External growth is passe, we now need internal growth || Acharya Prashant (2019)

Questioner: Adam Smith, who is considered to be the father of modern economics, said that economics is a science of wealth; he places primary importance upon money and not on man. Alfred Marshall, another economist, said that economics is a study of material welfare; there he puts importance on man and his welfare, and not on money. So, how should welfare be assessed? Is it only a material thing, or is there something more to it?

Acharya Prashant (AP): Ultimately, welfare or wellness is an experience within the experiencer. Irrespective of where the object of that experience lies, the experience is always within. You might be experiencing pleasure from a great building in front of your eyes, but the building outside is in itself not the pleasure; the pleasure that you are experiencing is a subjective thing happening, obviously, within the subject. So, whether it is something as tangible as a building or something less tangible, like a thought or a memory, the experience that you draw from it is always internal. The object might be external, or apparently not so external, but the feeling of wellness is always internal.

So, when we talk of human welfare, we are essentially talking of something within the human being. The human being might say that the cause of wellness or lack of wellness lies outside of himself, but still the effect is always experienced within, right? Now, this experience within has been observed to be only partially a function of the conditions outside. There is ample proof. Japan is one of the wealthiest countries in the world, and the Japanese have been empirically known to be one of the unhappiest people on the planet. That by no means implies that material wealth is inversely correlated with internal wellness. We also have examples of highly impoverished nations where the people are internally unwell because of the poverty outside; material poverty, therefore, is a known reason for a lack of internal wellness. At the same time, material abundance is not a known reason for internal wellness.

So, till some point, human welfare is indeed material welfare; we cannot deny that. Till a particular point of prosperity, internal wellness is indeed directly proportional to external tangibles. It is a little inconceivable to have a situation where a person does not have food to eat, shelter to live under, basic decent conditions to socially abide in, and is yet internally peaceful and satisfied. Rather inconceivable, no? So, we do need basic material prosperity no doubt.

Hence, economics, till a point, must be about material prosperity. The catch is, in most of the developed world, that point has long since been exceeded. The basic minimum prosperity that is needed, the basic threshold of material availability, has been breached. No, ‘achieved’ is a rather lenient word; it has been many times overachieved. Beyond that point, there is no incremental return in terms of internal wellness with the increase in external abundance; after that point, the curve becomes rather flat. You may even have an inverted U-shaped curve where, with the increase in material prosperity beyond a point, you actually start finding that the internal wellness is diminishing.

The world in general, on an average, has come to a point where external growth is no longer going to help. External growth is largely saturated, though there are deep regional variations; what is true for the United States is not quite true for, let’s say, Bangladesh. But if I talk of a broad average, then further wellness on this planet cannot now come through external growth.

We have come to a very special point in the history of mankind. Till this point, all history was all about material growth, external prosperity; that is what dictated the course of history; that is what dictated the rise and fall of empires, and so much else as well. But now that factor, external prosperity, as we said, is saturated. It will not help anymore to have more money. Now what we need is internal growth, not external growth. Further internal wellness, I am asserting, will not come through external growth, but only internal growth. In fact, if we insist on more external growth, we are going to have catastrophic results for the planet, as we are already witnessing.

Some parts of this planet still need external growth. India is one of those parts. We still have large chunks of the population who need to have more external prosperity. We still have people who don’t have even very small houses, or even basic sustainable incomes, or means to decently educate their children. So, in their case, yes, still more growth is needed, but only for them, not for the planet in general.

Please get this distinction clear. The developed world, for example—and the developed world accounts for three fourths of the planet’s total production and GDP, though it amounts for only a sixth of the total population of the planet. The developed world especially cannot target any more external growth; the developed world cannot talk the language of GDP anymore. It would be suicidal. They do not need GDP growth anymore. If they want to have GDP growth, it would only help them to have some kind of shallow psychological satisfaction, but it would not contribute to internal wellness. Their internal wellness, I am repeating, does not depend anymore on external growth.

And the planet has no more to offer to accommodate external growth. How will you get external growth? The planet has already given you as much as it could. You cannot draw anymore from it. Sooner than later, in the next few decades, even the developing world would reach the threshold after which external prosperity does not help.

So, we can very safely and very confidently say that for the world in general the future is internal growth. If economics is about welfare, then further welfare of this planet and of mankind in general is not going to come from GDPs; it is going to come from an internal ascension. And if that internal ascension is not being targeted and is instead being sought to be compensated by more and more external goods, then it is very unwise.

So, it brings us to a peculiar conclusion. Economics, from now onwards, would be spirituality. If economics is human welfare, then further welfare is not going to come from more goods, more productivity, more lavish markets; further wellness or welfare is going to come from an internal center. Economics, which only dealt in the language of numbers and productions and such things, will have no option but to turn inwards, and maybe develop some kind of an indicator or coefficient of internal growth, CIG. Nations will need to be ranked on their respective CIGs, coefficients of internal growth. It’s another matter that if a country rises sufficiently high on a CIG index, it will cease to have great interest in remaining a country in the conventional sense of the word. If there is real internal growth, the concept of parochial boundaries as history has known would cease to be relevant.

And a lot more things would happen. With internal growth you would not need to rank nations in terms of the number of nuclear warheads that they possess. The P5 in the United Nations security council would need not be relics of World War Two era. You would not say that the security council would be decided on the basis of the winning side of a world war; you would not say that only those who possess nuclear weapons deserve to have a permanent chair. In fact, if the CIG manages to do well, then instead of a security council, you would have a spirituality council. Hopefully India will be the chairperson. But then, that’s not quite a spiritual statement, is it? When I say India, I do not really mean the political formation.

So, the concept of wellness, welfare, growth, prosperity, the very idea of progress, has to undergo a fundamental transformation, if we have any sanity. You cannot just keep talking the language of endless numbers. You cannot say, now we have reached X trillions, and what is ahead, what next? X plus two trillions, and then X plus four—an endless movement amounting to what? Certainly not internal welfare.

The economic idea that human welfare is to be measured through material availability is now getting outdated. Maybe it had relevance fifty years back, maybe Adam Smith and Keynes were right, but only topically right—right only as per the situation of their times. How right is the old definition of economics today needs to be re-ascertained. But rest assured, the time of growth is over. And when I say growth, I mean external growth.

People feel that because human intelligence knows no limits and human desire knows no limits, therefore the human race is going to keep expanding endlessly. They are taking inspiration from history. They keep saying that if you look at history, man has kept ceaselessly inventing; if you look at history, man has kept endlessly progressing; if you look at history, then man has never stopped at one particular level of development. So, from this historical trend they want to extrapolate that the future will be the same as the past. What they forget to factor in is the simple variable called the carrying capacity of the Earth. Yes, till now we have kept materially expanding, both in terms of consumption and in terms of population, because the Earth, this planet, could afford that.

But now we have come to a very special point in history; we cannot do it any further, and that is irrespective of the kind of efficient technologies we bring about. When it comes to technology and efficiency, the more efficient a technology becomes, the more widespread its use becomes. Hence, the net material consumption, instead of declining, actually increases. So, if you say that a particular raw material or resource is in scarcity and hence we need a better technology to enable its more efficient consumption, then that better technology would indeed make the consumption more efficient, and therefore more affordable, and therefore more widespread. Hence, the net result would not be a decrease in consumption but actually an increase in consumption.

So, let’s get over the idea that with better technologies we will be able to continue expanding materially forever. That is not going to happen. People give the example of Europe; they say, “See, in the middle of the last century, Europe was as polluted as India and China currently are. Look at the Ganges today, and look at the condition of the Thames in the 1950s. Not much difference.” They say, “Look at the Delhi sky today and look at the London sky in the 50s. Not much difference. But Europe progressed more materially, and more material growth was the answer to pollution.” That’s their line of reasoning. So, they say, “If you want to overcome the problems facing the Earth today, the solution is not less consumption but more consumption, because today the Thames is quite clean, and Europe is quite green, and the air quality in Europe is just fine. And how did this come about? This came about by more growth, more consumption.”

So, their logic is, let there be more technology and that will lead to a solution to our problems. What they forget is the difference between a local optimum and a global optimum. Europe is clean today, yes, but at what cost to the rest of the world? It’s almost like saying that a five star hotel has a pretty pleasant ambience—yes, obviously, but at what cost to the overall environment? It is clean, comfortable, but what is it doing to the environment in general? So, that kind of logic is misplaced. Further, let’s not forget that in global terms, Europe is just around thirty, thirty-five crore people, less than UP and Bihar combined. Europe can indulge in material extravaganza. If the rest of the world starts following the standards of America or Canada or Europe or Japan, then we will have an unremitting scale of disaster.

The mind of an economist has to stop thinking in language terms of consumption now. If you are an aspiring economist, that’s my advice to you. Unfortunately, too many economists are still very, very old school; all they talk about is demand and supply, production and consumption. Consumption is not the way ahead. Economics and spirituality have to now converge. You cannot keep measuring human wellness by human consumption anymore; not possible. You have to train yourself to think in different terms. Your internal model of human wellness has to be very different now; it has to be an internal model.

What does an internal model mean? You will ask how peaceful the person really is. And remember, now you cannot ask if the fellow has the basic means of survival because, as we said, the developed world already has those means, and within a few decades all of the developing world, too, will have all of those means. So, that question has become very irrelevant.

Does the fellow have food to eat? Does the fellow have clothes to wear? Does the fellow have basic security, physical security? Those things will become irrelevant soon. Then you will have to train yourself as an economist to ask, does the fellow really understand life? Does the fellow really know love? Does the fellow have it in him to remain stable in the face of psychological turbulence? These are things that will now determine and define your wellness. So, be ready for the new world of wellness.

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