We need growth because otherwise our economies will collapse, and other myths

Time to dismantle the growth narrative. In this article series, lead author of our degrowth book Living Well on a Finite Planet: Building a Caring World Beyond Growth Winne van Woerden will rebut arguments to keep defending growth one at a time.

In part one she explained what growth is and what it isn’t, and argued that we should stop conflating growth with wellbeing. In part two she argued why green growth is a dangerous illusion that is hampering efforts towards bringing economies back into balance with the living world. In this part, she will turn towards a myth that is causing many people on the political left to keep defending growth: “We need growth because otherwise our economies collapse, unemployment rises and we all are worse off.”

There may be quite some people who would agree that having economies that grow exponentially is incompatible with our planet’s ecology. But they may still keep defending growth for other reasons. A common argument to do so is that within our current economy, negative or low rates of economic growth will lead to adverse socioeconomic impacts caused by large-scale unemployment and inflation. Rather than improving human wellbeing, a degrowth economy would be only worse for all of us.

The crux lies exactly there, ‘within our current economy’.

In a capitalist economy, the strategy for providing social security and financial stability is: more growth. If such an economy becomes unable to continue its ever rising accumulation of wealth – for example during an abrupt halt in the global economy due to a pandemic – it will indeed lead to unemployment and mass impoverishment. Degrowth is often conflated with such a recession.

But degrowth is not about shrinking a growth-addicted economy, quite the opposite.

We can stop growing ánd meet our needs

Degrowth is about designing an economy that doesn’t need growth in the first place. Rather than being organised around capital accumulation, a degrowth economy is organised around meeting human needs in the absence of growth and thus in the absence of ever rising environmental pressures. So how do we do this? How can we live well within planetary limits?

To answer this question, we need to redefine social security. We know that rich countries can still meet human needs at a high standard with significantly less resources and energy than they presently use (other sources can be found here and here and here). To ensure that a degrowth transition happens in a just matter, we need thorough policies. We will briefly describe three.

Justice as the antidote to growth

In our Degrowth book, we write that “every capitalist system needs growth to accumulate more capital and produces inequality somewhere during its accumulation process”. Since economic wealth is intrinsically tied to the extraction of energy and material resources, degrowth’s aim to diminish the latter will lead to a reduction in the former.

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A just degrowth transition requires that economic wealth is captured for public use rather than for elite consumption and capital accumulation. Currently, growth is often used by political leaders as an excuse to not redistribute (‘if we will grow the pie of the economy as a whole, more will “trickle down” to poorer people’). In other words, growth has become a substitute for equality. But if growth is a substitute for equality, then by the same logic, equality can be a substitute for growth. An economy without growth as its central goal, will need to have justice at its core instead.

This is why a crucial degrowth policy is a (more) progressive distribution of existing wealth and income in our economy. By sharing what we already have more fairly, we can improve human welfare and achieve social objectives without needing to plunder the Earth for more.

From redistribution to predistribution

We can introduce a high marginal tax rate on top income (for example similar to an 80% average tax rate in the US from 1943 to 1983), which would also include income from capital in the form of dividends or capital gains. We could also introduce a maximum wage policy (meaning that income over a certain threshold faces a 100% rate of tax). The maximum wage could be set in proportion to a minimum wage, for example at no more than 5 times the minimum legal wage. We can introduce a wealth tax to cut the purchasing power of the rich, as Thomas Piketty has proposed in Capital in the 21th Century, and a financial transaction tax.

Besides redistributive policy measures, we can introduce fairer policies that focus on the level of wealth creation to begin with, also known as ‘predistributive measures’. Think of democratising economic provisioning and encouraging cooperative ownership structures where economic value is collectively stewarded by the people who create it, instead of being siphoned off to shareholders. Or we can go further by preventing the accumulation of wealth from properties, abolishing private property and eliminating economics rents entirely.

Less SUV’s, more care

In a degrowth economy, we are scaling down forms of economic activity that are less relevant to human needs but highly relevant to GDP (remember the first blog where I emphasised that high levels of GDP shouldn’t be confused with societal wellbeing). Think of SUVs, fast food and fashion, private jets, marketing and advertising, planned obsolescence and exorbitant military investment. As we scale down socially less necessary parts of commodity production, the amount of paid labour that is required also decreases. After all, we are producing less, so there will be fewer jobs left in things like marketing, product development, administration and management.

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In The Right to be Lazy, Paul Lafargue observed that the existence of workers in need of employment for their survival, was the main reason that capitalism reigned supreme. In fact, it is only as a result of the exploitation of the labour force that any growthist system can survive. In a post-capitalist economy, we will have to reverse this dynamic. In a socially just and equitable degrowth transition, we need to break the cycle between livelihood security and income generated through employment within an extractive economy.

Policies for a caring economy

Firstly, we can implement work time reduction policies to distribute paid labour more fairly. Meanwhile, working hours can be reduced without affecting salaries simply by shrinking the profit margin of companies and capital holders. Secondly, a public job guarantee could ensure that labour is mobilised around key provisioning sectors like healthcare, education and energy and ecosystem restoration. The goal should be to ensure that all people who want to can participate in the most important collective projects of our generation, doing dignified, socially necessary work. In essence, employment becomes a public good instead of a requirement for a growthist extractive economy to maintain its stability. Lastly, we can establish a universal basic care income to guarantee everyone who can’t devote their time towards paid labour a right to livelihood, and to strengthen the bargaining power of workers.

It goes without saying that in a degrowth economy, the concept of ‘work’ will be significantly broadened. ‘Work’ will not only include what is generally considered as paid labour, but include everything that is needed to reproduce all that is necessary for a well-functioning economy, in line with feminist economic thinking. A degrowth economy will thus be centred around what is known as the ‘care economy’: the domains of the household and the commons where humans are taking care of themselves, their community and the natural world around them. Through sharing socially necessary – and paid! – work more equitably and granting everyone a guaranteed level of income, people can satisfy their needs without requiring a continuous level of income generated by waged labour and thus without requiring more growth. Relieved from the grip of growthism, people would be granted more time to be truly careful, in the broadest sense of the word.

A call for radical abundance

Ensuring that people can live well within limits goes beyond ensuring financial security in the absence of additional growth alone: people will also need to be able to access the resources they need to live a good life. For this, decommodifying essential provisioning services and expanding the commons is key. This means generous, high-quality public healthcare and education, rent controls, affordable public housing and transportation, and access to public parks and recreational facilities, much like a vision of Universal Basic Services proposed by UCL’s Institute for Global Prosperity. Furthermore, we can place essential sectors, like that of energy, food, housing and care in the domain of the commons: the sector where people self-organise around basic services and resources in a cooperative way: think of energy co-ops, housing collectives, childcare circles and community gardens. Platform commons could allow people to share their material resources without having to pay ridiculous unnecessary fees to private platforms like AirBnB or Uber.

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As Jason Hickel has pointed out in Degrowth: A call for radical abundance, “capitalism transforms even the most spectacular productivity gains not into abundance and human freedom, but into scarcity”. Scarcity is the engine of capitalist expansion and it creates recruits to the ideology of growth. If capitalism calls for scarcity in order to generate more growth, degrowth calls for the opposite. By de-commodifying essential goods and expanding the commons, degrowth is about reversing artificial scarcities to render growth unnecessary. As such, degrowth is a call for radical abundance.

Building alliances

It is important to emphasise that the policies discussed will not only improve the lives of the vast majority of people, but are also ecologically coherent. We know that shifting towards an economy focused on justice and human provisioning would also make it possible to achieve rapid decarbonization consistent with the Paris Agreement goals, without relying so heavily on negative emissions technologies and productivity improvements.

However, foregrounding the fact that the ecological imperative to get rid of unnecessary forms or production does not stand in contrast to creating decent livelihoods for all, will be crucial to build the political alliances needed between environmental and labour movements. The call for an ecologically sane and genuinely just world will have to be built through such bottom-up alliance building , or it will not be built at all.