Policies for a Post-Growth Economy
9 August 2017
By Dr Samuel Alexander for Dick Smith Fair Go.
This short article outlines a range of bold policy interventions that would be required to produce a stable and flourishing post-growth economy. I acknowledge that most people do not recognise the need for a post-growth economy yet, and therefore would reject these policy proposals as unacceptable or unnecessary. But as the limits to growth tighten their grip on economies in coming years and decades, the debate will inevitably evolve, and the question will not be whether a post-growth economy is required, but rather how to create one – by design rather than disaster.
A post-growth economy will require, among other things, developing new macroeconomic policies and institutions, confronting the population challenge, and culturally embracing post-consumerist lifestyles of material sufficiency. The following proposals are not intended to be comprehensive, and they are not presented as a blueprint that could be applied independent of context. Instead, the review simply outlines a range of key issues that would need to be addressed in any ‘top down’ transition to a post-growth economy (even if the drivers for change must come ‘from below’, at the grassroots level).
- Explicit adoption of post-growth measures of progress: In order to transcend the growth model, the first thing needed is to adopt better and more nuanced measures of progress than GDP (Stiglitz, Sen, and Fitoussi, 2010). What we measure, and how we measure it, matters. It is now widely recognised that GDP is a deeply flawed measure of societal progress, yet it remains the dominant way to assess politico-economic success. Accordingly, a politics and economics ‘beyond growth’ must begin by explicitly adopting some post-growth measure of progress, such as the Genuine Progress Indicator (GPI). Although it is not a perfect metric, the GPI takes into account a wide range of social, economic, and environmental factors that GDP ignores, thus representing a vast improvement over GDP. Public understanding of and support for such post-growth accounting systems would open up political space for political parties to defend policy and institutional changes – such as those outlined below – which would genuinely improve social wellbeing and enhance ecological conditions, even if these would not maximise growth in GDP. If we do not measure progress accurately, we cannot expect to progress.
- Reduce overconsumption via diminishing ‘resource caps’: One of the defining problems with the growth paradigm is that the developed nations now have resource and energy demands that could not possibly be universalised to all nations. The quantitative ‘scale’ of our economies is grossly overblown. It follows that any transition to a just and sustainable world requires the developed nations to stop overconsuming the world’s scarce resources and reduce resource and energy demands significantly. Although in theory efficiency gains in production provide one pathway to reduced demand, the reality is that within a growth economy, efficiency gains tend to be reinvested in more growth and consumption, rather than reducing impact. In order to contain this well documented phenomenon, a post-growth economy would need to introduce diminishing resource caps – that is, well defined limits to resource consumption – to ensure that efficiency gains are directed into reducing overall resource consumption, not directed into more growth. Formulating a workable policy in this domain would require, among other things, a highly sophisticated and detailed scientific accounting of resource stocks and flows of the economy. But the first step is simply to recognise that, in the developed nations, diminishing resource caps are a necessary part of achieving the decline in resource consumption that is required for justice and sustainability.
- Working hour reductions: One obvious implication of diminishing resource caps is that a lot less resource-intensive producing and consuming will take place in a post-growth economy. That will almost certainly mean reduced GDP, although there is still great scope for qualitative growth (technological innovation, efficiency improvements, and improved wellbeing). But what implications will a contracting economy have for employment? Growth in GDP is often defended on the grounds that it is required to keep unemployment at manageable levels. If a nation gives up the pursuit of GDP, therefore, it must maintain employment via some other means. Restructuring the labour market is essential for the stability of any post-growth economy. Could we work less but live better? By reducing the average working week to, say, 28 hours, a post-growth economy would share the available work amongst the working population, thereby minimising or eliminating unemployment even in a non-growing or contracting economy, while at the same time increasing social wellbeing by reducing overwork (Coote and Franklin, 2013). The aim would be to systematically exchange superfluous consumption for increased free time, which would also bring environmental benefits.
- Rethink budget spending for a post-growth transition: Governments are the most significant player in any economy and have the most spending power. Accordingly, if governments decide to take the limits to growth seriously this will require a fundamental rethink of how public funds are invested and spent. Broadly speaking, within a post-growth paradigm public spending would not aim to facilitate sustained GDP growth but instead support the projects and infrastructure needed to support a swift transition to a post-growth economy. This would include huge divestment from the fossil fuel economy and a co-relative reinvestment in renewable energy systems (see next section). But it would also require huge investment in other forms of ‘green’ infrastructure. Currently, many people find themselves ‘locked in’ to high-impact lifestyles due to the structures within which they live their lives (Sanne, 2002). To provide one example: it is very difficult to stop driving a private motor vehicle if there is poor public transport and insufficient bike lanes. Change the infrastructure, however, and new, low-impact lifestyles implied by a post-growth economy would be more easily embraced. Greening infrastructure will therefore require a significant revision of government expenditure.
- Renewable energy: In anticipation of the foreseeable stagnation and eventual decline of fossil fuel supplies, and recognising the grave dangers presented by climate change, a post-growth economy would need to transition swiftly to renewable energy and more efficient energy systems and practices. This provides a hugely promising space to meaningfully employ large segments of the population as the fossil fuel economy enters terminal decline. But just as important as ‘greening’ the supply of energy is the challenge (too often neglected) of reducing energy demand. After all, it will be much easier to transition to 100% renewable energy if energy use is significantly reduced through behavioural changes, reduced production and consumption, and more efficient appliances. Indeed, the extremely tight and fast diminishing carbon budget for a safe climate now makes this ‘demand side’ response a necessity (Anderson, 2013; Anderson, 2015), yet the significantly reduced energy demand required for a safe climate is incompatible with the growth model, because energy is what drives economic growth (see Ayres and Warr, 2009). Accordingly, a post-growth politics would initiate a transition to 100% renewable energy financed in part by a strong carbon tax, and undertake a public education campaign to facilitate reduced energy demand.
- Banking and finance reform: Currently, our systems of banking and finance essentially have a ‘growth imperative’ built into their structures. Money is loaned into existence by private banks as interest-bearing debt, and in order to pay back that debt plus the interest, this requires an expansion of the money supply (Trainer, 2011). Furthermore, there is so much public and private debt today that the only way it could be paid back is via decades of continued GDP growth. This type of banking system requires growth for stability and yet limitless economic growth is the driving force behind the environmental crisis. In order to move toward a stable, post-growth economy, part of the institutional restructuring required involves deep reform of banking and finance systems. This is a complex transition that could take various forms, but at base it would require the state taking responsibility for creating banking and finance systems that do not require growth for stability, and strictly regulating these systems to ensure equity.
- Population policies: As population grows, more resources are required to provide for the basic material needs of humanity (food, clothing, shelter, etc.), increasing our demands on an already overburdened planet. It is absolutely imperative that nations around the world unite to confront the population challenge directly, rather than just assuming that the problem will be solved when the developing world gets rich. Population policies will inevitably be controversial but the world needs bold and equitable leadership on this issue. Research suggests that the world is facing a population of around 9.5 billion by mid-century and 11 billion by the end of this century (Gerland et al, 2014), which would be utterly catastrophic from both social and environmental perspectives. As Paul Ehrlich famously noted, ‘whatever problem you’re interested in, you’re not going to solve it unless you also solve the population problem.’
- Reimagining the good life beyond consumer culture: Despite the environmental necessity of population stabilisation and eventual decline, the fact remains that currently there are 7.5 billion people on earth, all of whom have the right to the material conditions needed to live a full and dignified human life. Nevertheless, if the global economy is to raise the material living standards of the great multitudes currently living in destitution, this is likely to put further pressure on global ecosystems. Therefore, in order to leave some ‘ecological room’ for the poorest people to develop their economic capacities in some form, high-impact consumer lifestyles must be swiftly transcended. There is no conceivable way that seven billion people, let alone eleven billion, could exist sustainably on Earth living consumerist lifestyles. Globalising affluence, quite simply, would be ecologically catastrophic. Accordingly, members of the global consumer class need to reimagine the good life beyond consumer culture and develop new conceptions of human flourishing based on sufficiency, moderation, frugality, and non-materialistic sources of meaning and satisfaction.
- Distributive justice: Environmental concerns cannot be isolated from social justice concerns. The conventional path to poverty alleviation is via the strategy of GDP growth, on the assumption that ‘a rising tide will lift all boats’. Given that a post-growth economy deliberately seeks a non-growing economy – on the assumption that a rising tide will sink all boats – poverty alleviation must be achieved more directly, via redistribution, both nationally and internationally. In other words (and to change the metaphor), a post-growth economy would eliminate poverty and achieve distributive equity not by baking an ever-larger economic pie but by slicing it differently. Any attempt to systemically redistribute wealth via taxation or property reform will be highly controversial, especially in our neoliberal age, but present concentrations of wealth demand a political response. Research published this year shows that the richest 8 men on the planet now own more than the poorest half of humanity. Dwell on that for a moment. There is no single best policy for eliminating poverty or achieving a just distribution of wealth, but key policy options include (i) a basic income or job guarantee for all, which ensures that every permanent resident has a minimal, living wage; (ii) progressive tax policies (i.e. the more you earn, the higher the tax rate) which could culminate in a top tax rate of 90% or more; (iii) wealth taxes, that systematically transfer 3% of private wealth from the richest to the poorest recognising the large social component in wealth production; and (iv) estate taxes of 90% or more to ensure the laws of inheritance and bequest do not create a class system of entrenched wealth and entrenched poverty.
I contend that these policy platforms – all in need of detailed elaboration and discussion – should be the opening moves in a ‘top down’ transition to a post-growth economy. To be employed in concert, they clearly challenge the dominant macroeconomics of growth and would require far more social control over the economy than neoliberal capitalism permits today. Markets work well in some circumstances, no doubt, but leaving everything to the market and thinking this will magically advance the common good has been proven dangerously false. The policies above also depend upon a society that sees the necessity and desirability of a post-growth economy, hence the special importance of public education campaigns and the emergence of a new, post-consumerist culture of consumption.
Beyond these policy platforms, it should go without saying that any post-growth transition would require an array of other structural changes, including policies to create (or recreate) a ‘free press’; policies to ensure that campaign financing rules do not permit undue economic influence on the democratic process; policies that ensure affordable housing or access to land; and so forth. I do not pretend to have provided a complete political agenda for a post-growth economy. The proposals above are merely key aspects of such a transition and a good place to begin thinking about how to structure a just and sustainable, post-growth economy.
As well as maintaining and updating the critique of growth and detailing coherent policies for a post-growth economy, it is also important to develop sophisticated transition strategies that would maximise the chances of a post-growth political campaign succeeding. Among other things, this would involve exploring the role grassroots social movements might have to play creating the cultural foundations for a post-growth economy. As suggested above, a clever and sustained ‘social marketing’ campaign promoting a post-growth economy is critical here, in order to weaken the hold the ideology of growth has on society.
Ayres, R. and Warr, B. 2009. The Economic Growth Engine: How Energy and Work Drive Material Prosperity, Edward Elgar Publishing, Cheltenham, UK.
Anderson, K. 2013, ‘Avoiding dangerous climate change demands de-growth strategies from wealthier nations’, available at: http://kevinanderson.info/blog/avoiding-dangerous-climate-change-demands-de-growth-strategies-from-wealthier-nations/ [accessed 25 August 2015].
Anderson, K. 2015. ‘Duality in Climate Science’ Nature Geoscience 8 pp.898-900. DOI:10.1038/ngeo2559
Coote, A. and Franklin, J. (eds) 2013, Time on Our Side: Why We All Need a Shorter Working Week, New Economics Foundation, London.
Gerland, P. et al 2014, ‘World Population Stabilization Unlikely This Century’ Science 18 September 2014: DOI: 10.1126/science.1257469.
Sanne, C. 2002. ‘Willing Consumers – Or Locked-In? Policies for a Sustainable Consumption’ Ecological Economics 42, pp. 273-287.
Stiglitz, J., Sen, A., and Fitoussi, J.P. 2010, Mis-Measuring Our Lives: Why GDP Doesn’t Add Up, The New Press, New York.
Trainer, T. 2011, ‘The Radical Implications of a Zero Growth Economy,’ Real-World Economics Review 57 pp. 71-82.