Growth, no growth, degrowth

I just read the 2nd edition of Tim Jackson’s now-classic Prosperity Without Growth, which has been out for a few months, and it’s a book I’d recommend to anyone but especially economics students. Although most students do now learn about environmental constraints and trade-offs, we do socialize them quickly into thinking about economic growth as the objective of policy. It is all too clear that the failure to take account of externalities and the depletion of natural capital assets means we’ve paid a high price for past growth. Measuring these better to ensure they’re incorporated in the choices society makes is part of my own research.

Havings said this, and commending the book, I have one central problem with its argument, as with some others making similar arguments. And that turns on the understanding of what (GDP) growth consists in. Even those who acknowledge the importance of services in the economy – as Tim Jackson does – then consistently talk about growth as consumer demand for material products, for stuff: “How is it that with so much stuff already we still hunger for more? Would it not be better to halt the relentless pursuit of growth in the advanced economies and concentrate instead on sharing out the available resources more equitably?” So stuff and growth are conflated.

As I’ve been pointing out for 20 years, growth in the advanced economies is increasingly non-material – accepting that we import stuff embodied in goods, which must be accounted for. The archetype of modern growth is a new idea – that an aspirin can avert cardio-vascular problems as well as cure headaches; that apps on one device can replace multiple material objects.

This is why indicators like the Genuine Progress Indicator, that flatline from the 1970s on while GDP rises, are so unpersuasive. I disagree with Tim when he writes: “[T]he continued pursuit of economic growth doesn’t appear to advance and may impede human happiness.” So although I agree completely that the usefulness of GDP as a welfare measure is declining, I don’t think we know how to weigh against each other the environmental minuses and innovation pluses. This is why I’m obsessed with how we conceptualise and measure society’s economic welfare, including measuring assets to give us a handle on sustainability; but many of the innovations do advance human well-being. I remember the 1970s, and though the music was better, many aspects of life were far less satisfying. Patti Smith and Siouxsie & the Banshees aren’t enough to make me want to turn the clock back.

This is an important, possibly existential debate, so I hope the book is being widely read. I also appreciate its (only slightly lukewarm) defence of economics: contrary to the impression some environmetalists seem to give, many economists care passionately about our environment and sustainability, & we think our intellectual tools can make a useful contribution.

Share

9 thoughts on “Growth, no growth, degrowth

  1. “growth in the advanced economies is increasingly non-material”

    What does this mean? The post doesn’t make this very clear, though it seems to equate “stuff” with manufacturing and “non-material” with services. But services still consume “stuff”, especially energy, most of which still derives from fossil fuels. All those universities and their student accommodation; gyms, coffee shops, restaurants, hairdressers, nail bars, tattoo parlours, tanning studios and so on require energy to heat and light their premises and power their equipment. Tourists consume energy to travel to and from their destinations – typically by air. The online world requires a huge infrastructure of computing devices, cabling, transmitters, server farms burning energy night and day…

    • I don’t think total decoupling is possible, above all for energy use, & that isn’t my argument. Material intensity is declining, however, and this should be acknowledged. As I keep saying, I am really eager that we should measure properly the sustainability or otherwise of economic growth.

      • But if total (absolute) decoupling of GDP from GHG emissions (and other environmental pressures) is not possible, then how can we meet the Paris agreements, let alone the recommendations of the IPCC? One of the main arguments of Jackson’s book is that relative decoupling (including a reduction of material intensity of GDP) is not sufficient, not least due to rebound effects — but he does acknowledge that relative decoupling is happening.

        If we simply give up on achieving absolute decoupling, then we are signing the death warrant for our, and our grandchildren’s, current livelihoods as well as countless species. This should be the argument policy makers and economists need to make but continually fail to do so. For example, on the Today Programme a few days ago, Nick Robinson dismissed the argument of whether economic growth was commensurate with meeting environmental goals while interviewing the esteemed Michael Gove — Robinson didn’t even want to ask Gove the question. We need policy makers, economists and academia to be making the point that absolute decoupling *is* what is needed, and that while relative decoupling is a step on the way, it is not nearly good enough.

  2. “we do socialize them quickly into thinking about economic growth as the objective of policy”

    I won’t dispute that, but it’s a shame. I mean, one only has to think about the utility function U=(C,L) – where L stands for leisure – which isn’t exactly uncommon in mainstream economics, to realise that maximising C does not maximise U.

    It’s also a shame when the Solow growth model without mention of Solow’s work on environmentalism – there are some fairly easy-to-teach models of finite resources.

    Incidentally, I recently came across this short essay by Solow about his amateur dabbling in environmental economics, you may enjoy:

    http://www.annualreviews.org/doi/abs/10.1146/annurev.resource.050708.144305

  3. I learnt a lot from Tim Jackson’s book and also your work on better measurement, I see though in today’s FT you essentially agree, I think, with one of his main conclusions in the book, to resist the ‘productivity trap’, (where increasing efficiencies lead to increased unemployment unless the economy grows), and shift the focus of work to quality of output over quantity. Right?

    • No, I think productivity is important and not a trap. My FT article says there are services where productivity – measured as speeding up or automation – is possible and desirable, and others where output quality matters much more. Quality here refers to output rather than characteristics of the work, although they’re likely to be correlated.

Comments are closed.