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

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 UK’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.

8 comments

  1. Loved the war analogy. Was somewhat confused though as to how you draw the connection between income redistribution and GHG emissions.

    I mean I certainly agree with that, and I have my reasons, but I wonder if you could make yours more explicit.

  2. Well that just says that people with more money emit more GHG. #duh. Redistributing wealth would just redistribute the GHG pie. Unless…what?

  3. “The key is that governments should no longer be judged on the basis of the GDP record under their watch”

    This seems to be a very important point. It is time for all progressives to stop blathering on as if GDP growth were a good thing (BC NDPers included). Much of what makes up GDP is clearly uneconomic activity, such as fracking gas and tar sands extraction.

  4. It’s not just about redistributing income from rich to poor (although that alone would reduce emissions, as the wealthy spend more on things like travel with higher GHGs). It’s about transferring income from consumption of luxury items to needed social goods and infrastructure (such as child care and housing). That would lower our emissions. Also, if people had confidence that their core needs like child care, post-secondary education and pensions were provided collectively, they might be more willing to step off the treadmill of over-work and economic activity with little social value (or indeed harmful environmental impacts).

    This post was drawn from a longer piece I presented to the Institute for New Economic Thinking, which answers some of “Fork’s” questions. It can be found here:
    http://www.policyalternatives.ca/multimedia/seth-klein-speech-INET-2012

  5. As Seth notes “The key is that governments should no longer be judged on the basis of the GDP record under their watch” — Shouldn’t this also apply to unions? Within the labour movement we often judge our leaders on the basis of how large a percentage they are able to negotiate — when perhaps we should put more emphasis on reducing income inequality within the workplace, negotiating social benefits or job security.

  6. While it is an admirable goal and makes a lot of common sense (the war analogy is apt here) and it would be very nice if it could all happen that way, I doubt very much that it will. If people started to judge governments on how well they met social justice criteria instead of GDP/or corporations by the increase in their share price, it would mean a mind shift had succeeded and capitalists had lost the media/culture fight and when that happens capitalism dies and if that happens then there isn’t the impetus for continually increasing growth. But getting from here, today, to there where social justice is our criterion is and always has been the big how? We know capitalists won’t do it, allow income to be re-distributed, willingly, so either capitalism has to disappear or it has to be so weakened that they can no longer resist the change. And capitalists don’t give a darn whether or not we are on a climate cliff edge so they won’t be motivated by that at all, or at least not until it is way too late. So back to the big how?

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