Some economists offer Earth a rest
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? This 2011article is from Miller-McCune, Dec 15. |
By David Villano
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.
The International Conference on Degrowth in the Americas, a weeklong event next May in Montreal, 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.
They define growth as an increase in gross domestic product, or GDP, the money spent for a country’s goods and services in a given period. Because overall GDP can correlate with higher quality of life, officials in the US 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.
The US 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 US recession 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%.
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.
One of the keynote speakers in Montreal in May 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. Victor argues 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, notes per capita GDP in 1950 in the US 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.
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JJS: Could a growing population of human beings living on a finite planet produce and consume ever greater amounts of goods and services? If people recycle everything -- make new tins cans out of old tin cans -- why not? If people don’t pollute but minimize and utilize byproducts, why not? As for there being too many of us, that issue tends to go away, too, when people reach a comfortable level of material intake and social welfare, as has happened in Europe.
Again, the solution seems not to be full-on frontal assault -- thou shalt not grow! -- but instead a campaign to win economic justice for all. What policies achieve that? Revenue reform. (1) Quit subsidizing the despoilers like bankers and agri-business. (2) Quit taxing the things the reformers above want, such as minimal wages, local businesses, and esthetic, non-leaking buildings. (3) Recover the spending for land and privilege by charging full-value for things like land titles and corporate charters. And (4) Disburse surplus public revenue as a dividend to the citizenry.
Want to stabilize growth or even de-grow? Look at the fourth revenue reform, the Citizens Dividend. Before people get it, they have to earn money, so they produce and trade. That drives up land values, especially in commercial districts. Higher location values -- where land dues are levied -- lead to fatter rent-shares. Enjoying such dividends triggers a reversal. People can work less. That lowers site values. That shrinks the Citizens Dividend. So the cycle starts all over again. Thus this Share-Rent Cycle keeps the economy in balance, year after year, and annuls the growth imperative. So, again a surface goal is achieved by winning deep “geonmic” reform.
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Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .
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