The recent report on ‘Better Growth, Better Climate’ immediately resonated strongly with the media and policy makers. In a nutshell, the report argues that we can have everything: inclusive growth and development, better climate and ecosystem stability, and most likely we also can save the whales. I don’t want to belittle the strategic intent of the report and its drive towards very sensible policies in the light of an ever-increasing global ecological crisis. I especially welcome its focus on cities as a level of transformational government, the plea for establishing a low-carbon infrastructure, and a cut to non-sustainable subsidies in the energy sector. This will all be necessary for tackling climate change, but also for providing a decent life for us and our children.
Blind faith in growth…
What puzzles me, however, while reading the report is the blind faith in growth itself. Let me be absolutely precise here: growth cannot, under any circumstances whatsoever continue in the real world – be it some form of ‘green’ growth or otherwise. When we speak of growth don’t let yourself be fooled by talk about ‘well-being’, ‘quality of life’ or ‘happy planets’. Growth is and will remain to be first and foremost GDP growth i.e. an increase in the sum of all products and services (inevitably connected to their ecological footprint) sold in the economy in a year according to (more or less distorted) market prices. And from this increase, raised income for the economy as a whole, but also for each and every individual working in that economy is coming from. Speaking bluntly, ‘well-being’ doesn’t pay your bills – at least if we remain in a money-driven economy. So regardless what anyone in the ‘Better Growth, Better Climate’ report says about quality of life and growth, it all boils down to good old GDP.
…but growth fails
But when we look to GDP and its development, we see something very disturbing: it is not growing (as much) anymore. When looking at the ‘Big Four’ economic regions of the planet – the EU, the US, China and Japan, making up for almost 60 per cent of global GDP – we see a lost decade in Europe, recovery in the US almost over and resulting in lower incomes, faster than expected diminishing growth rates in China, and Japan on the brink of state bankruptcy. Looking beyond to the other supposedly emerging ‘powerhouses’ of global GDP growth, we see a faltering Brazil, a Russia in reverse, leaving all hopes to India, but with huge demands on (resource-intensive) infrastructure and education spending. The general outlook of global GDP growth, not just in relative percentage points but in absolute additional real income generated, is grim. Even the great success story of the past three decades of moving 2 billion people from below two dollar a day is looking increasingly fragile. Scholars like Robert J Gordon of Northwestern University have argued, for the US economy, that the future average growth rate for real disposable income will be hovering around 0.2 per cent due to decline in labour productivity, shifting demographics, increased inequality, an education gap and high national debts. Others like Jeremy Grantham’s GMO, a leading financial asset company based in Boston, come to the conclusion that long-term US growth will be below 1 per cent if effects of climate change are included. Looking beyond the US, even the OECD has to concede that future global growth rates in the so-called developed world will be between 0.5 and 1%, with global growth not much more than 2.5 per cent. If you inquire a bit more and take the scenario analysis from Jørgen Randers serious, global GDP growth in total will be more likely below 2 per cent, maybe somewhere in the range of 1 to 1.5 per cent.
Postgrowth ahead
All these outlooks, even the more mainstream conservative ones like the OECD’s, point into a direction of a radical change within the fundaments of economic action. The growth era we are used to and that started after World War 2, is about to end – mostly out of those economic reasons Gordon portrayed for the US that will certainly apply to other economies as well; but also out of serious environmental limitations and a squeeze on resource prices, directing more and more investment into resource exploration and extraction as can be seen by the investment folly of fracking. Especially the latter development is perfectly mimicking the collapse dynamics of the World3 model used in the original ‘Limits to growth’ study in 1972, a model whose business-as-usual scenario discomfortingly fits actual data. This does not mean that economic growth will stop overnight; but all these developments combined point into the direction of a ‘postgrowth’ economy. That is an economy that will be, to a large degree, stationary as regards capital and income, with selective growth and contraction within its aggregate. For Europe and Japan, we can definitely state that postgrowth has become a reality – and one that will be here to stay. But over the next decades, gradually the rest of the global economy will move also into this direction. Just as the growth explosion was inevitable after 1945, the postgrowth transformation, with selective growth and contraction and an overall stationary state, will also be inevitable; postgrowth will be the ‘new normal’.
Desperately wanted: growth ‘agnosticism’
In one way, this is good news for the climate and the planet: less economic output always equals less carbon emissions and other ecological impacts. However, the current economic system and its associated political systems – like taxation, social security, pensions, healthcare – are inherently growth-dependent. Postgrowth today manifest itself as crisis, unemployment and civil unrest. The policies within ‘Better Growth, Better Climate’ do not change anything about that. What is needed desperately is a ‘Plan P’: growth ‘agnostic’ policies for a postgrowth environment. The ‘Degrowth’ movement encapsulates some of this by emphasizing redistribution of income, wealth, and paid work via reduction of working hours; by re-evaluating the means of production towards reproduction, towards re-use and repair, and more localized subsistency; a stronger focus on social cohesion, social capital and alternative monetary systems; a circular economy running on renewables, but with a drastically reduced physical scale; and technology being embedded into deliberate democratic processes. Unless our policy reports become agnostic about growth – it might occur, it might even be ‘green’, but we cannot be sure and therefore cannot rest our hopes on it – we will replicate our crises and endanger the well-being of all humanity today and in the days to come.
It’s postgrowth, stupid – so adapt and thrive, or stick to your old dreams of growth and perish.
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