As central banks continue to raise interest rates to combat inflation, a recession is beginning to hit the western world. This year, a short-lived British government has left the British economy battered by a desperate attempt to boost growth. The climate crisis is unmistakably present to the world as a result of economic activity. At the same time, the widening gap between rich and poor remains a sign that years of economic growth have not translated into higher wages or improved living conditions for many.
It is not surprising that the debate surrounding “de-growth”, that is, the removal of economic growth as a social goal, has intensified recently.
In Japan, environmental concerns have sparked calls to limit mass production and consumption, making de-growth Marxist Yukihira Saito a corollary for the best-selling author of “Capital in the Anthropocene” (Capital in the Anthropocene) sold more than half a million copies in this generally conservative country. An English version of the book will be published next year. Also published this year is Limits and Beyond, a follow-up to the seminal and controversial 50-year-old report The Limits to Growth. , scientists at the Massachusetts Institute of Technology (MIT) have predicted that if the growth trend of population and resource consumption does not slow down, society will collapse.
Author Ugo Badi pointed out in “Limits and Beyond”: “Humanity seems to commit suicide while flourishing and developing.” This book believes that the theory in “The Limits to Growth” has been fully confirmed.
While the arguments of growth-oriented opponents are gaining traction again, they remain a fringe group in mainstream economics. Even among their critics, though, there are those who are eager to reassess the way we think about growth and the weight we place on its almighty measure—gross domestic product, or GDP (GDP, it should be noted, American economist Simon Kuznets, the inventor of GDP, opposed the use of GDP as a decision-making tool).
Indeed, there is now a worldwide push to introduce standardized national measures of issues such as well-being and environmental degradation to give policymakers more tools at their disposal. As Diana Coyle, professor of public policy at the University of Cambridge, puts it, we “must treat natural and human capital as fundamental contributors to economic development”.
The cost of economic growth
Tim Jackson, a British ecological economist and former government adviser, is one of the leading voices for ending the growth mania. His book, Prosperity Without Growth, was one of the Financial Times’ best books of the year in 2009. He is also a member of the Club of Rome, a Swiss think tank that was commissioned to write The Limits to Growth published in 1972. Jackson pointed out that the “Trussomics” of Liz Truss’ brief and disastrous prime ministership this year, of boosting growth through tax cuts, marked the “finishing phase” of an obsessive mentality that has led to many bad decisions. “.
Jackson told Fortune magazine: “We have deregulated the financial system, our companies have leveraged too much, we have created financial instability, and the gap between shareholder returns and worker wages has created a huge gap between rich and poor. Environmental investment has failed utterly. And it’s all because we’re only looking at the bright streak of economic growth.”
Jackson argues that we should separate our definition of prosperity from the “simple question” of expanding economic output. “From a philosophical point of view, it’s fairly easy to do, and part of that is because GDP, which we use to measure economic growth, really isn’t a very good indicator, let alone economically,” he said. Prosperity is measured more comprehensively. This view has a long history, dating back at least to 1968, when Robert Kennedy criticized GDP, saying that it “measures many things except human life.” valuable ones’.”
While acknowledging many of its principles, Jackson, like many, is not comfortable with the term “degrowth” because of its negative framing and controversial definitions. He worries that de-growth is seen as “a strategic decision to reduce economic output .
Jackson’s reservations are well-founded. Many economists, such as Coyle, disagree with the notion that economic growth is unnecessary or optional.
“There is no innovation without growth,” Coyle said. “We don’t want to reduce the likelihood of prosperity in the future. We need to be mindful of the impact on the environment, [but] that to me means measuring growth in a sustainable way, which is to adjust What to measure, but we are certainly not throwing away the idea that the economy should be growing.”
Jackson pointed out that a growth-free economy “must have all kinds of innovation.” He said there are “good innovations,” such as renewable energy technology and health care systems, and “bad innovations,” such as manufacturing processes. Products that are harmful to the environment and that are not durable after the consumer purchases them. “De-growth does not in any way exclude things that contribute to our quality of life,” he said.
Another point of contention with degrowth is whether it narrows or widens the gap between rich and poor. Advocates of degrowth, Coyle argues, are “disingenuous” because they’re actually calling for a recession that would make things worse for people, especially the poorest in society. “If the economy isn’t growing, you probably won’t be able to redistribute any incremental income to people who aren’t looking that far ahead,” she said, adding: “Redistribution policies don’t win elections.”
Jackson said degrowth needs to be paired with measures to narrow the gap between rich and poor. He points out that it is easier to get around this problem when the economy is growing and both the rich and the poor are getting richer, but not when the economy is shrinking, either intentionally or by accident. , unless attention is paid to the distribution of income, happiness cannot be created.”
Jackson conceded that his proposed “static sustainable economy of happiness” might be “not quite like capitalism as we know it,” but added: “It’s not quite socialism or communism as we know it.” doctrine.”
A better indicator than GDP
Whatever economic policies governments choose to adopt over the next few years, they will likely be based on a more diverse set of important data. The United Nations will publish in 2025 the first new “System of National Accounts” since before the 2008-2009 global financial crisis. For the first time, the system will display GDP side-by-side with standardized indicators of well-being and environmental sustainability. Some countries have already started to compile such indicators. For example, the UK’s Office for National Statistics publishes “environmental accounts” alongside GDP, while the system promoted by the United Nations is intended to apply the same standards to all countries.
“GDP won’t change,” Coyle said. “Macroeconomic policy needs it, so it’s useful, and you can’t throw away information like that, but I think governments will increasingly not use it as the sole measure of success.”
Jackson was cautiously optimistic about the U.N.’s measure – “it gives us room to reset the direction we’re heading”, but it should yield more than a few new indicators. “Politically, it must proceed to remove the supremacy of GDP from political decision-making,” he said.
Coyle pointed out: “There is no single data that can reflect the situation of monetary activity, the market economy, the situation of residential activities, changes in the natural environment, and distribution. One can never put all these into one indicator. Medium. Going forward we have to look around and look at some of the different things we care about.” (Fortune Chinese Network)
Translator: Charlie
Recession looms across the West, as central banks keep raising interest rates to battle inflation. This year, a short-lived British government tanked the UK economy in a desperate attempt to boost growth. And the climate crisis—fueled by the effects of economic activity —made its presence undeniably visible across the world. Meanwhile, rising inequality continues to demonstrate how years of economic growth have not delivered higher wages or better living standards for many people.
Little wonder that the debate around “degrowth”—abandoning economic growth as society’s goal—is flaring up these days.
In Japan, the Marxist academic and degrowth advocate Kohei Saito has unexpectedly become a bestselling author with an environmentally driven call for limits on mass production and consumption: With over half a million copies sold in the generally conservative nation, Capital in the Anthropoe will be able to in English next year. This year also saw the publication of Limits and Beyond, a 50-years-on update to the seminal and highly controversial report The Limits to Growth, in which MIT scientists predicted social collapse if growth trends in population and resource depletion are not abated.
“It seems that humanity is thriving and committing suicide at the same time,” noted author Ugo Bardi in the newer book, which argues that the original’s thesis has been broadly vindicated.
While opponents of the growth-is-good mantra are enjoying revived interest in their ideas, they remain on the fringe of mainstream economics. But even among their critics, there is enthusiasm for reevaluating how we approach growth and the importance we place on the all -powerful metric that measures it—gross domestic product, or GDP. (It should be noted that Simon Kuznets, the US economist whose work led to the creation of GDP, argued against using it as a policymaking tool.)
Indeed, there is now a global push to introduce standardized national metrics for things like well-being and environmental degradation, to give decision-makers additional tools. As Diane Coyle, a public policy professor at the University of Cambridge, put it, we ” have to count natural capital and human capital as fundamental contributors toward economic progress.”
The costs of economic growth
Tim Jackson, an ecological economist and former government advisor in the UK, is one of the leading voices calling for an end to growth mania; his Prosperity Without Growth was one of the Financial Times’ books of the year in 2009, and he’s a member of the Club of Rome, the Swiss think tank that commissioned The Limits to Growth back in 1972. Jackson argues that “Trussonomics”—the slash-taxes-to-boost-growth playbook that characterized the brief and disastrous UK premiership of Liz Truss this year—was the “endgame” of an obsession that has led to many bad decisions.
“We deregulated financial systems; we’ve over-leveraged companies; we’ve delivered financial instability; we’ve created huge inventory because of the difference between the returns to shareholders and the wages to workers; and we’ve completely failed to invest in environmental protection,” Jackson told Fortune. “All because we all have our eyes on the glittering prize of economic growth.”
Jackson argues for separating our conception of prosperity from the “simple question” of expanding economic output. “From a philosophical point of view, it’s pretty easy to do that, and it’s partly pretty easy to do it because GDP, which is what we measure economic growth by, really isn’t a very good measure, even of the economy, let alone of a broader measure of prosperity,” he said. “That’s a quite well-established argument that goes back to at least 1968 when Robert Kennedy critiqued the GDP and said it ‘measures everything except that which makes life worthwhile.’”
Even though he’s aligned with many of the movement’s principles, Jackson is skittish about the term “degrowth”—as are many others, owing to its negative framing and contested definition. He’s wary of people seeing degrowth as “a strategic decision to go and turn down economic output…It’s rather a decision to say, ‘Be focused on the economic activity that creates well-being in society, wherever that may be,’” he said.
There’s good cause for Jackson’s defensiveness; many economists, Coyle included, are scathing about the idea of treating economic growth as undesirable, or as optional.
“If you don’t have growth, you don’t have innovation,” said Coyle. “We don’t want to understand the possibility of future prosperity. We need to pay attention to what’s happening with the environment, [but] that says to me that you measure growth in a sustainable way, so we change what we measure, but we certainly don’t throw away the idea that the economy ought to grow.”
Jackson counters that a growthless economy “would have to have all sorts of innovation.” He argues that there’s “good innovation”—such as renewable-energy technologies and health care systems—and “bad innovation,” exemplified by goods that are environmentally harmful to make and that do not last once consumers have bought them. “Things that can contribute to the quality of our lives are not ruled out in any sense by degrowth,” he said.
Another controversial aspect of degrowth is the question of whether it would reduce or boost inequality. Coyle argues that degrowth advocates are being “dishonest” because they are effectively calling for recessions that will make people—particularly the poorest in society—if worse off.” You don’t have a growing economy, you can’t possibly redistribute any income growth to the people who’ve not seen it so far,” she said. And, she added, “the politics of redistribution don’t win elections. “
Jackson says degrowth would need to go hand in hand with measures to tackle inequality. It’s easier to sidestep the issue when an economy is growing and both rich and poor are getting richer, he says, but not in times of deliberate or unintentional economic shrinkage. “You cannot achieve well-being in a society in which you have turgid levels of economic growth or perhaps no levels of economic growth, unless you pay attention to the distribution of income,” he said.
Jackson admits his proposed “stationary, sustainable economy that delivers well-being for people” would probably not be “much like capitalism as we know it,” though he adds that “it isn’t entirely what we’ve learned as socialism or communism “either.
Better metrics than GDP
Whichever economic policies governments choose to follow in the coming years, there’s a good chance that they’ll have more diverse and meaningful information on which to base it. The United Nations will in 2025 release the world’s first new “system of national accounts” since before the 2008–09 financial crisis, in which GDP will for the first time be accompanied by standardized metrics for well-being and environmental sustainability. Some countries have already started producing such metrics—the UK’s Office for National Statistics publishes on the “environment” side GDP figures, for example—but the UN push is an effort to get everyone on the same page.
“GDP will still be there—it’s needed for macroeconomic policy so it’s useful, and you don’t throw away this sort of information—but I think governments will increasingly not use it as their sole measure of success,” said Coyle.
Jackson is cautiously optimistic about the UN process—“It’s a place where we have a chance to reset our direction of travel”—but says it needs to result in more than just new measurements. “It politically has to engage in the process of supplanting the supremacy of the GDP in political decision-making,” he said.
“You’re never going to get a single number that captures what’s happening to monetary activity; the market economy; what’s happening to household activity; what’s happening to the natural environment; what’s happening to distribution—you’d never get all that into a single metric,” said Coyle. “We’re going to have to get our heads around looking at several different things that we care about.”
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