This article was originally published by Dr André Richiel on 17 December 2013.
In the discussions on the future of economic growth, business as usual is not an option. This alone can be regarded as good news. When the modern narrative of growth is evoked in policy debates, it is always green growth that is summoned. Green growth is sought to be resource-efficient, low-carbon and socially inclusive. Green growth is the key strategy to battle climate change, bring eco-friendly development to emerging countries, renew economic structures in industrialized nations and produce robust jobs for a changing world. And it will also probably save the whales. If green growth is such a wonderful thing, in line with everything everyone could possible want – economically, ecologically, socially – why isn’t it happening everywhere, big time? Of course it is argued that it already happens in some places whereas others will have to catch up.
In Germany for example there are signs of green growth when you look for both energy intensity and primary energy consumption. Both have slightly declined over the past 20 years while GDP steadily increased. While the German economy produced more goods and services in terms of GDP, it reduced the amount of energy it used in producing them. So that is green growth: having more with using less. How did Germany do that? Well, it did away with a lot of its energy intensive industry and outsourced this part of the supply chain to other parts of the planet, most notably China. It is true of course that there was a lot of progress in Germany as towards more eco-friendly production but the main reduction of ecological footprint came from outsourcing footprint to somewhere else. The same accounts for the UK economy who has achieved some remarkable green growth in the past. If you look at the development of its industry structure you know why. So is green growth as we have seen it in countries like Germany or the UK feasible for the planet as a whole when there is no “away” anymore to outsource your problems? We will then really have to use less to have more for a still growing global population.
The central concept of green growth is decoupling, the idea that “the more you shop, the more you save”; that the air coming out of a car at its rear end is cleaner than at the front, while at the same time you saved fuel in driving. Decoupling however is a myth, not more than wishful thinking. There is no single empirical evidence that there is some form of absolute decoupling via the means of green growth on an absolute scale. Absolute scale means an absolute reduction in ecological impact: less carbon dioxide emissions, less material extraction, less biodiversity loss. Relative decoupling, as in the outsourcing examples above, abounds. There is less fuel consumption per miles travelled but more fuel consumption in total. Less kWh of electricity per refrigerator but more refrigerators. All in all, these so-called rebound effects of relative decoupling i.e. efficiency increases backfire on a global scale: green growth does not deliver.
Yet still the idea of green growth, which is a revival of the 1980s hit on “ecological modernization” and “dematerialization”, is strong and persists its evidential failure. Why is that so? On the one hand this is due to its connection to the growth narrative. Growth is such a strong mindset, emerging from the core of the modernist project which is the logic of expansion: going west beyond every new horizon. Since 1500 onwards this expansionist logic permeated all realms of thinking, first in Western societies, now in all societies on the planet. We are now, as German sociologist Niklas Luhmann pointed out, a world society and the world economy is a growth economy. When we say growth we always mean economic growth. Everything else, like for example happiness or quality of life, is a distraction. Growth is growth, nothing else. However, the appeal of green growth is clear. Nothing has to change, everything can go as we know it. Policies can remain the same, just with a bit more green focus. Business models can remain the same, just with a bit more corporate responsibility. But if green growth does not deliver on the ecological front is it really wise to bet everything we have on it?
This is truly a heavy question as the signs for an “End of Growth” or even a “Great Disruption” are getting clearer and clearer. Ecologically, growth has clear limits posed by a finite planet: the rising economic costs of climate change (draughts, floods and storms) and resource extraction (especially unconventional gas and oil via hydraulic fracturing and tar sands), the latter being the dominant reason for the collapse dynamics of the World3 model in the original Limits to growth study. Economically, growth probably has worn off in most “developed” countries through diminishing return effects. The more you already have the more difficult it gets to produce more. The same accounts for productivity gains. The more efficient, the more optimized a process has become, the more difficult it gets to squeeze out that extra percentage of productivity.
Mats Larsson even argues that innovativity, the ability to innovate new products and new processes, itself has limits. If a product can be produced at zero costs and its production process is squeezed into zero time, no more innovation is possible. With information technology this limit is clearly visible, but even in more traditional industries like automotive and its high degree of automation and optimized production processes and lean supply chains, physical limits of becoming better are within reach. And if “innovation” only means the iPhone 6, 7, and 8 you can ask yourself whether or not we are really getting anywhere new that might account for higher productivity that is always a prerequisite for the future outlook for economic growth. Together with other developments like demographics in Europe, Russia and China, the unfulfilled hope of large leaps of growth in countries like India or South Africa, and the only population driven growth in the US, we might as well conclude that the world economy is entering a new developmental phase of postgrowth.
Postgrowth can be seen as some form of political-societal utopia like formulate in the degrowth movement. Here postgrowth would mean a voluntary contraction of Northern economies via shortening of working hours, redistribution of wealth and income, an increase of subsistency production and collaborative consumption, and a general rise of non-monetary, commons-based economic interaction, with some economic growth left for Southern economies to develop until the bulk of the global population moves out of poverty. The vision of a future economy that is both ecologically sustainable and social equitable is that of a steady state economy. Postgrowth as described above is clearly not a utopia but an empirical phenomenon that is already happening in some economies and bound to unfold in a global scale in the next 20 to 30 years. It is the coming reality of economic action, the new normal.
The narrative of postgrowth does have its problems, especially when viewed from a growth and green growth perspective. An economy that does not grow does, at least, look very dull. Steady state appears to imply a static economy, in fact a static society. However even if for example the German economy would not grow from now on and remain static, it would need to produce and sell products and services worth 3,500 billion USD in purchasing power parity – each year! In comparison a steady state US economy would require to create an annual GDP of 15,900 billion USD. These numbers hardly look dull or static, in fact just to keep the GDP at this level requires an enormous dynamic within these economies. This is even more clear if you distinguish GDP on the aggregate level and individual companies’ value added. If the aggregate does not grow or even decline, some of its components may well grow – just think about the transition within the energy system away from fossil fuels and nuclear towards renewables.
Postgrowth does not mean postdevelopment. And it surely does not mean the end of entrepreneurial spirit and novelty, just as it does not imply the end of human creativity and inner development. John Stuart Mill once famously noted 1848 in his “Principles of Political Economy“, in the chapter on the stationary state, that “[it] is scarcely necessary to remark that a stationary condition of capital and population implies no stationary state of human improvement. There would be as much scope as ever for all kinds of mental culture, and moral and social progress; as much room for improving the Art of Living, and much more likelihood of its being improved, when minds ceased to be engrossed by the art of getting on. Even the industrial arts might be as earnestly and as successfully cultivated, with this sole difference, that instead of serving no purpose but the increase of wealth, industrial improvements would produce their legitimate effect, that of abridging labour.” And if even the father of economic growth theory, economic nobel prize laureate Robert Solow, states that there “is no reason at all why capitalism could not survive without slow or even no growth. I think it’s perfectly possible that economic growth cannot go on at its current rate forever”, going beyond growth might not be such a great deal after all.
So are green growth and postgrowth incommensurably at odds? If you listen to conversations between and about them, the answer appears to be yes. In his recent book on “Smart Growth: the Green Revolution“, Ralf Fücks, president of the green political think-tank Heinrich-Böll-Stiftung in Germany, argues for a renewed optimism in the possibility of green growth via new technologies, new forms of social innovation and green ordo-liberalism. After bashing on some postgrowth/degrowth strawmen, Fücks starts advocating several policy levers. Regulatory levers include taxes on resource use and carbon emissions in order to spur innovation and, through steady increase of these taxes over time, curb the rebound effect. Fücks also proposes, for the European case, the establishment of a European Community for Renewable Energy. Just like EURATOM promoted nuclear energy in Europe, such a “EURenew” would invest in R&D on storage and grid technologies, build a coherent development program and funding scheme for renewable energy, foster knowledge transfer across Europe, and maybe even invest directly into the European electricity grid. While the strongest levers for Fücks remain within new technologies – renewable energy, resource efficiency and also zero waste and cradle to cradle strategies – he also focuses on post-fossil eco-cities with new localized forms of production and consumption, even urban farming and sharing as a new economic paradigm.
From a postgrowth perspective all of these levers are also needed and most welcome. The emphasis would however be on non-technical issues and also more on hard social policy. What Fücks and other green growth proponents leave out, either intentionally or not, are regulatory changes in the financial sector, redistribution policies, reduction of work hours, and more commons-based forms of economic activity. Postgrowth advocats like Peter A. Victor and Tim Jackson focus more on these levers that either actively reduce growth or make the economic and social systems less growth dependent. This “growth neutrality” or “growth resilience” might be the ground on which both green growth and postgrowth folk can meet. Technologies that not just decouple economic activity from ecological impact but more or less destroy the connection completely are a part of such a “Minimal Beyond Growth Program” (MBGP). Renewable energy production for example supplies us with energy for zero variable costs and, if renewables infrastructure is produced with renewable energy itself and circular flow of materials, zero ecological impact. Especially circular flow technologies, everything that enables zero waste and the cradle to cradle approach for product design and product use can break the connection of growth and impact – however only if the use and re-use phase of products plays a more significant role. In the current cradle to cradle paradigm, which is purely technology-driven, aspects of sharing and collaborative consumption, in fact the entire notion of collaborative economy is missing.
If these social innovations become a part of technology, cradle to cradle might finally be able to deliver. In order to enable the social aspects of a MBGP that is neutral to green growth and postgrowth, the feasibility of working together in local communities, probably without monetary capital but social capital as key production factor and reward scheme, has to be ensured by policy measures. Reduction of working hours in order to have enough time for these activities belong to them just as some form of income and/or wealth redistribution in order to supply for a guaranteed basic income for all, so that social security, pensions, and healthcare are ensured. This would also make social security systems more independent from rising (or stagnating or shrinking) GDP and national income. At the same time these collaborative forms of economic activity can additionally rest on alternative monetary systems like local or virtual currencies, thus establishing a second monetary systems next to the fiat money system of central banks. Financial crises would be dampened by such a back-up system and provide for greater resilience. And what is really needed in both green growth and postgrowth is a new entrepreneurialism both in traditional economic sectors and collaborative and commons-based forms of economic activities. The term “civil economy”, in analogy to “civil society”, might work best for this back-up economy providing for social wealth in our cities and communities. All these measures and policy levers combined do not run against green growth nor postgrowth convictions. The former might emphasize technology more, the latter policy and social innovation. But both can “live” with the whole package – and best of all, if green growth is possible despite the obstacles, there is no damage done to the possibilities for green growth and the other way round as well: if green growth fails, the postgrowth elements of a MBGP will kick in and save the economy from stalling.
Green growth or postgrowth, that question will be decided by reality. But with a Minimal Beyond Growth Program as sketched here, we can build a bridge between the two perspectives and make the twain meet. And finally move on and build that sustainable future for us all.