Watermelon Macroeconomics:
On the Feasibility of Degrowth Policy Alternatives
Abstract:This thesis addresses the issues concerning economic growth and its effects on
environmental degradation and society. The current regulatory framework is insufficient to address climate change and has a disproportionate effect on society. Insights into the degrowth narrative show that there is an alternative which can address both issues at the same time. Their utopian alternative might be feasible.
Name: Liesbeth Dieleman
Student number: 10209808
Supervisor: Annette Freyberg-Inan
Second reader: Luc Fransen
CHAPTER 1: INTRODUCTION 4
CHAPTER 2: GROWTH AND DEGROWTH 6
2.1ECONOMIC GROWTH 6
2.1.1 The origins of the economic growth paradigm 6 2.1.2 Modern thinking on economic growth 8 2.1.3 The economic growth paradigm and society 10 2.1.4 Economic growth and the environment 13
2.2DEGROWTH 17
2.2.1 The conceptual origins of degrowth 17
2.2.2 Degrowth: the movement 20
2.2.3 The varieties of degrowth 29
2.2.4 Critiques of degrowth 32
2.3CONCLUSION 34
3 MACROECONOMIC DEGROWTH POLICY OPTIONS 35
3.1 THE IMPORTANCE OF ECONOMIC GROWTH FOR MACROECONOMIC POLICIES 35
3.1.1 Economic growth and monetary policy 36 3.1.2 Economic growth and fiscal policy 39
3.2 DEGROWTH ALTERNATIVES 40
3.2.1 Bank reforms 40
3.2.2 Public and private debt 42
3.2.3 Alternative and regional currencies 43
3.2.4 Taxes and subsidies 46
3.2.5 Investments 47 3.2.6 Social schemes 48 3.2.7 Employment 50 3.2.8 Environmental regulation 50 3.2.9 International considerations 51 3.3CONCLUSION 52
CHAPTER 4. COMPARING WATERMELONS: THE FEASIBILITY OF DEGROWTH STRATEGIES 53
4.1ECONOMIC DEGROWTH STRATEGY 53
4.2ECOLOGICAL DEGROWTH STRATEGY 55
4.3CULTURAL DEGROWTH STRATEGY 57
4.4RADICAL DEGROWTH STRATEGY 58
4.5THE DYNAMIC DEGROWTH STRATEGY 60
CHAPTER 5: CONCLUSION 61
Chapter 1: Introduction
Last March, 2019, Dutch politician Thierry Baudet called the Green New Deal a
watermelon. This was meant to slight other right-wing parties, which spoke in favour of the Green New Deal, for being secret socialists: green on the outside, red on the inside. While environmental action is not necessarily linked to one political ideology, it does affect the poor disproportionately harder the wealthy. The inevitable natural resource scarcity will probably have a negative effect on employment and financial stability. Normally, a government uses macroeconomic policies to stimulate economic growth and thereby stabilize the economy, but it has been argued that economic growth is no longer possible within the earth’s ecological limits.
This calls for macroeconomic policy adjustments which can function without growth. The question is:
Can macroeconomic policy without a focus on growth create a more socially and ecologically sustainable society and is it feasible?
The answer is yes, it can. However, in order create a socially and ecologically sustainable society, certain policy changes need to made. This following chapters will explain why and how.
The concept of an economy without growth is not new. It first gained popularity in the 1970s and resurfaced at the turn of the 21st century in France in the form of the
degrowth movement. The degrowth movement sees ‘sustainable development’ as an oxymoron as long as development is defined in quantitative terms, because then it implies the need for growth, and continuing growth is per definition not sustainable. The movement addresses the issues related to perpetual economic growth, such as environmental degradation and social erosion. This research aims to address these issues and offer insights into the degrowth narrative, in order to show that their utopian alternative might be feasible.
The term degrowth has become a ‘missile concept’ to signal the abandonment of growth for growth’s sake and has inspired many academic schools of thought to think about a society without growth. Some scholars prefer to use “a-growth”, “post-growth” or “steady-state” to signal a similar critique towards growth, but they all discuss the (active) downscaling of material throughput in the economic sphere to an ecologically sustainable level. The confusing semantics and the large variety of policy proposals call for a clear discussion on how a degrowth transition can be implemented, which this research aims to provide.
The second chapter will start by outlining the emergence of the economic growth paradigm in the 19th century and how this paradigm has shaped society over the last
centuries. In 2.2 the discussion moves on to the degrowth narrative. It starts with the conceptual origins of degrowth and continues on to provide a holistic view of the movement and relevant academic contributions. Chapter three will start with a focus on the importance of economic growth for macroeconomic policies. This provides the background needed to understand the interaction between degrowth and economic stability. The fourth chapter combines the different varieties of degrowth strategies discussed in chapter 2.2.3 with the degrowth policy alternatives discussed in chapter 3.2 in order to study the economic sustainability and political feasibility of the respective strategies, while taking into account their ability to create a just and ecologically sustainable society. Chapter five concludes.
Chapter 2: Growth and Degrowth
When speaking of degrowth, people might mean different things. They can refer to degrowth as the movement, la décroissance, which originated in France at the turn of the 21st century, or the phenomenon of low, or even negative, economic growth. This chapter will introduce both the concept and the movement of degrowth. In order to clarify the implications they might have for society, and specifically for macroeconomic policy, the chapter starts with a discussion on economic growth.
2.1 Economic growth
Economic growth is at the centre of modern mainstream economics. Both in micro- and macroeconomics, academics use economic growth either as the object of their studies, or as one of the assumptions in their model. The growth paradigm is not only dominant in the field of economics, it has also integrated into society on a more fundamental level: personal (economic) growth has become an important goal to many.
2.1.1 The origins of the economic growth paradigm
The origin of the concept of economic growth, as we know it, lies in the 19th century
with the start of the industrial revolution. During this period Western countries
experienced a transition from a limited access order to an open access order, in which destructive rent-seeking behaviour is limited by the institutionalisation of impersonal relationships amongst elites, and later, amongst all citizens (North et al. 2009). This institutional development, combined with technological advancement and an increase in the diffusion of knowledge, made it possible for economic growth to become an
aggregate, instead of a niche phenomenon (Mokyr 2005). As opposed to the period before the industrial revolution, which was characterised by the rise and fall of empires, economic growth seems to have become sustainable and everlasting.
Even though interest in economic growth goes back centuries,1 the economic thinkers
of the 18th century are often quoted as the start of this field of research. Quesnay’s
“tableau economique” of 1758-9 introduced the concept of the reinvestment of
surpluses, and Adam Smith, who is thought to have been influenced by the Physiocrats during his stay in France, linked this theory to the accumulation of capital and economic growth. From this point onwards, economic growth and the accumulation of wealth can be seen as central aspects of economic thinking. Classical economic theorists held that “The growth of economies will depend on the re-investment of surpluses from the productive activities. If these are absorbed or more than absorbed by the unproductive, nothing will remain for investment, and a nation’s output will stagnate or decline.” (Eltis 2016, p. xviii)
Classical economists, while promoting economic growth as the main contributor to the overall welfare of society, clearly saw the limits to economic growth and the regular inevitability of a stationary state. Since the economy was still predominantly agricultural in the 18th century, Malthus and Ricardo feared that rising populations, combined with
the lack of quality arable land, would put an end to growth. Technological improvement and the availability of re-investible surpluses would become insufficient to counteract the law of diminishing returns (Zweig 1979). A stationary, or declining, state was here seen as undesirable. Contrarily, half a century later, John Stuart Mill was “[..] inclined to believe that [a stationary state] would be, on the whole, a very considerable
improvement on our present condition”, if combined with the re-distribution of wealth (Mill, 1848). Marx abandoned this idea of stagnating economic growth, and envisioned the end of the capitalist system through a class-struggle, which would lead to the start of a socialist society. He believed this society would not be limited by any resource
1
Of course, thoughts on economic growth date back as far as the Ancient Egyptians. Eltis (2016) also mentions Sir William Petty and his ‘political arithmetic’ of 1662, and Ibn Khaldûn’s theory on the rise and fall of empires, from 1377.
scarcity, due to its ability to innovate and the lack of the capitalists’ need for accumulation (Ucak 2015).2
Apart from the material limits to growth, Smith also feared the negative effects the division of labour could have on the minds of labourers, what Marx would later describe as the alienation of labour. Romanticism in the nineteenth century clearly demonstrates a counter-movement to industrialisation and its individualistic, competitive and market-driven effects. “Commerce” was criticised for breaking down social bonds, family ties and patriotism (Friedman 2005, p. 35).
Economic history of the 18th and 19th century thus shows periods of pessimism and optimism concerning the limits to economic growth and its effects on society. Even though concerns about economic growth were also raised in the 20th century,
mainstream economics then became more unequivocally concerned with creating economic growth and its benefits for society as a whole.
2.1.2 Modern thinking on economic growth
Inspired by their predecessors, economic thinkers have devised different models to study the origins of economic growth, and the means by which growth could be stimulated. An important contributor to the renewed interest in economic growth was the invention of the Gross Domestic Product (GDP)3 and its subsequent adoption by the
Bretton Woods institutions: the World Bank and the International Monetary Fund. Even though criticism against the GDP has been raised on and off since its conception, it is still the go-to measure to compare countries’ welfare (Fioramonti 2016).
An in-depth discussion on economic growth falls outside of the scope of this research, but four waves of theories can be observed since the start of the 20th century. First, the
Keynesian theorists studying the business cycle found that there is no natural reason for
2
More on the stationary, or steady, state economy will be discussed in chapter 2.2.
3
Earlier attempts at measuring welfare were introduced by, e.g. William Petty in 1652, but Simon Kuznets, with his 1934 report on national income, is seen as one of the main architects of the current measure of GDP (Fioramonti 2016).
an economy to have balanced growth. Therefore, the state needs to adjust monetary and fiscal policy to stabilise the economy and achieve higher growth rates
(Commendatore et al. 2003). The second and third waves are more grounded in microeconomics and focus on technological innovation and human capital. The
neoclassical theorists provided a model of exogenous growth, meaning that growth is stimulated by forces outside of the economy, e.g. technological innovation. Later, the previous model was countered with the concept of endogenous growth, meaning growth stimulated by a rise in human capital, re-investable surplus or other innovative forces from within the economy. These three categories still form the basis for the current economic growth paradigm.
The fourth wave is more focused on political economic theory and development
economics. It studies the link between economic growth and geographical, institutional or cultural elements of states (Snowdon 2006). One simply has to look at the differences in living standards between the highly developed and the developing countries to see the potential of economic growth. Besides providing material benefits for at least the majority of the population, economic growth also offers greater opportunity and social mobility, it suits our dedication to fairness and it fosters tolerance for diversity
(Friedman 2005).
These four waves thus work from the assumption that economic growth needs to be stimulated to create a richer, fairer and more tolerant society. They are not necessarily bound by a capitalist perspective; planned economies have also pursued growth
strategies. Provided modern theories are implemented correctly, one could assume that technological advancement will keep pushing the limits of growth further due to the returns of innovation. This optimistic view, however, ignores two fundamental
relationships: the effects of a culture of economic growth on society, and the effects of economic growth on the environment. These will be discussed in the next two sub-sections.
2.1.3 The economic growth paradigm and society
Economic growth is assumed to benefit society as a whole, not only because of the increase in GDP and the (near) full-employment it enables, but also because of its association with greater opportunities, more tolerance and social mobility. It has helped alleviate extreme poverty somewhat, mainly due to rising incomes in Asia, but this has been outstripped by increased wealth and income inequality.4 “In 2009, the combined
wealth of the world’s richest 380 people equalled the wealth of the bottom half. By 2017, just 42 billionaires had as much as the bottom 50%” (Inequality.org).
In light of Simon Kuznet’s study on economic growth and income inequality (1955), the increase in inequality might be seen as a transition period in which ‘it needs to get worse, before it gets better’. His theory suggests that economic growth and equality have a U-shaped connection. It is based on the assumption that rural areas might be poorer, but do have an initial low level of inequality. When industrialisation sets in, people from rural areas will move to urban areas for better job prospects. Initially the influx of people will lower the wages in the urban areas, and thus inequality increases. When the internal migration process has peaked, however, urban wages will go up, and welfare state dynamics will set in, thus reducing internal inequality. Kuznets himself mentions that his theory is based more on speculation than on facts (Kuznets 1960, p.26). It has nonetheless been tested rigorously since its conception, but the lack of time series data and intertemporal observations make it difficult to find statistical evidence (Kanbur 2000).
The welfare state dynamics Kuznet mentions present a more ‘bottom-up’ theory in which wealth is redistributed to the poor by state intervention. Neoliberal theorists, however, often see economic growth benefitting the poor through the ‘trickle-down’ effects of economic prosperity. The idea being that if capitalists have more room to invest their surpluses in new operations, this will increase production and improve
4
Estimates of the World Bank say that 9 out of 10 of the extreme poor will come from Africa in 2030. While extreme poverty was reduced in Eurasia and East Asia/Pacific, Sub-Sahara Africa saw an increase of 9 million people living in extreme poverty over the period 1990 to 2015. (World Bank, 2019)
employment prospects. The invested surpluses will thus ‘trickle down’ to the poor
through employment and production. It “implies a vertical flow from the rich to the poor that happens of its own account” (Arndt 1983, p. 3). This theory is often the basis for contemporary fiscal and monetary policies, such as tax cuts for big companies or the asset purchasing programmes of central banks in the aftermath of the Global Financial Crisis (Watkins 2014).
That economic growth has the potential to benefit the poor is obvious, but does it still benefit society after a certain threshold has been passed? The “Easterlin paradox” suggests that a rise in income does not parallel a rise in happiness, happiness mainly depends on one’s income as compared to others (Easterlin 1974).5 Other theorists argue
that, when basic needs are satisfied, any increases in wealth will have barely any effect on one’s subjective wellbeing (Konow et al. 2008). Also, if economic growth is not accompanied by re-distribution, either in the form of social policies or the supposed trickle-down effect, inequality will increase. Wilkinson and Pickett (2009) have shown that income inequality is correlated to various health and social problems. They argue that the “standards of health and social well-being in rich societies may now depend more on reducing income differences than on economic growth without redistribution” (Wilkinson & Pickett 2009, p. 509).
Friedman (2005) argues that, while people might compare their situation to others’, the need to get ahead as compared to others declines when they are better off relative to their own prior experiences. Therefore, economic growth, and the accompanying increase in general living standards, should increase a person’s sense of wellbeing, regardless of the extent of inequality. Yet, Bartolini’s (2010, 2013, 2015) studies on subjective wellbeing in relation to economic growth claim otherwise. He claims poorer
5
Easterlin’s studies have been subject to critiques, since the scale used to measure happiness is limited from one to ten, while GDP can rise into infinity. It is also shown that there are cultural differences in the conception of Happiness. Finland, for examples, always seems to score high, even though it also has one of the highest suicide rates (Snowdon 2006).
countries tend to be happier than the rich and modernised Western countries. 6 For
example, even though China has seen major improvements in the standards of living indicators since the 1990s, the Chinese felt substantially less satisfied with their life in 2007.
Besides the fact that economic growth does not necessarily increase happiness, the constant need for growth, both on the aggregate and personal level, is argued to have negative effects on people’s wellbeing. The competitive nature of economic life and the prioritisation of the economic above the social can have distorting effects on societies, both within and across states. Considering the effects across states, the introduction of neoliberal growth policies, also referred to as the Washington Consensus, in developing countries demonstrated clearly how the pursuit of economic growth, without paying attention to its distributive effects, may come at the expense of the domestic
population. Liberalisation policies, accompanied by tax cuts and regulatory leniency for foreign companies, may encourage foreign investors to set up factories, but may also set off ‘race-to-the-bottom’ dynamics, thereby constraining the country in its fiscal and regulatory powers (Porter 1999; Broad & Cavanagh 1999). The rationale of competition among states is not just relevant for developing countries, developed countries have also reformed their fiscal and social policies in order to stay ‘competitive’. The
“neoliberal insistence on ‘incentives’ to kick-start economic growth entailed higher pay and lower tax rates at the top, along with cuts in wages and benefits at the bottom of the ladder” (Streeck 2014, p. 67).
On a more personal level, the economic growth culture reduces people to rational, self-interested utility-maximisers, which creates a materialistic and individualistic society, away from the cooperative and social nature of human beings (Fournier 2008). It stimulates the pursuit of extrinsic goals, e.g. wealth or status, which is seen as one the
6
Veenhoven’s (2009) findings, however, claim that happiness still tends to rise in modern societies. This, combined with the critiques on Easterlin’s work (note 5), shows the difficulties concerning the measurement of subjective wellbeing or happiness. Some scholars therefore argue for a de-prioritisation of happiness, to be substituted with human needs (Koch et al. 2017).
main links in the negative relation between materialism and happiness (Kasser 2002; Pandelaere 2016). The “Hedonistic Paradox” states that a person who “seek[s] happiness for him- or herself, will not find it, but the person who helps others will” (Konow 2008). However, the individualist and self-interested behaviour of the homo economicus erodes these social connections, which are considered to be positively correlated with a person’s reported happiness. Moreover, the focus on extrinsic values, such as wealth, will motivate people to work more, even if this does not translate into greater happiness (Mogilner 2010; Bartolini et al. 2013).
The economic growth paradigm has become so incorporated into our social lives that some speak of universal commodification, fearing that “if everything that humans value becomes conceivable only in gains from trade, human life as we now know it no longer can exist” (Radin & Sunder 2005, p. 4). Mainstream economists might argue for the freedom to sell whatever a person wishes to sell. This, however, does not take into account socio-economic inequality and the coercive nature of free-market dynamics. If wealth is not distributed equally, the poorest of society might feel ‘forced’ to sell “questionable commodities such as sexual services or body parts” (Radin & Sunder 2005, p. 5).
So, if economic growth does not increase equality or promote wellbeing after a certain threshold of wealth has been passed, then why do countries still perceive it as the holy grail of national and global welfare? More on this subject in chapter three.
2.1.4 Economic growth and the environment
Economic growth affects the environment in two ways. First, in order to produce goods and services, natural resources are needed. If these resources are extracted from the environment at a faster pace than they can be re-created, a shortage is inevitable. This also affects biodiversity, since producers value certain types of natural resources above others. Second, besides the polluting effect from CO2 emissions, production leaves other wastes, since most of the world’s production is not circular.
The trade-off between the environment and economic growth will also be discussed in the section on degrowth. Most mainstream economists, however, do not think degrowth is necessary to make the economy ecologically sustainable and counter the two effects described above. Alternatives to degrowth which believe that the growth paradigm is compatible with care for the environment will be discussed here.
At this moment, mainstream economists see capitalism as either the best, or the second best7 structure to organise the economy. Since capitalism’s core is the accumulation of
capital for re-investment, economic growth is needed to keep the engine running. A commonly held belief is that innovation will keep growth possible, regardless of the earth’s limits.
While nature has been part of classical economic models, this was mainly focused on the availability of quality arable land. Later, in the early 20th century, Pigou (1920)
introduced the concept of externalities, i.e. the marginal social costs which are not reflected in product prices. He suggested a tax system for polluting activities to incorporate these externalities in product prices.
The concept of taxing polluters is still seen today as one of the best policy options. An emissions tax will internalize the costs of pollution and stimulate the industry to invent better and ‘greener’ means of production. It will also drive up product costs, and thereby automatically lower demand.8 Lower demand will lead to less production, and
less production will lead to even less pollution. To further stimulate green production, a government can give out subsidies, or ‘green loans’. This approach has two fundamental flaws, however. First, due to rising price of production, pollution becomes a sort of luxury product, only available for the rich. Second, a transition to a more efficient use of energy can offset the ‘rebound effect’. If technological innovation reduces energy prices, consumers might start using more energy, thereby reducing the environmental gains
7
Simply put, second-best economists see market failures, which need to be fixed by additional regulation. (Lipsey & Lancaster 1956).
8
(Greening et al. 2000). For example, if fuel prices go up, car owners might drive less and choose cheaper, and often somewhat more environmentally friendly, solutions to get from A to B. But if governments simultaneously subsidize affordable electric or hybrid cars, car owners will no longer feel the financial need to limit the amount they travel by car, and will thus sustain, or even increase their energy consumption. Also, this focus on the reduction of fossil fuels does not take into account the non-exhaust traffic related particles which are generated from sources such as brake, tyre, clutch and road surface, or are resuspended due to traffic induced turbulence (Grigoratos & Martini 2014). The switch to electric cars will thus only solve a part of the problem.
Coase (1960) rejected the need for government intervention through taxes, because he believed it would distort the market mechanism. He suggested a voluntary bargaining solution based on property law. If person A negatively affects person B’s property, person A owes compensation for damages to B. The option to settle disputes
concerning pollution or nuisance under common law has been around for centuries, and its principles were later included in the UN’s Stockholm Declaration of 1972 (Percival 2017). Coase’s theory assumes a cost-benefit analysis where damages can be translated into a concrete price. This could in principle lead to the costs of closing down a factory, which pollutes the air of a nearby residential area, being judged higher than the benefits of people living there enjoying clean air. The leading critique here is that the polluter pays principle is not always the right way to address these kinds of disputes. The concept might work on small scale and visible externalities, e.g. when your neighbour sets up a wall which blocks your view. In case of environmental pollution, it is often not one single person or institution which owns the property rights to the damaged ‘goods’, just as it is often difficult to point out one specific air polluter in a city.
Both Pigou and Coase reduce environmental issues to externalities, i.e. they are not part of the economic system, but influence it from the outside. This line of reasoning can be problematic, because the long-term costs of polluting are difficult to calculate, while the short-term costs of greening production are instantly visible. The valuation of
environmental issues in monetary terms has led to the commodification, and
subsequent financialization, of the environment, in which “sustainability has increasingly become subordinated to the demands for financial returns on speculative capital
‘investment’” (Clark & Hermele 2013, p. 69-70). Even if ecological assets are not solely valued on the basis of their international marketability, and we try to take into account the immaterial values of nature, financialization still opens it up to market forces. The investor’s need for profit will be prioritised above ecological sustainability, thereby making nature just one of many competing profitable domains of the financial market (Sullivan 2013). The trend of ‘selling nature to save it’ thus incorporates it into the economic system and “offers a rationale for the illusion that biological diversity can be ‘saved’ without fundamental changes” (McAfee 1999, p. 151).
The study into the relationship between economic growth and the environment has led economists to believe that the U-shaped Kuznets curve might not only be relevant for studying inequality, but also for the impact of economic growth on the environment. Theoretically, this provides a neat model for the relationship between income and environmental pollution. A poor person cannot afford to own a car or buy fuel, and is therefore low on the pollution scale. When this person moves up, he or she can afford a used car, usually with a high fuel consumption ratio. He or she is thus polluting more than necessary. When this person earns even more, he or she will choose a new car, which is energy efficient and pollutes less than older cars. Of course, this theory does not take into account the aforementioned rebound effect or the excessive material consumption of high-income states. The empirical examinations have therefore shown both an inverted U-shaped relation and an N-shaped relation between income and environmental pollution (Bo 2011).
One of the reasons why high-income countries could pollute less is their easy access to capital which can be used to innovate and create more environmentally friendly means of production. Innovation is often portrayed as the holy grail for a greener and
with the promotion of a zero-waste circular economy, could have a decoupling effect on the link between GDP-growth and environmental degradation. A relative decoupling, meaning the economy grows faster than the use of energy or material resources, can be observed over the period 1990-2015, but absolute decoupling, which would mean economic growth is no longer restricted by the earth’s limits, still seems impossible. Even if the whole world switched from fossil fuels to 100% renewable energy, an absolute decoupling would not occur (Ward et al. 2016). Besides, the promotion of a zero-waste economy within the current paradigm will create waste management value chains, which only transpose waste to marginalised territories (Valenzuela & Böhm 2017).
The concept of “green growth”, as well as the commodification of the social sphere, create new sources for growth, even when other areas of production are stagnating, thereby pushing the expansionary limits of the market. Stimulating ecologically sustainable production and environmental conservation with market-based solutions will shift the responsibility for the environment towards private for-profit actors. The prioritising of economic growth above the socio-ecological spheres might lead to undesirable outcomes, and will most probably be insufficient to counter environmental degradation. Degrowth initiatives might be better suited to address these problems.
2.2 Degrowth
Chapter 2.1 discussed the economic growth paradigm and its relation to the environment and the social spheres. This subchapter continues this discussion by focussing on degrowth. The conceptual origins of degrowth, the degrowth movement and its academic varieties and critique will be discussed.
2.2.1 The conceptual origins of degrowth
As mentioned in the previous subchapter, the idea that economic growth is limited and might have adverse effects on society and the environment goes back centuries. The concept of degrowth, however, is often traced back only to the second half of the 20th
century. This period saw the rise of activist protest against capitalism which focused on both the ecological and social downsides of capital accumulation and economic growth (Klimke & Scharloth 2008). Degrowth “merged a scientifically based ecological critique of growth and of mainstream economic thought with a strand of socio-cultural
criticisms of the paradigmatic escalatory logic of late capitalism” (Schmelzer & Eversberg 2017, p. 331).
Since the 1950s, a greater popular concern for the environment was created with the emergence of, among other things, aboveground nuclear testing, the thick smog in London and the disastrous effects of synthetic chemicals in pesticides. Subsequently, the ecological worldview grew as an integral part of the scientific and socio-political spheres (Magdoff & Williams 2017). From this background, the earth’s natural limits entered back into the discussion in the early 1970s. Georgescu-Roegen can be seen as one of the most fervent advocates against the “growth-mania” of mainstream economists of that time. In his bio-economic work The Entropy Law and the Economic Process (1971) he focused on the irreversibility of material degradation when resources enter into the production process. He went as far as stating that “not only growth, but also a zero-growth state, nay, even a declining state which does not converge toward annihilation, cannot exist forever in a finite environment” (Georgescu-Roegen 1975, p.367).
Other ecological economists at the root of the degrowth debate, even though holding a somewhat more positive view on the idea of a sustainable state, were Meadows et al. (1972) and Daly (1973). The Limits to Growth (Meadows et al. 1972) report used a computer simulation to show the limited capacity of the earth to absorb pollution, next to the limitations due to material resource scarcity (Cosme et al. 2017). Daly (1972), inspired by the work of John Stuart Mill, advocated the steady state economy to create a sustainable society.
The limits to economic growth can be interpreted as solely ecological, i.e. material, but there may also be social limits to economic growth. The post-developmental roots of
the degrowth narrative focus on the pursuit of economic growth as a Western construct. Economic growth is not the solution to end global inequality, but it is its main
perpetrator. The post-developmental critique goes against the uniformization of
cultures led by the economic expansion of the global North (Demaria et al. 2013). Other schools of thought, such as the anti-utilitarian school, criticized the idea of a rational homo economicus and the economisation of society. This critique is mainly inspired by the works of Marcel Maus, Karl Polanyi and Alain Caillé (Demaria et al. 2013). It criticizes economic growth, because it creates the need for the commodification of labour and nature to keep the capitalist’s “mega-machine” running (Bonaiuti 2012).
The second half of the 20th century also saw the rise of academics which advocated a
radical transformation of society. Often influenced by Kumarappa’s “Gandhian
Economics”, they promoted simplicity and conviviality as a means to a happier way of living, provided in the works of E.F. Schumacher (Small is Beautiful, 1973) and Serge Mongeau (La Simplicité Volontaire, 1985). This current also includes the Situationist International movement, which argued that “passionate playfulness would replace work” (Hecken & Grzenia 2008, p. 24; Kallis et al. 2015). The ideas of simplicity and conviviality also touch upon the previously discussed (2.1.3) effects of economic growth on
subjective wellbeing, such as the Easterlin Paradox and the negative relationship between happiness and the pursuit of extrinsic goals.
The works of Jacques Ellul and Ivan Illich voiced concerns over the dominating power of large-scale technological appropriation (Kallis et al. 2018). Together with Castoriadis, they advocated the need for democracy and autonomy, instead of ‘uncontrolled’ technological advancement, conformism and mass-consumption (Asari at al. 2013; Demaria et al. 2013).
“[I]f humanity in its entirety wants to survive on this planet in a steady and
planet's resources, a radical check on technology and production, a frugal life” (Castoriadis in: Asari et al. 2013, p. 236).
While recent studies have categorised the conceptual roots of degrowth in different ways9 (e.g. Schmelzer & Eversberg 2017; Kallis et al. 2015; Demaria et al. 2013; Bonaiuti
2012; Martinez et al. 2010), it is clear that the predecessors of the degrowth advocates have addressed both the material and social limits to economic growth. Their desire to solve environmental issues, create social equity, safeguard democracy and encourage a simpler, happier way of living are at the root of what inspired the degrowth movement.
2.2.2 Degrowth: the movement
Most of the works discussed in the previous section, though providing the academic background, did not use the English term “degrowth” as it is currently used in
academics. It is the translation of the French “décroissance”10, which was first used in the
1970s by Andre Gorz when discussing the Limits to Growth. He also explicitly discussed degrowth in his book Ecologie et Liberté (1977) (Kallis et al. 2015). 11 Later, in 1979,
Georgescu-Roegen’s Entropy Law and the Economic Process was translated as Demain la Décroissance: Entropie, Ecologie, Economie (Levallois 2010).12
While the academic interest in the limits to growth subsided in the last decennia of the 20th century, the growing critique on consumerism and the disappointment with the
sustainable development paradigm13 rekindled the degrowth debate at the turn of the
21st century. A series of events both academic, such as the republication of
Georgescu-Roegen’s work as La Décroissance (1996), a special issue on degrowth in S!lence, a French ecological magazine, and a symposium in Paris under the title: “Défaire le
9
Some of the referenced academics might be categorised differently. For example: Ivan Illich is also a notable contributor to the post-developmental school and the idea of conviviality, while Castoriadis was also a member of the Situationist International movement.
10
The translation from décroissance to degrowth has been under discussion within the community. While the English term has mainly negative connotations, the French term is seen as something more natural, because it is also used to describe the different phases of the moon or tidal phenomena (e.g. Kallis et al 2017a).
11
In the English edition of the book, décroissance was translated as ‘inversion of growth’(Kallis et al 2015).
12
Georgescu-Roegen never used the word degrowth. He spoke of a decline of economic growth (Latouche 2010)
13
In which economic growth, social welfare and environmental protection would be organised by intergovernmental cooperation.
développement, refaire le monde”, and activist, such as car-free protests, communal meals and campaigns against advertising, inspired both new and existing academic and activist organisations in France, Italy and Spain in the early 2000s. It was not until 2008, however, following the first degrowth conference in Paris, that the English term was officially adopted by the movement (Kallis et al. 2015).14 Figure 1 gives a structured
overview of the main events within the degrowth community.
The degrowth movement consists of a loosely organised network of local or national groups, firmly grounded in academia, that challenge the neoliberal common sense and its focus on perpetual growth. It provides different platforms where ideas and
experiences can be shared and debated. The movement does not promote degrowth as an ideology, a blueprint which should be followed or even as the direct opposite to growth. Instead the concept should signify “a symbolic weapon or ‘missile concept’ against the ‘tyranny of growth’, and to provoke thought about alternatives” (Fournier 2008, p. 531). It is meant to “strongly signal the abandonment of growth for the sake of growth” (Latouche 2010, p. 519) and can be seen as “normative concept with analytical
14
The movement here specifically refers to the Research and Degrowth, Institut TELECOM SudParis, the International Society for Ecological Economics, the Sustainable Europe Research Institute and the Wuppertal Institute.
Figure 1: The timeline of the degrowth movement
and practical applications” (Kallis et al. 2018, p. 292). Degrowth should not be
“envisaged in terms of sacrifice, or austerity […], but as an opportunity to reconsider what constitutes the good life” (Fournier 2008, p. 536). On the whole, it might be
beneficial to discuss degrowth not as a social movement, but as “an interpretative frame that can create meaningful connections between otherwise separate ecological, social, and political concerns” (Schmelzer & Eversberg 2017, p. 351).
One of the first attempts to clearly define degrowth occurred during the 2008 conference in Paris. Degrowth was subsequently defined as “a voluntary transition towards a just, participatory, and ecologically sustainable society” (Research & Degrowth 2010, p.524). The declaration elaborates by providing the objectives of degrowth:
“The objectives of degrowth are to meet basic human needs and ensure a high quality of life, while reducing the ecological impact of the global economy to a sustainable level, equitably distributed between nations. This will not be achieved by involuntary economic contraction.” (Research & Degrowth 2010, p.524)
Schneider et al. (2010) see degrowth as:
“[A]n equitable down-scaling of production and consumption that increases human well-being and enhances ecological conditions at the local and global level, in the short and long term” (Schneider et al 2010, p. 512).
Demaria et al. (2013) see degrowth as a noneconomic concept that
“challenges the hegemony of growth and calls for a democratically led redistributive downscaling of production and consumption in industrialised countries as a means to achieve environmental sustainability, social justice and well-being” (Demaria et al. 2013, p. 209).
According to Demaria et al. (2013), degrowth is foremost “an attempt to challenge the omnipresence of market-based relations in society and the growth-based roots of the
social imaginary replacing them by the idea of frugal abundance” (Demaria et al. 2013, p. 209).
While all three definitions are dynamic and define degrowth as a transition towards an equitable and ecologically sustainable society, they do differ somewhat on certain points. The first and the third definition also take note of the need for a participatory society, while the second makes no mention of participation or democracy. The
declaration’s definition also emphasizes the voluntary character the degrowth transition should have, while the others make no mentions of this. Comparing the three
definitions, Schneider et al. (2010) seem to focus more on the economic character of degrowth, i.e. they explicitly mention a downscaling of production and consumption, while Demaria et al. (2013) put more emphasis on social equity, deeper democracy and an overall move away from market-based relations. The declaration’s definition is broad enough to cover both the less and the more radical forms of degrowth. On the whole, these definitions provide four main characteristics which should be clarified: justice, wellbeing, ecological sustainability and (participatory) democracy. I will address each of them in turn.
Justice
Within the degrowth narrative, justice is discussed in light of social and environmental issues. It is seen from both a geographical and a temporal perspective. The movement strives for an equitable distribution of wealth and resources within and across nations and generations (Demaria et al. 2013). The environmental approach does not only look at current injustices, such as disproportionate pollution or waste exports from North to South (Schneider et al. 2010), but it also takes into account the past injustices flowing from the claim that “the wealthier nations owe some kind of remuneration (an
‘ecological debt’) to poorer nations for the environmental damage” (Roberts & Parks, 2009) and the effects of excessive material consumption on future generations. As discussed in chapter 2.1.4, the market-based approach to solving environmental issues
does not take into account the inequalities embedded in the global economy. The degrowth transition instead needs to involve local and global redistribution to secure basic access to eco-system services and deal with the possibility of a global rebound effect (Scheinder et al. 2010; Demaria et al. 2013).
The social approach to justice within the degrowth narrative is focused on social sustainability or social equity. It strives for a “society built on quality rather than on quantity, on cooperation rather than on competition […] humanity liberated from economism for which social justice is the objective” (Latouche in Martinez-Alier et al. 2010, p. 1742). In the current economic structure, growth is needed to create
employment and ensure social schemes. A contracting economy, which also leads to reduction of material throughput, will hurt the have-nots more than the haves, because the former are heavily dependent on selling their labour. Furthermore, the austerity measure taken by governments to stimulate economic growth have a disproportionate effect on the poorest of society.
“Economic growth fuelled by increased consumption does not bring more wealth to the most needy, as the infamous ‘‘[trickle] down effect’’ would have us believe. Rather it tends to privilege the richest and those who are already consuming beyond their fair share of the earth[‘s] resources” (Fournier 2008, p. 541). Degrowth proponents understand justice as a global prevention of misery, which is to be achieved by “a fair distribution of economic, social and environmental ‘goods’ and ‘bads’ at all time-lines [i.e. across generations][…] both within and between North and South economies” (Demaria 2013, p. 200).
Wellbeing
At the heart of the degrowth discussion on wellbeing lies a critique against the GDP as a of welfare, because it only takes into account economic performance.
“[GDP measures] the production and sale of commodified goods and services, ignoring the damaging effects these have on other ‘‘goods’’: justice, equality,
democracy, human and ecosystems’ health, quality of life, social relations” (Fournier 2008, p. 531).
The degrowth narrative criticizes the consumerist character of modern societies, not just because it results in excessive energy and material use, but also because the economic growth paradigm is seen to have a negative effect on society and our subjective
wellbeing. A degrowth transition could contribute to general wellbeing in two different ways. The first is based on preventing a decline in social capital, while the second relates to the concepts of “positional goods” (Hirsch 1976) and social comparison.
Regarding the first point, the neoliberal program has extended the economic and
entrepreneurial logic of the homo economicus to all dimensions of social and public life. It has neutralized the normative foundations of democracy, social justice and the ‘good life’, which has led to a path of ‘dedemocratization’ (Kallis et al. 2018, p. 306). While this also touches on the subject of democracy, discussed later in this subchapter, it has also been argued that it has influenced our subjective wellbeing. According to Bartolini (2010; 2014), the decline in happiness can be largely explained by three factors. The first two effects begin with an increase in ‘relational poverty’, created by the individualistic state of mind of the homo economicus and the prioritisation of economic advancement above maintaining social ties. The decline in social ties increases feelings of loneliness and distrust. This distrust produces a sense of insecurity about public institutions, which further depresses the general feeling of happiness. Degrowth scholars therefore
promote the concept of conviviality, which extends beyond the concept of social bonds. According to Ivan Illich, conviviality “refers to a society in which modern tools are used by everyone in an integrated and shared manner, without reliance on a body of
specialists who control said instruments” (Kallis et al 2015, p. 107). For degrowth supporters, this provides “an escape from the economy”, a way to create a society of “fewer goods, more relationships” (Fournier 2008, p. 534).
The Second negative effect of the economic growth paradigm on our subjective wellbeing relates to the perceived importance of our position within society and our welfare as compared to others’. ‘Positional goods’ (Hirsch 1976) are luxury goods that signify one’s position in society, e.g. exclusive art, sports cars or villas (Kallis et al. 2015, p. 167). People are motivated to buy these goods because of the social status they provide, not because of their use value (Bonaiuti 2012). According to Hirsch (1976), these goods provide a social limit to growth, because even unlimited growth cannot make everybody as rich as the richest man, or woman, on earth. How does this relate to our subjective wellbeing?
“Growth does not change relative rank or relative access to positional goods, but it does inflate expectations and prices of material goods, increasing frustration. Relative comparisons matter for personal wellbeing in low-income and high-income countries; for both, the more equally high-income is distributed, the happier people are.” (Kallis et al. 2018)
A term closely related to positional goods and conviviality is dépense, which refers to “the unproductive expenditure of the social surplus. How civilizations allocate their surplus—the expenditures they make above and beyond what is necessary to meet basic human needs—gives them their essential character.[…] [D]épense is displaced to privatized acts of exuberant consumption. Degrowth envisions
radically reducing the surplus and deploying it [in] ways that help build community and collective meaning” (Kallis 2017, p.21)
The decline in social capital, combined with the desire to have what our neighbours have, fuels mass-consumption and increases indebtedness (Bonaiuti 2014).
“If growth has a negative effect on common goods, then a self-feeding
mechanism is generated where environmental decay and the deterioration of our relationships produce economic growth and this, in turn, produces an even greater environmental decay and a further deterioration of our relationships. […]
This mechanism creates formidable consumers, because it creates expensive lives” (Bonaiuti 2014, p. 154).
From this perspective, a degrowth transition could thus benefit our subjective wellbeing by enhancing social relations and reducing the need for material consumption.
Democracy
The previous section already touched on the subject of democracy and also implied the need to replace the consumer by the citizen, which is central to the degrowth
movement. The movement puts the “emphasis on democratic choice […] over economic rationality” (Fournier 2008, p. 535), because the economic growth paradigm is seen to legitimise technocratic corporate efficiency, to increase competitiveness or production, at the costs of political or ecological imperatives. Degrowth thinkers want to
democratise the economy in order to restructure economic processes and strengthen collective autonomy (Kallis et al 2018). The emphasis on the citizen over the consumer will also help create a society driven by social relations and collective action, instead of individualism and competition. Making people less dependent on the economy will give them the opportunity to spend their time differently. It creates a climate in which care activities and voluntary work can prosper.
There are two different positions within the movement’s debate on democracy. The first wishes only to reform current institutions and also promotes state level action, while the second demands new institutions based on autonomy and participatory democracy (Demaria et al. 2013; Kallis 2011). This inevitably leads to a discussion on the appropriate level of organisation. While awareness exists that action must be taken on all levels society, i.e. local, regional, national and international, the more radical proponents of degrowth, who emphasize voluntary action and a participatory democracy, may find it difficult to extend their organisational structure beyond the local level.
The focus on democratic choice and autonomy also implies that degrowth is not a forced option, but a choice. Degrowth proponents will prioritise the political, above the
ecological. In this sense, the movement is first and foremost about social justice, of which a fair distribution of the ecological space is just one aspect (Fournier 2008).
“The material conditions defined by limited ecological space and its current over-use may create an imperative for radical change in the ways we organise
ourselves, but it does not in itself dictate how this should be done” (Fournier 2008, p. 536).
Ecological sustainability
Even though the roots of the degrowth movement are firmly grounded in the debate on material limits to economic growth, the previous three sections addressed ecological sustainability as a positive by-product of the de-economisation of society or as a tool to ensure the fair distribution of environmental ‘goods’ and ‘bads’. It can therefore be argued that the degrowth movement sees the current ecological concerns as an
opportunity to motivate the transition away from the economic rationality of neoliberal capitalism, instead of a goal in itself (Fournier 2008). However, ecological economists in favour of a degrowth transition are often less radical and define degrowth as the
“equitable downscaling of throughput, with a concomitant securing of wellbeing” (Kallis et al 2018, p. 297), thereby shifting the focus away from the democracy debate.
“[E]conomic growth […] will accelerate climate change, biodiversity loss and resource extraction and waste disposal in ‘commodity frontiers’, not
coincidentally the last environmentally preserved areas of the globe, where indigenous groups often reside” (Kallis et al. 2012, p. 173).
Through the lens of ecological sustainability, our current growth trajectory is simply unsustainable, especially if developing countries are to reach the same levels welfare, i.e. consumption, as the global North. The productive sector15 of the economy is dependent
on exhaustible material resources and, according to the entropy dynamics in economic
15
The material needs of the service and transport sectors should not be ignored. Within the EU the material consumption of these two sectors has more than doubled over the period 1997-2007 (BIO Intelligence Service 2013)
processes (Georgescu-Roegen 1971), these resources will never be completely
recyclable, thereby creating a constant need for new supplies and waste management (Kallis et al. 2012).
When scarcity in material resources becomes more critical under the current economic system, which distributes resources on the basis of their market value, i.e. price-setting through supply and demand, it will become disproportionately more difficult for the poorest of society to satisfy their (basic) needs. This will lead to more inequality within and across societies, thereby touching upon the concepts of justice and subjective wellbeing discussed above.
“The question is not whether humanity as a whole will survive a climate or resource disaster, but who will live how and where, with what non-human natures. This is ultimately a question of justice, not of resource technicalities” (Kallis 2017, p. 74).
On the whole, the way degrowth advocates prioritise the four concepts of justice, wellbeing, democracy and ecological sustainability creates different varieties of degrowth. These will be discussed in the next section.
2.2.3 The varieties of degrowth
The difficulty of defining what degrowth entails arises not just because of the variety of its academic sources, but also because of the divergent prioritisation of the four key concepts within the movement, discussed above. Since it is often unclear how degrowth should take shape and what it is that needs to ‘degrow’, Ott (2012) has structured the varieties of degrowth into four different, not mutually exclusive types: the economic (DG-1), the ecological (DG-2), the social (DG-3) and the radical (DG-4). All these degrowth strategies are focused on a planned transition, and should therefore not be confused with advocacy of an economic depression or a stagnating economy.
Proponents of a degrowth strategy might, however, use the survivalist argument “which argues that growth is coming to an end, whether we like it or not, and “we” better be
preparing to adapt […] in order to survive” (Kallis 2017, p. 198). Now, I will address the four degrowth strategies starting with the least radical.
Economic degrowth
This type of degrowth strategies adopts a narrow reading of degrowth, which is centred around the unsatisfactory prevalence of the GDP as measure for social welfare. It does not necessarily mean that economic growth should cease, it only wishes to emphasise the use of other measures of social welfare to guide policy making. Guided by the idea that material welfare does not increase subjective wellbeing after a certain threshold, its proponents argue that wealthy countries should focus more on intrinsic values, e.g. family values, democracy and charity. The strategy can be seen as a transition towards a steady state economy. While other degrowth strategies might envision a steady state economy in the long run, the economic degrowth strategy implies a stabilization of the economy, i.e. an economy with mildly fluctuating GDP growth, from the current
consumption levels (Martinez et al. 2010). This strategy is therefore more easily adopted within existing socio-political structures and finds increasing support in mainstream politics, as can be seen by the introduction of new parliamentary commissions.16 Ecological degrowth
From this perspective, degrowth is a mandatory strategy to reduce environmental
degradation and pollution. A decrease in GDP growth is seen as a side-effect of reduced material consumption. Proponents argue that the “impacts of growth upon both
ecologic and human systems are repugnant” (Ott 2012, p. 573). They react against the commodification of nature by moving towards a system of “sustainable utilization of common goods” (Ott 2012, p. 573) and strive for global environmental justice. If the negative impacts on the environment can be defeated, a decoupling of GDP growth and material consumption, GDP growth might be continued. However, due to rebound effects on energy efficiency and the material needs of the economy, this is
16
For example, the German ‘Enquete-Kommission zum Thema Wachstum, Wohlstand, Lebensqualität’, the French ‘Commission Stiglitz-Sen-Fitoussi’ and the British ‘All-Party Parliament Group on limits to growth’
unlikely to happen outside of an economic model. While high-income countries might be forced to reduce material consumption, the global South has “some environmental space (however defined) left for [its] economic development” (Ott 2012, p. 573). A more comprehensive variant of the ecological degrowth strategy, which Ott (2012) calls DG-2+, includes a wider emphasise on global equality, based on the contraction and convergence regime. Such a regime “limits the overall throughput of the economic sphere according to ecological constraints (‘‘contraction’’) and it distributes the
remaining entitlements for making use of natural resources more equally in the middle and longer run (‘‘convergence’’)” (Ott 2013, p. 573).
Cultural degrowth
Cultural degrowth relates mainly to what was discussed in the sections about wellbeing and democracy in chapter 2.2.2. Following a degrowth strategy will liberate “our lives from pervasive competition, ‘rat race’-careers, dependency on monetary income, [and] acceleration of the speed of life” (Ott 2012, p. 574). It values the pursuit of intrinsic goals and forms a counter-culture against the “hegemonic lifestyles based on competition, careers, and consumption” (Ott 2012, p. 574). The social gains of degrowth thus outweigh the material gains that continued growth would bring.
Radical degrowth
While the previous three degrowth strategies might fit within some form of capitalism, the radical degrowth strategy is described as “an overall strategy to transform and eventually replace capitalistic modes of production and distribution by other modes” (Ott 2012, p. 574). It does not simply attack economic growth, but the whole
“technological system” (Ellul 1964).17 Radical degrowth comes in many forms, inspired
17
“In modern societies a technological system has emerged with its own logic of reproduction, autonomized from social control. At the core is a scientific-industrial complex, which invents what can be invented and develops what can be developed without external considerations for the social purposes that new knowledge serves. Unlike most contemporary degrowth thinkers, Ellul went as far as claiming that profit-seeking, growth, and capitalism are epiphenomena of the technological system, not its driving forces.”(Kallis et al. 2018, p. 303-304)
by different traditions, e.g. socialism, Marxism, or anarchism, but all agree that an effective degrowth strategy will not be possible under capitalism.
This radical strategy also excludes planned economy alternatives which still focus on material consumption. Instead, they look towards alternative lifestyles and grassroot initiatives, such as eco-villages, communal food networks, urban gardens, or community currencies, to find alternatives to the (capitalist) economy (Kallis 2017; Ott 2012).
2.2.4 Critiques of degrowth
While mainstream economists might see the flaws of GDP growth as a measurement of welfare or find some merit in the survivalist argument, the comprehensive degrowth strategies (DG-2/DG-4) are often portrayed as unnecessary, economically unsustainable, politically infeasible and, on the whole, utopian. Paul Krugman, for example, believes that emissions trading, carbon taxes and technological advancement will make “action to save the planet […] cheaper and easier than almost anyone imagines,“ while reducing the idea that economic growth is incompatible with climate action to unnecessary “climate despair” (Krugman 2014).
The current system is dependent on growth to stabilize not only the economy, but also society as a whole. This is captured by the growth ‘lock in’ of modern societies,18 which
could make a degrowth strategy both economically unsustainable and politically infeasible (Büchs & Koch 2019). Buch-Hansen (2018) studied the prerequisites for a degrowth paradigm shift and finds that “the degrowth project does not enjoy support from a sufficiently comprehensive coalition of social forces or from the public at large” (Buch-Hansen 2018, p. 162). Ančić and Domazet (2015) show that, while the
environmental limits to growth are widely supported within Europe, the support for degrowth strategies is limited.
Degrowth proponents also tend to forget that, due to global interdependence, it might be costly to “escape the economy” on a national level, which would result in currency
18
and asset devaluations, penalties resulting from broken trade agreements and political isolation, while, at the same time, gains in energy efficiency and decreases in material consumption might be off-set by higher consumption elsewhere (Kallis 2017).
Another objection related to the problem of scale is centred on the feasibility of pushing local initiatives to a national, or even global level. Apart from the probable lack of
unanimous consent,
“Simple living in peripheral communities today relies on the surplus—and the products and infrastructures—provided by the rest of the industrial economy. As Andre Gorz (1994) put it, the whole industrial system is embedded in the radio (see computer today) of a commune” (Kallis et al 2012, p. 174).
Creating a nation of small, relatively isolated communes can also have an adverse effect on society due to a decrease in liberal-cosmopolitical values, such as diversity, gender equality and anti-racism and an increase interpersonal violence (Quilley 2013).
Scholars have also criticized the normative bias and limited vision of degrowth
proponents. Schwartman (2012) sees the attractiveness of a “green and red utopia”, but criticizes degrowth’s lack of a comprehensive alternative to the capitalist mode of production and its limited vision on natural, physical and informational sciences. Lastly, degrowth has also been criticized by environmental social justice movements in the global South as a Eurocentric project: “degrowth is not only perceived as ‘missing the point’, but is also in some ways a ‘luxury’ debate” (Rodrígues-Labajos et al. 2019). It does not have enough regard for the effects northern degrowth will have on global value chains and other international trade relations. Without some form of global redistribution, the implementation of degrowth strategies in the global North may thus aggravate socio-economic conditions in the global South.
2.3 Conclusion
This chapter focused on the complex relations between economic growth, society and the environment. The degrowth narrative provides a framework through which the current multidimensional crisis of economic instability, social erosion and environmental decay could be addressed. The degrowth movement might not (yet) have the political support needed for a degrowth paradigm shift, but it does provide us with alternatives to address the aforementioned crisis. The next chapter will focus the possible
3
Macroeconomic degrowth policy options
Degrowth thinkers, whether wishing to end capitalism or to transform it, have suggested various policy options to create a path towards a “just, participatory and ecologically sustainable society” (Research & Degrowth 2010, p.524). This chapter will be dedicated to the connection between economic growth and macroeconomic policy as we know it and discuss the possible limitations of degrowth alternatives.
3.1 The importance of economic growth for macroeconomic policies
As mentioned in the previous chapter (2.2.4), one of the potential problems with a transition towards a degrowth society is the supposed growth ‘lock-in’ of modern societies (Büchs & Koch 2019). The institutional developments of the 19th century that
made economic growth an aggregate phenomenon also created the basis for other aspects associated with modern society, such as the nation state, the rule of law and welfare systems. The idea of growth has become part of our conception of welfare and self-fulfilment, as discussed in the previous chapter, and is central to how public
structures, both national and transnational, are organised.
“The embeddedness of the growth-based capitalistic economic system in these co-evolved institutions and ways of thinking makes it difficult to transition to a degrowth system because the change of the economic system would need to involve a parallel transformation of those coupled systems.” (Büchs & Koch 2019, p. 160)
One of these co-evolved institutions is international trade and investment law, which promotes free trade and compensation for expropriation. Breaking these international treaties can create additional costs and political isolation (Kallis 2015).
The surplus generated by economic growth made it financially possible to increase the size and tasks of governments and fund welfare projects, education and infrastructure investments. While this shaped macroeconomic policies in different ways and made them, up to a certain point, dependent on continued growth, it has also increased the
state’s reliance on capital, thereby shifting its power towards private actors (Büchs & Koch 2019; Mellor 2010).
Van Griethuysen (2012) argues that the profits accumulated by the capitalisation of property have “provided the western elite with an unprecedented power, and [this] has created a process of institutional and technological lock-in” (Van Griethuysen 2012, p. 264) in which “industrial economies have become locked into fossil fuel-based
technological systems” (Unruh 2000, p. 817). The ‘acculturation’ of technology further reinforces the lock-in and extends it into the societal spheres, thereby making any institutional changes, e.g. limiting speed on highways to reduce carbon emissions, more difficult (Unruh 2000). Unruh (2006) suggests that the techno-institutional carbon lock-in has globalised, thereby transformlock-ing developlock-ing states lock-into “carbon copies”. Next to the obvious negative impact on the environment, this has also increased the power of, and dependence on, capital and technology.
These lock-in dynamics need to be taken into account in devising a feasible alternative to the current growth-orientated economy. The recent Global Financial Crisis and its aftermath have once more demonstrated the power of capital and the unsustainability of the current (European) welfare systems in periods of economic distress. The next two sections discuss how lack of growth affects the economy and macroeconomic policies.
3.1.1 Economic growth and monetary policy
Monetary policy is used to regulate the money supply in order to affect spending and ensure price stability, i.e. a stable rate of inflation. This task is often performed by an independent central bank due to the perceived inflationary bias of governments.19
Central banks have three different policy options to ensure price stability: the setting of interest rates, reserve management and open market operations. These policy options
19
The idea being that politicians wish to be re-elected and therefore tend to promote expansionary policies, e.g. employment, tax cuts or social security programmes, above price stability. If these policies are financed through money creation, inflation will occur.
