Growth or Degrowth?

Our needs are few, but our wants are many. Therefore the basic goal of an economy is to take care of our basic needs. What are those basic needs? Housing, medical care, employment, education and food. We must learn to fulfill these needs without leading us astray into thinking that more and more sophisticated versions of these basic needs will ever satisfy our main need: the need for inner fulfillment, for happiness. ^[1] We need to build an economy of happiness. But how?

There are various reasons why humans have destroyed the environment. There are economic, cultural and political reasons. But the main cause is rooted in human nature and psychology itself, in our insatiable need for more—more money, more things, more pleasure. We humans come hardwired with two innate characteristics:  the need to take care of ourselves, and the need to take care of others. We may call the first need self-interest and the other group-interest. Our modern insatiability for more things originates in the human psychology of self-interest.

I think human needs are basic and few and that providing these needs for all, without compromising the environment, is the new economy’s main priority.

We have built our economic system on the principles of selfishness and insatiability, of confusing our few basic needs with more material wants. Moreover, capitalism is based on the idea that selfishness and the desire for more are not only necessary drivers of the economy, they are also virtuous human qualities. President Ronald Reagan, with his Hollywood persona and neo-liberal ideology, epitomized this mythic vision of capitalism: that the dream of wealth and the wrath of scarcity are two opposing principles that are essential to form a dynamic economy. Since the Reagan era, this vision has become an economic dogma, and, we think, one of the main reasons we are a global society in deep economic and environmental trouble. Unlike Reagan and his ideological supporters, I think human needs are basic and few and that providing these needs for all, without compromising the environment, is the new economy’s main priority. Does that mean the economy in the rich countries needs to stop growing in order to save the environment?

Growth, No-growth or Degrowth?

Our environmental problems, now spanning the globe, have painfully taught us the limits of economic growth. The industrial and commercial growth machinery of capitalism has taught us at least three things:

1. Capitalist growth creates economic inequality. Over the past 30 years, as GDP growth has risen, economic inequality has also risen dramatically in the Western world, while at the same time global inequality between rich and poor countries has also increased.
2. Capitalist growth is often environmentally disastrous. Thanks to ever-expanding loans and credit lines, we in the Western world are able to purchase fancier cars and upgraded electronic gadgets at increasingly shorter intervals, exotic foods from faraway places, and bigger houses filled with more stuff than ever before. At the same time, the Chinese and Indian middle class is growing by tens of millions of people every year who demand cars and more consumer goods. The escalating rise in production of these goods puts a growing strain on the environment by rapidly reducing non-renewable resources such as oil and gas while also increasing pollution and toxic waste.
3. Capitalist growth has manifested economic globalization but, in my estimation, it has not created a “good global society” in the spirit of Aristotle. It was indeed he who first outlined some of the qualities of the good life—individual courage, moderation, generosity, wisdom and the social and economic requirements needed for the individual to realize those qualities. It is environmentally wise, I think, to aspire for the good society, where human expressions such as art, music, ethics, spirituality, literature, sports, rather than material qualities, are favored. But capitalist materialism does not consider these valid notions of progress.

For the true believers in unrestricted, neo-liberal capitalism today, the good society is a society where the most successful have the most toys, and where the dream of the rest is to one day in the future have even more toys, even more money than the most successful today. In Europe, and to a lesser degree in the US, this cut-throat form of capitalism has been tempered by some government control over the market, redistribution of wealth and environmental regulations, but these checks and balances have not been enough to stem the growing increase in environmental problems.

Economist John Maynard Keynes looked forward to a time when growth would end, a time when we were materially satisfied and had plenty of time to pursue leisure activities. Not unlike a contemporary environmentalist, he had realized, already in the 1930s; that capitalist progress was a “soiled creed, black with coal dust and gunpowder.” In an address to students at Cambridge in the 1920s, he outlined his prophetic vision of a society 100 years hence where “the economic problem may be solved, or at least within sight of solution.” We would work no more than three hours a day and spend the rest of our time in a joyous spirit of artistic and intellectual pursuits—not just the privileged few but society as a whole.

So far, Keynes’ prophecy has not been realized. The reason is simple, say many environmentalists: we cannot grow our way into the future and expect to live in both harmony with nature and ourselves. The influential Club of Rome sponsored book, Limits to Growth, published in 1972, has set the tone for much of the environmental writings ever since: growth is bad, reduced growth is good, going back to nature and living the good life of simplicity and sustainability is the answer to capitalist excess. From John Stuart Mill to John Maynard Keynes to contemporary ecological economist Herman Daly, the vision of steady-state economics has been strong and consistent.

Economist John Maynard Keynes looked forward to a time when growth would end, a time when we were materially satisfied and had plenty of time to pursue leisure activities.

According to Daly, a steady-state economy, like the idea of the good society, will enable any non-physical component of the economy to grow indefinitely; while there will, from time-to-time, be limits to economic growth as per ecological constraints. The basic tenets of steady-state economics are: (1) Maintain the health of ecosystems and the life-support services they provide. (2) Extract renewable resources like fish and timber at a rate no faster than they can be regenerated. (3) Consume non-renewable resources like fossil fuels and minerals at a rate no faster than they can be replaced by the discovery of renewable substitutes. (4) Deposit wastes in the environment at a rate no faster than they can be safely assimilated. ^[2]

While many, if not most, environmentalists adhere to this form of ecological economics, there are technological optimists within the sustainable economy camps who promise ecological designs “beyond sustainability” ensuring abundance and ecological balance in perpetuity. In other words, economic growth and ecological balance is possible, argues architect William McDonough and chemist Michael Braungart in their book, The Upcycle, if “technical nutrients” such as metals, plastics and other materials not continuously created by the biosphere become, in an industrial ecological cycle, “resource food” for another product and yet again for another product—forever and ever.^[3]  Inventers of various industrial designs, they, and a growing number of ecological activists and scientists, now believe economic growth is possible through ecological designs by turning sewage plants and houses into alternative energy generators and industrial plants into non-polluting facilities where all waste is cycled back into productive use.

Unless there is economic restructuring of the economy, green capitalism will not be able to deliver what it promises: a sustainable world for all of us.  

I agree, but what is missing in this optimistic, green vision is an economic structure to ensure that such ecological designs do not only become a feature of a privileged few countries. As Heather Rogers suggests in Green Gone Wrong, in the name of profit, corporations could easily start to dominate these new industrial concepts as well, ensuring monopoly and control. Unless there is economic restructuring of the economy, green capitalism will not be able to deliver what it promises: a sustainable world for all of us.  

Global retail giant Wal-Mart, to name one example of a corporate giant gone green, is one of the most profitable businesses in the world. It is one of the largest sellers of organic produce, but the company is, despite four billion dollars of profits each year, still paying their workers low wages without providing them medical care. Their environmental focus has not translated into better business practices. The bottom line, not a new-found, progressive conscience, dictates their business practices. Plus, wherever Wal-Mart sets up shop, the aggressively competitive company inevitably drives smaller firms out of business. In our observation, this is not only green gone wrong, this is green gone mean.

Economic growth or de-growth depends on the situation.

Selling environmental products is therefore not enough. This practice must also be supported by economic policy changes and economic restructuring. Otherwise, the profit motive will continue to dictate environmental concerns. And that kind of sustainability is too shallow, too green-washed to have any meaningful impact on the economic and environmental crisis we’re in.

Economic growth or de-growth thus depends on the situation. Currently, the Western world does not need to grow in the production of luxury goods, or in constructing bigger houses, more coal fired power plants, or in designing more weapons of mass destruction. The Western world needs to grow in providing more fuel-efficient cars, greener homes, greener industrial plants, less waste and increased recycling. The Western economy needs to grow leaner and greener companies and products, and its economy needs to decentralize and localize.

Regarding localization of the economy, the online retail giant Amazon is a case in point. The heavily centralized yet global company employs 65,000 people, most of whom earn only a fraction of what the shareholders earn. If all the operations of Amazon were decentralized, according to economist Robert Reich, the various companies it would create would employ nearly 850,000 people. This would not only ensure a growth in the economy by spreading the wealth around to more wage earners and away from the wealthy one percent in the shareholder class now running the company, it would also cause fewer shipping miles and thus have less impact on the environment—in sum, the economic impact would be more equitable and the carbon footprint would be drastically reduced ^[4] in a win-win situation for both the economy and the environment. 

What we need instead is sustainable growth in some areas, degrowth in others, and human, cultural and spiritual growth yet in other areas.

In recent years, we have painfully learned that capitalism has created an economy mainly based on material growth. We have also learned that material resources are limited; that their utilization sometimes creates pollution, and that pollution has a cost—economic, social, personal, and environmental. We have learned that we cannot simply grow the economy without paying off these debts to nature and to humanity. 

But for most of modern life, politicians and business leaders have told the public that economic growth is the single most important pursuit of society. Today we know this economic goal is the number one cause of the environmental crisis. We have also learned this: of all the crises that humanity is faced with today, no matter how devastating they may be, the one with the possibility of the most profound impact on human life is the environmental crisis. Without solving that, we will have endless material growth leading to a final catastrophic sate of collapse and no-growth. What we need instead is sustainable growth in some areas, degrowth in others, and human, cultural and spiritual growth yet in other areas. Growth or degrowth is not an either/or proposition; within a well-balanced and regenerative economy it can be a long-term yes/and formula.

[1] Robert and Edward Skidelsky, How Much Is Enough?, New York: Other Press, , 2013

[2] From Wikipedia: ‘Steady State Economy,’ http://en.wikipedia.org/wiki/Steady_state_economy

[3] William McDonough and Michael Braungart, The Upcycle, (New York: North Point Press, , 2013), 14

[4] Robert Reich, from his documentary film Inequality for All, 2013, see http://inequalityforall.com/

Top Photo by Micheile Henderson