The Crisis of Our Age – Part III: Sustainable Degrowth

By the middle of the 20th Century the world had endured two world wars and a global economic depression unprecedented since the beginning of the Industrial Revolution.  With the defeat of various forms of Fascism in World War II, Soviet and Chinese forms of Communism vied with Democratic Market Capitalism to dominate the social and economic structure of the world system.  Arthur Schlesinger Jr. argued that in the post-war era the economic system that came to dominate was a reflection of the vision of Franklin Roosevelt.

Central to that vision as it evolved in the 1950s was the importance of growth to improve the human prospect.  And for this growth to occur the world would embrace free markets, free trade, greater mobility, and the spread of  industrial capitalism.  The idea was so alluring that it caused the end of the Soviet experiment and the transformation of China from an authoritarian communist state to an authoritarian capitalist state with growth as its central mission.  The world was awash in growth – growth in human numbers and growth in the consumption of goods and services.  The world’s population of humans tripled from 1950 to today, now nearly 7.5 billion  share the Earth.  The world’s Gross Domestic Product per capita, one measure of economic activity, has more than tripled since 1950.  Many more people came to have much more income.

The logic of the value of this growth was simple.  Higher incomes would generate more consumption leading to greater happiness.  Growth was good.  As I mentioned in Part I and Part II of this series, the benefit of this growth was promoted in simple terms — a rising tide lifts all boats.

A Rising Tide Lifts All Boats -- some more than others

“…some more than others”

There were dark sides to this growth as well.  It increased the inequality of human existence on the planet to unprecedented levels.  Many boats were lifted a little while even bigger new boats were built and lifted to higher water levels.  To feed, clothe, and house all these new people at higher standards of living put unprecedented pressure on the natural resources of the planet.  And as we see increasingly around the globe today, growth in consumption, at least beyond some basic level, has not delivered the widespread happiness that it was supposed to.

There are alternatives for organizing a free and open society that are not reliant on simple growth as a foundation.  One such alternative is sustainable de-growth.  The premise of degrowth is that there is more to human happiness than consumption of ever increasing amounts of goods and services.  Furthermore, the idea recognizes that there are biophysical limits to the resources humans can extract from the planet and to the ability of the planet to absorb the wastes of our consumption.  Degrowth is a vision of society with more happiness and fewer demands on the natural world.

Of course this idea is not new to economics.  Economists all the way back to classical economists like John Stuart Mill wrote about the concept of the steady state economy.  The degrowth movement is a modern version of this that recognizes happiness, once basic physical needs are met, comes from purposeful relationships with other humans and the natural world, from meaningful work activities, security, and a sense of purpose in life.  The degrowth paradigm is not fully developed, there is much work to be done.  But its rudiments are best understood in contrast to the dominate growth paradigm of the past seventy years.

Where growth economics assumes that wellbeing is a function of income and the things it will buy (more is preferred to less), degrowth sees happiness as a more nuanced way.  Once basic food, clothing, shelter, health care, the like are satisfied, many of the determinants of happiness have nothing to do with more consumption.

Growth emphasizes efficiency in the use of resources over fairness in the distribution of goods and services made from those resources.  Degrowth replaces efficiency as the primary economic criterion with the idea of justice as fairness, as American philosopher John Rawls put it.

In growth economics the products of nature are considered commodities to be priced and traded in markets to produce goods and services for consumers.  In degrowth economics humans get more from nature than just production of stuff, and nature itself is intrinsically valuable.

Growth requires a population with larger cohorts of younger people (demographers Population Pyramids from PRBsay that population pyramids in this case have a broader base, see the figure here).  More younger people means more workers.  Degrowth recognizes that the human population is limited and that therefore the demographic trends of the past 250 years cannot continue into the future.  Therefore we need to learn how to structure economies where there is balance between young, middle-age, and older citizens.

Growth economics demands as much free trade as possible and markets to allocate the products of that trade efficiently.  Degrowth emphasizes that trade can be both beneficial and detrimental to the people involved in the process.  Whether trade should be freer or more restricted depends on multiple factors, so there is no blanket rule that we should always favor more free trade.

In the growth economy, work is primarily a means of earning income to consume more goods and services.  People put up with long commutes and activities that pound the life out of them in return for ever higher incomes.  In the degrowth paradigm, work is a means of earning the resources to meet the basic needs of life, a contribution to the wellbeing of the community, and a source of personal satisfaction with a job well done.

Growth requires mobility.  If you lose your job due to growth, the rational response is to move to where markets tell you another job is available.  Degrowth emphasizes the value of stability in communities that is lost in the churning movement of the growth economy.  Again, efficiency is not the only criterion that matters for wellbeing.

And so in the growth economy your home is an economic asset.  It is good when its market value increases and bad when its value declines because you never know when you are going to have to move to get a new job.  In the degrowth economy your home is where you build a life as part of a community of people with shared interests.  Its fundamental value is nonmonetary so it matters less or even not at all if its market value increases or decreases.

Growth economics requires technological change and innovation for their own sake.  Degrowth economics treats newness as neither a benefit nor a detriment.  Degrowth does not require you to have a new cell phone every year for you to be happy.  As a corollary degrowth rewards the repair and re-use of things.  The old can be as good as the new if cared for.

The degrowth paradigm is not yet fully developed, but it is a work in progress reported  in academic journals like Ecological Economics.  Getting from the current growth economy to sustainable degrowth will not be a trivial exercise.  There are many problems in health care, taxation, banking and investment, government programs, and international relations.  But what it does is provide a vision of our economy where the products of our efforts and creativity are shared fairly among the people of the world and where nature that is at the foundation of our wellbeing is respected.


Mark W. Anderson

About Mark W. Anderson

I am proud to be a Mainer, born in Caribou and schooled at Brewer High School, Bowdoin College, and the University of Maine. I am grateful for a 35 year career at UMaine, the last decade in the School of Economics.