Martin Wolf has (once again) declared in the Financial Times that the fate of democracy rests on economic growth. As he said, in advance of the Budget:
[Reeves'] first priority must be to get whatever growth she can.
Growth made democracy possible, he claims, and only growth can now save it, in his opinion. But this claim is built on two ideas that no longer stand up to scrutiny.
The first is that economic growth of the sort that defined the second half of the 20th century can be revived.
The second is that the government must wait for the private sector to deliver this growth before it can act.
Both ideas are fundamentally wrong.
First, growth is not coming back in the form he imagines, whether he thinks it necessary or not. Wolf might lament the collapse of postwar productivity miracles and clearly longs for their return, believing a combination of AI, other disruptive technologies, and greatly relaxed labour laws — allowing companies to dispense with their employees at will to the detriment of employees everywhere — might deliver them again. Doing so, he describes this sacrificing of people to capital as an act of creative destruction, an idea ascribed by people like Wolf to Schumpeter, but which he seems to think virtuous, when I seriously doubt that Schumpeter held such a view, as I discussed here recently.
The fundamental fact that Wolf ignores is that we live on a finite planet. The gains of the past, about which he enthuses, were built on cheap energy, abundant abuse of materials without taking into consideration the consequences of doing so, and a willingness to ignore the external costs imposed on society as a result of that indifference. That era is over. We face climate breakdown now. We are already on a dire path to 1.5 degrees Celsius of warming because we pretended that infinite growth was possible, and Wolf still wants more of the same. This is economic, social and climate madness. He might wish for increased productivity from consuming (and abusing) ever more of the world 's natural resources, whilst showing complete contempt for the rights of working people, but the stalling productivity numbers he quotes in his article do not show a failure of effort or the consequence of laws protecting labour rights; they show the natural consequence of economies hitting planetary and social limits.
Second, and more dangerously, Wolf assumes that when growth slows, the state must shrink too. He repeats the household-budget myth: that tax revenues fund spending, and if “the economy” has faltered, then the government cannot afford the services people need. This is simply false. A government like the UK's, which issues its own currency, never runs out of money. It can always pay for the labour and resources that are available within its borders. The idea that political choice is constrained by what the private sector chooses to do is the logic of neoliberal defeatism. Wolf is clearly still a believer in that.
Moreover, Wolf suggests the economy is “zero-sum” now, effectively arguing that redistribution is killing the goal of growth. Yet the real zero-sum game is the hoarding of wealth by a rentier class while essential services are starved of investment. Redistribution is a political choice, not a productivity function.
Worse still is his argument that businesses must be freer to fire workers to embrace innovation. But workers are not the block to progress. Under-investment, financial speculation, and corporate short-termism are.
And he demands that taxes must rise because the state is supposedly out of money, without ever asking why we should continue subsidising unearned income, wealth extraction and corporate tax abuse. If taxes rise, they should rise to curb wasteful inequality and to free up real resources for public use, not to “pay back” some fictional debt to the private sector.
The reality is that democracy does not depend on everyone buying another car, or building another airport, or burning more carbon, so that consumption numbers look pretty in a spreadsheet. Democracy depends on everyone being safe, housed, cared for, educated and able to participate in society. None of those requires extractive growth. They require political will.
The real challenge we face is not how to restart a growth engine that has already driven us to the edge of environmental collapse. It is how to redesign the economy so that the resources we already have are used to meet human and ecological needs. That is the issue at the heart of a politics of care. Wolf clearly does not care: his is the politics of an old man apparently quite indifferent to the impact of his wishes on generations still at work (whom he treats with contempt), and those to come after them (whom he seemingly consigns to oblivion).
What we must do is decide that fiscal policy must serve social purposes rather than the profit expectations of the wealthy. If we do that, then we can:
- Fund the NHS and social care adequately.
- Build the homes people need.
- Invest in a green transition that preserves life.
- Guarantee full employment at living wages.
- Ensure that technology improves lives rather than replacing livelihoods.
Wolf asks the wrong question. The issue is not whether growth can save democracy. The issue is whether democracy can save us from the economic ideology that demands endless growth without ever meeting basic needs, which must be the absolute priority of every economy, especially if democracy is to be saved from the far right.
We must stop letting neoliberal economists tell us the state is powerless. The state is the economy's creator of money, guarantor of stability and steward of shared resources. It should act like it.
It is time to abandon the growth-fetish that has failed us. It is time to recognise that democracy, prosperity and care can thrive without worshipping at the altar of GDP.
It is time that people like Martin Wolf stopped being treated as if they had something valuable to say. They haven't. Their ideas are well past their sell-by dates. It's time to bin them for the sake of the well-being of both people and our planet.
And if this article sounds angry, it is because I am. The world can no longer afford the sort of folly Wolf promotes. It is time for his day on the FT to be done.
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“The reality is that democracy does not depend on everyone buying another car, or building another airport, or burning more carbon, so that consumption numbers look pretty in a spreadsheet.”
That’s a great summary. And your list of what we can a should do is good too.
But whilst conventional growth, of making and acquiring more and more stuff, which is what I assume Martin Wolf is taking, about is clearly wrong, I don’t think we should give up on growth.
Certainly we can’t burn more and more carbon. Fortunately we are moving into an era where we don’t have to. Solar power particularly, is becoming ever cheaper and is plentiful. At noon the sun delivers about 1kW per square metre. On average it’s about 350W on average (night and day). That’s a lot of energy. We don’t have to cover our limited land area to get all the energy we need. When you do the maths it’s a pretty small area. Of course we do need to store energy too, but there’s huge progress in that as well.
Much of the progress over the past couple of centuries has been from utilising more and more energy. Much of this has been from fossil fuels. But we don’t need this any longer and can still get lots of energy and make progress. I am optimistic.
Thanks
Yes, Tim, energy is the new god.
Let’s think about all these new energy uses which are purportedly driving the invasion of farmland, forests and the uplands by solar arrays and wind turbines.
Electric cars – used just as inefficiently as petrol/diesel cars (the most inefficient tool that has ever been put into mass production) with similar life-cycle environmental impacts. Datacentres – huge consumers of electricity and water (which of course our rivers don’t really need, do they?) and employing very few people (so productive!).
Just elements of the new hyper-society (which no one has voted for), a way-station en route to the further destruction of habitats, resources and societies. And species death.
As Richard says above, “Democracy depends on everyone being safe, housed, cared for, educated and able to participate in society. None of those requires extractive growth.”
I don’t share any enthusiasm for a high-energy culture. It will inevitably degrade the human project. Thinking in terms of entropy, there is no free lunch here…
And given that Second Law of Thermodynamics, all energy use creates heat (and other losses), which, as global temperatures continue to rise, we might want to limit – when we eventually wise up. No free lunch indeed…
The Age of More is definitely over. The Age of Better awaits if we use our intelligence to respect planetary boundaries – all of them.
Much to agree with
Whilst not wanting to dampen your enthusiasm, you are incorrect, and I want to echo the writings of the late, great JC McKay (see: https://www.inference.org.uk/sustainable/book/tex/sewtha.pdf). McKay’s motivation in writing Sustainable Energy without the hot air (SEWTHA) was exactly so we would not use simplistic arguments to misrepresent our situation.
Given completely contradictory claims by different vested interests, McKay, said: “This heated debate is fundamentally about numbers. How much energy could each source deliver, at what economic and social cost, and with what risks? But actual numbers are rarely mentioned. In public debates, people just say “Nuclear is a money pit” or “We have a huge amount of wave and wind.” The trouble with this sort of language is that it’s not sufficient to know that something is huge: we need to know how the one “huge” compares with another “huge,” namely our huge energy consumption. To make this comparison, we need numbers, not adjectives.” He then went on to assess our energy use, and potential sources. I ask everyone here to read it. It was written in 2008/9 – but the physics hasn’t changed. His methodology anticipates efficiency, etc. The numbers will not be precise (neither is Rachel’s spreadsheet!!) – but let’s at least try to deal with the big picture.
From SEWTHA Figure 27.1:
Our ‘western lifestyle’ per-person energy use (2008) was approximately: 125 kWh/d (kilo-watt hours per day – measure of energy)
Given efficiencies, our future (2050) need is estimated to be: 68kWh/d.
McKay argued that people would want to maintain that lifestyle, if possible – but that efficiencies would occur.
Thanks
From SEWTHA, Chapter 6:
The incident solar energy at midday from the sun on a cloudless day is approximately 1000 W/m^2 (1000 W per metre squared). Then we include our latitude (only get about 60%), ratio of average intensity to midday intensity at the equinoxes is about 32% of that. Then it isn’t always cloudless. “The combined effect of these three factors and the additional complication of the wobble of the seasons is that the average raw power of sunshine per square metre of south-facing roof in Britain is roughly 110 W/m^2, and the average raw power of sunshine per square metre of flat ground is roughly 100 W/m^2”. At the time, good ‘domestic’ photovoltaics were 20% efficient. Fundamental physical laws limit the efficiency of photovoltaic systems to at best 60% with perfect concentrating mirrors or lenses, and 45% without concentration. I worked on the design of a satellite system where we used 40% efficient solar panels. So, let’s be optimistic and assume we can extract about 40W/m^2. This is an order of magnitude different from your suggestion. But let’s run with it. If we can collect and store for later use the energy with panels of 40% efficiency, we will get about 1kWh/day/m^2. Of course, this neglects that we’d get the energy in the Summer, but our need is primarily in the Winter……
With this optimistic outlook we are using 70m^2 of solar panels per person. This works out at ~4% of the land area of England for the population in England. However, there’s still a need to grow food, travel, work, and do all the other things we do – and cope with the demand in Winter. Currently, “developed uses (including all buildings) account for about 8.7% of the land in England”. (AI google search, today). Even without coping with Winter peaks demand and the challenges of storage, Solar isn’t looking like an easy fix (by itself).
There are new houses near me that have provision for approximately 4m^2 of solar panels (this in a 3 or 4 bedroom house). Why are houses not being built with future-proofing in mind? Because we are being complacent!
I don’t want to dampen anyone’s enthusiasm. But we need to be consistent with the physics. McKay went on to examine how we could balance our consumption and potential sources of energy – and presented hypothetical plans. No UK government has addressed the issues in his seminal report. But the first step is that people are at least aware and we present the reality of the situation. And the people on this blog should too.
Another obvious question is how much of that Economic Activity is ‘value’
The suggestion is that the 20mph speed limit in built up areas in Wales has saved something like 1000 Killed & Seriously injured AND damage to vehicles.
So with the cost of a Road Traffic Death estimated at £2 million last time I looked and about £300000 for a serious injury thats a lot of GDP that has vanished but is anyone going to say that its a bad thing?
[…] remains the measure of economic success, even though, as I have argued elsewhere this morning, that's a metric well beyond its use-by […]
You are right to be angry, we should all be angry, if not screaming from the roof tops. We have known for over 50 years about the desrtructiveness and dead end of ever increasing economic growth. From the Club of Rome’s Blueprint for Survival 1972 and the Meadows book The Limits of Growth and Schumacher’s Small is Beautiful. The ecologicai ignorance of our economists and commentariat is unforgiveable. With the COP 30 UN climate conference in Brasil next month we must push for a massive international effort to reverse the suicidal path we are on. .
Agreed
Richard, this and your podcast with Larry Elliott need analysis quickly for a policy briefing. Are you able to put that video or a transcript where I can use it please?
It’s on here this morning…
I’m not defending Wolf by any stretch of the imagination but I think what he is really pointing out is that if the economy does not start generating wealth or let’s just call it ‘money’ then there will be for sure a further growth in fascism in this country and he is right about that. Because that will be the end of democracy for some time. We are at the gates of a really dark age.
Of course, where he is wrong is everything else. Wolf is a most frustrating economic commentator – sometimes disarmingly candid about failure but also intransigent about putting things right. To me, he is the epitome of modern liberalism – unable to balance freedoms with responsibilities.
Because as you appear to say Richard – economic freedom is finite.
Growth must end at some point otherwise it implies infinitely large GDP in a finite world. To suggest otherwise is absurd.
However, we may not be there yet for two possible reasons.
First, over 200 years ago, Malthus suggested that population was limited by food production and would ebb and flow according to the harvest (indeed, such thinking informed attitudes to the Great Famine in Ireland). But technology changed things; better food production and distribution has allowed the population to explode since then. If energy is the new food and global temperature the constraining factor then wind, solar, hydro and (dare I say it on this blog) nuclear allow greater energy consumption without frying the planet.
Second, 100 years ago economic strength was measured by coal and steel production; 50 years ago it was measured in “stuff” (real physical things). But today it is ideas (intellectual property) and services which aren’t constrained by climate or other resources to the same extent.
So, we need to do two things. First, invest in new energy technology. Second, orient growth away from “stuff” to ideas/services and reserve limited “stuff” production for important things like housing and transport infrastructure. Last time I checked writing poetry or sitting and feeding an elderly friend used little energy, only time.
But we are criticially short of essewntial stuff
Ask people in poverty
And people who need housing
So we ahve to stop making the *shit* that drives consumption
But we are criticially short of essential “stuff”
Ask people in poverty
And people who need housing
So we have to stop making the *shit* that drives consumption
The great famine in Ireland was due to the failure of the the potato crop but there was a good crop of wheat which could have the Irish but it was shipped to the UK.
It was not a famine. It was a starvation or genocide.
This ‘famine’/’genocide’ is not an abstract concept for me. It was exacerbated by “the Corn Laws—tariffs on grain which kept the price of bread high” (Wiki). An English Quaker called John Bright campaigned, ultimately successfully, for the abolition of these laws though the “famine situation worsened during 1846, and the repeal of the Corn Laws in that year did little to help the starving Irish.”
Bright was one of my great grandfathers. One of his daughters (who happened to be illegitimate) eventually married my grandfather – being the son of another great grandfather – this one also called Joseph Burlington – who had been a tenant farmer and carrier in Northern Ireland but was made bankrupt at that time. He moved to Cumberland, worked as a labourer/mason and sent the afore-mentioned grandfather out to work at the age of ten. The latter eventually set up a bookshop and wholesale and retail news agency – a successful business later run by my father – and from which I benefitted . My father was born in 1877 – 128 years ago. He was 63 when I was born in 1940.
What a story.
Thank you.
Could ‘caring’ and ‘fairness’ be our goals rather than ‘growth’?
In Africa, disputes about grazing between arable farmers and nomadic cattle farmers are no longer simply caused by occasional droughts. There is so little rainfall now that quarrels seem irresolvable. (BBC World Service report last night – 29/10/2025). The victims have not caused global heating.
Widespread dieback of the Amazon rainforest is anticipated … The Atlantic Meridional Overturning Circulation (AMOC) is at risk of collapse …. This would result in much harsher winters in north-west Europe, disrupt the West African and Indian Monsoons, and decrease agricultural yields in much of the world – with major impacts for global food security. (Prof Tim Lenton of Exeter and others).
Richard, I applaud your proposals for ‘a British bank’ and for ‘a maximum wage’.
‘What would serious climate action look like? (Kevin Anderson, Tyndall Centre for Climate Change Research, March 2023).
‘An immediate moratorium on airport expansion and a plan to deliver a fair 80 per cent cut in all air travel by 2030. A huge shift away from private cars in cities and urban environments coupled with a shift towards public transport and active travel. Maybe rural communities would continue to use EVs, but with a rental rather than ownership model.
Retrofit existing homes, not just a pilot scheme, but actually rolling it out street by street at mass scale. Passive house standards would be required. All new properties to have a maximum size threshold. Why are we building homes that are 200 to 400m2? Cut this to a maximum of 100 to 150m2 – still large homes – but with much less resource and material use, and of course less land! And when we sell existing very large houses, have them carefully and creatively divided into normal-sized homes.
All of which would free up labour and resources to achieve the necessary decarbonisation agenda. On top of all of this we need a massive expansion of electrification in the energy system. This is an unprecedented scale and rate of change – pushing the productive capacity of society to its limit and consequently demanding the reallocation of labour and resources to deliver a decarbonised, sustainable and prosperous future.
I was just noticing the other day as I saw the horizon from a Japan Air flight that the earth was finite.
But full of infinite possibilities.
The UN have even noted that the world reached ‘peak farm’ sometime in the mid-2000s. The retreat in land area under farming isn’t consistent everywhere, but there’s a measurable net effect. Synthetic nicotine replacing tobacco plantations was one observation.
When we account for spending without the benefits returning to the economy from the spending, then the government fails to understand the unique position it is in.
THAT is the thing that needs to change. If it accounted for an welfare, social spending, infrastructure projects and so on with an estimation of the money returned to the state as a result, then some projects could be signed off easily as it would be a clear net gain.
Further, projects that invest in UK workers rather than foreign technology licensing, would likely be favoured, not because it is making an unfair bias for British options, but because if the government has a choice between a £10bn project where that money all goes abroad, or an equivalent benefit £11bn project where that money supports British engineering, manufacturing, design, legal services, etc, then the net cost to the taxpayer of the latter is FAR lower.
Yet more projects providing social good would also be that much easier to justify as the net cost would be modest.
Investment in areas like the NHS would likely signficantly increase, because the long-term cost of poorer health outcomes may easily outweigh the cost of improving those services when measured over a suitable timescale. Renewable energy would also likely gain.
Such a view applied to interest rates and quantitative tightening would likely also indicate that the government should recommend a looser inflation target (e.g. a range of 1-4% instead of the current effective 1-3%), allowing lower interest rates, and since sale of government bonds by BoE creates losses for the government while creating a disbenefit of having to pay higher rates on new gilts issued, there is no net benefit and QT by active sales should be generally blocked.
Even when something doesn’t have a direct economic gain (like providing welfare to a disabled person), a holistic net rather than gross view would still provide better support for such provisions, because spending on disadvantaged groups is money quickly recycled back into the British economy, meaning the true cost is much lower than the gross figure.
In short, it’s time for the government to understand its situation, take a holistic view, and look at estimated net cost/benefit over longer timescales (e.g. 10 years). Using overall net benefit calculations it would be able to support better health outcomes, investment in infrastructure and social support, etc.
There’s an argument that the FT is past its sell by date.
🙂
This is a related rather excellent post by Yves Smith that suggests solutions I think compatible with politics of care, and the Wolfgang Streeck book it’s is based on looks worth reading.
https://www.nakedcapitalism.com/2025/10/how-will-capitalism-end-essays-on-a-failing-system.html
Very good. Thanks.
Growth surely cannot continue forever. It’s a physical impossibility in a real and finite world. No doubt you can fix it so that the numbers grow, but that means the numbers, or the yardstick we are using, has become divorced from reality.
Why do we need growth? Fundamentally, I suggest, it’s because the neoliberal paradigm only works while there is growth; without it, everything falls apart. Those who benefit from the use of this paradigm, know this. Thus, it’s the oft repeated mantra, unquestioned by so many. They simply want to maintain their most favoured position.
The efforts to counter climate change and resource depletion need to succeed for the human race to maintain its presence here on earth. When push comes to shove, between humans and nature, nature will win always in the end. The only question is what state will the human race be in? Nature is unsentimental; humans aren’t essential for the planet to keep rotating around the sun. Neoliberal ideology ignores this.
Put simply, I believe we need to ditch that paradigm.
Agreed
A pity that that all dictatorships tend towards tyranny and corruption, so we need democracy to rescue humanity from them and those who would prefer such autocracies. Wolfson seems to be one of those people, now that his Tory party has become an offshoot of Reform.
The left has a lot of persuading to do if the opposing right-wing alliance, who blatantly represent the wealthy only, are to be kept out of government.