For a long time now, people have been told that economic growth = good. It is synonymous with increased living standards and more people in work. Recession, on the other hand, means bankruptcy and redundancy. It is this reasoning that backs a lot of policy and voting choices we see, especially in the West. This is even more apparent in the wake of COVID-19, as governments prioritise reopening the economy over other factors.
But is there another way?
Unfortunately, constant growth is inherently incompatible with caring for the environment or the needs of everyone on the planet. The earth only contains finite resources; many are renewable, but this requires us to use them in such a way that they can actually be renewed to keep up with global demand. Currently, many are over-consuming more than the earth can sustain, while vast multitudes around the world are also under-consuming due to poverty. As the world works to eradicate global poverty, the earth simply will not have the resources to sustain all humans consuming the way those in the Global North do currently.
The entire system needs to be changed, we can already see that current models don’t work as well as many assume. While global GDP has grown by more than 5000% since the 1960s, inequality has grown massively too.
In recent years, that system has started to fail. Rather than sustainable and widely shared prosperity, it has produced wage stagnation, ever more workers in poverty, ever more inequality, banking crises, the convulsions of populism and the impending climate catastrophe. Even senior rightwing politicians sometimes concede the seriousness of the crisis. At last year’s Conservative conference, the chancellor, Philip Hammond, admitted that “a gap has opened up” in the west “between the theory of how a market economy delivers … and the reality”. He went on: “Too many people feel that … the system is not working for them.”
We need a system where things work in balance, reducing reliance on growth alone while maintaining stability. People often talk about capitalism being the problem, but falter when it comes to discussing an alternative. This isn’t helpful in debates: people think that communism is the only other option being put on the table, and they switch off. This isn’t the reality of the situation, however.
So let’s actually talk about a viable alternative: degrowth.
What is degrowth?
Firstly, don’t be put off by the name. Degrowth is not advocating for recession. Let me tell you the history.
Degrowth became popular around the turn of the millennium, as a way to criticise ideas around development and infinite economic growth. It disputed the thought that growth always equals improvement, a concept that is still perpetuated today in both media and politics. This leads the public to associate growth with wellbeing, even if evidence suggests this isn’t the case.
The first international degrowth conference took place in 2008, put on by the academic collective Research & Degrowth. At this meeting, it was defined as a ‘voluntary transition towards a just, participatory, and ecologically sustainable society’. Nowadays degrowth is also seen as a unifying concept for both scientists and social activists who campaign again neoliberalism and privatisation. There have been several more conferences since, which has shaped an international community of academics, activists and economists who believe degrowth is a viable solution.
But what does the term actually mean? At its most basic level, it simply means abolishing economic growth as the primary aim for society. In this new model, communities would use less natural resources through downscaling of production and consumption, as well as generally organising and living differently.
The main argument is that, while growth can be helpful up to a certain point, continued unending growth eventually leads to rampant inequality, bad physical and mental health, long hours, pollution and congestion. Even as GDP increases, welfare indicators don’t change, because wellbeing doesn’t improve once a person’s basic material needs are met.
In an interview with The Washington Post, David Pilling, the journalist and author of The Growth Delusion: Wealth, Poverty, and the Well-Being of Nations, says GDP measures economic “quantity not quality” and should not be conflated with well-being, especially in richer countries. In some instances, GDP growth could even mean the opposite.
GDP has long been widely criticized for counting defense spending, financial speculation, and even theft as positive contributions to growth, while excluding non-monetized trade and ignoring environmental and social costs. “If I steal your car and sell it, that counts toward growth,” Pilling explains, “but if I look after an aged relative or bring up three well-adjusted children, that does not.”
But what about sustainable development?
Sustainable development may be something you’ve already heard of, but degrowth advocates are skeptical of the foundational element of sustainable development: decoupling.
The idea of decoupling is to progressively using less energy and raw materials due to becoming more efficient. According to this idea, economic growth and environmental preservation can both be achieved without having to change anything.
However, there are actually two types of decoupling, known as relative and absolute. Relative decoupling is the decline in ecological intensity per unit of economic output, not the use of energy and raw materials declining in absolute terms. Impacts still increase, but slower than GDP. This is achievable because, within a capitalist framework, increasing efficiency in production isn’t that difficult. Producers are always looking to innovate and increase efficiency because it helps them save money. This has already led to the global energy intensity of GDP now being 33% lower than it was in 1970.
The problem with this, however, is that we need to focus on absolute decoupling. Efficiency doesn’t matter if we can’t stop putting carbon into the air altogether. Climate breakdown can’t be stopped by simply being more efficient. Absolute decoupling means the use of environmental resources declining in absolute terms over time. If we want economic activity to remain within the limits the Earth can actually sustain, this is essential.
Thus far, evidence of absolute decoupling happening anywhere is difficult to find. There are a few countries who have stabilised in resource requirements since the late 1980s, which suggests absolute decoupling is feasible in some advanced economies. However, this data is also difficult to actually trust, because most developed countries tend to move away from domestic manufacturing and towards importing from abroad. A country may seem like it has lower emissions, but the carbon footprint of its people isn’t actually lower, due to the carbon cost of all the goods they’re now simply importing instead.
Regardless, global limits mean we need to take an international approach anyway, as running out of resources is a worldwide problem. The world GDP has risen faster than emissions for eighteen years, but no absolute decoupling has happened. Dramatic emissions reductions are still vital, and countries need to work together to achieve them.
Without evidence for absolute decoupling, it seems sustainable development is not as possible as people would hope. This is the starting point for those who argue for degrowth.
Mainstream economists may accuse degrowth advocates of misunderstanding the potential of technology, markets, and efficiency gains for absolute decoupling. However we’ve already seen decades of technology innovation and increased efficiency, and it tends to be reinvested in more consumption in a growth-oriented economy, not reducing impact. We can try to make capitalism green all we want, but this alone can’t help.
This is the defining, critical flaw in growth economics: the false assumption that all economies across the globe can continue growing while radically reducing environmental impact to a sustainable level. The extent of decoupling required is simply too great.
What does a degrowth economy look like?
Thus far, there is no feasible proposal for an economy founded on consumption and growth that delivers absolute decoupling. Therefore a new approach, one which centres the environment and maintaining employment over constant growth, is becoming more popular.
Economist Tim Jackson’s Prosperity Without Growth report talks about how modern economies are built around consumption growth. While politics or strategies may differ, all assume a return to high street spending is essential to restart growth (something we’re starting to see now as governments urge shops to reopen). So far, there have been almost no attempts to create an alternative.
Some thorough research that we do have is the Managing Without Growth paper from economist Peter Victor. It suggests the most important factors in transitioning to a sustainable economy are changes to investment and how we structure the labour market.
In the macroeconomic scenario that Victor developed for Canada as a case study, net business investment is reduced, accompanied by a shift in investment from private to public goods, implemented through changes in taxation and public spending. The labour force can be stabilised, partly through demographic change and partly through policies aimed at stabilising the overall population.
When labour productivity increases, this normally means there’s less work available. In Victor’s model unemployment is avoided by sharing the work more equally across the available workforce, through reducing average working hours and the working week as a structural solution. Universal Basic Income can also be a vital part of the solution, as this economic stability leads to more people working part-time, and therefore work being split more equally overall.
Additionally, in a degrowth economy, investment would change. Innovation would still be important, but it would be targeted towards sustainable goals. Investment would focus on areas like renewable energy, clean technology, green business, and climate adaptation.
What Victor’s study demonstrates is that there may be more room than commonly supposed—even within the conventional framework—to stabilise economic output. The fundamental macroeconomic variables will still pertain. People will still spend and they will still save. Enterprise will still produce goods and services. Government will still raise revenues and spend them in the public interest. Both the private and public sector will both still invest in stocks of physical, human and social capital. But new macroeconomic variables will need to be brought explicitly into play. These will almost certainly include variables to reflect the energy and resource dependency of the economy as well as the value of environmental services or stocks of natural capital.
Policy change needed for degrowth
Degrowth proposals that have been published in peer-reviewed journals tend to focus on three overall goals:
- Reduce the environmental impact of human activities through reducing material/energy consumption, incentivising local production and consumption and promoting changes in consumption patterns.
- Redistribute wealth both within and between countries through promoting community currencies and alternative credit institutions, promoting fair distribution of resources through redistributive policies of income, promoting work-sharing and creating a citizen’s income.
- Foster the transition from a materialistic to a convivial and participatory society by promoting downshifted lifestyles and by exploring the value of unpaid activity.
While degrowth comes from a grassroots beginning, most of these proposals follow a top-down approach, requiring shifts in policy such as taxes on the super-rich and regulations to create a proper degrowth transition. Many degrowth proponents have tended to focus on a more voluntary, people led change, which may seem like the opposite approach. Ultimately, it’s unhelpful to try and put them into binary categories, as we need both to succeed. For example, people would need to choose to drive less, but this can only happen if policies are created to introduce better public transport and more bike lanes. It’s both a top-down and bottom-up situation.
The new economists want to see much more systemic and permanent change. They want – at the least – to change how capitalism works. But, crucially, they want this change to be only partially initiated and overseen by the state, not controlled by it. They envisage a transformation that happens almost organically, driven by employees and consumers – a sort of non-violent revolution in slow motion.
The result, the new economists claim, will be an economy that suits society, rather than – as we have at present – a society subordinated to the economy.
This system builds on Herman Daly’s steady-state economy. Despite what the name suggests, this isn’t about simply maintaining the size of the economy and not pursuing further growth. Because we’re already consuming too many resources, and the poorest nations still need room to develop their economies, the transition requires the richest nations to downscale their resource and energy demands. This is what makes it different from a recession, as it’s a plan of phased contractions to create a state that can operate within the Earth’s limits.
What does this look like in practice?
I know the idea of planned contractions may seem terrifying or unfeasible, and it’s true that it wouldn’t always be easy to achieve. Society would need to transition from messages of self-interest to those of social good and preserving what really matters.
Degrowth is not about going back to harder ways of life or being anti-progress, it’s about liberating people from the burden of pursuing material excess. It’s about rethinking consumerism, and truly acknowledging that we don’t need so much stuff, because stuff doesn’t bring meaning.
Degrowth shares many of the same principles as slow living. Many of us are already living in this way, which makes it less scary to consider. it’s just about creating simpler ways of life by producing and consuming less. It may mean lifestyles are less materialistic, but it’s also based on making sure everyone has enough to live well. It’s about less private jets, not going without food or living a life of constant painful sacrifices. In fact, many human needs can be met in simpler and low-impact ways while keeping quality of life high.
Degrowth societies are organised around ‘sharing, simplicity, and solidarity, rather than profit, efficiency, and competition’.
Degrowth societies look like localised economies (as much as possible) to reduce carbon-intensive global trade and build resilience. More local businesses and production, rather than huge multinational chains. Forms of direct and participatory democracy to ensure everyone’s basic needs are met, reducing working hours and introducing universal basic income in exchange for more home-production and leisure, utilising renewable energy, retrofitting homes for efficiency, becoming more self-sufficient, focusing on regeneration and rewilding, and creating a circular economy and economy of sharing.
Wherever possible, we would grow our own organic food, water our gardens with water tanks, and turn our neighbourhoods into edible landscapes as the Cubans have done in Havana. As my friend Adam Grubb so delightfully declares, we should “eat the suburbs”, while supplementing urban agriculture with food from local farmers’ markets.
We do not need to purchase so many new clothes. Let us mend or exchange the clothes we have, buy second-hand, or make our own… we creatively re-use and refashion the vast existing stock of clothing and materials, and explore less impactful ways of producing new clothes.
We have examples for ways this is already being implemented through local leadership and movements such as transition towns. Below is a UK example:
Preston’s hilltop city centre, which had been fading for decades, now has a refurbished and busy covered market, new artists’ studios in former council offices, and coffee and craft beer being sold from converted shipping containers right behind the town hall. All these enterprises have been facilitated by the council. Less visibly, but probably more importantly, the city’s large concentration of other public sector bodies – a hospital, a university, a police headquarters – have been persuaded by the council to procure goods and services locally whenever possible, becoming what the Democracy Collaborative calls “anchor institutions”. They now spend almost four times as much of their budgets in Preston as they did in 2013…
At a time when local councils are supposed to have been hugely weakened by government cuts – Preston is in small but visible ways undermining the authority of neoliberalism, dependent as it is on the insistence that no other economic options are possible.
And a USA one:
“American local government also has greater powers. So you have the ability to create radical new models from the ground up.”
In 2008, the Democracy Collaborative began working in Cleveland, one of America’s poorest big cities, which had been losing jobs and residents for decades. The activists followed an Alperovitz strategy called “community wealth-building”. It aims to end struggling local economies’ reliance on unequal relationships with distant, wealth-extracting corporations – such as chain retailers – and to base these economies around local, more socially conscious businesses instead.
In Cleveland, the Democracy Collaborative helped set up a solar power company, an industrial laundry, and a city-centre hydroponic farm growing lettuces and basil. All three enterprises were owned by their employees, and some of their profits went to a holding company tasked with establishing more cooperatives in the city. All three enterprises have succeeded, so far. The goal of the project was summed up in blunt, almost populist terms by one of the Democracy Collaborative’s co-founders, Ted Howard, in 2017: “Stop the leakage of money out of our community.” Yet “community wealth building” also has a more subtle purpose: it is a concrete demonstration that economic decisions can be based on more than neoliberalism’s narrow criteria.
What about less developed nations?
This is, of course, a complex area. As discussed when I wrote about China’s emissions, we can’t point the finger at Global South nations simply because they happened to develop later than us. I think the main points to stress here is that degrowth should be mainly pursued by the richest nations. This gives emerging economies space to grow, including still having some international trade which operates on a lesser, more economically fair scale, rather than huge amounts based on exploitation, sweatshops and cost-cutting that hurts poorer nations, and helping those economies adopt green growth policies (through international cooperation, not becoming white saviours or through colonial intervention). Some of these may already be easier than past development we’ve seen, as renewables become cheaper than fossil fuels and more sustainable design options become available. While there isn’t a one size fits all solution, it’s also not impossible.
Overall, degrowth may seem like a radical and impossible idea, but this isn’t the case if we actually examine what it entails. Many people are already opting for slower and fairer lifestyles, and policy proposals such as decarbonised cities and universal basic income are popular across the board. It’s unlikely that every single element of degrowth would be fully implemented (for example I think The Green Party’s frequent flyer levy is a fairer system than insisting nobody travel at all), but there are certainly large parts of the principle that are backed by economists, desired by normal people, and can provide viable alternatives to our current capitalist model.