‘We need growth to eradicate extreme poverty.’ ‘We need growth to fund the welfare state’. ‘We can decouple growth from ecological impact’. Even though we are in the midst of ecological breakdown and social crises, growth advocates keep defending growth with ever more arguments about why we need it.
Time to dismantle the narrative. In the upcoming weeks, lead author of our degrowth book Living Well on a Finite Planet Winne van Woerden will respond to pro-growth arguments one at a time. But first, an introduction. What is economic growth, what is degrowth and how do they relate to wellbeing?
In 2021 events of ecological peril have become so ubiquitous that they no longer disturb but rather paralyse. Wildfires with an unprecedented devastating capacity; storms being ever more intense than the one preceding it; floods forcing whole communities out of their homes; droughts creating unlivable circumstances for more and more families; summers with unbearable heat periods becoming the new normal. As the UN Secretary-General describes the conclusions of the IPCC report launched in the summer of 2021, we are in a “code red for humanity”.
And still, our fossil fuelled-economic machinery continues to spin, burn and grow. Even though investments in renewables are rising, so are greenhouse gas emissions. Research from Climate Action Tracker, one of the world’s top climate analysis coalitions, shows that COP26 promises a global temperature rise of 2,4 degrees celsius. Perhaps it is, amongst others, the sense of urgency spurred by these doom scenarios that is driving a growing interest in what is known as the concept of degrowth.
Over the course of 2021, the degrowth proposal and the policies linked to it have been picked up by more and more mainstream media platforms (see figure below).
Likewise, the pile of degrowth literature is becoming more and more diverse, as numerous perspectives are being added to the conversation. Yet, the topic of degrowth is nowhere near circulating in policy debates, even though the position that the political focus on growth is misleading and problematic is spreading. Most politicians are talking about post-pandemic growth recovery or ‘Global Reboot’ when discussing human welfare issues, and about ‘net zero targets’ or ‘decoupling emissions’ when quarrelling about the wrecked state of the planet.
There is a common thread in the arguments that different types of growth defenders typically use to keep defending growth. In this blog series, we will discuss some of the main ones, and we will show how to debunk them from a degrowth perspective.
What is degrowth?
First things first: a short recap on the paradigm we are dealing with here.
Aiming to tackle the destruction of our natural world, enhance human wellbeing and improve global justice, degrowth defenders point to the need to confront the exponential expansion of our production and consumption levels driven by capitalism’s growth-imperative.
Importantly, the degrowth proposal is specifically about downscaling energy and resource use in wealthy nations in the Global North, who are responsible for the vast share of global greenhouse gas emissions and where more GDP growth has ceased to translate into any improvements in human or planetary wellbeing (more on this later).
Very often, the term ‘growth’ is used to refer to an increase in economic wealth and is linked to societal wellbeing. By now it is well known that this is far from the truth. In reality, economic growth is a very narrow concept only describing an increase in Gross Domestic Product, or GDP – an indicator that has been coined only very recently in the 1930s during the interwar period. Since GDP captures the aggregated value of commodity production, what we measure as economic growth (and what we are targeting through our growth-focused welfare policies) is the expansion of commodified goods and services sold within the domain of the market.
GDP interprets every expense as positive and does not distinguish welfare-enhancing activity from welfare-reducing activity. GDP also does not account for the distribution of income among individuals. Lastly, GDP fails to include all those other activities that are essential for human health and wellbeing, like the care we receive from and give to the people surrounding us, the connection we feel with our neighbourhood, the wealth created through commons and the well-functioning of ecosystems. Numerous studies in welfare and feminist economics, social history, and ecological economics have shown that the focus on GDP is “mismeasuring our lives”. Yet, regardless of this and to the frustration of many, today GDP is still the most important indicator used to steer national and global governance processes aimed to improve human welfare.
Growth or inequality?
What is less known is the fact that there is no direct relationship between human wellbeing and GDP growth. While tax revenues may increase with growth, what matters more are progressive governments that invest in a robust public welfare system. Social wellbeing is not so much determined by the growth of an economy or its tax returns, but rather by how the wealth is distributed within it. As the epidemiologists Kate Pickett and Richard Wilkinson show it in their seminal book The Spirit Level: Why More Equal Societies Almost Always Do Better, it’s not national wealth, but economic equality which is most related to national wellbeing. Greater economic equality correlates far more closely with high rates of longevity, literacy, security, political participation and happiness. In the words of Wilkinson and Pickett: ‘inequality damages the social fabric of the whole society’.
The link between GDP and national wellbeing seems to play out on a saturation curve. In the beginning, a rise in GDP is certainly necessary to fulfil people’s basic needs, but beyond a certain point – a point that richer nations have long since surpassed – GDP growth ceases to translate into any improvements in social wellbeing. The ecological economist Herman Daly calls the result ‘uneconomic’ growth: when more growth begins to create more ‘illth’ than wealth.
This is well illustrated by a 2013 study comparing the GDP per capita and a metric for life satisfaction called the Gross Progress Indicator (or GPI) per capita of 17 countries comprising just over half the global population. As the figure below shows, the measures were highly correlated from 1950 until about 1978, when they moved apart as environmental and social costs began to outweigh the benefits of increased GDP.
Any capitalist system needs growth to accumulate more capital and thus produces inequality somewhere during its accumulation process. This is a fact which makes policies that are steered by GDP growth while intended to enhance societal wellbeing quite paradoxical. Indefinite growth year-on-year is not the panacea for constant improvement in living standards as many believe it to be; it is, in fact, an effective way to consistently increase the level of inequality and the socio-economic ills with which it is so closely associated.
In the following three blog articles, we will discuss some key growth defending arguments, which we have clustered under three themes:
- ‘We can decouple growth from ecological impact’
- ‘We need growth because otherwise our economies will collapse’
- ‘We need growth to tackle global inequality and extreme poverty’