The mainstream economic narrative in recent times has been almost exclusively anchored around economic growth. Mrs Truss labelled her political opponents as the ‘anti growth coalition’ and pivoted her regime on the promise of ‘growth, growth, growth.’ Growing the pie would allow everyone to take a larger slice. Whilst Sunak has unsurprisingly shied away from being overly zealous about growth, due to austerity measures and political capital, the leader of the opposition has done nothing but, instead protesting about the UK’s “high tax, low growth” economy. However, I’ve yet to see any analyst on mainstream communication avenues care to question not the policy of the current government, but the intentions behind them, which is to increase the size of the UK economy. Perhaps that narrative ought to be interrogated.
DeGrowth
There has recently arisen a surfacing of the sentiment that GDP is a problematic metric, notably among those towards the left on the economy. The condensed reasoning as to why GDP shouldn’t be the primary measure of economic performance is that it simply measures the value of output, and in order to increase GDP, a country must increase it’s output, which inevitably means utilising more resources, creating more waste and leaving a larger carbon footprint. An unlimited and unchecked expansion of production is incongruent to a world with finite resources and fragile planetary boundaries. More traditional environmentalist economic policies posit that we can continue to enjoy and indulge, whilst sourcing our pleasures through sustainable means - solar panels, meat alternatives (although claims that meat is bad for the environment are sketchy), and eco friendly houses have been scientific evolutions which should have supposedly allowed us to cut back our carbon footprints; of course, this has not been the case. ‘Degrowthers’ would consequently argue that it’s not a lack of new technology or efficiency which is hampering efforts to tackle the climate crisis, but rather GDP growth itself. Of course, an economic contraction would presumably result in everyday citizens of wealthier countries getting poorer; antithetically, Jason Hickel, a leading spokesperson of the degrowth movement, would illuminate the fact that developed European countries, such as Spain and the Nordic nations, enjoy a higher standard of life despite being poorer than the USA.
When it comes to poorer countries, the solution would appear somewhat clear - allow these nations to grow to a certain point, and then stop. Perhaps even encourage richer nations to divert some of their budget towards a fund which would subsequently be filtered towards green policies in lesser economies.
On the contrary, there is compelling evidence that ‘decoupling’ can enable nations to grow their economies whilst implementing progressive, climate friendly economic policies - research conducted by the Breakthrough Institute finds that absolute decoupling has occurred in 32 nations, whereby emissions fall whilst GDP grows. Moreover, lower and middle income nations often feature larger manufacturing sectors - a fall in consumption in wealthy nations could potentially stifle growth and worsen poverty in poorer nations, which rely on exports to richer countries. When lockdowns hit, workers in labour intensive industries established in poorer nations were met with a profound dilemma - work and flout lockdown regulations, or starve.
The social consequences of a no growth world cannot be understated - the economy would effectively become a zero sums game. If I get richer, it means you transferred me money in exchange for a product/service - there is no scenario in which we all get richer. Social unrest would inevitably unfold. Perhaps a solution would be to design an aggressively redistributive system, however, if the welfare state depended exclusively upon redistribution, and the Government’s tax revenues remained fairly constant, this would be somewhat unsustainable; governments would be less likely to borrow, due to the fact that they can’t rely on growth to help alleviate the deficit. With less borrowing, government expenditure would decrease, and either the welfare state would have to contract, or other/numerous portions of the budget would suffer significantly.
On a broader level, once we eventually reach the theoretical goal of having no growth, poor countries would explicitly be poor due to wealthier nations being wealthy, in turn fuelling global inequities and unrest. Attempting to navigate this issue by forcing governments to tax their own tax revenues in order to perhaps build a welfare state for the nation would be profoundly complex and susceptible to corruption, not to mention the disproportionate power the body responsible for overseeing this transfer of wealth would possess. Another note - if we were to hinder the growth of developed nations, whilst also allowing developing economies to expand, to what extent will the rate of climate change be affected? China, India, Russia, Iran and Indonesia are all among the world’s 10 largest emitters of carbon.
The way forward
In order to sustain our planet, whilst also engaging in proportional and fair redistributive schemes, perhaps our answer lies instead in material productivity. Instead of simply producing a higher quantity of goods and services, we ought to improve the quality of the products being produced. Take for example two pairs of jeans: jeans A cost £15, but are formulated in China, and will last no more than 10 years. Jeans B are manufactured in a developed nation, cost £100, yet will comfortably last a lifetime. The cost per year of jean B is indeed cheaper than pair A when accounting for the durability of the clothing. This yields a fascinating insight into how the modern global economy can be re-directed towards emphasising quality and sustainability without compromising living standards. Insulating homes, regulating against fast fashion and factory farming, more deliberate utilisation of resources and more intentional planning are elemental, significant steps towards generating an economy capable of living within its means. In order to achieve this feat, it is equally vital to strengthen and enhance the welfare state and public services - an architect who has undergone thorough and rigorous training will aid in delivering sustainable housing. In order for people to afford higher quality food, clothing, shelter and medicine, they must have a government-funded buffer between themselves and poverty. When consumers are not anxious about meeting the survival requirements of their family, they can in turn emerge as more conscious consumers - veganism is associated with the ‘London metropolitan elite’ for a reason.
Local oriented living, a strong welfare state and strong industry enhance sustainability, and vice versa. And the benchmark we can use to quantify ‘quality’ of output, and subsequently sustainability, is identifiable in the aforementioned ‘material productivity’ - GDP per unit of material consumed.
Neither growth merchants nor degrowth advocates provide feasible policy prescriptions in the context of the earth’s limitations; green growth is tangible, albeit not in the traditional sense - we ought to instead emphasise material productivity over GDP, and in turn assemble the economic apparatus which can facilitate both planetary and humanitarian prosperity.
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