Why Faster Isn’t Always Better: Rethinking Productivity Growth through a Philosophical Lens

By Agneya Veer Dhingra 28th October 2024

In modern economics, productivity growth is often regarded as the closest thing to a “free lunch.” As Joseph Heath notes in his provocatively titled essay Should Productivity Growth Be a Social Priority?, the pursuit of ever-greater economic efficiency seems so obviously beneficial that questioning it feels almost heretical. But what if this obsession with growth is, in fact, a distraction — or worse, a trap?

The Promises of Productivity

Historically, productivity gains promised a better world:

• Shorter workweeks and more leisure time,

• Higher consumer satisfaction,

• Eradication of poverty,

• And even reduced inequality, as a rising tide lifted all boats.

  
  

But Heath argues that these promises haven’t been fulfilled, at least not in recent decades. Despite decades of rising output, North Americans are working longer, feeling more time-pressured, and experiencing little increase in subjective well-being. In fact, studies show that after a certain threshold (around $10,000 GDP per capita), further economic growth has almost no correlation with happiness.

So, Where Did It All Go Wrong?

Heath offers three compelling philosophical explanations for why rising productivity hasn’t translated into rising welfare:

1. The Proliferation of Desire – Galbraith’s Squirrel Wheel

Drawing on John Kenneth Galbraith, Heath likens the modern consumer to a hamster on a wheel. The more we consume, the more desires we generate. Like an addiction, each new product delivers a fleeting high, which soon fades, replaced by another craving. This recalls the ancient Greek warning against unrestrained hedonism: the idea that desire is endless, and satisfaction transient.

2. Competitive Consumption – The Neo-Veblenian Trap

Even if consumption doesn’t increase happiness directly, it does serve a social purpose: signalling status. Following Thorstein Veblen, Heath argues that consumption often functions as a form of invidious comparison. A “nice” car, home, or gift only feels valuable if it’s better than someone else’s. The result is a zero-sum arms race of “defensive consumption,” where individuals buy more not to get ahead, but to avoid falling behind. No wonder we feel squeezed.

3. The Tyranny of Positional Goods – Hirsch’s Fallacy of Composition

Fred Hirsch introduces a subtler critique. Some goods — beachfront property, elite university seats, quiet neighbourhoods — are inherently limited. No amount of productivity growth can increase their supply. Yet these goods increasingly define the lifestyle differences between rich and poor in developed societies. As incomes rise across the board, competition for these goods only intensifies, pushing up their prices and fuelling frustration. Everyone gets richer, yet nobody feels closer to the good life.

The Radical Reframing

Heath’s conclusion is refreshingly unorthodox: maybe productivity growth isn’t the solution — or at least, not the only one. He suggests we’ve reached a stage where further growth may deliver diminishing or even negative returns, especially when one considers environmental degradation, urban congestion, and the erosion of public goods.

Instead of asking how to grow more, Heath encourages us to ask: what else could we prioritize?

• Redistribution: Growth without equity does little to alleviate poverty or improve welfare.

• Leisure: Time, not stuff, is increasingly the scarce commodity.

• Public Goods: From healthcare to parks, these often deliver more marginal utility than another kitchen appliance.

• Environmental Regulation: If growth increases negative externalities (like pollution) more than positive ones, it may lower welfare overall.

• Security: Reducing economic precarity and job instability might do more for happiness than raising output.

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Opposing Views: Why Heath's Critics Disagree

To be sure, many economists push back on Heath’s skepticism. Proponents of growth argue:

• That long-term innovation and technological progress rely on growth incentives.

• That developing countries still benefit enormously from productivity gains.

• That post-material values like leisure and environmentalism emerge because we got richer — and thus, growth is still the enabler.

• And some even dispute the happiness data, arguing that surveys of “subjective well-being” are flawed or culturally biased.

But perhaps the most serious counterargument is this: without growth, how do we fund the very redistributive and public goods-oriented policies Heath champions? If the economic pie stagnates, won’t political fights over its slices become more toxic?

A Final Thought: Growth, But to What End?

Heath doesn’t reject growth entirely. He simply invites us to be honest: growth is not a moral good in itself. If it delivers no gains in leisure, no real happiness, no better public life, then we must consider the possibility that we are — like London’s traffic — just going faster in place.

It’s a humbling but liberating idea: maybe the next great leap in economics isn’t about producing more, but wanting less, sharing more, and living better. And that, perhaps, is the real free lunch we’ve been looking for.