The Tyranny of Growth: Why capitalism has triumphed in the West and failed in Africa

By Malcolm Ray

The Tyranny of Growth is a modern epic that exposes the lie of economic growth. It provocatively recounts how the 2008 global financial meltdown and  COVID-19 pandemic have become the leading cause of governments' and multilateral institutions' global spectacular failure. It brilliantly explains how a single number - GDP - came to have such bewildering power over our lives, despite its ruinous consequences. But ultimately the book strives to illuminate a new way of imagining the world. 

• Language: English
• Publisher: Melinda Ferguson Books
• Release date: Jan 21, 2022
• ISBN: 9781990973413

Malcolm Ray

Malcolm began his career as an anti-apartheid activist during the 1980s & early 90s. He became a financial magazine editor in the early 2000s. He has written and contributed to several books as well as to journals and magazines, covering politics, economics and business. He describes his trademark literary style as that of a “non-fiction novelist”.  

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Why capitalism has triumphed in the West and failed in Africa

MALCOLM RAY

For Liam

In memory of

Sheila Mary Ray

1939–2020

till Hope creates

From its own wreck the thing it contemplates

PERCY BYSSHE SHELLEY, Prometheus Unbound (1820)

Author’s note

It was 6:30 pm one wintry August evening in 2020 when my phone rang. I paused for a brief, savage moment, then answered. The voice on the other side was curt and matter of fact. My mother had died, the caller told me. At her bedside were a handful of oddments, a creased folio containing a prayer, a framed picture of the Catholic Sacred Heart, some books and scrawls in a scrap notepad.

The medical examiner’s report a few days later was another blow: my mother had died from COVID-19-related complications. Like birth, brimming over with life, Certificates of Death carry the same official imprimatur, dripping death. Hers stated only that she had died from ‘natural causes’.

Yet, there was nothing natural about this. The story of her life, from aspirant gentility to near-indigence and solitude, describes a silent genocide – the quiet but ruthless devastation of lives and livelihoods by a social and economic system we have come to accept as normal.

In 2020, history cracked open for the world, but the abyss that opened for me on that fateful August evening was the deepest of all.

And so, in a cruel irony, it was in death that the present book began life.

*

Seldom has an idea made more sense to me than this, The Tyranny of Growth. For years I had suspected I would attempt something like this, but I know now that the present could never have been postponed had I had done this sooner. I am here now, sitting in my study, trying to draw a line under the past, with its rot creeping into the future. And so, like Carlyle’s depiction of his biography of Oliver Cromwell as akin to dragging out the Lord Protector from under a mountain of dead dogs, I have set out to exhume a small part of what lies buried beneath an economic era whose bitter excesses are being laid bare, every minute, by the COVID-19 pandemic.

As I strain in the dim light of yet another power cut, in an attempt to follow the thread of a story that began a long time ago, I am struck by feuding feelings. The most vulnerable – the jobless and the destitute – have dim prospects of ever finding work, much less accessing affordable healthcare that has been mortgaged to overpriced private clinics and medical insurance schemes or secure social security to shelter, clothe, feed and educate their families.

As I write this note, I feel rage and despair. As a black activist, I had given a significant part of my youth and adult life to the struggle against apartheid because, like millions of others, the opportunity to rise to the height of my dreams was blocked, trampled and then detoured to the despairing fate of the poor.

Twenty-six years after the end of apartheid, and I am sitting in my study trying to understand why the vision I shared with so many other activists has become a nightmare of gaudy opulence and grinding poverty; of grand larceny and social exclusion; of crass materialism and dispiriting alienation; and of cronyism in the allocation of economic and job opportunities.

When, in the early 2000s, I ran a black empowerment magazine called Enterprise, I hurled imprecation upon imprecation upon the old racial oligarchy. It was a time when the elation of our democracy sagged and the great weariness of the poor began to show in deepening inequalities that seemed to fuel the polemical heat of the Thabo Mbeki presidency. The basic error in my judgement, I know now, is that black economic empowerment – that hoary antidote to racial inequality – is only really a by-word for plunder, self-enrichment and elitism, the legatee of the ‘growth at all costs’ market super-cult. Stripped of its rhetorical legerdemain, its social consequences are not dissimilar to the tragedies that befell the poor in Zaire (now the Democratic Republic of Congo) under Mobutu Sese Seko’s ‘Zairenisation’ purges during the 1970s, Nigeria under the brutal kleptocracy of General Sani Abacha in the 1990s, and Zimbabwe under the ‘indigenisation’ regime of Robert Mugabe during the 1990s and early 2000s.

As an older generation in South Africa dies, institutional memory fades and new mythologies become accepted verities, so much so that even the erstwhile black courtiers of apartheid-capitalism, the ‘BEE’ protégés who amassed small fortunes prostrating themselves before the old oligarchy, entered our democracy ‘heroes’. Paradoxically, those who dared to stand for an inclusive and non-discriminatory society became the villains in the ‘new’ South Africa. So pervasive was this falsification of history that, as the former South African intelligence chief, Mo Shaik, once ironised to me, It is hard to find a single collaborator in South Africa today.

To Shaik’s wry reference to collaborators I would add an uneasy courtship of elites who did absolutely nothing and, when it was over, still expected everything in return.

*

As I sit here reflecting on the discontent and despair around me, I can’t help but wonder what a tragic defeat was immured in our victory on that fateful day in April 1994. I see, instead of liberation, the bitter legacy, not just of apartheid but of an elite nourished in its womb.

The difference between apartheid and the new South Africa, the venerable doyen of black empowerment, Sam Motsuenyane, said to me in 2011, is that there was no state largesse to loot before 1994. He might have forgotten his own protégés in black business who did just fine during apartheid and, once the state was finally captured, after apartheid, too. Beneath their pious morality lies a kinship with the new ethos of elitism. Their path to ill-gotten gains, bled of virtually all truth, has been mythologised, much like other African elites; their infamies fawned over by the media as ‘success stories’ to be emulated by new generations for whom bleeding the economy dry now seems to be their insurance against the future.

Steal and get rich, said Mobutu Sese Seko to his courtiers, but please make sure you don’t steal too much. Having so emphatically restated this imprimatur (‘Get filthy rich, fast!’), the entreaties to black enrichment in South Africa are what the Algerian existentialist, Franz Fanon, in his withering indictment of the emerging post-colonial African elite in the 1960s, called social treason.

*

I would like to comment briefly on the South African context in which I am writing this. When I started working on this book, in the autumn of 2021, the former South African president, Jacob Zuma, had very publicly, and not without bluster and pillory, defied a Constitutional Court ruling to appear before a public commission of enquiry into state capture during his ten-year reign, headed by Deputy Chief Justice Raymond Zondo. When, in late June 2021, I sat down to write this note, the same court ordered Jacob Zuma’s arrest.

It was the spark that set the country ablaze, literally, in a surge of internecine violence and looting by impoverished township dwellers across the country. Less visible in this inexorable curve of chaos was the far grander heist by the Zuma oligarchy that, paradoxically, set it all off. This book is appearing as the economic and social devastation of the Zuma era is being aired, in broad daylight, adding sombre depth to the venality of elitism.

The violence will, eventually, abate. But the root cause of the chaos will linger. Cleansing the filth in public (it is, after all, in the sweat and blood of the poor that the filth is being cleansed) is only really a symptom of a policy choice that has assiduously cultivated a profit-at-all-cost ethos. If the cleansing is to move beyond the politics of spectacle to the much larger problem, then the policies and incentives for self-enrichment and elitism will have to be scrapped – and by cleaner hands.

The shift, like an armed robbery in reverse, reminds me of Goethe’s maxim that it is necessary in order to guard what one possesses to conquer it ever anew.

*

As with many books, then, it took a profound social tragedy and economic calamity to heave our story from a vague abstraction to the product you hold in your hands. In one sense, this book is a personal and moral odyssey; in another, it is a social and economic narrative, resonant with historic significance. As we might expect, what makes a fresh look at the economic growth story possible is not necessarily the facts (always at our disposal), but how we interpret them in the context of the deep and multifaceted crisis that now challenges a central canard of modern capitalism.

Over the past eight-plus decades the triumphalist theme of growth and prosperity has been systematically and ideologically disarticulated from its social and environmental consequences, in a way that has made growth seem like a product of natural law rather than myth/historiography. Almost daily, data and stories are offered up in the media, corporate spreadsheets and official economic reports in a form that appears to disarm critical analysis and intellectual dissidence.

In his description of the mythic process, the anthropologist Marshall Sahlins’s exceptional Historical Metaphors and Mythical Realities makes the point that the movement of a mythic narrative appeals to the clichés of historical memory. Or, as the historian Thomas Fleming has written, Memory is not history. It is too clotted with sentiment, with the kind of retrospective distortion that we all inflict on the past.

If one of the central concerns of this book is to rearticulate the economic growth narrative we have all come to accept, then the other, following Sahlins’s and Fleming’s epigram, is to record the historical development of one of the most shop-worn myths in our daily lives. This book is not meant to be a dispassionate look at the growth story. The reinterpretation of history has sometimes been called ‘revisionism’, and it is too often frowned upon by some and viewed with suspicion by others. Yet there can be no recounting of history without a point of view.

My starting point is an adaptation of the author Mark Gevisser’s caveat in his brilliant life of Thabo Mbeki that no historical account can be predicated on the traditional presumption of omniscience. What I do, rather, is present you with a historical account, following the historian Edward Carr’s injunction that must draw meaning from a deeply subjective selection of facts. If this falls into the revisionist trap, my approach has at least had the singular merit of allowing me to pursue my central aim: To see the official growth story through a fresh lens. This book tells another side of that story.

A note on terminology

Please keep three conceptual and stylistic issues in mind as you read. Firstly, of Gross Domestic Product’s (GDP’s) three words, ‘gross’ means a number with nothing subtracted; ‘domestic’ means in the home country, as distinct from Gross National Product, which includes everything produced by a country’s companies, whether at home or abroad; and ’product’ means everything produced, both goods and services. The three words measure what is spent, what is earned, and what is made.

Secondly, there exists, for scholars and policy-makers, precise distinctions between the ‘economy’ and ‘GDP’. In strictly technical terms, the economy consists of domestic production data that GDP tries to measure. However, most of us do not see the actual social and ecological impact on our lives reflected in the official growth picture painted by GDP data. This is because current economic measures of GDP growth exclude the social and environmental costs of growth. The terms ‘GDP’ and ‘growth economy’ are, therefore, used interchangeably in this book since both terms relate to the ‘growth at all costs’ model of the post-Second World War Neoclassical economic paradigm.

Thirdly, I have used financial data sparingly for two reasons. The first is that official growth data is relative to the metric used to measure economic activity. Most sectoral and macroeconomic data produced within the current dominant growth paradigm tend to tell a misleading story. The second reason is a lesson from my own experience over the years as an editor of financial magazines: financial data can be daunting, even to the specialist reader. This book is for everyone.

Any errors are mine, and mine alone.

Malcolm Ray

JOHANNESBURG, June 2021

Abbreviations and acronyms

ACFTAAfrica Continental Free Trade Agreement

AUAfrican Union

AEAAmerican Economic Association

ANCAfrican National Congress

ACCFAfrican Committee for Cultural Freedom

ADAAmericans for Democratic Action

AFLAmerican Federation of Labour

AMSACAmerican Society of African Culture

ANLCAAmerican Negro Leadership Conference on Africa

BEABureau of Economic Analysis

CAACouncil on African Affairs

CIACentral Intelligence Agency

CORACCouncil on Race and Caste in World Affairs

CORECongress of Racial Equality

CCFCongress for Cultural Freedom

COVID-19Coronavirus

EUEuropean Union

GDPGross Domestic Product

GNPGross National Product

BRICSBrazil, Russia, India, China, South Africa

DFIDevelopment Finance Institution

FBIFederal Bureau of Investigation

GATTGeneral Agreement on Trade and Tariffs

IMFInternational Monetary Fund

ICFTUInternational Confederation of Free Trade Unions

IFCInternational Finance Corporation

MNCMultinational Corporation

MAIMultinational Agreement on Investment

NAFTANorth Atlantic Free Trade Agreement

NAACNational African American Council

NDACNational Defense Advisory Commission

NBERNational Bureau of Economic Research

NEPADNew Economic Programme for Africa’s Development

NDPNational Development Plan

NGONon-Government Organisation

NSANational Security Agency

OAUOrganisation of African Unity

OECDOrganisation of Economic Cooperation and Development

OPACSOffice of Price Administration and Civilian Supply

SAPStructural Adjustment Programme

SDGSustainable Development Goals

WHOWorld Health Organization

WEFWorld Economic Forum

WTOWorld Trade Organization

UNUnited Nations

UKUnited Kingdom

USAUnited States of America

Introduction

THE TIPPING POINT

If GDP were a person, it would be indifferent, blind even, to morality.

– DAVID PILLING

There is a colourless jargon term called ‘externalities’ that private corporations routinely use. In the age of footloose capitalism, it is among the most openly ideological yet enduring facades since the Second World War of what has become known, rather prosaically, as the ‘growth economy’.

In the day-to-day media, this is the smoke and mirrors of the wealthy and powerful; the social impact of growth is censored and unreported. The media barons who sit at the choke points of propaganda, wrote the Australian journalist John Pilger, regard this cavalierly as slow news.¹

The reality is less mundane. The term is a current euphemism for what the historian Elizabeth Schmidt, in her eloquent defiance, has described as corporate camouflage;² it masks the daily deluge of social and environmental ‘imbalances’. By this form of legal plunder, it offers not prosperity for the majority, but simply a hidden reality.

This book is devoted to the true meaning of the growth economy. The idea came to me in the autumn of 2020, while reading the Italian political economist Lorenzo Fioramonti’s splendid riposte of the neoclassical growth model in his book, Wellbeing Economy: Success in a World without Growth. I had encountered Fioramonti’s thinking in early 2018, while working on a stakeholder capitalism project at one of South Africa’s institutional investors in Johannesburg. Now, in the Fioramonti book, I re-encountered his ideas, but in vastly changed circumstances. It was around the time that the COVID-19 pandemic began cutting a ruinous swathe across the world. The tragic loss of life – four million deaths worldwide at the time of writing in July 2021 – and the devastating impoverishment of at least a quarter of the global population was surreal. It all seemed like the received verities of imperial carnage that was the post-Second World War growth ‘miracle’ were suddenly being swept away, only to be replaced by another dystopia.

These indelible images were not confounded. All around me, the human, social and environmental costs of close to a century of growth were being seared in public consciousness by two moments that suggested a tipping point had been reached. The 2008 global financial meltdown and onset of the COVID-19 pandemic in 2020 were more than a decade apart, but they seemed to me to have a kinship. They betrayed a generalised systemic crisis that was becoming incompatible with the exigencies of modern economic and social order.

*

As the crisis joined the catastrophic Wall Street stock-market crash of October 1929 on capitalism’s hall of shame, governments and multilateral institutions, led by the traditionally ‘neoliberal’ International Monetary Fund (IMF) and World Bank, seemed to turn their backs on market orthodoxy. Some retreated behind the dissembling vocabulary of ‘inclusive growth’ and ‘shared prosperity’ that had been doing the rounds in the policy circuit since 2008, quietly at first, now gathering strength.

Globally, one of the chief arbiters of this policy turn was the enterprising founder and chairperson of the World Economic Forum (WEF), Klaus Schwab, whose annual winter soirées in the tiny Alpine ski resort of Davos, Switzerland, are a grand parade of the world’s political and business elite. Over the past year I watched Schwab become more strident, even more irrepressible, in his judgement of the free market than he had been in the years before the COVID-19 pandemic. Sometimes, his barefaced antipathies presented the man as something of a swashbuckling ‘free-market Karl Marx’. In one sense, Schwab’s WEF, set up during the stormy global oil shock of the early 1970s, has had one thing in common with the Marxist enterprise – his knack for pushing capitalist ideology to its radical edge.

As the idea was pressing toward reality in the chaotic climax of COVID-19, it was clear to see where governments were looking for solutions. Switzerland and New Zealand, transfigured and ravaged by the pandemic, abandoned the market orthodoxy, which had been prevalent in much of the non-communist world since 1979, for circular economic growth models.³,⁴ Some of the European Union’s (EU’s) most advanced member-states seemed to be on a similar policy conversion course.

But the antidote to the poison dart would still have to work its sorcery. It is the strategy of ruling elites and their agents, Edward Herman had written in his fine essay, The Banality of Evil, to normalise the unthinkable for the general public.⁵ This is presumably what Schwab himself intended. Year after year, his Davos gatherings have been assiduously at work not to end elitism, but to replace it with a more acceptable WEF-sanctioned version of the same ethos.

*

None of this should be surprising. There was certainly very little in the rhetorical legerdemain of inclusive growth that dealt with the real meaning of the crisis, even less outside a Western frame. The rhetoric was tendentious; the free-market ‘super-cult’ was being given a spurious gloss, the work of mainstream economists, policy experts and spin-doctors. This verbal conjuring enterprise extended to accredited journalists, too, who, wrote Michael Parenti in Inventing Reality: The Politics of the Mass Media, rarely doubt their own objectivity even as they faithfully echo the established political vocabularies and the prevailing politico-economic orthodoxy.⁶

My own experience as a finance editor and journalist, much of the latter spent reporting the impact of growth policies on the poor in South Africa and other African countries, has exposed me, often with ruthless guile, to the facade of ‘impartiality’ of the media establishment. Official truth can be a powerful illusion. That has been the trend.

In one sense, the mainstream media have held sway. Throughout 2020 there was a barrage of online stories and live television streams of poor families struggling to access the unworkable and tangled mess of public healthcare during COVID-19; of an endless bazaar of informal traders and street hustlers trying to get by; and of small business owners agonising over insurmountable debt.

A new poverty had arisen in a period of less than a year as businesses abandoned large numbers of their workforce. The unskilled, especially, had been marooned. Many of those remaining were put on part-time employment contracts. The storyline was that life had never been tougher.

But what struck me was how the pandemic was being consistently portrayed as a ‘growth paradox’. With almost proprietary regularity, government statesmen and their fixers stood before anxious citizens in live television broadcasts, drawing the same calamitous conclusions about COVID-19 mortality and infection rates. Then, by the end of December 2020, the focus began to shift to more desolate conclusions about the economic impact on livelihoods. Soon, the media began citing official economic data on growth as if they were palpable facts. Challenging this marketed wisdom was apostasy.

As I probed the different ‘models’ governments had more or less uniformly designed to balance their growth and social welfare/healthcare priorities, the true nature of the crisis came to me in a totally unexpected manner. Between the privileged and the millions who had fallen into penury stood a ‘marketised’ social security and healthcare system in most countries of the world. Without social protection, growth, a dry economic term, was the starting gun for a roller-coaster ride into the unknown. The policy debate by this time was that locking down economies was bad for business and employment; keeping them open was detrimental to lives. Predictably, the media played the story as a straightforward ‘growth versus lives’ dilemma. This would become the stock narrative of public debate in countless newspaper opinion pieces, online blogs and television news shows.

I had, by this time, planned on pitching a series of opinion pieces to newspapers in Johannesburg on ‘the growth paradox’, but decided that there was more to the story than met the eye. There was no evidence, I said to the editor of a Johannesburg-based Sunday newspaper over coffee one Monday afternoon in November, that the data on growth and employment were grounded in fact. In my attempt to sell the idea, I suggested that the ‘lives versus livelihoods’ quandary that had begun to mark the boundaries of mainstream reportage was a false dichotomy. Out of sheer desperation, I even used ‘corporate speak’, offering the paper a ‘competitive advantage’. Pushing the boundaries of permissible dissent, I proposed, would set the paper apart as a ‘trailblazer’ of new thinking for a post-COVID era, when all around competitors were hobbled by repetitive reportage on a broken economic growth model.

It didn’t matter. For, after all, who was to question ‘the facts’? The proprietorship of official records on COVID-19 and the economy, as far as the media were concerned, was vested in government. Government, in turn, relied on the agency of the media for the consent of citizens – a cosy relationship. And so it was in December 2020, during one of the periodic peaks of the pandemic, when I became more convinced than ever that, for most of humanity – those shut out from the growth enterprise at any rate – the about-turn in policy had meant normalising the unthinkable.

If the narratives of journalism draw their agency from the currency of time, then the story of the day in the mainstream media was the impact of COVID-19 on growth. The question, I was sure, was wrongheaded; the reverse was true. If the economy, globally, was so inadequate in meeting peoples’ needs, I wondered why the crisis of growth wasn’t as clear in the media maelstrom on the pandemic. What bothered me was the fact that the world was haemorrhaging lives and livelihoods only served to deflect attention from the real issue – the growth doctrine.

Was I wrong? In mainstream journalism, news is a reflection of ‘official’ facts, and few have bothered to question that. I know from experience that some of the best stories are ‘turfed’ because they aren’t supported by ‘official’ data. In the received wisdom of COVID-19, official data spoke logically, even powerfully – one thing you couldn’t gainsay was the ‘facts’ about the impact of the pandemic on growth and livelihoods. There was ‘truth’ in numbers – the death count, the infection rate, the recovery rate, the growth rate, the job losses. Or so it seemed.

As I probed deeper, it seemed I was right. When, during a visit to Alexandra township in Johannesburg in early March 2021, I asked a twenty-year-old informal street trader named Arnold Madzunya whether COVID-19 had affected his trade, he stared blankly at me, a beacon of incredulity. "We live here because we have to survive. Every day! I noted the irony, then asked him about housing, transport, electricity, water, sewerage, healthcare. The question rubbed his emotions raw. Visibly agitated, he waved me off. Look around you. What do you see?"

Years of colonialism and apartheid had turned the place into a vast, unofficial, shadow economy that nestled in the bosom of the formal growth economy. Beyond apartheid, a parade of decay and penury grew because the growth economy had failed. Across the township, the picture was very different from the story of the day. For if the impact of COVID-19 on growth was ‘the story’, I surmised places like Alexandra, where the swathe of informality had placed a heavy burden on its capacity to meet peoples’ needs, did not count. The new rules of the game – social distancing, remote work, controlled gatherings – disappeared in the shadows of informalism.

I began to wonder whether it was enough for journalists to see themselves as mere messengers of the official policy line. The propaganda of news filters out the news fit to print,⁷ the anarchist Noam Chomsky had written in his brilliant book, Manufacturing Consent: How the Media Creates the Illusion of Democracy.

To understand this is to see why official ‘facts’ were so dissembling. It is to understand, too, why the failure of policy officials, economists and journalists to engage, publicly, in a discussion about the true nature of the crisis was far more sinister, if that is an adequate word.

During the interminable build-up to the pandemic, I never found the questions about it easy to answer, and the manner in which countries around the world argued among themselves seemed wholly inadequate to the causes and scale of the economic crisis. I wanted to see past the abstractions, to what economic growth really means. Nothing, I felt, was fixed yet.

I did not doubt my intuition that the real story – the ‘tipping point’ that had been official rhetoric since the start of the pandemic – lay buried in the message, and the myth that surrounds it.

*

One of the most abiding myths that resurfaced during the COVID-19 pandemic has been the failure of economies to grow at rates that benefit the poor. Yet the fate of formal and informal economies has remained entangled, with cruel disappointment for the latter born of the failure of the former. The irony is that informal settlements like Alexandra grew because the rest of the growth economy had created so many wants and shortages that the basic instinct to survive drove a shadow economy.

Perhaps the starkest manifestation of the growth myth is the official smokescreen of economic data that is safe and limited by invisible boundaries, what is referred to with gentle understatement as ‘externalities’.⁸ The most incredulous stretch of all the data was a series of calculations in late 2020, adjusted for the COVID-19 impact, by the World Bank and the IMF about Gross Domestic Product (GDP) projections for 2021. In a classical market economy, GDP, by definition, is simply the measure of the total gross value of all official goods and services produced and consumed within an economy, usually calculated over quarterly and annual periods. In this theory, the driving force in economic life – individual self-interest – was enthroned in the pantheon of classical economics by the Scottish economist and philosopher Adam Smith. In his masterpiece, The Wealth of Nations, Smith peered into the inner workings of early industrial capitalism and observed an ‘invisible hand’ that leads, rationally, to growth and societal progress. But the facts and logic were radically different.

Year after year, since at least 2008, GDP data has sat incongruously alongside rising levels of poverty and inequality. Yet the myth that the actual measure of GDP is somehow inviolable has been something of a taboo subject in media reports and expert commentaries on COVID-19. These, and other collateral issues, were matters for self-censorship.

When the World Bank global GDP data was released, I wondered, as did many, whether the bank’s assumptions were a true reflection of the costs of the COVID-19 pandemic. In their own attempts to adapt to the vicissitudes of the pandemic, many corporations spent the past year replacing jobs with technology and slashing wages – and making handsome profits! They even coined a term for it; they called it ‘the new normal’. In the currency of time, I was convinced that this was what policy officials in governments meant by ‘tipping point’; these were the invisible boundaries of official economic data.

It was around this time that I re-encountered Lorenzo Fioramonti, the political economist whose ideas sparked this book. I wanted to know the true nature of the relationship between economic data and GDP, and why this was so important for our understanding of the economic crisis and future policy.

*

While paging through Fioramonti’s book, in late December 2020, I came across a study he’d done with the help of a team of economists. Backtracking official World Bank GDP data since 1975, Fioramonti had a sudden insight. By deducting the negative environmental consequences of global GDP, treating them as a loss rather than a gain by producers, he began to see that something was wrong. There were statistical biases and cover-ups.

Supposedly, Fioramonti knew that his discovery defied the laws of capitalism. If, in classical economics, rational choices in trade and competition achieve the best possible outcomes for individuals and society, then the reality Fioramonti witnessed was vastly different. The official model used to calculate GDP data, he suggested, was designed to fit the outcome of a model of ‘growth at all costs’.

The resulting imbalances were startling. Since the 1980s, there had been no real growth around the world. The simple deduction of some environmental costs reduced economic growth to zero. Fioramonti came to the profound conclusion that official calculations of growth were a circle of fictions, designed to exclude what the Peruvian economist Hernando de Soto in his thrilling book, The Mystery of Capital, described as ‘dead capital’ – the scourge of joblessness and informalism that did not count. This was the real economic miracle of growth, Fioramonti argued, one that is completely offset by the social and ecological debt we face today.⁹

And there you have the crux of the problem. Capitalism represented not so much Adam Smith’s hidden hand, but rather a crude distortion of production and consumption. In fact, Fioramonti observed, there was only one law in a classical growth economy: Consumption, consumption, consumption!¹⁰ The weakness was evident in the facts. And where were the facts? Everywhere! Ever-widening inequalities; a rapidly expanding informal economy now resembling the face of modern poverty; and the collateral consequences of decades of environmental abuse by corporate enterprises and governments.

Either by design or sheer coincidence, the results of Fioramonti’s work came at a time of growing recognition, globally, that there was something systemic about the crisis all along. By the time of the 2008 global financial crisis and the signing of the Paris Accord on Climate Change by 196 countries eight years later, the massive economic, social and environmental imbalances had become real concerns. Not least of these concerns was a recognition that the depletion of energy and other natural resources demanded a shift away from the conventional consumption model on which the growth doctrine had been based for at least a century. Fioramonti went a step further; his study vividly described a system in a deadly crisis.

Fioramonti was not an economist, but his observations marked a huge step forward in economic thinking. The result was his remarkable book, Wellbeing Economy, published in 2007, and it was a visionary tract that offered the reader a glimpse into the atrophying ‘growth-first’ economy.

*

By the close of 2020 the world seemed to be groping implacably towards a new, albeit fragile and deeply contested era. The violent climax of the 2008 financial meltdown and the COVID-19 pandemic were giving way to a grim recognition of the real perils and moral ambiguities of a transition that seemed to be under way. But transition to where, from what – and what was the change?

I knew that answering these questions required coming to terms with the real content of the growth doctrine. If my assessment in the opening lines of this Introduction is correct, it seemed to me that the truth about growth was all the more interesting for what it concealed about the ideologies and interests of elites. Against the marketed wisdom, Adam Smith’s ‘iron law’ of economic growth was designed for others; for the poor majority, it was an Orwellian moniker.

By this time I convinced myself that, finally, I had a story to tell, at least in broad outline. But how to capture it? I knew enough about the growth concept from my days as an activist and finance editor; that it was both a goal and a measure of wealth in modern economies; that it was driven by trade and competition; that it was presumed to have a direct correspondence with investment, saving and employment; and that, in the latter sense, its measure of prosperity and progress was an ideologically contested terrain. But I also knew that explaining the current moment and the blizzard around me meant something more than a mere recording of official data.

The story, I decided, was bound up in how we got here. Perhaps then I would be able to explain the dynamic of change in the world today, and what went wrong. Perhaps, too, I would be able to peel away the myth of growth and, thence, heave our story into the lived reality of ordinary people.

PART I

The origins of the growth myth

1930s

CHAPTER 1

Shadows and shortages

THE GREAT DEPRESSION

There is a magnificent perch on Capitol Hill above the Potomac River in Washington DC that looks over the city, from the Lincoln Memorial to the shimmering cityscape in the distance. Down each side of Capitol Hill runs one of the city’s most placid promenades, known as the National Mall.

It was here, on a bitterly cold morning, that a small group of state officials, dignitaries and their spouses began gathering in late January 2021 to witness the inauguration of America’s forty-sixth president. Beneath the stately appearance of the gathering, the mood was hushed. There was a sense of anxiety, mixed with palpable relief, that a new era could finally end four years of Trump madness and economic chaos.

The sense of crisis was underscored by what, to all intents, seemed like a garrison city. As they mingled, a few guests could be seen looking out at the distant chain-link fence that fortified Capitol Hill. The whole atmosphere, wrote Christopher Morris in The New York Times, was of a city that had been visibly stricken, transformed into something like a war zone.¹¹ Throughout the capital, heavy concrete slabs barricaded entire streets as masked National Guard troops stood by, fingering their rifles.

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Joe Biden was not new to Washington. At the princely age of seventy-eight, he had already notched up a five-decade career in politics, including two full terms as former President Barack Obama’s running mate. But the Washington he arrived in on 20 January 2021, wrote Sky News correspondent, Alex Rossi, was a reflection of a fractured, dystopian social and economic landscape.¹²

For the first time in modern American history there were no flag-waving enthusiasts thronging the Capitol. Instead, 200 000 national flags were displayed on the promenade and more than 25 000 National Guard troops were drafted by the Pentagon to fortify the streets – by one estimate, almost three times the number of American soldiers deployed in Iraq, Afghanistan, Somalia and Syria combined.¹³

People were traumatised. The country they had known – the fat and happy land of freedom and apple pie – seemed to have utterly vanished, as if wiped out by bombs. The pungent air of ferment, the raw fury of violent mobs swarming the Capitol just fourteen days earlier, still hung like a grubby shroud over the city.

Shortly after noon, a bugle called. Biden, appearing unsteady, sidled up the maroon-carpeted ramp to the lectern. His face was grim, his throat swollen. We must end this uncivil war that pits red against blue, rural versus urban, conservative versus liberal, he intoned, looking out over the barren promenade. We can do this if we open our souls instead of hardening our hearts, if we show a little tolerance and humility, and if we’re willing to stand in the other person’s shoes, he continued.¹⁴

The inaugural was a cautious work of oratory, a double-edged message of patriotic vigilance and prosperity. But it’s one thing to wring from his audience equal parts sympathy and astonishment about a divided nation and a once-in-a-lifetime silent killer;¹⁵ it’s quite another to reduce harsher realities and complexities of the times to the nuances of diplomacy. Beneath Biden’s genteel mannerisms and crusading liberalism that January afternoon was another reality. From the heights of power and prestige – when the inaugural was fawned over by Americans and indulged by foreign dignitaries – he now seemed to crash into a public plight so demeaning it was pitiable.

What many Americans no doubt knew but could not grasp was that another theatre of the uncivil war did in fact involve casualties and death on American soil. Beneath the decrepit surface of scowling racists on 6 January were more than ten million jobless people. Coming close on the heels of a surge of corporate bankruptcies, millions more jobs and livelihoods were on the line. Many blamed Washington. Others blamed the pandemic. COVID-19, however, was only really a pretext. The chain-linked fences and armed guards fortified Capitol Hill all right, but from an under-class of people whose right-wing bellicosity was as much an expression of their indignation against the gaudy opulence of the political and economic elite.

If Joe Biden’s homily was a perfect theatrical display, the story hidden from public view was of an elite willing to suspend reality for a mythical state in which an elaborate facade of economic policies and institutions concealed their complete lack of substance. Perhaps the most audacious stretch of the imagination is a story, missing from the vast body of literature on American capitalism, of a system born in an economy of shortage and shadows that contained the protein nutrients of the present crisis. When one looks back across the past eight-plus decades, through the prism of apple pie and soda pop, there is a tendency to view America’s economic rise as mythic. After decades spent in the washing machine, the story of growth has been bled of all reality, to an extent that few today know the reality, much less that the growth story, was a recent invention of a generation of individuals whose exploits were to become a legend.

The keynote of this extraordinary story was struck in 1933, four years after the start of the Great Depression, when President Franklin Roosevelt pulled off a master stroke that established a pattern, one of ordinary people across the globe foiled by the wiles of American capitalism, which was to be repeated for a century to come.

Let us conjure a moment in history that starkly matches the present. It is a blustery Saturday morning in March 1933. A hundred thousand people stand outside the Capitol, waiting for president-elect