Arquivo da tag: Decrescimento econômico

Capitalism is in crisis. To save it, we need to rethink economic growth. (MIT Technological Review)

technologyreview.com

The failure of capitalism to solve our biggest problems is prompting many to question one of its basic precepts.

David Rotman


This story was part of our November 2020 issue

October 14, 2020

No wonder many in the US and Europe have begun questioning the underpinnings of capitalism—particularly its devotion to free markets and its faith in the power of economic growth to create prosperity and solve our problems. 

The antipathy to growth is not new; the term “degrowth” was coined in the early 1970s. But these days, worries over climate change, as well as rising inequality, are prompting its reemergence as a movement. 

Calls for “the end of growth” are still on the economic fringe, but degrowth arguments have been taken up by political movements as different as the Extinction Rebellion and the populist Five Star Movement in Italy. “And all you can talk about is money and fairy tales of eternal economic growth. How dare you!” thundered Greta Thunberg, the young Swedish climate activist, to an audience of diplomats and politicians at UN Climate Week last year.

At the core of the degrowth movement is a critique of capitalism itself. In Less Is More: How Degrowth Will Save the World, Jason Hickel writes: “Capitalism is fundamentally dependent on growth.” It is, he says, “not growth for any particular purpose, mind you, but growth for its own sake.”

That mindless growth, Hickel and his fellow degrowth believers contend, is very bad both for the planet and for our spiritual well-being. We need, Hickel writes, to develop “new theories of being” and rethink our place in the “living world.” (Hickel goes on about intelligent plants and their ability to communicate, which is both controversial botany and confusing economics.) It’s tempting to dismiss it all as being more about social engineering of our lifestyles than about actual economic reforms. 

Though Hickel, an anthropologist, offers a few suggestions (“cut advertising” and “end planned obsolescence”), there’s little about the practical steps that would make a no-growth economy work. Sorry, but talking about plant intelligence won’t solve our woes; it won’t feed hungry people or create well-paying jobs. 

Still, the degrowth movement does have a point: faced with climate change and the financial struggles of many workers, capitalism isn’t getting it done. 

Slow growth

Even some economists outside the degrowth camp, while not entirely rejecting the importance of growth, are questioning our blind devotion to it. 

One obvious factor shaking their faith is that growth has been lousy for decades. There have been exceptions to this economic sluggishness—the US during the late 1990s and early 2000s and developing countries like China as they raced to catch up. But some scholars, notably Robert Gordon, whose 2016 book The Rise and Fall of American Growth triggered much economic soul-searching, are realizing that slow growth might be the new normal, not some blip, for much of the world. 

Gordon held that growth “ended on October 16, 1973, or thereabouts,” write MIT economists Esther Duflo and Abhijit Banerjee, who won the 2019 Nobel Prize, in Good Economics for Hard Times. Referencing Gordon, they single out the day when the OPEC oil embargo began; GDP growth in the US and Europe never fully recovered. 

The pair are of course being somewhat facetious in tracing the end of growth to a particular day. Their larger point: robust growth seemingly disappeared almost overnight, and no one knows what happened.

Duflo and Banerjee offer possible explanations, only to dismiss them. They write: “The bottom line is that despite the best efforts of generations of economists, the deep mechanisms of persistent economic growth remain elusive.” Nor do we know how to revive it. They conclude: “Given that, we will argue, it may be time to abandon our profession’s obsession with growth.”

In this perspective, growth is not the villain of today’s capitalism, but—at least as measured by GDP—it’s an aspiration that is losing its relevance. Slow growth is nothing to worry about, says Dietrich Vollrath, an economist at the University of Houston, at least not in rich countries. It’s largely the result of lower birth rates—a shrinking workforce means less output—and a shift to services to meet the demands of wealthier consumers. In any case, says Vollrath, with few ways to change it, we might as well embrace slow growth. “It is what it is,” he says. 

Vollrath says when his book Fully Grown: Why a Stagnant Economy Is a Sign of Success came out last January, he “was adopted by the degrowthers.” But unlike them, he’s indifferent to whether growth ends or not; rather, he wants to shift the discussion to ways of creating more sustainable technologies and achieving other social goals, whether the changes boost growth or not. “There is now a disconnect between GDP and whether things are getting better,” he says.

Living better

Though the US is the world’s largest economy as measured by GDP, it is doing poorly on indicators such as environmental performance and access to quality education and health care, according to the Social Progress Index, released late this summer by a Washington-based think tank. In the annual ranking (done before the covid pandemic), the US came in 28th, far behind other wealthy countries, including ones with slower GDP growth rates.

“You can churn out all the GDP you want,” says Rebecca Henderson, an economist at Harvard Business School, “but if the suicide rates go up, and the depression rates go up, and the rate of children dying before they’re four goes up, it’s not the kind of society you want to build.” We need to “stop relying totally on GDP,” she says. “It should be just one metric among many.”

Part of the problem, she suggests, is “a failure to imagine that capitalism can be done differently, that it can operate without toasting the planet.”

In her perspective, the US needs to start measuring and valuing growth according to its impact on climate change and access to essential services like health care. “We need self-aware growth,” says Henderson. “Not growth at any cost.” 

Daron Acemoglu, another MIT economist, is calling for a “new growth strategy” aimed at creating technologies needed to solve our most pressing problems. Acemoglu describes today’s growth as being driven by large corporations committed to digital technologies, automation, and AI. This concentration of innovation in a few dominant companies has led to inequality and, for many, wage stagnation. 

People in Silicon Valley, he says, often acknowledge to him that this is a problem but argue, “It’s what technology wants. It’s the path of technology.” Acemoglu disagrees; we make deliberate choices about which technologies we invent and use, he says.

Acemoglu argues that growth should be directed by market incentives and by regulation. That, he believes, is the best way to make sure we create and deploy technologies that society needs, rather than ones that simply generate massive profits for a few. 

Which technologies are those? “I don’t know exactly,” he says. “I’m not clairvoyant. It hasn’t been a priority to develop such technologies, and we’re not aware of the capabilities.”

Turning such a strategy into reality will depend on politics. And the reasoning of academic economists like Acemoglu and Henderson, one fears, is not likely to be popular politically—ignoring as it does the loud calls for the end of growth from the left and the self-confident demands for continued unfettered free markets on the right. 

But for those not willing to give up on a future of growth and the vast promise of innovation to improve lives and save the planet, expanding our technological imagination is the only the real choice.

Rewriting capitalism: some must-reads

  • Reimagining Capitalism in a World on Fire, BY REBECCA HENDERSON
    The Harvard Business School economist argues that companies can play an important role in improving the world.
  • Good Economics for Hard Times, BY ABHIJIT V. BANERJEE AND ESTHER DUFLO
    The MIT economists and 2019 Nobel laureates explain the challenges of boosting growth both in rich countries and in poor ones, where they do much of their research.
  • Fully Grown: Why a Stagnant Economy Is a Sign of Success, BY DIETRICH VOLLRATH
    The University of Houston economist argues that slow growth in rich countries like the United States is just fine, but we need to make the benefits from it more inclusive.
  • Less Is More: How Degrowth Will Save the World, BY JASON HICKEL
    A leading voice in the degrowth movement provides an overview of the argument for ending growth. It’s a convincing diagnosis of the problems we’re facing; how an end to growth will solve any of them is less clear.

MIT Predicted in 1972 That Society Will Collapse This Century. New Research Shows We’re on Schedule (Motherboard)

A 1972 MIT study predicted that rapid economic growth would lead to societal collapse in the mid 21st century. A new paper shows we’re unfortunately right on schedule.

By Nafeez Ahmed – July 14, 2021, 10:00am

A remarkable new study by a director at one of the largest accounting firms in the world has found that a famous, decades-old warning from MIT about the risk of industrial civilization collapsing appears to be accurate based on new empirical data. 

As the world looks forward to a rebound in economic growth following the devastation wrought by the pandemic, the research raises urgent questions about the risks of attempting to simply return to the pre-pandemic ‘normal.’

In 1972, a team of MIT scientists got together to study the risks of civilizational collapse. Their system dynamics model published by the Club of Rome identified impending ‘limits to growth’ (LtG) that meant industrial civilization was on track to collapse sometime within the 21st century, due to overexploitation of planetary resources.

The controversial MIT analysis generated heated debate, and was widely derided at the time by pundits who misrepresented its findings and methods. But the analysis has now received stunning vindication from a study written by a senior director at professional services giant KPMG, one of the ‘Big Four’ accounting firms as measured by global revenue.

Limits to growth

The study was published in the Yale Journal of Industrial Ecology in November 2020 and is available on the KPMG website. It concludes that the current business-as-usual trajectory of global civilization is heading toward the terminal decline of economic growth within the coming decade—and at worst, could trigger societal collapse by around 2040.

The study represents the first time a top analyst working within a mainstream global corporate entity has taken the ‘limits to growth’ model seriously. Its author, Gaya Herrington, is Sustainability and Dynamic System Analysis Lead at KPMG in the United States. However, she decided to undertake the research as a personal project to understand how well the MIT model stood the test of time.

The study itself is not affiliated or conducted on behalf of KPMG, and does not necessarily reflect the views of KPMG. Herrington performed the research as an extension of her Masters thesis at Harvard University in her capacity as an advisor to the Club of Rome. However, she is quoted explaining her project on the KPMG website as follows: 

“Given the unappealing prospect of collapse, I was curious to see which scenarios were aligning most closely with empirical data today. After all, the book that featured this world model was a bestseller in the 70s, and by now we’d have several decades of empirical data which would make a comparison meaningful. But to my surprise I could not find recent attempts for this. So I decided to do it myself.”

Titled ‘Update to limits to growth: Comparing the World3 model with empirical data’, the study attempts to assess how MIT’s ‘World3’ model stacks up against new empirical data. Previous studies that attempted to do this found that the model’s worst-case scenarios accurately reflected real-world developments. However, the last study of this nature was completed in 2014. 

The risk of collapse 

Herrington’s new analysis examines data across 10 key variables, namely population, fertility rates, mortality rates, industrial output, food production, services, non-renewable resources, persistent pollution, human welfare, and ecological footprint. She found that the latest data most closely aligns with two particular scenarios, ‘BAU2’ (business-as-usual) and ‘CT’ (comprehensive technology). 

“BAU2 and CT scenarios show a halt in growth within a decade or so from now,” the study concludes. “Both scenarios thus indicate that continuing business as usual, that is, pursuing continuous growth, is not possible. Even when paired with unprecedented technological development and adoption, business as usual as modelled by LtG would inevitably lead to declines in industrial capital, agricultural output, and welfare levels within this century.”

Study author Gaya Herrington told Motherboard that in the MIT World3 models, collapse “does not mean that humanity will cease to exist,” but rather that “economic and industrial growth will stop, and then decline, which will hurt food production and standards of living… In terms of timing, the BAU2 scenario shows a steep decline to set in around 2040.”

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The ‘Business-as-Usual’ scenario (Source: Herrington, 2021)

The end of growth? 

In the comprehensive technology (CT) scenario, economic decline still sets in around this date with a range of possible negative consequences, but this does not lead to societal collapse.

image1.png

The ‘Comprehensive Technology’ scenario (Source: Herrington, 2021)

Unfortunately, the scenario which was the least closest fit to the latest empirical data happens to be the most optimistic pathway known as ‘SW’ (stabilized world), in which civilization follows a sustainable path and experiences the smallest declines in economic growth—based on a combination of technological innovation and widespread investment in public health and education.

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The ‘Stabilized World’ Scenario (Source: Herrington, 2021)

Although both the business-as-usual and comprehensive technology scenarios point to the coming end of economic growth in around 10 years, only the BAU2 scenario “shows a clear collapse pattern, whereas CT suggests the possibility of future declines being relatively soft landings, at least for humanity in general.” 

Both scenarios currently “seem to align quite closely not just with observed data,” Herrington concludes in her study, indicating that the future is open.   

A window of opportunity 

While focusing on the pursuit of continued economic growth for its own sake will be futile, the study finds that technological progress and increased investments in public services could not just avoid the risk of collapse, but lead to a new stable and prosperous civilization operating safely within planetary boundaries. But we really have only the next decade to change course. 

“At this point therefore, the data most aligns with the CT and BAU2 scenarios which indicate a slowdown and eventual halt in growth within the next decade or so, but World3 leaves open whether the subsequent decline will constitute a collapse,” the study concludes. Although the ‘stabilized world’ scenario “tracks least closely, a deliberate trajectory change brought about by society turning toward another goal than growth is still possible. The LtG work implies that this window of opportunity is closing fast.”

In a presentation at the World Economic Forum in 2020 delivered in her capacity as a KPMG director, Herrington argued for ‘agrowth’—an agnostic approach to growth which focuses on other economic goals and priorities.  

“Changing our societal priorities hardly needs to be a capitulation to grim necessity,” she said. “Human activity can be regenerative and our productive capacities can be transformed. In fact, we are seeing examples of that happening right now. Expanding those efforts now creates a world full of opportunity that is also sustainable.” 

She noted how the rapid development and deployment of vaccines at unprecedented rates in response to the COVID-19 pandemic demonstrates that we are capable of responding rapidly and constructively to global challenges if we choose to act. We need exactly such a determined approach to the environmental crisis.

“The necessary changes will not be easy and pose transition challenges but a sustainable and inclusive future is still possible,” said Herrington. 

The best available data suggests that what we decide over the next 10 years will determine the long-term fate of human civilization. Although the odds are on a knife-edge, Herrington pointed to a “rapid rise” in environmental, social and good governance priorities as a basis for optimism, signalling the change in thinking taking place in both governments and businesses. She told me that perhaps the most important implication of her research is that it’s not too late to create a truly sustainable civilization that works for all.

Conventional wisdom holds that rising living standards are fueled by oil. What if that’s wrong? (Anthropocene Magazine)

Researchers found that recent improvements in life expectancy are only weakly coupled to increases in carbon emissions

By Sarah DeWeerdt

March 31, 2020

In recent decades, life has gotten better, more comfortable, and longer for many people around the world. Conventional wisdom holds that these gains in human well-being are underpinned by fossil fuel energy. After all, a country’s energy use tends to be correlated with its inhabitants’ life expectancy at any given point in time.

But this assumption doesn’t hold up to scrutiny, a new analysis indicates. And that, in turn, suggests the hopeful conclusion that decarbonization need not put future gains in well-being at risk.

Researchers in the UK and Germany analyzed data on energy extraction, carbon emissions, economic activity, food supply, residential electricity availability, and life expectancy in 70 countries around the world between 1971 and 2014.

They used a relatively new method called functional dynamic decomposition: a series of mathematical equations to analyze the changing relationships between two variables – such as carbon emissions and life expectancy – and assess whether changes in one drive changes in the other.

The method cannot demonstrate causality, but a lack of association between two variables over time is evidence of lack of causation.

In fact, while some variables are correlated at particular points, one does not drive the other over time, the researchers report in the journal Environmental Research Letters. They call this a “carbon-development paradox.”

The new results “demonstrate that fossil fuels are not, as often imagined or stated, significant contributors to improvements in human development,” the researchers write.

Carbon emissions, primary energy use, and economic activity as measured by market exchange rate income (MER, which depends on international trade) are all “dynamically coupled” over time.

So are economic activity as measured by purchasing power parity (PPP, which indicates how far people’s incomes go within their home country), food supply, residential electricity, and life expectancy.

“Recent improvements in life expectancy are only weakly coupled to increases in primary energy or carbon emissions,” the researchers write. Instead, life expectancy gains are more closely linked growth in real incomes, access to food, and availability of electricity at home.

And although increases in carbon emissions account for much of the increase in primary energy over time, they account for a relatively small amount of the increase in residential electricity.

Increases in primary energy account for the vast majority of increases in MER income, but only about half of increases in PPP. “Economic growth is thus not enough on its own: the question is what type of economic growth,” the researchers write.

So stoking the furnace of the economy with fossil fuels won’t necessarily result in human flourishing. And reducing energy use and carbon emissions won’t necessarily result in human suffering.

“Our results directly counter the claims by fossil fuel companies that their products are necessary for well-being,” lead author Julia Steinberger of the University of Leeds said in a statement. “Reducing emissions and primary energy use, while maintaining or enhancing the health of populations, should be possible.”

To do that, governments will need to prioritize people’s access to food, renewable energy, and other goods that are more directly related to well-being—rather than economic growth for its own sake.

Source: Steinberger J.K. et al.Your money or your life? The carbon-development paradox.” Environmental Research Letters 2020. 

Image: Shutterstock

Can We Have Prosperity Without Growth? (New Yorker)

Dept. of Finance February 10, 2020 Issue

The critique of economic growth, once a fringe position, is gaining widespread attention in the face of the climate crisis.

By John Cassidy February 3, 2020

person skateboarding downhill
The degrowth movement would overhaul social values and production patterns. Illustration by Till Lauer

In 1930, the English economist John Maynard Keynes took a break from writing about the problems of the interwar economy and indulged in a bit of futurology. In an essay entitled “Economic Possibilities for Our Grandchildren,” he speculated that by the year 2030 capital investment and technological progress would have raised living standards as much as eightfold, creating a society so rich that people would work as little as fifteen hours a week, devoting the rest of their time to leisure and other “non-economic purposes.” As striving for greater affluence faded, he predicted, “the love of money as a possession . . . will be recognized for what it is, a somewhat disgusting morbidity.”

This transformation hasn’t taken place yet, and most economic policymakers remain committed to maximizing the rate of economic growth. But Keynes’s predictions weren’t entirely off base. After a century in which G.D.P. per person has gone up more than sixfold in the United States, a vigorous debate has arisen about the feasibility and wisdom of creating and consuming ever more stuff, year after year. On the left, increasing alarm about climate change and other environmental threats has given birth to the “degrowth” movement, which calls on advanced countries to embrace zero or even negative G.D.P. growth. “The faster we produce and consume goods, the more we damage the environment,” Giorgos Kallis, an ecological economist at the Autonomous University of Barcelona, writes in his manifesto, “Degrowth.” “There is no way to both have your cake and eat it, here. If humanity is not to destroy the planet’s life support systems, the global economy should slow down.” In “Growth: From Microorganisms to Megacities,” Vaclav Smil, a Czech-Canadian environmental scientist, complains that economists haven’t grasped “the synergistic functioning of civilization and the biosphere,” yet they “maintain a monopoly on supplying their physically impossible narratives of continuing growth that guide decisions made by national governments and companies.”

Once confined to the margins, the ecological critique of economic growth has gained widespread attention. At a United Nations climate-change summit in September, the teen-age Swedish environmental activist Greta Thunberg declared, “We are in the beginning of a mass extinction, and all you can talk about is money and fairy tales of eternal economic growth. How dare you!” The degrowth movement has its own academic journals and conferences. Some of its adherents favor dismantling the entirety of global capitalism, not just the fossil-fuel industry. Others envisage “post-growth capitalism,” in which production for profit would continue, but the economy would be reorganized along very different lines. In the influential book “Prosperity Without Growth: Foundations for the Economy of Tomorrow,” Tim Jackson, a professor of sustainable development at the University of Surrey, in England, calls on Western countries to shift their economies from mass-market production to local services—such as nursing, teaching, and handicrafts—that could be less resource-intensive. Jackson doesn’t underestimate the scale of the changes, in social values as well as in production patterns, that such a transformation would entail, but he sounds an optimistic note: “People can flourish without endlessly accumulating more stuff. Another world is possible.”

Even within mainstream economics, the growth orthodoxy is being challenged, and not merely because of a heightened awareness of environmental perils. In “Good Economics for Hard Times,” two winners of the 2019 Nobel Prize in Economics, Abhijit Banerjee and Esther Duflo, point out that a larger G.D.P. doesn’t necessarily mean a rise in human well-being—especially if it isn’t distributed equitably—and the pursuit of it can sometimes be counterproductive. “Nothing in either our theory or the data proves the highest G.D.P. per capita is generally desirable,” Banerjee and Duflo, a husband-and-wife team who teach at M.I.T., write.

The two made their reputations by applying rigorous experimental methods to investigate what types of policy interventions work in poor communities; they conducted randomized controlled trials, in which one group of people was subjected to a given policy intervention—paying parents to keep their children in school, say—and a control group wasn’t. Drawing on their findings, Banerjee and Duflo argue that, rather than chase “the growth mirage,” governments should concentrate on specific measures with proven benefits, such as helping the poorest members of society get access to health care, education, and social advancement.

Banerjee and Duflo also maintain that in advanced countries like the United States the misguided pursuit of economic growth since the Reagan-Thatcher revolution has contributed to a rise in inequality, mortality rates, and political polarization. When the benefits of growth are mainly captured by an élite, they warn, social disaster can result.

That’s not to say that Banerjee and Duflo are opposed to economic growth. In a recent essay for Foreign Affairs, they noted that, since 1990, the number of people living on less than $1.90 a day—the World Bank’s definition of extreme poverty—fell from nearly two billion to around seven hundred million. “In addition to increasing people’s income, steadily expanding G.D.P.s have allowed governments (and others) to spend more on schools, hospitals, medicines, and income transfers to the poor,” they wrote. Yet for advanced countries, in particular, they think policies that slow G.D.P. growth may prove to be beneficial, especially if the result is that the fruits of growth are shared more widely. In this sense, Banerjee and Duflo might be termed “slowthers”—a label that certainly applies to Dietrich Vollrath, an economist at the University of Houston and the author of “Fully Grown: Why a Stagnant Economy Is a Sign of Success.”

As his subtitle suggests, he thinks that slower rates of economic growth in advanced countries are nothing to worry about. Between 1950 and 2000, G.D.P. per person in the U.S. rose at an annual rate of more than three per cent. Since 2000, the growth rate has slowed to about two per cent. (Donald Trump has not, as he promised, boosted over-all G.D.P. growth to four or five per cent.) The phenomenon of slow growth is often bemoaned as “secular stagnation,” a term popularized by Lawrence Summers, the Harvard economist and former Treasury Secretary. Yet Vollrath argues that slower growth is appropriate for a society as rich and industrially developed as ours. Unlike other growth skeptics, he doesn’t base his case on environmental concerns or rising inequality or the shortcomings of G.D.P. as a measurement. Rather, he explains this phenomenon as the result of personal choices—the core of economic orthodoxy.

Vollrath offers a detailed decomposition of the sources of economic growth, which uses a mathematical technique that the eminent M.I.T. economist Robert Solow pioneered in the nineteen-fifties. The movement of women into the workplace provided a onetime boost to the labor supply; in its aftermath, other trends dragged down the growth curve. As countries like the United States have become richer and richer, Vollrath points out, their inhabitants have chosen to spend less time at work and to have smaller families—the result of higher wages and the advent of contraceptive pills. G.D.P. growth slows when the growth of the labor force declines. But this isn’t any sort of failure, in Vollrath’s view: it reflects “the advance of women’s rights and economic success.”

Vollrath estimates that about two-thirds of the recent slowdown in G.D.P. growth can be accounted for by the decline in the growth of labor inputs. He also cites a switch in spending patterns from tangible goods—such as clothes, cars, and furniture—to services, such as child care, health care, and spa treatments. In 1950, spending on services accounted for forty per cent of G.D.P.; today, the proportion is more than seventy per cent. And service industries, which tend to be labor-intensive, exhibit lower rates of productivity growth than goods-producing industries, which are often factory-based. (The person who cuts your hair isn’t getting more efficient; the plant that makes his or her scissors probably is.) Since rising productivity is a key component of G.D.P. growth, that growth will be further constrained by the expansion of the service sector. But, again, this isn’t necessarily a failure. “In the end, that reallocation of economic activity away from goods and into services comes down to our success,” Vollrath writes. “We’ve gotten so productive at making goods that this has freed up our money to spend on services.”

Taken together, slower growth in the labor force and the shift to services can explain almost all the recent slowdown, according to Vollrath. He’s unimpressed by many other explanations that have been offered, such as sluggish rates of capital investment, rising trade pressures, soaring inequality, shrinking technological possibilities, or an increase in monopoly power. In his account, it all flows from the choices we’ve made: “Slow growth, it turns out, is the optimal response to massive economic success.”

Vollrath’s analysis implies that all the major economies are likely to see slower growth rates as their populations age—a pattern first established in Japan during the nineteen-nineties. But two-per-cent growth isn’t negligible. If the U.S. economy continues to expand at this rate, it will have doubled in size by 2055, and a century from now it will be almost eight times its current size. If you think about growth-compounding in other rich countries, and developing economies growing at somewhat faster rates, you can readily summon up scenarios in which, by the end of the next century, global G.D.P. has risen fiftyfold, or even a hundredfold.

Is such a scenario environmentally sustainable? Proponents of “green growth,” who now include many European governments, the World Bank, the Organization for Economic Co-operation and Development, and all the remaining U.S. Democratic Presidential candidates, insist that it is. They say that, given the right policy measures and continued technological progress, we can enjoy perpetual growth and prosperity while also reducing carbon emissions and our consumption of natural resources. A 2018 report by the Global Commission on the Economy and Climate, an international group of economists, government officials, and business leaders, declared, “We are on the cusp of a new economic era: one where growth is driven by the interaction between rapid technological innovation, sustainable infrastructure investment, and increased resource productivity. We can have growth that is strong, sustainable, balanced, and inclusive.”

This judgment reflected a belief in what’s sometimes termed “absolute decoupling”—a prospect in which G.D.P. can grow while carbon emissions decline. The environmental economists Alex Bowen and Cameron Hepburn have conjectured that, by 2050, absolute decoupling may appear “to have been a relatively easy challenge,” as renewables become significantly cheaper than fossil fuels. They endorse scientific research into green technology, and hefty taxes on fossil fuels, but oppose the idea of stopping economic growth. From an environmental perspective, they write, “it would be counterproductive; recessions have slowed and in some cases derailed efforts to adopt cleaner modes of production.”

For a time, official carbon-emissions figures seemed to support this argument. Between 2000 and 2013, Britain’s G.D.P. grew by twenty-seven per cent while emissions fell by nine per cent, Kate Raworth, an English economist and author, noted in her thought-provoking book, “Doughnut Economics: Seven Ways to Think Like a 21st Century Economist,” published in 2017. The pattern was similar in the United States: G.D.P. up, emissions down. Globally, carbon emissions were flat between 2014 and 2016, according to figures from the International Energy Agency. Unfortunately, this trend didn’t last. According to a recent report from the Global Carbon Project, carbon emissions worldwide have been edging up in each of the past three years.

The pause in the rise of emissions may well have been the temporary product of a depressed economy—the Great Recession and its aftermath—and the shift from coal to natural gas, which can’t be repeated. According to a recent report by the United Nations and a number of climate-research institutes, “Governments are planning to produce about 50% more fossil fuels by 2030 than would be consistent with a 2°C pathway and 120% more than would be consistent with a 1.5°C pathway.” (Those were the targets established in the 2016 Paris Agreement.) In a recent review of the literature about green growth, Giorgos Kallis and Jason Hickel, an anthropologist at Goldsmiths, University of London, concluded that “green growth is likely to be a misguided objective, and that policymakers need to look toward alternative strategies.”

Can such “alternative strategies” be implemented without huge ruptures? For decades, economists have cautioned that they can’t. “If growth were to be abandoned as an objective of policy, democracy too would have to be abandoned,” Wilfred Beckerman, an Oxford economist, wrote in “In Defense of Economic Growth,” which appeared in 1974. “The costs of deliberate non-growth, in terms of the political and social transformation that would be required in society, are astronomical.” Beckerman was responding to the publication of “The Limits to Growth,” a widely read report by an international team of environmental scientists and other experts who warned that unrestrained G.D.P. growth would lead to disaster, as natural resources such as fossil fuels and industrial metals ran out. Beckerman said that the authors of “The Limits to Growth” had greatly underestimated the capacity of technology and the market system to produce a cleaner and less resource-intensive type of economic growth—the same argument that proponents of green growth make today.

Whether or not you share this optimism about technology, it’s clear that any comprehensive degrowth strategy would have to deal with distributional conflicts in the developed world and poverty in the developing world. As long as G.D.P. is steadily rising, all groups in society can, in theory, see their living standards rise at the same time. Beckerman argued that this was the key to avoiding such conflict. But, if growth were abandoned, helping the worst off would pit winners against losers. The fact that, in many Western countries over the past couple of decades, slower growth has been accompanied by rising political polarization suggests that Beckerman may have been on to something.

Some degrowth proponents say that distributional conflicts could be resolved through work-sharing and income transfers. A decade ago, Peter A. Victor, an emeritus professor of environmental economics at York University, in Toronto, built a computer model, since updated, to see what would happen to the Canadian economy under various scenarios. In a degrowth scenario, G.D.P. per person was gradually reduced by roughly fifty per cent over thirty years, but offsetting policies—such as work-sharing, redistributive-income transfers, and adult-education programs—were also introduced. Reporting his results in a 2011 paper, Victor wrote, “There are very substantial reductions in unemployment, the human poverty index and the debt to GDP ratio. Greenhouse gas emissions are reduced by nearly 80%. This reduction results from the decline in GDP and a very substantial carbon tax.”

More recently, Kallis and other degrowthers have called for the introduction of a universal basic income, which would guarantee people some level of subsistence. Last year, when progressive Democrats unveiled their plan for a Green New Deal, aiming to create a zero-emission economy by 2050, it included a federal job guarantee; some backers also advocate a universal basic income. Yet Green New Deal proponents appear to be in favor of green growth rather than degrowth. Some sponsors of the plan have even argued that it would eventually pay for itself through economic growth.

There’s another challenge for growth skeptics: how would they reduce global poverty? China and India lifted millions out of extreme deprivation by integrating their countries into the global capitalist economy, supplying low-cost goods and services to more advanced countries. The process involved mass rural-to-urban migration, the proliferation of sweatshops, and environmental degradation. But the eventual result was higher incomes and, in some places, the emergence of a new middle class that is loath to give up its gains. If major industrialized economies were to cut back their consumption and reorganize along more communal lines, who would buy all the components and gadgets and clothes that developing countries like Bangladesh, Indonesia, and Vietnam produce? What would happen to the economies of African countries such as Ethiopia, Ghana, and Rwanda, which have seen rapid G.D.P. growth in recent years, as they, too, have started to join the world economy? Degrowthers have yet to provide a convincing answer to these questions.

Given the scale of the environmental threat and the need to lift up poor countries, some sort of green-growth policy would seem to be the only option, but it may involve emphasizing “green” over “growth.” Kate Raworth has proposed that we adopt environmentally sound policies even when we’re uncertain how they will affect the long-term rate of growth. There are plenty of such policies available. To begin with, all major countries could take more definitive steps to meet their Paris Agreement commitments by investing heavily in renewable sources of energy, shutting down any remaining coal-fired power plants, and introducing a carbon tax to discourage the use of fossil fuels. According to Ian Parry, an economist at the World Bank, a carbon tax of thirty-five dollars per ton, which would raise the price of gasoline by about ten per cent and the cost of electricity by roughly twenty-five per cent, would be sufficient for many countries, including China, India, and the United Kingdom, to meet their emissions pledges. A carbon tax of this kind would raise a lot of money, which could be used to finance green investments or reduce other taxes, or even be handed out to the public as a carbon dividend.

Taking energy efficiency seriously is also vital. In a 2018 piece for the New Left Review, Robert Pollin, an economist at the University of Massachusetts, Amherst, who has helped design Green New Deal plans for a number of states, listed several measures that can be taken, including insulating old buildings to reduce heat loss, requiring cars to be more fuel efficient, expanding public transportation, and reducing energy use in the industrial sector. “Expanding energy-efficiency investment,” he pointed out, “supports rising living standards because, by definition, it saves money for energy consumers.”

To ameliorate the effects of slower G.D.P. growth, policies such as work-sharing and universal basic income could also be considered—especially if the warnings about artificial intelligence eliminating huge numbers of jobs turn out to be true. In the United Kingdom, the New Economics Foundation has called for the standard workweek to be shortened from thirty-five to twenty-one hours, a proposal that harks back to Victor’s modelling and Keynes’s 1930 essay. Proposals like these would have to be financed by higher taxes, particularly on the wealthy, but that redistributive aspect is a feature, not a bug. In a low-growth world, it is essential to share what growth there is more equitably. Otherwise, as Beckerman argued many years ago, the consequences could be catastrophic.

Finally, rethinking economic growth may well require loosening the grip on modern life exercised by competitive consumption, which undergirds the incessant demand for expansion. Keynes, a Cambridge aesthete, believed that people whose basic economic needs had been satisfied would naturally gravitate to other, non-economic pursuits, perhaps embracing the arts and nature. A century of experience suggests that this was wishful thinking. As Raworth writes, “Reversing consumerism’s financial and cultural dominance in public and private life is set to be one of the twenty-first century’s most gripping psychological dramas.” ♦Published in the print edition of the February 10, 2020, issue, with the headline “Steady State.”

John Cassidy has been a staff writer at The New Yorker since 1995. He also writes a column about politics, economics, and more for newyorker.com.

‘Alternatives to development’: an interview with Arturo Escobar (transitionculture.org)

28 Sep 2012

At the 2012 Degrowth conference in Venice one of the highlights for me was the talk by Arturo Escobar(my notes from which can be found here). He is the author of Encountering Development and Territories of Difference, among others.  His talk looked at how Transition might look in the context of the Global South, and held many fascinating insights.  Here is the interview I did with him, first as an audio file, and below as a transcript.

So, Arturo, could you tell us a little bit about yourself please?

My name is Arturo Escobar, I was born and grew up in Colombia and I teach in the US, at the University of North Carolina in Chapel Hill. I teach anthropology and most of my work as an anthropologist is also in Colombia, especially the rainforest region, the Pacific region of Colombia, with African descendant movements and communities.

So Arturo, you gave a presentation yesterday about what Degrowth would look like in the context of the developed world and the developing world, the Global North, the Global South. Could you set out what you see as the prime motivation in each of those places – what’s distinct between those two?

OK.  One of the points that I was trying to make is a parallel between the Degrowth movement as a set of ideas and political projects and social projects for transformation or transition in the Global North, especially in Europe and the US, especially in Europe, the US is still way south as you probably know better than me.

The parallel movement in the US, in Latin America at least, maybe not so much for the Global South as a whole but for Latin America in particular, which is the region of the world that I know the best because I am from there and I’ve been working there for a long time as an anthropologist and ecologist, as an activist, is what I call ‘Alternatives to Development’.

When you talk about Degrowth, I think one of the speakers today referred to that, I think it was Marcelo the theologian who referred to that in our session. When he speaks about Degrowth in Brazil people laugh at him: “why do we need Degrowth with all this poverty and all these problems and all these possibilities for growing?  We Brazilians are growing like crazy, Degrowth doesn’t make any sense”.

I think that’s a mistaken perception of what Degrowth is in Latin America, because people who have looked at Degrowth and Transition Town initiatives in South America, including some environmentalists, they find it appealing and they find that it’s not sufficient for tackling issues in South America.

One of the main ones – and he might be a great person for you to also interview – if  I wanted to point you to one single source in the South American debates on Transition and alternatives to development andBuen Vivir, would be this Uruguayan ecologist whose name is Eduardo Gudynas. He knows about Transition Towns, he’s read your books, he has a great outfit in Montevideo, but he spends most of his time in the Andean region, specifically Nicaragua, Bolivia, Peru, Ecuador and Colombia.

Not Chile, not Brazil, not Venezuela, especially the four countries in the Andes. The other person who is really focussing on this is an Ecuadorian whose name is Alberto Acosta, who was the president of the constituent assembly that wrote the new constitution for Ecuador, where there is a huge section on Buen Vivir, and rights of nature, and both of them have been writing about alternatives to development and about the other concept that I didn’t get to explain yesterday which is transitions to post-extractivist model of society and economy.

What they find is that Degrowth – and they have some differences with Degrowth – they say here in Latin America we still have to grow in some ways. People’s livelihoods have to improve, and it’s difficult to do that without some growth. Health, education, housing – there are some sectors where the economy still has to grow.

But the second point they say is that growth has to be subordinated to a different vision of development, which is the Buen Vivir.

Could you tell us a bit more about what that is?

Yes, the Buen Vivir is a concept that has been coming out strongly over the past 10 years, especially in South America, in the context of the emergence of the left-leaning regimes in many South American countries, almost all South American countries with the exception of Colombia and Peru now, well it’s difficult to say what Peru’s current regime is.

In that context, it is the search for a different way of thinking about development and pushed by indigenous peoples and to some extent by peasants, by African descendents, and in collaboration with ecologists, sometimes feminists, sometimes activists from different social movements.  They started to say that for this model of development, this is the moment to change our development model, from a growth-oriented and extraction of natural resources oriented model to something that is more holistic, something that really speaks to the indigenous cosmo-visions of the people in which this notion of prosperity based on material well-being only and material consumption does not exist.  What has been traditionally cultivated among indigenous communities, is not even a notion of development, that is the key, because people are saying Buen Vivir is the new theory of development.

No, it’s not a theory of development. It’s a theory of something else that is not development. People translate it as ‘the good life’. I prefer to translate it as collective well-being. But it’s a collective well-being of both humans and non-humans. Humans, human communities and the natural world, all living beings.

And what does that look like in practice? What are the elements of it?

That’s the key question, the practice, the implementation of the Buen Vivir.  That’s the struggle, especially in Ecuador and Bolivia that have governments that have been put in power mostly by coalitions of social movements, especially indigenous movements, which over the past 6 years since they were elected in 2006, and they were elected with the promise that they were going to carry out this mandate of the Buen Vivir in the constitutions of both Bolivia and Ecuador, with different notions of Buen Vivir in both constitutions.

That said, the goal of state policies should be to promote Buen Vivir which involves social justice, a new notion of rights that includes the rights of nature, ecological sustainability, the elimination of poverty or the reduction of poverty. The reduction of poverty and the protection of nature are the two main dimensions of that.

So there are two sides to the Buen Vivir, which is the social and economic political side, and the rights of nature which is the ecological side. So the aims of the constitutions and development plans, I’ve looked at the development plans of both governments and they are very contradictory, because they say “we have to carry out this mandate”. But they keep falling back to the old ideas about growth and extraction of natural resources and planning as a top-down exercise, and we the experts have decided the plan for theBuen Vivir, but communities feel excluded.

So they clash now in both countries. This is like, so in southern Colombia, southern Mexico, Chiapas and Oaxaca is between indigenous, and peasant, and black movements on the one hand, movements that are for the Buen Vivir, that are for a different vision of development, and the state approach which still is what Gudynas and Acosta in particular call ‘neo-extractivists’.

They are neo-extractivit because they are still based on the extraction of natural resources: oil, natural gas, lithium, soy beans, sugar cane, agro-fuels of all kinds, gold, minerals.  They are Left regimes that are transacting with corporations, Canadian, American, European, South African, Chinese, corporations to take out natural resources. They are not traditional extractivism because, like the older Venezuelan regimes for instance, where there was so much oil, but the oil benefited only a small elite.

Now the idea of these Left regimes, which is a very good idea obviously, is they are going to be using the revenues which are far larger than in the previous regimes that basically gave everything to the corporations. They are going to use the revenues for social redistribution, to reduce poverty and to reduce inequality and to some extent they are doing it. But in the process, they have become this neo-developmentalist development models, pretty much the same as in the past but with a better social policy.

It’s interesting that the starting point was the idea of social justice and linked to environmental protection whereas in England at the moment, for example, the British government there are basically saying we have to go for economic growth at all costs, and environmental protection is optional. It’s interesting to see how with Buen Vivir, that’s been there from the beginning.

Exactly, and that is happening in the US as well, with policies like hydro-fracking which has been given carte blanche all over the place.

So in Transition we get asked about what Transition should look like in the Global South, and we say it’s about building resilience in both places, that the process of globalising food production has reduced food resilience in the Global North because we’ve become so dependent on imports and moving stuff around, and in the Global South it’s about the destruction of small farming and so on and so on. What’s your sense of that balance of how we build resilience in both places?  Also what Transition groups who are working in the Global North can do through their actions to support what’s happening in the South?

I think the concept of resilience is very good and I know that you emphasise it from the very first book, the concept of resilience.  I think it is a concept that could cut across Global North and Global South. I would have to go and look more carefully to see if it is being used now in Latin America, but it is a very fruitful concept, and actually that would be a very good question for Eduardo Gudynas who is a very good friend of mine, so I am going to ask him the question.

There are some parallels that I think could be thought about for both the Global North and the Global South in principle. In practice they would have their own specificities as you yourself said yesterday in your presentation on the first night, because every town basically has its own specificities. Local food, I think is a very important one in the Global North. It is increasingly important in the Global South, under a different umbrella.

The different umbrella is that of food sovereignty, food autonomy. In Colombia for instance, movements prefer to use autonomia alimentaria (food autonomy) which is somewhat different to food sovereignty.  Food sovereignty tends to put the emphasis on the national level, so a county might say we basically produce food for the population blah blah blah, that’s not good enough. There has to be food autonomy locally, regionally, nationally.

So peasant movements like Via Campesina that is a very important movement in Latin America and worldwide is focussing on food sovereignty, and food autonomy to a lesser extent. So the question of food is crucial as an entry point to Transition.

Energy?  Energy is so important to the Global North, I see it as less important to the Global South, and that doesn’t necessarily mean something good. We should be thinking more about energy, and that’s actually one of Gudynas’s co-workers now that I recall, who has a programme on energy, in particular for South America. He talks about the transformations that have to take place on the level of energy for transitions to take place.

The people in the Global North who say ‘oh, you can’t talk about local food because if you talk about local food you’re condemning farmers in Kenya and Chile to poverty and unemployment. How do you respond to that argument?

I don’t think it makes any sense! If you look carefully, sure, there’s a lot of food being grown in Africa, Asia and South America for the European and American markets, but who’s benefiting from that? Most times it’s not local peasants. It ceased to be local peasants at least two or three decades ago.

Even some of the agro-fuels that are touted as big solutions environmentally and so forth, like African palm which I know very well because it has been planted in Colombia all over the place. It’s being done at the expense of local communities, local ecosystems, by large Colombian capitalists or by large corporations.

I know that in parts of Africa and the Middle East it’s mostly German and European corporations that are planting food in these countries, with local cheap labour, to be exported to European markets. So on the contrary, I think local food in the north is going to be good for local food in the south. It’s going to stop this idea that the south will have to grow luxury crops for the Global North.

So if a Transition initiative in the Global North is actively working to localise its food supply, to reduce its carbon footprint, to put in place renewable energy infrastructure, localise it’s economy, is your sense that by default that that is helping the movement towards alternative development in the Global South or could they be doing something more mindfully, more intentionally to support that struggle at the same time?

I think that the first option that you outlined is the better way to think about it. That doesn’t mean that we shouldn’t do it thinking about the Global South as well, and how the Global South is affected. There might be cases in which particular groups in the Global South might be hurt by practices that emerge in the Global North around Transition initiatives, for instance one of the speakers this morning, Antonella Picchio, a feminist economist, who says we should always think from the perspective of women.

In principle that’s very good. How do we ask the question – how might our activities in Transition initiatives in the Global North benefit, or hurt, particular vulnerable groups in the Global South.  Women, indigenous peoples, black peoples, ethnic minorities and peasants in particular.  I think that’s always a very good question to ask. It’s not such a huge question to answer, you sort of follow the threads of the actions.

But as a whole I would tend to think Transition activities in the Global North would tend to contribute if not immediately, at least at some point, to alternatives to development and local autonomies in the Global South to the extent that they continue to erode corporate power, which is what unites and which is really screwing up everybody, including people in the Global North.

My Finnish and Canadian friends tell me that the same corporations that have been screwing up the Global South for so many decades are now doing the same in northern Canada and Finland. So it’s not even going to be the north that’s going to be spared anymore.  In that sense I think the alliances have to be built. The conversations between Transition activists in the north and Transition activists in the south have to be cultivated. They will be somewhat difficult conversations and I think the questions you are asking are the ones we have to start with.

The concept, the practice of Transition that we use for different parts of the world, we have to take into account that they will be inter-cultural conversations, inter-epistemic conversations, different knowledge is going to be involved, and those require translation.  Translation across knowledges, across cultures, across histories, across different ways of being negatively affected by globalisation, across levels of privilege and so forth.

Is just applying the concept of localisation, going to generate sufficient employment to create the kind of employment that these countries need?

Probably not. I think it has to be a level, certainly a lot of emphasis on local actions, local solutions, but there has to be also some degree of thinking and policy implementation at the regional level and at the national level. The state has to become more part of the solution than part of the problem that it is now. Now it is much more of the problem.

With some of these progressive regimes it has tried to become part of the solution as well in terms of connecting with social movements, but the give and take between social movements that are pushing more for the local autonomy, the protection of territories, the preservation of cultural and biological diversity on the one hand, and the state, who has the national or transnational level in mind, is going again really tight, and ruptures are beginning to happen, even in countries like Bolivia and Ecuador where there has been more closeness between the state and the movements.

What’s the role of technology here? There are some people who would say if we could do open-source genetic modification then that would have a role. There are all these technologies like nuclear power, these kinds of things.  In your take on alternatives to development what constitutes good technology and what constitutes a technology that doesn’t have a place?

I think technology is super important.  I think Buen Vivir indigenous communities, Afro-descendant communities, peasant communities, they are not opposed to technology per se. If they can be connected to the internet, if they can have technologies that improve the productivity of the land, if they can have technologies that improve their living standards, that’s all great.

What they are opposed to is having those technologies coming in at the expense of their autonomy, at the expense of their territories, at the expense of their cultural traditions, at the expense of their world-views and ways of living. But when you read – and I think this is a misconception – that the Buen Vivir, because it has been promoted mostly by indigenous movements and intellectuals is something about going back to the past  – it’s not at all. It’s not about going back.

Someone said that here today too, that Degrowth is not about going back, it’s about moving forwards. The same with indigenous communities, it’s about moving forwards, but how?  The difference is “how?”  The way in which we’re moving forwards today on the basis of growth and instructivism and profit and the dominance of one particular model which is capitalism and modernity, for many communities and in the movements, that is the end and that has to stop.

But it’s not anti-technology and it’s not anti-modern. For me the criteria is to weaken or lessen the dominance of the growth model, the hi-tech model, the conventional economic neo-liberal model and the dominance of one particular cultural framework which is the cultural framework of modernity, and to allow for many different world-views and frameworks.