Growth is built into the fabric of our everyday discourse; whether it’s relating to the economy, business, or personal wealth and assets.
We hear politicians all the time talking about the tremendous importance of economic growth; even running election campaigns on the promise.
Growth, we have been taught to believe, fundamentally underpins what we believe to be positive progress and success. Success of the economy, success as businesses, success as people.
”“We are socially addicted to growth, because thanks to a century of consumer propaganda, which fascinatingly was created by Edward Bernays, the nephew of Sigmund Freud, who realized that his uncle's psychotherapy could be turned into very lucrative retail therapy if we could be convinced to believe that we transform ourselves every time we buy something more.”Kate RaworthDoughnut Economics
As the world’s economy is crippled by the Covid-19 pandemic, the debate around economic growth has been thrust into the mainstream; and serious questions are being asked around whether we really want a return to ‘business-as-usual’.
”Anyone who believes growth can go on forever is either a madman or an economist.Kenneth Boulding
Economics & The Environment
Economic growth is often equated to physical growth that uses more inputs: infrastructure expanding and material goods production at the determinant of the earth’s finite resources. This is ‘extensive’ economic growth.
When looking at it from this perspective; economic growth can be intertwined, and even synonymous, with the (arguably blind and brash) over-consumption of Earth’s resources—and its negative environmental impact.
Economic growth goes hand in hand with increased exploitation of both renewable and non-renewable resources. Due to this overuse, more and more environmental impacts (which are commonly considered merely as “negative externalities“) arise (e.g. pollution, overfishing, deforestation) and, somewhat ironically given one the fundamentals of economic growth being cited as a reduction of poverty, social welfare also decreases as a result.
The rate at which natural resources, i.e. land, water and air, are being degraded in the name of economic growth in many countries is ‘alarming’.
More economic growth means more consumption, and hence more resources are extracted as well as more waste produced. The result is resource depletion, pollution, climate change and biodiversity loss. In fact, because of our obsession with economic growth, all of the earth’s life support systems are currently in dramatic decline.
The concentration of carbon dioxide in the atmosphere has shot up from around 327 parts per million in 1972 to 416 parts per million today. For perspective, scientists warned that passing 350 parts per million risked dangerous warming.
What’s more, Global temperatures have increased almost 1 degree Celsius, since pre-industrial times — fueling extreme weather events, catastrophic heat waves in the Arctic, and steadily rising sea levels.
Last year, a United Nations report found that humans are altering the planet so thoroughly that up to 1 million species face extinction.
Green Economic Growth?
In 1968, a small group of elite academics, industrialists, and government officials, dubbing themselves ‘The Club Of Rome’ gathered to discuss “the predicament of mankind.” The thesis was simple: the planet simply could not sustain current rates of economic and population growth.
It was predicted by the group in their book Limits Of Growth that “the most probable result, will be a rather sudden and uncontrollable decline in both population and industrial capacity.”
After being met with scorn in the mainstream media, the thinking gained traction when a geologist testified before Congress and quoted Kenneth Boulding “Anyone who believes growth can go on forever is either a madman or an economist.”
”[Limits Of Growth is] the book that cried wolf. The wolf was the planet’s decline, and the wolf was real.”David WorsterHistorian
There is disagreement amongst environmentalists and thinkers about whether economic growth and increasing production is the primary reason for the alarming environmental situation. The green movement is split on the issue: those who believe growth can continue under new, more sustainable conditions, and those who believe that “green growth” is at best an oxymoron, at worst a distracting fantasy.
Whilst these camps have found an uncomfortable alliance in some of their common goals, the issue over whether economic growth is compatible with a sustainable world has been thrust into the spotlight as the world’s economy is crippled and is expected to shrink by 6% by the Covid-19 pandemic.
We have witnessed whole industries emerging based on the idea of painting the economy green. Replace plastic plates with compostable ones; exchange your diesel car for a hybrid; buy yourself a keep cup. This widespread school of thought believes that the world’s economies can continue to produce more, but in a ‘green way’.
”“Greening growth is necessary, efficient, and affordable”The World Bank2012
“Green growthers” argue that new low-carbon technologies, combined with a steady shift toward producing more services, can make continued growth sustainable. This could be aligned with an ‘intensive’ economic growth model. This line of thinking has dominated discourse in the debate of how we turn our gargantuan systems around to save the planet.
”A better policy is to jump-start the green transformation by subsidising green R&D and making sure those sectors of the economy that use renewable energy grow, and other sectors that rely on fossil fuels shrink. It is thus possible to curb global warming without lowering the overall growth rate of the economy.Professor Rick van der PloegOxford’s Department of Economics
Many have argued that with careful planning, designing a green growth economy can also be utilised to mitigate against other intersecting issues such as green job generation, social justice and equitable policy-making.
A more fringe group of thinkers argue that economic growth, no matter how green, endangers the planet; and that purposeful ‘de-growth’, shrinking of the economy or at the very least curbing growth is the only option.
”Material growth cannot continue indefinitely because planet Earth is physically limited...Living well on a finite planet cannot simply be about consuming more and more stuff.Tim JacksonEcological Economist
As the climate crisis intensifies, this outlook on economic growth is becoming more prevalent and entering the discourse, especially amongst the environmental activist community:“We are in the beginning of a mass extinction, and all you can talk about is money and fairy tales of eternal economic growth” – Greta Thunberg
A Simple Question?
At the heart of debates between green-growthers and de-growthers lies a simple question: Can the global economy, that giant engine which has spent centuries sucking down fossil fuels and spewing out material goods, be separated from environmental destruction?
Historically, emissions reduce during periods of recession & resurge when the economy begins to pick back up.
This pattern is no different in the current situation (although admittedly there are additional factors involved in lockdown circumstances), as global CO2 emissions fall to the lowest they have been in 14 years during lockdowns. By mid-June, however, as cars returned to city streets and businesses began to reopen, emissions were nearly back to their pre-pandemic levels.
Can technology and innovation break this pattern like the green-growthers argue, where rising emissions and growth can be decoupled? There is some promising news for this camp as the world economy grew around 3 percent per year from 2014 to 2016, yet global carbon emissions didn’t budge.
But is it enough or just the exception to the rule? The separation of emissions and growth is “totally outside historical experience…That doesn’t mean it can’t be done, technically — but it does mean that it’s incredibly difficult, and that it’s very different from anything that we’ve done before.” according to Tim Jackson. Whilst some countries have temporarily managed this separation, things haven’t changed that much: in the roughly two-and-a-half decades since industrialized countries signed the Kyoto Protocol to slash carbon emissions, fossil fuel pollution has risen by a staggering 50 percent.
Perhaps we are just being impatient? Cameron Hepburn, Professor of Environmental Economics and Director of Oxford’s Smith School of Enterprise and the Environment argues ‘‘Economic growth can and must be achieved alongside climate mitigation… Stopping economic growth is unnecessary, undesirable and indeed probably impossible. But we need a new economic model that enables humanity to prosper within planetary boundaries.”
Time is, however, of the absolute essence. If we did take a green-growth approach, the transformation from the current economy to a new, cleaner one, would have to take place at a lightning speed to avoid the worst consequences of climate change.
It is estimated that the coronavirus pandemic will likely cut global carbon emissions somewhere between 5 and 8 percent, the biggest drop since World War II. But to keep warming below 1.5 degrees celcius— widely considered by scientists as the point at which climate impacts go from bad to terrible — the world would have to decrease emissions by 7.6 percent every year from now until 2030. This has never been done before.
De-growth, however, brings its own challenges: around 1.9 billion people live on less than $3.20 a day, and around a third of them, mainly in sub-Saharan Africa, try to survive on just $1.90 a day. As such, it is much easier to discuss de-growth from the comfort of an affluent developed country such as the UK. From this exceedingly important perspective, green growth can be argued to be the only feasible way out.
Advocating for de-growth does not render you oblivious to global poverty and many de-growthers argue that developing countries should continue to grow to lift their populations out of poverty, even if it means their emissions rise. To balance the scales, this means developed countries need to do more with less: which could involve radically shrinking large economies. A feat that would require considerable safety nets for the poor and vulnerable given the disparity of income in wealthy countries.
De-growth remains a fringe position, but is on the rise as climate change accelerates. Post-growth ideas are being introduced to change the way we think about growth altogether: and ditching GDP as the measure altogether.
Tim Jackson advocates for markers such as “prosperity’ as he came to realise “all the decisions you might want to make about the quality of people’s working lives or doing something about climate change — they were all just being trumped by the pursuit of GDP.”
Kate Raworth is a leading thinker in this space with her “economies should be designed to thrive not grow” approach. Her ‘doughnut economics’ model incorporates the ecological limits of the earth, providing shelter, health care, education, food etc, while not compromising clean water, air, or soil.
We are starting to see this replacement of GDP with a more rounded approach coming into reality in countries such as New Zealand where Jacinder Ardern has created a well-being budget to complement GDP, which includes 61 indicators such as trust in government, water quality, general life satisfaction, and the unemployment rate.
Is the environmental awareness of the population the only reason for the change in thinking? Probably not. Despite every effort of leadership and governments, economic growth has actually been rather slow of late; and this could be due to the fact we are reaching the end of “the Great Acceleration”, the period of rising prosperity and population growth that followed World War II.
Is this a bad thing? Following decades of sharp economic growth peppered with a few severe recessions, it may feel like that. But it could also offer opportunities to live and work differently.
The urgency that the Covid-19 pandemic has injected into our discussions around ‘business as usual’ and ‘economic growth & GDP at all costs’ attitudes is palpable. There is a new and swelling ‘seize the opportunity’ sentiment that we need to consider a new path forward.
For some, the impacts of the virus reaffirm the idea that de-growth is not the answer as we see record unemployment rates and the World Bank projects that COVID-19 could force 71 million people into extreme poverty.
For others, the virus has thrust much deeper problems into the spotlight; some of the countries most powerful economies failed miserably in protecting the poor and vulnerable from the disease.
Whilst many try to rush back to normal, the question of how we rebuild is more important than ever. Here in the UK, Brainthinks reported that actually, only 12% of Brits (across the political spectrum) want a return to normal.
We are being offered a very narrow window right now to ask ourselves: ‘is normal really what we want to rush back to?’