The Multidimensional Crisis and Inclusive Democracy, Takis Fotopoulos (2005)

Chapter 5:

Growth economy and growth ideology


 printable version


The rise of the growth economy


Fukuyama triumphantly declared the “end of history” when the collapse of the socialist project was obvious in both its Eastern and Western versions (“actually existing socialism” and social democracy respectively). He (rightly) identified modernity with the market economy and representative “democracy”, but (wrongly) concluded that the present universalisation of this type of modernity in the form of neoliberal globalisation signified that there was nothing else towards which we could expect to evolve, hence the end of history.


However, the socialist project, particularly in its statist form that was the only form historically tested (its libertarian version was never tested in practice), was only one battle in the war between the autonomy/democratic tradition and the heteronomy tradition. It is therefore clear that the collapse of the socialist project does not mean the end of history but simply the failure of this particular attempt to create an autonomous society.


In other words, the collapse of the socialist project simply implied the dismantling of what we may call socialist statism, that is, the historical tradition that aimed at the conquest of state power, by legal or revolutionary means, as the necessary condition to bring about radical social transformation. It should also be stressed that, even before the actual dismantling of socialist statism it has already become evident to many in the Left that there was a fundamental incompatibility between the state-socialist project and the demand for creating conditions of equal sharing of political, economic and social power among all citizens. State ownership and control of economic resources, even when it led to security of employment and to significant improvements in the distribution of income and wealth, proved utterly inadequate for creating conditions of economic democracy, namely the equal sharing of economic power, not to mention conditions for the equal sharing of political power. Furthermore, socialist statism did not make any significant progress in creating conditions of democracy in the social realm generally, namely the household, the workplace, the educational institutions and so on.


Starting point in the analysis of the causes of the collapse of the socialist project should be the fact that there is an intrinsic link between, on the one hand, the socialist ideology and the form of “socialist” societies established in the 20th century and, on the other, the growth ideology and the growth economy. This is because both the capitalist and the “socialist” economies were types of growth economy i.e. a system of economic organisation geared, either “objectively” or deliberately, toward maximising economic growth. But, how did the growth economy emerge?


A perhaps useful way to account for the rise of the growth economy would be to refer to the interaction between the “objective” and “subjective” factors which led to its emergence. The objective factors refer to the grow-or-die dynamic of the market economy whereas the subjective factors refer to the role of the growth ideology. In this book’s problematique, contrary to the claims made by most currents in the green movement, it is not the growth ideology which may simply be defined as the ideology founded on the social imaginary signification that “the unlimited growth of production and of the productive forces is in fact the central objective of human existence”[1] that is the exclusive, or even the main, cause of the emergence of the growth economy. The growth ideology has simply been used to justify “objectively” the market economy and its dynamics, which inevitably led to the capitalist growth economy. The implication is that the main issue today cannot be reduced to just a matter of changing our values, as some radical greens naively argue, or even condemning economic growth per se. The crucial issue today is how we may create a new society where institutionalised domination of human being over human being and the consequent idea of dominating nature is ruled out.  The search for such a system will lead us to the conclusion that it is not just growth ideology, which has to be abandoned, but the market economy itself.


Objective and subjective factors did not contribute equally to the emergence of the two types of the growth economy. Objective factors were particularly important with respect to the rise and reproduction of the capitalist growth economy, whereas they did not play any significant role in the emergence of the “socialist” growth economy —although they were important with respect to its reproduction. Vice versa, subjective factors, the growth “values”, merely played an ideological role, as far as the capitalist growth economy is concerned, in the sense of justifying the emerging market economy, but played a crucial role with respect to the rise and reproduction of the “socialist” growth economy, given the Enlightenment’s identification of Progress with the development of productive forces and the influence that the Enlightenment ideas had on the rising socialist movement.


Capitalist and socialist growth economy


The advent of “Actually Existing Socialism” (AES) had created another type of growth economy in which economic growth was not the byproduct of the dynamics of the market economy, as in the capitalist growth economy, but, instead, was a deliberate political objective. In both these two types of growth economy, including the hybrid form of social democracy, the means are different but the end-result is the same: the maximisation of growth. In fact, it is the much lower degree of compatibility between ends and means in the socialist case than in the capitalist one which led to the eclipse of the socialist growth economy.


As we saw in chapter 1, marketisation and growth, fuelled by competition, constituted, historically, the two fundamental components of the system of the market economy. Thus, mechanised production under conditions of private ownership and control of the means of production implies, first, marketisation, as the outcome of the effort of those controlling the market economy to minimise social controls on the markets and, second, economic growth, as the outcome of a process which, at the micro-economic level, involves the pursuit of profit through the continuous improvement of efficiency. Both orthodox and Marxist economic theory could be used to show that the maximisation of economic growth and efficiency crucially depend on the further division of labour, specialisation and the expansion of the size of the market. This is why modern technology has always been designed to maximise economic efficiency, something that implies further expansion of the division of labour and the degree of specialisation, irrespective of the broader economic and social implications. Thus, economic growth, extension of division of labour and exploitation of comparative advantages imply a departure from the principle of self-reliance. But, this departure has considerable repercussions at the economic level (unemployment, poverty, economic crises in market economy and economic irrationalism in socialism), the cultural level (disintegration of social ties and values), the general social level (drastic restriction of individual and social autonomy) and, as we shall see, the ecological level.


The inevitable consequence of the pursuit of profit, through maximisation of efficiency and the size of the market, has been the concentration of economic power in the hands of the elites that control the economic process. However, concentration of economic power has not been the prerogative of the capitalist growth economy. A similar concentration took place in the socialist growth economy. Therefore, the difference between the two types of growth economy with respect to concentration is simply reduced to who owns the means of production and how they are allocated among different uses.


Thus, first, as far as the form of ownership of economic resources is concerned, both the private-capitalist and the state-socialist forms of ownership lead to the pursuit of partial interests as they both assign the right to control the production process to a minority. In the former case directly, through private ownership that gives a capitalist minority the right to control the means of production and in the latter case indirectly, through state ownership that assigned a similar right to the bureaucratic elite of the AES countries.


Second, as far as the mechanism for resource allocation is concerned, both the market mechanism and the planning mechanism result in establishing a few in privileged positions, at the expense of the many. But, whereas in the capitalist growth economy the concentration of economic power at the hands of the capitalist elite is realised “automatically”, through the unequal distribution of income that results from the market economy’s functioning, in the socialist growth economy, the corresponding concentration at the hands of the bureaucratic elite was realised through the concentration of political power at the hands of this minority that secured its control over the planned allocation of resources.


Therefore, to the extent that the “socialist” concentration of power is accidental”, when socialism takes the form of soviet “democracy” at the political level and central planning at the economic level, to a corresponding extent, the capitalist concentration of power is accidental when liberalism takes the form of representative  “democracy” and the market economy respectively. In both cases, concentration is justified by the respective ideology, directly in Marxism and indirectly in liberalism. Thus, in the former, concentration of power is considered necessary in the transitional” period to communism whereas in the latter, as long as it is legal”, it is not considered to be incompatible with the fundamental liberal principle of the primacy of the individual”, even though concentration negates the principle’s universality. It is therefore clear that neither “actually existing socialism” leads to the liberation of human beings, nor “actually existing capitalism” affirms the primacy of the individual”.


As it is obvious, the distinction introduced in this book between the capitalist growth economy and the socialist growth economy is made on the basis of the way in which economic resources are allocated, and not on the basis of the nature of the respective regimes. This is of particular importance with respect to the AES regimes, which can surely not be characterised as socialist, even by the standards of classical Marxism.[2] Therefore, in the capitalist growth economy, economic growth and the basic economic problems (what, how, for whom to produce) are left to the price mechanism, whereas in the socialist growth economy most of the corresponding decisions are taken through some form of central planning mechanism. Using this distinction, under the “capitalist growth economy” label, we will classify the growth economies in the West, which mainly flourished in the post Word War II period and took either a social-democratic form (during statist modernity) or the present neoliberal form, whereas under the “socialist growth economy” label, we will classify the pre-1989 economic structures in the East, namely the AES countries.


The above distinction is necessary because, although ownership —and particularly control of the means of production— was only formally social in the “socialist” growth economy, the fact that the allocation of resources was achieved mainly through the  central planning rather than the price mechanism constitutes an important qualitative difference. Thus, whereas in the capitalist growth economy (and the “socialist market economy”) the growth objective as well as the intermediate objectives (efficiency, competitiveness) are derived “from within” the logic and dynamics of the system itself, in the “socialist” growth economy, the same objectives are imposed “from without”, by the political decisions of the party bureaucrats who control the planning mechanism. In other words, it is conceivable that a planned economy may pursue different objectives from those that a market economy does. But, although a certain amount of development of productive forces will always be needed so that, at least, the basic needs of all citizens are satisfied, still, this does not imply a struggle to maximise growth in competition with the capitalist growth economy (“to catch up and overtake America” was the Soviet slogan) and everything this struggle involves in terms of the need to improve efficiency. So, whereas in the capitalist case, the growth economy is the inevitable outcome of the workings of the market economy at the micro-economic level, in the socialist case, it is simply the selected objective at the macro-economic level.


However, apart from this basic difference, the two types of the growth economy share many common features and, in particular, two very important characteristics: concentration of economic power and ecological damage. These characteristics, in turn, follow from the fact that both versions share the intermediate objective of efficiency. Efficiency is defined in both systems on the basis of narrow techno-economic criteria of input minimisation/output maximisation and not on the basis of the degree of satisfaction of human needs, which is supposed to be the aim of an economic system.[3] Therefore, although concentration of economic power in the socialist growth economy was mainly the outcome of the concentration of political power in the hands of the party elites, and not the outcome of the “automatic” functioning of the economic system, still, the adopted objective to maximise growth and efficiency imposed the need to use the same methods of production in both the East and the West. Furthermore, given that the concept of economic efficiency, which both  systems share, does not take into account the “externalities” of the  economic process and particularly the negative consequences of growth on the environment, the outcome is today’s widespread environmental damage all over the  planet.


Growth economy and growth ideology     


The first component of the market economy system, the marketisation process, as we saw in chapter 1, had divided the intelligentsia of the industrial era and led to the two large theoretical and political movements, liberalism and socialism. However, no similar divide had arisen with respect to the second component, that is, economic growth. Economic growth became a central element of the dominant social paradigm (i.e. the system of beliefs, ideas and the corresponding values, which is associated with the political, economic and social institutions) in both the capitalist and the “socialist” versions of the growth economy. Thus, economic growth became a liberal and a socialist objective, although it is intrinsically linked to the market economy and despite the commitment of the ruling elites in the AES countries to substitute central planning for the market economy.


Therefore, despite the fact that the dominant ideology in the West has been that of liberalism and in the East socialism, still, both the market economy in the former case and the planned economy in the latter shared the same growth ideology that has been established for over 200 years, in the wake of the industrial revolution and the “grow-or-die” dynamic, which was set in motion by the market economy. In effect, the shift to modernity marked to move to new forms of social organisation embodying what Castoriadis called a new social imaginary signification[4]: the boundless spreading of rational domination, which identifies progress with the development of productive forces and the idea of dominating Nature. This is why for both liberals and socialists, from Adam Smith[5] to Karl Marx[6], the fundamental problem was how humankind could, with the help of science and its technological applications, maximise growth. In fact, Marx was even more emphatic about the importance of rapid growth. So, the growth ideology has complemented the liberal ideology of the capitalist growth economy and the socialist ideology of the socialist growth economy. In this sense, the growth ideology has been the ultimate ideological foundation for both the capitalist and the socialist growth economy, despite the different ways in which the hierarchical patterns of power concentration are structured in the two types of growth economy. Furthermore, the growth ideology has, in a sense, functioned as the “ideology in the last instance”, since it has determined which ideology would be dominant at the end. This is why the economic failure of the socialist growth economy (namely, the failure to create a Western-type consumer society) was the main reason that led to the collapse of this type of growth economy and to the present predominance of the capitalist growth economy and its own ideology (liberalism). 


The common growth ideology can also account for the fact that both types of growth economy share a similar environmental degradation —in fact, a bigger degradation in the AES countries due to the less efficient technologies used in these economies and the fact that the pollution effects were intensified by their price structures, which underpriced energy and raw material resources leading to their overuse. Thus, to the extent that the present concentration of power cannot be simply reduced to capitalist production relations, as Marxists contend, to a similar extent, the ecological crisis itself cannot be merely reduced to capitalist relations and conditions of production, as eco-Marxists maintain.[7] It is, anyway, evident that an analysis of the ecological crisis on the basis of capitalist production relations fails to explain the presence of an even more serious ecological crisis in the AES countries, despite the absence of capitalist production relations in the sense of privately owned means of production. Thus, just as it would be wrong to attribute the ecological crisis merely to the growth ideology, as the environmentalists and various “realos” within the Green movement do, disregarding the institutional framework of the market economy and the consequent power relations, it would be equally wrong to impute this crisis mainly to capitalist production conditions, as eco-Marxists are trying to do, disregarding the significance of the growth ideology on the theory and practice of socialist statism.


In fact, in order to provide an adequate interpretation of the ecological crisis, we should refer not just to the interplay of capitalist production relations with conditions of production (as eco-Marxists do), but to the interplay of ideology with the power relations that result from the concentration of power in the institutional framework of a hierarchical society. At this point however it should be pointed out that although the idea of dominating nature is as old as social domination within hierarchical society, the first historical attempt to dominate nature en masse emerged with the rise of the market economy and the consequent development of the growth economy. Therefore, to explain the present ecological crisis we have to begin with the historical factors which led to the emergence of the hierarchical society in general and continue with an examination of the contemporary form of hierarchical society, in which the elite draws its power mainly from the concentration of economic power.


Still, despite the fact that the growth ideology underpinned both the liberal and socialist ideology one should not ignore the intrinsic relationship between means and ends. Therefore, in spite the fact that both types of growth economies aimed at the same goal (maximisation of economic growth) the difference in the means used is very important. Planning is a means which is primarily consistent with a system of social ownership of the means of production whereas the market is primarily consistent with private ownership. Although therefore various combinations of planning/market and social/private ownership of productive resources have been proposed and implemented in the past, the fact remains that it is the combination of planning (combined perhaps with forms of artificial “markets” like the ones proposed in ch. 6) with forms of social ownership which can only secure the satisfaction of all citizens’ needs. Therefore, any combination of real markets with private ownership of productive resources (as in market economies) is bound to distribute the economic benefits from growth in a very uneven way that does not meet the needs of all citizens. In fact, even a combination of social ownership of the means of production with real markets is bound to lead again (because of the dynamics of the market mechanism itself) to significant unevenness and inequality, as is the case in the today’s “socialist-market” economies (China, Vietnam etc).


Concentration: the inevitable outcome of market economy’s dynamics 


Concentration of economic power does not, of course, constitute a new phenomenon. In all hierarchical societies, some concentration of wealth has always accompanied the concentration of political and military power in the hands of the various elites —a fact usually “justified” through a system of social rules based upon religion. The new element in the growth economy is the fact that the reproduction of the social system itself, as well as of the power of the elite controlling it, crucially depends on the realisation of the growth objective which, in turn, is “justified” through the identification of Progress with growth. So, economic growth functions not just as a fundamental social and economic goal, but also as a basic means to reproduce the structures of unequal distribution of economic and political power which characterise the modern hierarchical society, as well as a central element of the ideology that supports it. Therefore, the hierarchical society took a new form with the rise of the market economy in the West and the planned economy in the East. In this new form, the elite draws its power not only (as in the past) from the concentration of political, military or, in general, social power, but, primarily, from the concentration of economic power, whether this concentration is brought about by the market mechanism, or through the control of the central planning.


However, the fact that the modern hierarchical society relies for its reproduction on the maximisation of economic growth constitutes, also, its fundamental contradiction. This is not because, as it is usually argued, the continuation of the growth economy has serious environmental implications but because the necessary condition for the reproduction of the growth economy is the concentration of its benefits to a small section of the world population, i.e. the huge inequality in the distribution of world income. This is on two counts:

  • First, it is simply not physically possible for the wasteful consumption standards, which are today enjoyed by the “two-thirds societies” in the North and the elites in the South, to be universalised and enjoyed by the world population. Thus, as Carley and Christie point out “it seems clear that the material consumption of industrial people cannot be universalised to encompass all humans on earth. The required increase in material production is enormous. To simply universalise the North’s standard of living now, global industrial production would need to rise 130 times”,[8] even if we do not take into account present growth and population growth projections![9] In this sense, one may argue that the present rapid growth rate in countries like China is physically sustainable only if the parallel huge increase in inequality continues.

  • Second, a universalised growth economy is not environmentally sustainable, at the present state of technological knowledge and cost of “environmentally-friendly” technologies. In other words, the universalisation of such technologies would not be possible, given their cost and the concentration of world income. Furthermore, it is at least doubtful whether after the universalisation of such technologies their beneficial impact on the environment will remain the same.

Therefore, concentration and ecological disintegration do not simply constitute consequences of the establishment of the growth economy, but also fundamental pre-conditions for its reproduction. Contrary to the under-consumptionist “civil societarians” who hope that the elites of the Triad, facing the threat of an inadequate demand because of growing inequality, will be induced to introduce a world mixed economy,[10] in fact, the opposite is the case. The growth economy in the North not only is not threatened by the growing inequality of the present internationalised market economy, but, instead, depends on it. Thus, just as the production of the growth economy is not possible without the plundering of nature, its physical reproduction is equally impossible without the further concentration of economic power.


In conclusion, it is obvious that the present concentration of economic, political and social power in the hands of the elites which control the growth economy is not simply a cultural phenomenon related to the values established by the industrial revolution, as significant currents within the ecological movement naively believe. Therefore, the realisation of ecological balance is not just a matter of changes in value-systems (abandonment of the growth logic, consumerism etc.) which would then supposedly lead us to an eco-friendly way of living. In fact, the concentration of power constitutes the inevitable outcome of a historical process that started with the establishment of hierarchical social structures and the implied ideology of domination of human over human and nature[11] and culminated in the last two centuries with the development of the market economy and its by-product the growth economy.


The market/growth economy and the concentration of economic power are opposite sides of the same coin. This means that neither the concentration of economic power nor the ecological implications of the growth economy are avoidable within the present institutional framework of the internationalised market economy. However, the increase in the concentration of economic power[12] leads many people to the realisation that Progress, in the sense of improvements in welfare through growth, has a necessarily non-universal character. Therefore, the moment of truth for the present social system will come when it will be universally acknowledged that the very existence of the present wasteful consumption standards depends on the fact that only a small proportion of the world population, now or in the future, are able to enjoy them.





[1] Cornelius Castoriadis, Philosophy, Politics, Autonomy (Oxford: Oxford University Press, 1991), p. 184.

[2] See Takis Fotopoulos, Dependent Development: The Case of Greece (Athens: Exantas Press, 1985 & 1987), Ch. A.

[3] The usual definition of economic efficiency in terms of technical efficiency, production efficiency and exchange efficiency, although supposedly “neutral”, in fact, assumes away distributional aspects, so that it is perfectly possible for a particular allocation of resources to be “efficient” and at the same time not capable to meeting adequately (or not at all) even the basic needs of many citizens .

[4] Cornelius Castoriadis, The Imaginary Institution of Society (Cambridge: Polity Press, 1997).

[5] Adam Smith, The Wealth of Nations (London: Harmondsworth, 1970), p. 104.

[6] As Sean Sayers observes, drawing from Marx’s Capital, Vol. 3, and Grundrisse, “Marx regards the immense expansion of production to which capitalism has led as its progressive and «civilising» aspect”; Sean Sayers, “Moral Values and Progress,” New Left Review, No. 204 (Mar.-Apr. 1994), pp. 67-85.

[7] See James O’Connor, “Capitalism, Nature, Socialism,” Society & Nature, Vol. 1, No. 2, (1992), pp. 174-202.

[8] Michael Carley and Ian Christie, Managing Sustainable Development (Minneapolis: University of Minnesota Press, 1993), p. 50.

[9] Andrew McLaughlin, "What Is Deep Ecology?", Capitalism, Nature, Socialism, Vol. 6/3, No. 23 (Sept. 1995).

[10] Hirst & Thompson, Globalisation in Question, p. 163.

[11] For a comprehensive analysis of this process, see the work of Murray Bookchin and, in particular, his works Remaking Society (Montreal: Black Rose, 1990), The Ecology of Freedom (Montreal: Black Rose, 1991), and From Urbanisation to Cities (London: Cassell, 1992 & 1995).

[12] For evidence on the historical concentration of economic power at the micro- and macro-economic level see TID, Ch. 2.