to grow, and there are many non-commodifiable practices and technologies we need to now invest in to achieve decarbonisation, even if they are not fully captured by GDP statistics.

This is the essential and hugely valuable insight of the ‘degrowth’ perspective – but overall this kind of thinking has limitations. There are no grounds for naivety about how easy it will be to decouple growth from fossil fuels, but recessions don’t tend to help efforts to decarbonise. And doing many of the things we need to do to decarbonise will generate conventional growth. The assumption that living standards might need to go backwards to save the planet must be resisted. It is clearly not going to mobilise many people to act in our collective best interests, especially in parts of the world that do not enjoy Western-style living standards. And suppressing consumption would require a degree of state intrusion into daily lives that would be impractical even if desirable.

Overall, these silences mean that growth for its own sake cannot be our goal. But as my caveats to the caveats suggest, GDP can be a useful tool of social-scientific inquiry, and GDP growth therefore a useful measure of economic performance. We need not accept that GDP captures everything that matters, including everything that matters for economic prosperity, in order to acknowledge that it can help us to understand the impact – and success, to some extent – of interventions designed to improve living standards for all, and decarbonise production. We should also acknowledge that increasing pie-size will help to maintain the political palatability of these efforts. 

Alas, we are not really anywhere close to a mature dialogue about the value and limitations of growth, and the trade-offs that pursuing growth entails. Because growth is not being used as a tool of social science. It is being used instead as a tool of ideological hegemony – indeed one that constrains our ability to genuinely grow the economy. 

Growing to stand still

One of the strangest, but revealing, aspects of growth ideology is that it generally insists that the main industrial structures of the economy are inviolable – even when the economy is demonstrably failing to grow. 

Capital does not make mistakes, only public authorities do. 

It should be obvious to us that change is necessary to grow – the most sustained periods of economic growth tend to follow disruptions that create entirely new industries, favouring some fractions of capital over others. Yet the growth ideologues can be most often found arguing that change is a threat to growth. 

A recent Financial Times report defined Britain as ‘consultation nation’ due to the fact that our services exports are dominated by ‘other business services’, principally management consultancy. Exports of other business services were valued at around £180 billion in 2023, compared to around £75 billion for financial services. In 2022, management consultancy constituted around a quarter of the value of other business services exports. 

It is this kind of portrait that convinced the Economy 2030 Inquiry (led by the Resolution Foundation and LSE’s Centre for Economic Performance) to insist that ‘being serious’ about ending the UK’s economic stagnation means understanding ‘what Britain’s 21^st century economy actually looks like’. And this means an economic strategy focused on the existing strength of services exports: 

‘Understanding your country is a prerequisite for making a success of it: we are a services superpower’

In defence of the inquiry, it has, firstly, produced an ambitious programme of reform in many ways. It wants the public sector, pension funds and corporations to step up to invest more in the British economy. It wants to maintain the pace of minimum wage increases, and to focus on creating strong pathways from education to good jobs for young people. It recommends a range of tweaks to tax and benefit systems to enable fairer outcomes and challenge endemic poverty. It believes that we can finally level up the economy by empowering local economies to nurture high-value services industries, alongside pockets of advanced manufacturing strength. 

It has also, secondly, centred greater equality, and more quality jobs, as economic policy goals alongside growth – rejecting the notion that these outcomes will be achieved by default as the economy grows. 

And thirdly, there is noting inherently wrong with a pragmatic commitment to starting from where we are. The means and ends of progressive politics must adapt to context. 

However, pragmatism is not the opposite of radicalism. What the economy ‘actually looks like’ is the departure point; this does not mean being merely ‘a better version of Britain’ (contrasted with ‘a British version of Germany’) must be the final destination too, insofar as this dictates a moderation of more transformative objectives. 

Growth to nowhere

There are, in fact, plenty of reasons for concern that Britain’s ‘services superpower’ status is illusory, and that a growth strategy centred on services exports involves long-term peril as well as short-term promise. 

First, as is typical of ideologically-charged analysis, the superpower metaphor is based on a partial reading of the relevant data. Britain’s services exports have almost tripled as a proportion of GDP since 1990, in the context of goods exports declining. Yet this is not a UK-specific shift. The OECD average value for services exports has almost doubled over the same period, even as goods exports have also increased. And note that services imports into the UK as a proportion of GDP have also risen sharply over this period – far more than the OECD average. Britain may be the ‘second largest’ services exporter in the world, after the United States, but it is not really very far ahead of the rest, according to OECD data. Germany – the country we must not try to emulate, remember – is a close third, and China, Ireland and France follow closely behind. 

Second, while Britain can invest in its strength in high-value services, it cannot dictate the structural conditions in which this strength manifests. Britain’s exports of financial and management consultancy services have been driven in part by the financialisation of the Eurozone and East Asian economies, which is unlikely to continue at the same pace. It has been greatly assisted by the global role of the English language, which is due mostly to the United States’ economic and cultural hegemony – hardly a safe bet anymore. 

Third, Brexit is clearly a significant barrier to Britain’s ability to export services within the European single market – most services exports are beyond Europe (with the United States the most important single destination), but nevertheless the EU represents an enormous chunk of our customer base. The inquiry’s recommendation that Britain should, in the context of Brexit, ‘pioneer new services trade agreements with the likes of Singapore, Australia, Canada, Switzerland and Japan’ is perfectly understandable. But without assessing how likely such agreements are, and whether the agreements that will be put in place are genuine opportunities, this position is not really that far away from the Brexiteers’ much-derided ‘Global Britain’ banality. 

Fourth, the growth of management consultancy has of course benefited from public sector outsourcing, and public sector largesse. The latter has probably peaked, and the former definitely should have. 

One of the secondary aspects of growth ideology is that, if something is growing, it must be virtuous. But a strength in one period of time can become a vulnerability in the next, when the structural drivers of extant growth shift. In fact, it is worth considering, fifthly, that strength in one part of the economy actually helps to cause weaknesses elsewhere. Think of all the STEM graduates being recruited by the City and management consultancies. Andrew Baker’s work on ‘the finance curse’ helps us to understand the wider, negative implications of hosting a very successful finance sector.

It is obviously important for the British economy to be able to export, and beggars are rarely choosers when it comes to what other nations want to buy from us. But there are few reasons to believe that there is scope to grow this part of the economy substantially, while reducing dependence on services imports. 

At the same time, there are plenty of reasons to believe that, for the sake of long-term growth, a more transformative economic policy agenda should focus on helping the economy to diversify its export base as well as building manufacturing and engineering capacity to secure domestic energy security, and on gearing up the economy to expand and reimagine care services as the population ages. This is all easier said than done, of course. But the path of least resistance is not by definition always the best one to choose. 

The growth oak

The imperative to amplify rather than alter the economy’s main features ironically means that growth ideology is compatible with interventions in markets by the state to protect key industries. This has been an increasingly important aspect of economic statecraft in Britain since the 2008 financial crisis. The brief premiership of chief growth ideologue Liz Truss is remembered for drastic tax cuts, targeted on the wealthy, that led to fears about the country’s future solvency. Yet her most significant act was the Energy Price Guarantee, preventing potential economic collapse by writing a blank cheque for energy suppliers to prevent enormous rises in wholesale energy prices being passed on to consumers. At the time, the scheme was expected to cost £89 billion. Truss said ‘extraordinary challenges call for extraordinary measures’ but added that the scheme would ‘boost growth’. 

This was growth extremism in action. Tax cuts for corporations and the highest earners. Substitutive state interventions when markets cease to function. Indeed, tax cuts even as public spending accelerates and fiscal risks intensify. Whatever it takes to clear the way for capital accumulation by existing elites in the here and now, and a hazy utopianism in place of a serious plan for long-term growth. 

Truss is gone and has none of the political skills required to engineer a resurrection. But her economic policy agenda lives on. Rishi Sunak laid the groundwork for Trussism as Chancellor, so it is no surprise to see the government he now leads becoming increasingly Trussified. The next government will have different policies and ambitions but they will be constrained by a failure to challenge the flawed assumptions of growth dogma. 

The problem with sensible centrism is that a determination to be unideological tends to blind you to the influence of ideology on the construction of the problems you are seeking to solve by technocratic means. 

The idea of growth is associated with neoclassical economics, and as such forms part of the ideological vocabulary of liberalism and neoliberalism. There is a sizeable literature within British political economy on ‘the neoliberal state’ that attempts to explain the emergence of economic interventionism from the right. As Will Davies argues, despite neoliberalism’s vilification of public servants and collectivist politics: ,

‘[t]he state is a central instrument for the advancement of a neoliberal agenda. Commitment to a strong state, capable of rebuffing political and ideological challenges to capitalist competition, is a defining feature of neoliberalism, both as a system of thought and of applied political strategy. There is scant evidence of neoliberal reforms ever leading to a “smaller” or “weaker” state in any meaningful sense, even if certain functions have been removed from the state via policies of privatisation and outsourcing.’

But this is not the whole story. The underlying imaginary of the economy – or capitalism, if they’re being honest – as inherently fragile bears the hallmarks of conservatism. This is the economy as a delicate ecosystem, the metaphorical oak of Edmund Burke’s critique of revolutionary politics, which forms the foundational thinking of modern conservatism. 

This fragility requires a strong state to protect the economy against the threat of transformation. It requires growth strategies that respect existing forms of capital accumulation, mainly offering more of the same. Nationhood is invoked in both regards, as justification for statism, and to valorise a uniquely British way of (economic) life. The biological connotations of the term ‘growth’ are ideologically useful in this regard, as the right can insist that growth must take a particular form – driven by a natural instinct to accumulate, characterised by inequality as only the fittest survive. 

Growth in this essentialised form must prevail even if it fails to deliver a meaningful increase in GDP as social scientists would understand it, and notwithstanding any evidence that progressive policies might be more successful at delivering economic expansion. 

Growth ideology therefore is ultimately a product of the co-evolution of neoliberalism and conservatism. This helps us to understand the adoption of growth-destroying policies such as strict immigration controls and under-investment in education. And it is the influence of conservatism, rather than the neoliberalism’s veneration of markets and competition, that convinces many social democrats to accommodate growth ideology, as their progressivism is tempered by commitment to a rather thin understanding of pragmatism. 

The one true growth

We should do everything we can to improve lives and maintain a habitable planet: much of what we do will lead to conventional growth. Some of it will not show up in GDP statistics in any direct sense, but that’s okay too, as long as we are not actively seeking to disable capacities to produce and innovate. 

And if we are going to centre growth in our economic strategies – which has a political as well as economic rationale – then it needs to be grounded in evidence about what drives (and hinders) genuine growth. Disrupting current accumulation processes is a good thing, when it helps to carve out more durable paths to shared prosperity. 

We would find that purposeful public sector institutions – and public-private partnerships such as universities – are essential to growth. Some will say that public and private sectors growing in tandem historically is a case of correlation rather than causation; either way, there is little evidence that well-designed public services and welfare provision are a threat to growth. For the sake of growth, we need to get the growth zealots out of these collective spaces, and replace them with public service fanatics. We need to stop trying to measure public sector productivity and output in the way we measure the value of commodified goods and services. 

We might also consider being a little kinder to the business community too. Many small businesses are not seeking to grow. They are not the growth economy’s lagging ‘long tail’; rather they are the providers of vital, local services in the foundational economy, allowing the rest of the economy to function. The firms holding growth back tend to be larger firms with the potential to invest in innovation but whose preferred modus operandi is rent-seeking. 

Growth matters. It is too important to be left to the growth ideologues. Progressives need their own account of how production expands and prosperity happens.