2014-06-13
Chris Mardon
Since the global financial crisis in 2008, there has been active discussion of the concept of de-growth, but some divisions have emerged between different groups, especially between the Anglo countries and the EU. In the Anglo countries, there has been a heavy emphasis on bottom-up movements such as Transition Towns and Eco-Villages.
Meanwhile in Europe, economists such as Serge Latouche in France make a more sophisticated attempt to describe social transformations that could achieve the same ends. He points out that most environmentalist discourses make no critique of the growth society and confuse the issue with vague talk of sustainable development. He asserts that we have to contract the economy if we are to emerge from the torpor that prevents us from taking action. Latouche suggests that the de-growth project inevitably means giving politics new foundations. Outlining the contours of what a non-growth society might look like is an essential preliminary to any program for political actions that respects the ecological demands of the moment. The de-growth project is therefore a utopia, or a source of hope and dreams. It is not, however, a political project in the electoral sense of the term.
The upheavals required to build an autonomous de-growth society can, in contrast, be seen as the systematic and ambitious articulation of eight interdependent changes that reinforce one another. For details of these eight goals, you can consult his book Farewell to Growth, but you can see that localisation is only one aspect of his approach.
Why is the de-growth movement important?
Greens often refer to the need for a transition to a sustainable, low-carbon economy, but what does that mean in the context of a growing world population and the steady growth of greenhouse gas emissions?
Today humanity would need the equivalent of 1.5 planets to sustainably provide the resources we use and to absorb our waste. Moderate UN scenarios suggest that if current population and consumption trends continue, by the 2030s we will need the equivalent of two Earths to support us, but we only have one. Turning resources into waste faster than waste can be turned back into resources puts us in global ecological overshoot, depleting the very resources on which human life and biodiversity depend.
The common response to the general ''limits'' claim is that technical advances can solve the problems enabling us to go on living with ever increasing ''living standards''. Green agencies can be among the front ranks of those claiming technical solutions already exist and attributing the continuation of the problems to the failure of politicians to implement them.
Perhaps the best known ''technical fix'' optimist, Amory Lovins, claims that we could at least double global output while halving the resource and environmental impacts, i.e. we could achieve a ''Factor Four'' reduction. Let us assume that present global resource and ecological impacts must be halved. If we in rich countries average 3% growth and a world population of 10 billion rose to the living standards we would then have by 2050, total world output would be about 20 times as great as it is today. It is not remotely plausible that technical advances will make it possible to multiply total world economic output by 20 while halving impacts, i.e. enable a Factor 40 reduction.
In terms of the ecological footprint, we are already well into overshoot, and any increase in resource use is out of the question if we want to achieve sustainability. Instead, Ted Trainer of the UNSW proposes a switch to what he calls a Simpler Way. The distinctive features of The Simpler Way approach are firstly its focus on the micro-economy of town, suburb and neighbourhood, where it is claimed most needs could be met, and will have to be met. There is also the Tiny House movement whereby a very small house is built on a trailer so that it can be towed to any vacant land. It can be designed to use solar panels, and some use composting toilets, so their utility requirements are minimal.
As I suggested in my article published in the March 2013 edition of Green magazine, the rising cost of extracting marginal oil reserves will take an ever-increasing proportion of global GDP. The economic implications of that are enormous because fuel imports may decline just as we become more dependent on them, and the investment capital needed to finance the transition to a low carbon economy may become hard to get unless we radically transform the Australian economy to reduce private debt and channel money into essential investments.
As energy gets scarcer, its cost in terms of the length of time we have to work to buy a kilowatt-hour, or its equivalent, is going to increase. We must therefore ensure that, in our communities and elsewhere, the energy-intensive projects required to provide the essentials of life in an energy-scarce world are carried out now. If they are not, their real cost will go up and they may never be done.
Growth and the class war
For the past 30 years or so, neoliberalism has been a triumph, delivering the greatest wealth transfer in history…mostly to the 1% and the people who benefit from serving them. In a sense, the current discussion about de-growth is mostly not in terms of class warfare. There was a class war and the 1% won it. However, the global financial system does have an Achilles heel. It is inherently unstable, and if the international banks impose onerous conditions of austerity on large numbers of people, there will be a reaction. People calling for de-growth and a transition to a steady-state economy may seem like dreamers, but they are trying to imagine alternative economic systems for a future of resource scarcity.
After WWII, we enjoyed a short period of relative equality with progressive tax systems and smaller discrepancies in wealth between the rich and the poor, but structural changes in the global economy during the 1970s led to rising debt and a widening gap between rich and poor. It also led to huge increases in salaries and perks for CEOs and senior executives, such that the share of GDP for ordinary workers gradually declined.
The gap is now so wide that CEOs can get incomes hundreds of times more than the people who work for them, and even if they fail to increase company profits, they can receive a generous golden handshake and move on to another company. Even when they are grossly dishonest, very few ever go to jail. The corporate watchdog (ASIC) seems to be asleep in its kennel, and in any case, it does not have a budget large enough to take all of the corporate crooks to court.
The problem is that the return on capital has outstripped the rate of economic growth, so the owners of capital are accumulating ever-increasing wealth at the expense of those who actually work for a living. Another French economist, Thomas Piketty, claims that we are returning to a situation like La Belle Époque in France and it could lead to revolution unless something is done about it. Some economists have warned that if such disparities of wealth are allowed to continue, economic growth could grind to a halt.
What's the solution?
With the rise of environmentalism in the 1970s, three ideas stand out: Daly's Steady-State Economy, Wakernagel's Ecological Footprint and Meadows' The Limits to Growth. In a sense, they are all related, but they represent different approaches to the problem of ecological sustainability and how to achieve it.
Herman Daly is one of the founders of Ecological Economics. He is a former Senior Economist of the World Bank. His idea of a steady-state economy was rejected in the 1980s and 1990s by advocates of “Green Growth” such as Paul Hawken, Lester Brown and Amory Lovins. They argued that green technology, green taxes, green labelling, eco-conscious shopping and the like could “align” profit-seeking with environmental goals, even “invert many fundamentals” of business practice such that “restoring the environment and making money become one and the same process.” This turn to the market was an expression of broader trends from the 1980s in which activists retreated from collective action to change society in favour of individualist approaches to trying to save the world by embracing market forces – “shopping our way to sustainability.” In the market mania of the Reagan-Clinton era, Herman Daly's plea for imposing “limits to growth” came to seem dated.
Critics of steady-state capitalism believe that a capitalist system collapses without ongoing growth. Others believe that large profits can still be made in a steady-state economy. The emphasis on qualitative improvement in a steady-state economy would replace the current obsession with quantitative growth. Since this still does not guarantee full employment, central governments need to become an employer-of-last-resort. There have been calls for a so-called Job Guarantee as a means of institutionalising a full employment policy.
Ecological economists are calling for urgent institutional reform at the international level, in particular, reform of the Bretton Woods institutions, such as the World Bank, the International Monetary Fund, and the World Trade Organization. Importantly, international institutional reform is an integral part of Daly's steady-state agenda.
It has long been realised that the growth of GDP is a very inadequate measure of economic growth because it is only a gross measure, and it ignores the social and environmental costs of economic growth. Through metrics such as the Index of Sustainable Economic Welfare (ISEW) and the Genuine Progress Indicator (GPI), it has been shown that the net per capita welfare in countries such as the USA, UK and Australia has been going backwards for decades, even though GDP continues to increase. In countries such as Australia in particular, where population growth has disguised the fall in net per capita welfare, the lauding of economic growth as an indicator of progress has been especially deceptive
It should be clear from the above that if the world is already in overshoot, then a substantial contraction of the global economy will be needed to even approach sustainability. Moreover, rebuilding our existing infrastructure to make it sustainable in future will require a lot of energy and resources in the short term, and it could take decades to achieve, so we are unlikely to become sustainable any time soon. Political and business elites in the rich countries are trying to impose austerity on ordinary people, while allowing economic growth to continue. However, that is unlikely to reduce energy and resource use, so emissions will continue to grow, the environment will deteriorate and it could lead to social unrest. The de-growth movement aims to bring about contraction without the social and environmental problems that would otherwise arise. To maintain employment, there would need to be a major shift in the structure of the economy, with a reduction of private debt, money channelled into essential investments, and backed by a Job Guarantee to institutionalise full employment.
I firmly believe that only by vigorous argument and debate can the Greens develop a convincing political narrative which describes our aspirations for a sustainable future. Vague statements about a transition to a sustainable low-carbon economy are not convincing unless you can provide such a narrative which sets out what we really want to do and how we might go about doing it. I hope that we can now have this debate and decide which path we want to follow. Unless we have this debate and put forward our arguments, somebody else will make the decision for us, but we might not like the outcome.
Creative Commons license for picture from: Alice's Adventures in Wonderland Lewis Carroll Illustrated by Sir John Tenniel