The Growth of Degrowth Economics
Degrowth theory, whose supporters push policies to reduce economic activity and end our obsession with GDP, is gaining momentum in Europe and Canada. Will the movement reach U.S. soil?
What if we promoted policies to shrink our economy, rather than grow it? What if government officials called for a recession, perhaps a depression, as the answer to humanity’s most intractable challenges?
As heretical as they sound, such questions frame very real policy proposals debated by a growing legion of economists, activists, and government officials representing the so-called Degrowth movement.
Degrowthists argue that only a contraction of the world’s developed economies can help reduce dependence on fossil fuel and other environmental resources, slow climate change, and shrink income disparities in developed nations while building wealth in emerging ones. “Constant and instant growth is a failed paradigm,” suggests Nicolas Kosoy, an ecological economist at McGill University and one of the organizers of the International Conference on Degrowth in the Americas, a weeklong event next May in Montreal.
The conference is the first of its kind in North America but follows similar ones in Paris in 2008 and Barcelona in 2010. Organizers of those events continue to promote their ideas in local forums around Europe and in the online Degrowth Magazine. In June, followers from 68 cities in 20 countries gathered for the worldwide Picnic 4 Degrowth.
Degrowthists distinguish their ideas from sustainable development and steady state economic theory — both of which strive for equilibrium between consumption and the Earth’s carrying capacity but which at times suggest growth may be desirable. Degrowth theory is more radical: a downscaling of production and consumption as a means of preserving resources while re-engineering a more equitable society.
To be sure, mainstream economists reject degrowth theory as a kind of macroeconomic science fiction. “Zero growth or degrowth would produce negative outcomes that you, me, and everyone else in this country — especially the poor — would feel in unimaginable ways,” says Romain Wacziarg, a growth economist at the UCLA Anderson School of Management. “It’s really a fantasy.”
Wacziarg says calls to reduce the negative effects of economic activity seem, paradoxically, to be loudest just before or during a recession — a time when few people take such proposals seriously. “Can you really imagine somebody in Congress right now standing up to say, ‘Hey, let’s slow down our economy!’ He’d be laughed out of the room.”
Growth commonly refers to an increase in gross domestic product, or GDP, the value of a country’s goods and services in a given period. Because overall GDP can correlate with higher quality of life, officials in the U.S. and around the world often target GDP growth as an overriding policy objective in itself. But the correlation is strongest when countries are poor. After a point, studies show, the size of the economy has little bearing on living standards.
James Gustave Speth, a professor at Vermont Law School and author of The Bridge at the Edge of the World: Capitalism, the Environment, and Crossing from Crisis to Sustainability, notes that the U.S. has the largest economy in the world, yet among wealthy nations it ranks last or near the bottom in 30 indicators of well-being, such as childhood poverty, income disparity, obesity, infant mortality, school performance, and prison population.
The U.S. recession, Speth points out, officially ended in late 2009 — recession is defined as two consecutive quarters of GDP decline — yet rates of unemployment and poverty remain high, wage income is stagnant, and record numbers of Americans lack health insurance. (Meanwhile, the Dow Jones Industrial Average is up 20 percent).
“Growth may serve the interests of the corporate world,” Speth says, “but it does not address the deeper problems that really matter.”
In Europe, such sentiments are not limited to Occupy rallies and tribal gatherings of the left-leaning academic cognoscenti. In 2008, France’s President Sarkozy commissioned a widely cited report to suggest alternatives to GDP as the country’s principal policy-shaping economic measurement. A year later, the U.K. government’s Sustainable Development Commission (which shut down in March) released its report “Prosperity Without Growth? Transition to a Sustainable Economy,” which argues for adopting a more widely encompassing definition of “prosperity” and outlines 12 steps for achieving it while kicking the addiction to GDP growth.
On the American side of the Atlantic, the Degrowth movement remains encamped north of the border: the Degrowth in the Americas conference, for example, has no U.S. sponsors or organizers. (Wacziarg considers degrowth too extreme even for Occupy organizers in the U.S., who fear alienating unions, the working class, and other mainstream supporters with such far-left-of-center proposals). One of the keynote speakers in Montreal will be York University economist Peter Victor, whose book Managing Without Growth: Slower by Design, Not Disaster argues, by way of complex computer modeling, how Canada can cut its growth rate to zero and still reduce poverty, unemployment, debt, and achieve positive outcomes of well-being.
Victor calls for a largely voluntary redistribution of work and wealth. For instance, studies show that many people, especially in higher-paying professions, would gladly work fewer hours for less pay. “We could have full employment if we worked less,” he says. Other policy proposals encourage a return to a pre-globalized economy where local merchants and service professionals satisfy local consumer demand.
But such changes, especially in the U.S., would not come easily, Victor argues, insisting that a “top-down, heavy-handed government intervention” is doomed to fail. A lasting transition to a post-growth economy requires grassroots conviction and, perhaps, self-sacrifice, which might prove a tough sell in a society where consumer spending is considered an act of patriotism.
William Rees, a Canadian economist best known for his creation of the ecological footprint analysis of human impact on the Earth’s ecosystems, says Americans will demand substantive changes in economic and social policy when they recognize that the grand promise of growth is a false one. In 1950, he notes, per capita GDP in the U.S. was a fraction of what it is today (about one-fourth in adjusted dollars), yet surveys of happiness and life satisfaction — not to mention other indicators of well-being — have declined steadily.
Growth is not the answer, he says, his voice rising. It’s the problem. “Nothing other than a long and loud public outcry will move the current system from its foundations.”