Tuesday, 19 January 2010


(A new article for Mediacat magazine)

How could business and marketing thrive in a post growth economy? It may sound like a weird question. Ever since Adam Smith economists have assumed that growth was the essential measure of an economy. Smith’s argument was that only in a growing economy would there be more jobs than workers, keeping wages high. Also he claimed economic growth (rather than absolute size) affected the general mood or morale of a nation.

Most modern economists also believe that GDP growth is essential. Negative growth (a recession) brings terror to the boardroom and panic to parliament; witness the events of the last few years. Prolonged negative growth such as in the Great Depression of 1930s America summons images of mass social dislocation and misery. Employment is still the crux; but it's a more subtle relationship since it is large companies protecting their profits and shareholder dividends that drive the rapid spikes in unemployment (not the long term supply and demand of Adam Smith's writings)?

But from a fringe idea associated - as the author of one UK report (Professor Tim Jackson) put it - with “Lunatics, Idealists and Revolutionaries”, growth has become a key debating point over the last few years in mainstream politics. Prominent figures such as Anthony Giddens (former president of the London School of Economics) and Nicholas Stern (World Bank Economist, author of The Stern Review of the Economics of Climate Change) have argued that since all the evidence continues to show that GDP growth leads inexorably to rising carbon emissions, it is mistake to continue to pursue growth which was only ever justified because it seemed to match the broader goal of maximising wellbeing. This linkage has also been challenged by ‘happiness economics’ some of whose studies claim that past a certain threshold level, extra GDP doesn’t make people happier. A conclusion reinforced by the recent Stiglitz report, commissioned by French President Sarkozy and the EU, which concluded we need a wider range of better measures of the wellbeing of nations than GDP alone.

Post growth economics is such a hot topic it made last September’s issue of the Harvard Business Review, in an article by James Gustave Speth called “Doing Business in a Post Growth Society”. In this article Speth argues that believing in continued economic growth could be about as dumb as believing in endless population growth, and for similar environmental reasons. He concludes that this would mean a world of less consumerism and higher prices; but that quality of life could improve in 'neglected areas'.

Economy growth is not necessarily the same thing as company growth, of course. A forest can be a steady state system, but the young trees still grow. For many a large corporation though, post growth economics would spell death. Only large and growing returns will satisfy speculator shareholders. And without ambient economic growth, to ‘lift all the boats’ this would be difficult for a very large and diversified corporation. They are also running out of anywhere to go for cheaper labour (‘the race for the bottom’). So a post growth future may be a place of smaller companies, and also ones with employee, community or customer ownership – cooperatives of various sorts and also social ventures (making money being secondary to some social purpose). In these types of business making excess profits is literally a bonus, the main thing is to serve the needs of your communities.

There is an assumption there would be very little marketing in such a world. A lot of marketing today is tied up with the growth imperative, not just in hyped image markets (perfume, fashion etc.), but also in much less conspicuous consumption such as mobile phone operators, energy utilities and financial services. If companies were not geared for growth would you need to fight so hard for the last fraction of market share? Going back to the forest analogy of course there could be a phase of even greater competition. Like the retail price wars that broke out as we entered the current recession. But after this phase there would be just fewer brands and companies, and people would keep things longer, treasure them and generally get by with less.

It’s hard to tell overall. But my strong hunch is we should be focusing on different kinds of marketing. For instance imagine a world where collaboration, community and sharing were dominant (rather than individualism). A world where the ‘brands’ might actually emanate from groups of people doing stuff together – crowd funding, group buying, even telling companies what they want or co-creating it. The other watchwords would likely be loyalty and trust. Imagine buying your last ever computer – from now on you will just upgrade parts of it (hardware and software), but keep many of the guts and casing. If you were doing that you’d choose a company you believed in, that would still be here and innovative in 20 years. It could spell the death of Dell, or even Apple and the return of IBM?

Speaking of death, the main reasons for engaging in all of this should be as responsible human beings. We surely can’t drive the world over some precipice for the sake of a few more fashionable gadgets or exotic holidays? Or even for the sake of keeping lots of lovely jobs in creative agencies. Even Martin Sorrell of WPP has said as much – that it is time to question ‘superconsumption’ for that reason. The interesting part comes when you realise that we literally need to reinvent everything, from marketing up to macro economics, to unhook ourselves at every level from addiction to growth.

1 comment:

steve said...

I fully agree that the emphasis on growth is unacceptable. The essence of the European "Leisure Class" for one, has distorted beyond recognition the values in life that are most fundamental. We need to revert to a time when comfort, utilitarianism and relation to the fullness of life was the driving force in obtaining a healthy and balanced array of goods and services.