Limits to growth: policies to steer the economy away from disaster

21 04 2016

Samuel Alexander, University of Melbourne

If the rich nations in the world keep growing their economies by 2% each year and by 2050 the poorest nations catch up, the global economy of more than 9 billion people will be around 15 times larger than it is now, in terms of gross domestic product (GDP). If the global economy then grows by 3% to the end of the century, it will be 60 times larger than now.

The existing economy is already environmentally unsustainable. It is utterly implausible to think we can “decouple” economic growth from environmental impact so significantly, especially since recent decades of extraordinary technological advancement have only increased our impacts on the planet, not reduced them.

Moreover, if you asked politicians whether they’d rather have 4% growth than 3%, they’d all say yes. This makes the growth trajectory outlined above all the more absurd.

Others have shown why limitless growth is a recipe for disaster. I’ve argued that living in a degrowth economy would actually increase well-being, both socially and environmentally. But what would it take to get there?

In a new paper published by the Melbourne Sustainable Society Institute, I look at government policies that could facilitate a planned transition beyond growth – and I reflect on the huge obstacles lying in the way.

Measuring progress

First, we need to know what we’re aiming for.

It is now widely recognised that GDP – the monetary value of all goods and services produced in an economy – is a deeply flawed measure of progress.

GDP can be growing while our environment is being degraded, inequality is worsening, and social well-being is stagnant or falling. Better indicators of progress include the Genuine Progress Indicator (GPI), which accounts for a wide range of social, economic and environmental factors.

Cap resources and energy

Environmental impact is driven by demand for resources and energy. It is now clear that the planet cannot possibly support current or bigger populations if developing nations used the same amount of resources and energy as developed nations.

Demand can be reduced through efficiency gains (doing more with less), but these gains tend to be reinvested in more growth and consumption, rather than reducing impacts.

A post-growth economy would therefore need diminishing “resource caps” to achieve sustainability. These would aim to limit a nation’s consumption to a “fair share” of available resources. This in turn would stimulate efficiency, technological innovation and recycling, thereby minimising waste.

This means that a post-growth economy will need to produce and consume in far less resource-intensive ways, which will almost certainly mean reduced GDP. There will of course be scope to progress in other ways, such as increased leisure time and community engagement.

Work less, live more

Growth in GDP is often defended on the grounds that it is required to keep unemployment at manageable levels. So jobs will have to maintained in other ways.

Even though GDP has been growing quite consistently in recent decades, many Westerners, including Australians, still seem to be locked into a culture of overwork.

By reducing the average working week to 28 hours, a post-growth economy would share the available work among the working population. This would minimise or eliminate unemployment even in a non-growing or contracting economy.

Lower income would mean we would have less stuff, reducing environmental impact, but we would receive more freedom in exchange. Planned degrowth is therefore very different to unplanned recession.

Redirect public spending

Governments are the most significant player in any economy and have the most spending power. Taking limits to growth seriously will require a fundamental rethink of how public funds are invested and spent.

Among other things, this would include a swift divestment from the fossil fuel economy and reinvestment in renewable energy systems. But just as important is investing in efficiency and reducing energy demand through behaviour change. Obviously, it will be much easier to transition to 100% renewable energy if energy demand is a fraction of what it is today.

We could fund this transition by redirecting funds from military spending (climate change is, after all, a security threat), cutting fossil fuel subsidies and putting an adequate price on carbon.

Reform banking and finance

Banking and finance systems essentially have a “growth imperative” built into their structures. Money is loaned into existence by private banks as interest-bearing debt. Paying back the debt plus the interest requires an expansion of the monetary supply.

There is so much public and private debt today that the only way it could be paid back is via decades of continued growth.

So we need deep reform of banking and finance systems. We’d also need to cancel debt in some circumstances, especially in developing nations that are being suffocated by interest payments to rich world lenders.

The population question

Then there’s population. Many people assume that population growth will slow when the developing world gets rich, but to globalise affluence would be environmentally catastrophic. It is absolutely imperative therefore that nations around the world unite to confront the population challenge directly.

Population policies will inevitably be controversial but the world needs bold and equitable leadership on this issue, because current trends suggest we are heading for 11 billion by the end of this century.

Anyone who casually dismisses the idea that there is a limit to how many people Earth can support should be given a Petri dish with a swab of bacteria. Watch as the colony grows until it consumes all of the available nutrients or is poisoned by its own waste.

The first thing needed is a global fund that focuses on providing the education, empowerment and contraception required to minimise the estimated 87 million unintended pregnancies worldwide every year.

Eliminating poverty

The conventional path to poverty alleviation is the strategy of GDP growth, on the assumption that “a rising tide will lift all boats”. But, as I’ve argued, a rising tide will sink all boats.

Poverty alleviation must be achieved more directly, via redistribution of wealth and power, both nationally and internationally. In other words (and to change the metaphor), a post-growth economy would eliminate poverty not by baking an ever-larger pie (which isn’t working) but by sharing it differently.

The richest 62 people on the planet own more than the poorest half of humanity. Dwell on that for a moment, and then dare to tell me that redistribution is not an imperative of justice.

So what’s stopping us?

Despite these post-growth policy proposals seeming coherent, they face at least four huge obstacles – which may be insurmountable.

First, the paradigm of growth is deeply embedded in national governments, especially in the developed world. At the cultural level, the expectation of ever-increasing affluence is as strong as ever. I am not so deluded as to think otherwise.

Second, these policies would directly undermine the economic interests of the most powerful corporations and institutions in society, so fierce resistance should be expected.

Third, and perhaps most challenging, is that in a globalised world these policies would likely trigger either capital flight or economic collapse, or both. For example, how would the stock markets react to this policy agenda?

Finally, there is also a geopolitical risk in being first to adopt these policies. Reduced military spending, for instance, would reduce a nation’s relative power.

So if these “top-down” policies are unlikely to work, it would seem to follow that if a post-growth economy is to emerge, it may have to be driven into existence from below, with communities coming together to build the new economy at the grassroots level.

And if we face a future where the growth economy grows itself to death, which seems to be the most likely scenario, then building up local resilience and self-sufficiency now will prove to be time and energy well spent.

In the end, it is likely that only when a deep crisis arrives will an ethics of sufficiency come to inform our economic thinking and practice more broadly.

The Conversation

Samuel Alexander, Research fellow, Melbourne Sustainable Society Institute, University of Melbourne

This article was originally published on The Conversation. Read the original article.

Advertisements

Actions

Information

9 responses

21 04 2016
Nathan Surendran

‘Limits to Growth’ by the UK’s parliament: http://bit.ly/1qEovEo

“A report commissioned on behalf of a cross-party group of British MPs authored by a former UK government advisor, the first of its kind, says that industrial civilisation is currently on track to experience “an eventual collapse of production and living standards” in the next few decades if business-as-usual continues.

The report (http://bit.ly/1qEpt3k) published by the new All-Party Parliamentary Group (APPG) on Limits to Growth, which launched in the House of Commons on Tuesday evening, reviews the scientific merits of a controversial 1972 model by a team of MIT scientists, which forecasted a possible collapse of civilisation due to resource depletion.

The report launch at the House of Commons was addressed by Anders Wijkman, co-chair of the Club of Rome, which originally commissioned the MIT study.

At the time, the MIT team’s findings had been widely criticised in the media for being alarmist. To this day, it is often believed that the ‘limits to growth’ forecasts were dramatically wrong.

But the new report by the APPG on Limits to Growth, whose members consist of Conservative, Labour, Green and Scottish National Party members of parliament, reviews the scientific literature and finds that the original model remains surprisingly robust.

Authored by Professor Tim Jackson of the University of Surrey, who was Economics Commissioner on the UK government’s Sustainable Development Commission, and former Carbon Brief policy analyst Robin Webster, the report concludes that:

“There is unsettling evidence that society is tracking the ‘standard run’ of the original study?—?which leads ultimately to collapse. Detailed and recent analyses suggest that production peaks for some key resources may only be decades away.”

The 1972 team used their system dynamics model of the consumption of key planetary resources to explore a range of different scenarios.

As Professor Jackson and Webster explain in the new APPG report:
“In the standard run scenario, natural resources (for example oil, iron and chromium) become harder and harder to obtain. The diversion of more and more capital to extracting them leaves less for investment in industry, leading to industrial decline starting in about 2015. Around 2030, the world population peaks and begins to decrease as the death rate is driven upwards by lack of food and health services.”

Not all the model’s scenarios result in this outcome, but the majority of them “show industrial output declining in the 2020s and population declining in the 2030s. The researchers didn’t put precise dates on their projections. In fact, they deliberately left the timeline somewhat vague.””

21 04 2016
Rapideffect

Modern civilization is the problem and no amount of policies are going to save it. Peak Civilization is here and the end is coming very soon.

The global economy is on the verge of collapse, everything that has been done since the GFC has made the global economic problems worse. Peak debt, peak demand, peak oil/energy, peak iphone!

Civilization is all peaked out…

The Great Correction is almost here

21 04 2016
Brendon Crook

“Modern civilization is the problem”.

I agree with that…………………..This culture only survives by sucking the life out of other creatures & a vibrant, living planet.

I long for the day to watch the zombie i-sheep population squirm when they can’t buy a new i-phone or watch Dancing With the Idiots on TV.

Collapse is a bitter notion for the i-sheep but the start of the morning after for the rest of creation………………………..

24 04 2016
Mark

i-sheep, have you got copywrite on it?
You see them at the shops every time there is a public holiday and everything is shut for a day or two, getting to be a rarity now but. Overloaded trolleys like the world is coming to an end.
waiting, waiting……………………

21 04 2016
Idiocracy

The sub-heading should really read…

Samuel Alexander, “formerly of” University of Melbourne

I mean who does this guy think he is! As a simple example, even our “Public Servants” in chief AND the Interwebs agree what’s important;

Google –
“Jobs and Growth” About 167,000,000 results
vs
“Limits to Growth” About 8,260,000 results
“Post Growth” About 17,000,000 results
“Degrowth” About 389,000 results
and so on…

Doesn’t matter how you cut the numbers, nor how much you kick and scream online/in the streets, Civilisation wins… 😦 until it cant… 8-P

“The Great Correction is almost here” – Rapideffect, hurry it up would ya! 🙂

22 04 2016
batalos

“If the global economy then grows by 3% to the end of the century, it will be 60 times larger than now.”

15 times larger actually… 70\3=23 thats double time… 23*4 = 92 thats 4 doubles till the end of the century… 4 doubles means 16

24 04 2016
SA

15 times bigger by 2050, then two doublings = 60 times by 2100.

23 04 2016
Mike

Interesting how we get a large paragraph about overpopulation, but it’s then swept under the carpet with no solution offered.

24 04 2016
Brendon Crook

“i-sheep, have you got copywrite on it?”

I knocked the term off from a commentator on Our Finite World where I lurk & occasionally comment.

I like the term as it reflects an extension of the term sheeple & humanities further disconnection from reality & ever deeper descent into the abyss of insanity……………………………………
Like you said Mark, you see them with their overloaded trolleys, vacant looks in their eyes & screaming offspring in tow………………
Profoundly depressing……………………………..

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s