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Policy Note delivers timely, progressive commentary on issues that affect British Columbians, including the economy, poverty, inequality, climate change, provincial budgets, taxes, public services, employment and much more. Contributors include staff and research associates from the B.C. Office of the Canadian Centre for Policy Alternatives (CCPA). The views expressed on this blog are those of the individual contributors, and do not necessarily represent the views of the CCPA. Visit the CCPA's Policy Note blog at www.PolicyNote.ca.

De-growth or growth? Maybe we don't need to figure that out

| May 17, 2012
Photo: Colectivo Desazkundea (Decrecimiento)/Flickr

There has recently been a renewed interest in the question of whether the ecological crisis means we need to see (or plan for) a stabilization or even a decline in economic growth. This week there is a major conference on degrowth in Montreal. York University's Peter Victor has made important contributions to this debate in his book Managing Without Growth, as has Tim Jackson in his report for the U.K.'s Sustainable Development Commission entitled Prosperity Without Growth?. There is a burgeoning literature on this topic.

But my own view is that this debate is largely distracting. The challenge is to focus on what matters -- reducing inequality, enhancing well-being/quality of life, ending poverty, low unemployment and good jobs, hard caps on GHG emissions that lower steadily over time, and limitations on the extraction of natural resources to ensure sustainability and protect biodiversity. Perhaps the result will be slow or even zero GDP growth. Then again, perhaps the investments needed to accomplish the above tasks will be so large that GDP will continue to rise for another few decades. Ultimately, this is not the central problem. The key is that governments should no longer be judged on the basis of the GDP record under their watch, but rather, on the basis of how well they accomplish the higher-order tasks just mentioned.

Clearly, there is an ecological imperative with which progressive economists must fulsomely grapple. Ecological limits necessitate that we see a drop in material throughput, waste and emissions. But this may or may not result in a drop in GDP/ income growth.

If we are to rise to the challenge of climate change, we would expect to see a decline in consumption (less consumer spending on useless things, and a great deal of redistribution, with higher income households spending less and poor households spending more); and a decline in trade (as we replace GHG-generating trade with more local production). However, in all likelihood, the task will require a substantially larger role for government (as governments spend more on meeting our core needs together, and on GHG reduction measures such as building retrofits, public transit improvements, inter-city high speed rail, etc.); and likely an increase in investment (as the private sector spends on new technology and capital equipment that allows it to capture and lower emissions). The net result of these shifts may well be that GDP still remains positive (at least for a few decades), given the scope of the task at hand.

The point is that while GDP may still grow, we would see a dramatic shift within the component parts of the GDP equation. An analogous example would be the experience of many countries re-tooling their economies during WWII: societies saw large reductions, indeed rationing, of consumer goods, and a redirection of resources by government and the private sector. People certainly changed their priorities, virtually overnight. But overall GDP increased. The challenge of climate change will ultimately require a societal effort and re-direction of resources on a similar scale.

To state the obvious: fundamental to achieving this sustainable re-balancing of GDP is a great deal more re-distribution of income, higher taxation, and much more regulation/planning of the economy. What we cannot sustain is growing inequality, with some households spending dramatically more than they need, while others are barely making ends meet.

This article was first posted on CCPA's Policy Note.

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Comments

We've already seen the effects of negative growth on the economy - recession, depression, and austerity programs. That's because there is a built-in imperative in capitalist economies for enterprises to either grow or die.

Negative growth, or de-growth, is totally incompatible with the maintenance of a capitalist economy - i.e., one based on private ownership and accumulation of capital and driven by the need to maximize profits. Ony an economy freed from that paradigm can even begin to contemplate sustained de-growth without catastrophic consequences for the mass of humanity. That means a socialist society - i.e., one based on public, collective ownership of capital, and democratically controlled and planned to meet the needs of humans and the environment.

Tinkering with taxation, trade, and monetary policies is not going to create a static-growth capitalist economy. You might as well try grafting wings onto pigs to make them fly.

thanks for  "within the component parts of the GDP equation", and for the note above, "a euphemism".

when environmentalists talk about 'growth' they're often thinking about 'stuff'- equating 'economic growth' with more consumerism, more stuff, and global 'trade' that involves oil-based shipping exports and imports.

i'm not sure people, generally, are talking about the same thing, or addressing eachothers' concerns; it would be useful if the term 'growth' is defined specifically whenever it is used, then discussion could move forward.

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I heard the CBC this morning talking about G8 decisions as 'growth' vs. 'austerity', however most economists have agreed that in the current global recession, austerity, defined as cuts to government spending, services, and jobs, along with higher taxes, would turn the current recession into Depression. Already one in four Spaniards are unemployed.

Randall Wray, author of the Modern Money Theory Primer (New Economic Perspectives) has written that a Jobs Guarantee- full employment- is central to good government policy.

Many at the CCPA, and around the world for decades, have advocated for a Robin Hood/ financial transactions tax, and for proper democratic regulation of private banking.  So far, the G8 only handed oversight to the Bank of  International Settlements' Financial 'Stability' Board, dominated by the private Wall Street bankers whose excesses caused the current global financial crisis, and which have now adopted a strategy of controlling and dismantling entire nations' economies instead of just poor homeowners. 

The Eurozone monetary/fiscal issue was exploited by private finance, which followed the lead of the European Central Bank in raising interest rates, signalling that the needs of the unemployed were not a priority. Private bankers made Greece's unemployment worse, and have turned the recession into a depression in Greece and Spain.

Leaders of the G8 need to spend to prioritize employment and social supports, introduce a Robin Hood tax, redemocratize central banks and all banking, move away from militarism, stop climate change, and respect the Earth,  if they want to stabilize economies.

 

 

 

 

 

I wholeheartedly agree, Seth, that a debate framed as a choice between growth vs. degrowth would be a distraction. However, that is not what Peter Victor's Managing without Growth or Tim Jackson's Prosperity without Growth are about. They are about examining the prospects for doing all those good things you mentioned.

The reason they bring up growth is that whenever those issues are raised the response from politicians, business leaders and unions is, "Yes... but not if it interferes with growth!" or "We can do that and have growth too with some marvelous technological breakthrough." Twenty years later and the emissions have gone up, along with the inequality.

It makes sense to do a reality check on whether the win-win scenarios of the politicians are even feasible, let alone their promises credible. I really wish you would read a short essay by Jeremy Seabrook, "Deindustrializing Humanity," part of which was reprinted in the latest CCPA Monitor.

I also agree with you that "economic growth" may well continue or even accelerate -- possibly for several decades -- if we take the steps necessary to deal with the ecological crisis and the social crisis. But here is the important point: it wouldn't be the same kind of growth.  That is, it wouldn't be the kind of growth that adds to shareholder value and enables governments to increase revenues without raising taxes. And please be realistic, when politicians and business leaders talk about growth, that is the only kind of growth they are concerned about. "Growth" is code. It's a euphemism for accumulation.

So, yes, a debate about "growth" is a distraction. But it is not the critics of "growth" that have created that distraction and if the critics were silent there would be only the false consensus that growth will solve all our problems.

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