To answer the question “what is degrowth”, we should first look at what is growth. Economic growth has been an integral and constant part of most countries’ policies and priorities since the beginning of the post-war era. To elaborate, economic growth refers to an increase in the market value of the goods and services produced by an economy over time, usually a year. Until recently, there seemed to be a widespread belief that a quantitative rise in the gross domestic product (GDP) is overall beneficial for the individuals in an economy until recent years. The United States, for example, has a growth rate per year of 1.80% between 1870-2008. This means that its economy is almost two and a half times its former size (Mankiw, 2012). This shows a clear emphasis on scaling up the economic size of the country.
However, the emerging adverse effects of growth-oriented financial provisions have led to an expanding group of people who claim that nowadays, most economies produce and consume more than necessary and that this should be cut down. This trend supports an alternative form of the economic model that is commonly called “degrowth”. To put it simply, degrowth is “a socially sustainable and equitable reduction … of society’s throughput” (Kallis, 2010, 874) and specifically refers to a planned and controlled economic decrease. As they are fundamentally opposing ideas, there is a growing need to decide which one is ultimately “better” for humanity. Because the world becomes gradually more global and the decisions made by the big economies affect more and more people. In this article, it will be argued that while there is no objectively superior choice, degrowth is ultimately a more preferable model.
Comparing the Sides
As systems that focus on growth and degrowth both have their own advantages and disadvantages, there is no clear agreement among experts on which side is preferable. On the one hand, it can be challenging to change the current economic models fundamentally due to how essential institutions are dependent on them. Moreover, the wealth increase provided by growth allowed more personal freedoms such as social mobility and equality among socioeconomic classes. However, modern standards of living also require high amounts of producer goods and energy; a smaller economy might not be able to supply these necessities effectively.
Degrowth offers simple and effective solutions to some of the most pressing concerns of most developed countries. Growing economies’ high demands are jeopardizing the sustainability of our planet, degrowth policies could help to remedy those effects. Some pro-degrowth experts also claim that a net increase in GDP does not improve the well-being of citizens and promotes income injustice, making a proposal to bring down the bigger companies’ scales down in order to make the economy more just. Contemplating on both sides’ arguments is essential in order to make a decision on how world economies should move forward.
A Choice of Words
A further elaboration on some of the arguments against degrowth might be appropriate. First of all, the term itself has some negative connotations. Growth is necessary for living beings to thrive and survive, it’s not surprising that a lot of people will have conditioned response to the term in the form of perceiving it as deteriorating or harmful.
Kate Raworth, who teaches economics at Oxford University’s Environmental Change Institute, notes that degrowth supporters have to spend too much time explaining and defending their cause because it simply does not have a clear enough name and consequently results in unproductive arguments (2015). While this might be a proportionately superficial issue compared to actual drawbacks that would be caused in the case of economies wholly embracing degrowth, it could be one of the reasons why the movement has yet to gain support on a more extensive level. After all, it is still an emerging trend that has more support from academics and experts than mainstream media so any negative publicity might affect the movement’s image significantly. Of course, this is only of relevance about the image of degrowth and not about its real merits and drawbacks.
Do We Have to Grow?
As for the actual objections against degrowth (or rather, support in favor of growth), most of them appear to present the current economic situation of the word as a matter of necessity: In order to maintain the economic system, more production is made and more resources are used; which in return causes the economy to grow. In a way, this is a perverse cycle, but not one without its benefits.
According to John V. C. Nye, a professor of economics at Washington University, the extent that the rapid economic growth in the last half-century is actually underrated. Nye remarks that the average annual income per capita stayed mostly consistently during this period, despite the dramatic increase in population. Better health services are available even for low-income households and food is of higher quality compared to fifty years ago.
And there are also unquantifiable advancements in technology and culture, which made possible thanks to the surplus of time and resources motivated by higher living standards (Nye, n.d.). With this information, we can say that economic growth is useful for modern societies and has major contributions to many fields. It is unsurprising that growth is seen as a must by many. Of course, it should be kept in mind that such developments might have needed economic growth to happen in a realizable timeframe, but it doesn’t mean that they need growth to sustain themselves.
Heavy Price for the Environment
Nevertheless, it can’t be ignored that the benefits of economic growth have come at a heavy price for the environment. As growth models are unidirectional, production has to constantly increase in order to raise the GDP. And the only source for commodity production is the environment, or more precisely exploitation of the environment. Aside from agricultural goods, a large majority of industrial production depends on limited sources such as fossil fuels, minerals, and clean water which can’t be recovered on a large scale. Considering how even renewable sources of animal and plant origin are often consumed faster than they can replenish into account, it can be easily seen that the current model of growth is not sustainable, especially in the long term.
While talking about the effects of economic growth on ecologic systems, economist Federico Demaria from Universitat Autònoma de Barcelona comments that even if the increase in GDP can theoretically be separated from depleting the natural sources like energy and matter, that simply is not the case with any model we have (2018). In other words, there is no such thing as sustainable economic growth. Even maintaining the current levels of emission and consumption is enough to deplete natural sources and causing irreversible damage to vital natural systems before we can find a solution for them. This is particularly important when making long-term economic plans. Because it needs to be understood that any model relying on growth is temporary and is needed to be treated as a transition rather than a goal.
Income and Equality
Furthermore, even if one ignores the environmental costs, an increase in GDP doesn’t mean a fair distribution of income. Even if GDP appears to rapidly increase, it is possible for poverty to remain. Between 1980 and 2016, the top 1 percent captured 27 percent of total real income growth, and in 2017 captured 82 percent of new wealth. Meanwhile, incomes of the poorest have grown far slower than global GDP. (Alston, 2020). That raises the question that whether wellbeing can be calculated merely by the number of commercial goods and services produced by a country. Considering how countries with the biggest economies in the world still have a long way to go with fighting poverty, the answer seems to be “no”.
Distribution of Benefits
In the United States alone, “the number of people living in extreme poverty has increased by roughly 1 million between 2010 and 2016” despite the annual GDP continuously increasing (United Nations, 2019). If the wealth created by growth is not used to effectively fight against poverty, where does it goes? It seems like individuals and corporations that were rich to begin benefit more from economic growth. Even if the average income is higher compared to a decade ago, this increase is not balanced at all. As a result, economic growth is not as efficient at increasing welfare as it is usually perceived since its benefits don’t return to society in a way that the majority can draw from.
However, there are also claims that degrowth is not needed because GDP can be increased without proportionality causing environmental damage. According to some, the climate crisis is merely the result of senseless handling of natural resources and it’s not fair to blame economic growth for it. Accordingly, it is only through economic expansion and by using the resulting income for universities and research institutes that developed countries can enhance their scientific capacity. Steve Cohen, the Director of the Earth Institute’s Research Program on Sustainability Policy and Management at Columbia University, argues that there is a mutually beneficial relationship between economic growth and environmental protection.
Possibility of a Third Option
Environmentally friendly products and live style promotion became a market by itself, helping economic growth significantly. In return, economic prosperity may allow countries to focus more on reducing their carbon footprints and advocating for more sustainable procedures. Cohen asserts his belief that it is possible to “harness human ingenuity to the practical problems of environmentally sustainable economic development” and attain an arrangement that minimizes the compromises big economies have to make (2020).
This may have been a legit argument in favor of growth but it completely relies on an uncertain possibility that one day we might discover a solution that can support an unsustainable system and avoids completely facing the flaws of said system. Nonetheless, it is true that a more efficient allocation of resources and tighter governance on industrial production and manufacturing can make growth less harmful for the environment. This may potentially help us to resume their current models while planning for a transition.
Aside from this, economic growth’s failings at reaching equity and even protecting inequity should be discussed. Until recently, economists commonly adopted the Kuznets curve, a theorem that suggests that development in an economy initially increases inequality but after a certain amount of growth, the wage gap shrinks, and the majority of the working population profits from the increased GDP.
However, a number of recent studies brought suspicion into this theory’s effectualness. According to two researchers from the University of Gabes in Tunisia, Nasfi Fkili Wahiba, and Malek El Weriemmi; this curve only works for a number of developed countries and fails to empirically prove the direct relationship between economic growth and income inequality (2014). Therefore, any assurances about GDP “eventually” having positive effects on low-income groups and lowering the wage gap seems mostly void. Individuals with higher capita and income draw more advantage from economic growth while working class’s contributions to the economy have diminishing returns to themselves.
Alternatives Exist
So, if growth doesn’t reduce inequality, can degrowth do? It seems simple but equality is really among the primary goals that degrowth supporters strive for. This is because there is an increasingly common view that a model that focuses on growth too much might ignore how well the resulting wealth is distributed and condone severe income inequalities.
Despite the fact that a call for the planned reduction of big economies might seem less wealth and a decrease in livelihood, it can be said that most of these economies don’t need to grow anymore. When talking about United Nations’ sustainable development plans, Dr. Jason Hickel, an anthropologist at the London School of Economics, comments that the exponential growth in the world economies’ GDP is “not physically possible” and an intentional decrease might be more beneficial than trying to maintain the growing curves.
He also demonstrates the lack of need for more money for providing higher living standards for citizens by reminding that “Europe has higher human development indicators than the US in most categories, despite 40% less GDP per capita and 60% fewer emissions per capita” (2016). This is crucial while discussing degrowth. Because it’s explicitly known that growth does not only fail to compensate for the ecological damage it causes, but it can also be seen that it does not benefit the average individuals more than an economy at a smaller scale would. Moreover, increasing GDP while the ecological limits are breaking lowers people’s living standards instead of improving them.
Comparably, degrowth is possible in an alternative that can offer modern living standards lessening the exploitation of natural sources. Countries can choose to produce for the sake of making their economies more equitable and forgiving. Of course, there is no guarantee that a deliberately smaller economy will be superior about job satisfaction and income equality. However, we can assume that countries can make decisions in favor of the people if they don’t have to meet the demands of large corporations for the sake of increasing GDP.
Conclusion
As a conclusion, degrowth has some essential advantages as a long-term economic model over growth-focused models. By lowering the annual GDP, it is still possible to distribute sources better and decreasing income inequality without making people poorer or falling into an economic rout. Of course, this step is neither uncomplicated nor easy. Redesigning large-scale economic models and governmental institutions that depend on them is a challenging task and certainly, some complications will be encountered during this transition. If there are any governments that choose degrowth, they might need a gradual transition to make things easier for both themselves and individuals. However, all these hardships pale compared to the ones that we might face if we blindly continue to grow.
The extent to which economic growth has reached is not sustainable. Most countries passed the point where it is required to increase prosperity, being trapped in a model that fails to satisfy people and where wealth is distributed unequally. Simply slowing down production and investing in green technologies might work but they are superficial measures to a systematic problem. If economies of developed countries can be successfully reduced to a point where they can sufficiently meet the essential institutions’ demands without forcing people to work for a system that has gradually diminishing returns for them, economies can properly accomplish their reason of being: Supplying welfare for all.
References
Alston, Philip. (2020). Alston Poverty Report. Link
Cohen, Steve. (2020, January 27). Economic Growth and Environmental Sustainability. Earth Institute. Link
Demaria, Federico. (2018, February 22). Why economic growth is not compatible with environmental sustainability. The Ecologist. Link
Hickel, Jason. (2016, August 23). Time for degrowth: to save the planet, we must shrink the economy. The Conversation. Link
Kallis, Giorgos. (2010). In defence of degrowth. Ecological Economics, 70, 873-880. Link
Mankiw, N. Gregory. (2012). Principles of macroeconomics. South-Western Cengage Learning.
Nye, John V. C. (n.d.) Standards of Living and Modern Economic Growth. The Library of Economics and Liberty. Link
Raworth, Kate. (2015, December 1). Why Degrowth has out-grown its own name. From Poverty to Power. Link
United Nations UN/DESA’s Economic Analysis and Policy Division. (2019 October 1). World Economic Situation and Prospects: October 2019 Briefing, No. 131. United Nations. Link
Wahiba, Nasfi Fkili & El Weriemmi, Malek. (2014). The Relationship Between Economic Growth and Income Inequality. International Journal of Economics and Financial Issues, Vol. 4 (No. 1). 135-138. Link
