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Support Growing for Degrowth

HELSINKI, Oct 5 2010 (IPS) - In the face of a global recession that has not yet run its course, there is growing demand now for an economic model away from reliance on continued growth.

Continued economic growth as a way of producing prosperity has been written into the DNA of the market economy. But that economic model is pushing the planet to an ecological cliff, experts warn.

“This idea that a secure growing economy would look after our children and their children forever has been a bit of an illusion,” Tim Jackson, professor of sustainable development at the University of Surrey in Britain tells IPS. “We have put all our economic eggs into this particular economic model and it has failed on its own terms.”

Data from 1900-2005 shows that the use of energy and materials, including fossil fuels, doubled for the first 50 years of the 20th century, and in the second 50 years increased by 700 percent.

The material and energy that enter the system are disposed of as waste back to the environment, and that is placing an excessive burden on the biosphere.

“Growth of the kind that we are used to is not feasible; we are either going to confront a crisis because we continue striving for growth that we can’t have, or we have to think about alternatives,” says Peter Victor, professor of environmental studies at York University in Britain.

Robert Solow, Nobel economics laureate and one of the founders of modern growth theory believes “there is no reason that capitalism could not survive with slow or even no growth.”

According to Solow, “it is possible that the U.S. and Europe will find that either continuoud growth will be too destructive to the environment and they are too dependent on scarce natural resources, or they would rather use increasing productivity in the form of leisure.”

The shift is also noticeable in the language of key economic institutions such as the World Economic Forum. Prior to the recent financial crisis its language was about growth, and about productivity and the institutions that could maintain that.

But this year in Davos, Switzerland, where the World Economic Forum holds its annual gatherings, there was a subtle shift in language because it barely mentioned growth at all, and talked more instead about economic security, resilient economies, and about the need for sustainability.

“Even if the attempt to get business as usual back is quite strong now as the financial crisis appears to be receding, the undercurrent is actually changed, and we are in a different place,” says Jackson.

But the idea of degrowth has its critics. Sixten Korkman, director of the Research Institute of the Finnish Economy (ETLA), says degrowth is incompatible with market economy and with democracy. “Growth simply means to do new things, more clever things, better things to change the structure of the economy, hopefully towards more services, be they social services or cultural services.”

According to him, a combination of appropriate incentives in a market economy would channel money into ecological investments, but this hasn’t happened because environmental taxes have not been set to the scale needed to create an impact.

Victor argues that this may be because the pursuit of growth is set as the standard. “Therefore unless we can divert our attention away from the pursuit of growth as traditionally defined, we won’t come around to doing things that economists have been proposing for a long time about how to fix prices.”

Advocating degrowth also raises eyebrows in the poorer countries where economic growth is seen as the main instrument for poverty reduction. But Victor and others in the degrowth movement say their focus is the rich countries. “It is not a prescription for poorer countries,” Victor tells IPS.

On the contrary, he says, when rich countries insist on expanding the size and scale of their economies, they make it impossible for the poorer countries to get access to the resources, to the energy and even to the food that they need. Degrowth and fighting poverty in the poorer countries are therefore closely related.

“Growth can bring in important benefits to poorer countries, but they cannot achieve that if the rich countries try to stay ahead.”