Degrowth - Natural or Artifical?
Degrowth is not a new conversation. One may argue that the conversation started with Thomas Robert Malthus (1766 ~ 1834), an English economist whose observations in England in the early 1800s led him to believe that the available farmland was insufficient to feed the increasing population. More specifically, he stated that the human population increases geometrically while food production increases arithmetically.
Under this paradigm, humans would reproduce until their numbers surpassed their production capacity, at which point the population would be forcibly reduced by famine or some other catastrophe and return to a manageable level. In essence, the predictions by Malthus go far beyond food production and can be applied to all the primary raw materials, or resources, we extract from nature that provide us with the products we use every day. Malthus focused on food supply in relation to population growth. In the 21st century, the same paradigm of population growth now affects all the resources humanity uses. The conundrum is whether governments will have to initiate degrowth policies artificially or will degrowth occur naturally?
To really engage in this conversation, there are two definitions we should become familiar with: Degrowth and Post Growth.
South Korea - A Case Study on Population and Economic Growth
The New York Times recently published an article on South Korea's population crisis or, rather, its declining population that will affect economic growth. Falling birth rates have been declining across developed countries for a number of years. In 2021, the United States stood at 1.7, France at 1.8, Italy at 1.3 and Canada at 1.4. But South Korea is distinctive as it has been falling even more - dropping below one child per woman in 2018 to 0.8 and now, in provisional data for the second and third quarters of 2023, to just 0.7 births per woman.
The NYT journalist Ross Douthat presents us with a thought experiment. "A country sustaining a birthrate at that level would have, for every 200 people in one generation, 70 people in the next one, a depopulation exceeding what the Black Death delivered to Europe in the 14th century. Run the experiment through a second generational turnover, and your original 200-person population falls below 25.
The estimates project a population plunge to fewer than 35 million people by the late 2060s - and that decline alone may be enough to thrust Korean society into crisis." Now, take notice of the last word, 'a crisis'! The sustainability of the planet requires less consumption based on current population forecasts. Population decline and less consumer spending plunge countries into a crisis! Countries do not know how to decouple themselves from economic growth.
The looming population pressures will weigh heavily on economic activity. Since 2021, South Korea's average GDP growth rate has ranged between 2.7% and 2.8%, but "it could potentially sink to the 1% range as soon as 2030," said Hong Joon-pyo of the Hyundai Research Institute. Many in South Korea see the baby bust as a bigger risk than a currency crisis, the Chosun Ilbo newspaper reported.
The South Korean government have been rolling out policies to alleviate this impending crisis with little success, which leaves immigration as a possible solution. For a country with a reputation for being one of the most homogeneous societies in the world, immigration may not be an easy sell.
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Hong echoed this sentiment, saying, "to raise economic growth potential, we will need to create a friendly working environment for women, relax immigration policies, and further develop a friendly investment environment that includes deregulation and creating new industries."
Consumer spending underpins economic growth, and for any conversation to emerge on post-growth or degrowth, will have to start with how economies function when it is not based on consumer and business spending. The current solutions on offer do not tackle degrowth at scale or in a way that keeps politicians in their jobs.
All too often, we have become far too dependent on government regulation as the driver for change. Returning to the original question as to the kinds of government policies that should enable degrowth, instead, we should be looking to consumers to be driving this change. The founder of Patagonia, Yvon Chouinard, stated in an interview with The Guardian newspaper, “Our best hope for change lies with consumers. You’ve got to change the consumers first, and then the corporations will follow, and then the government will follow the corporations. They [governments] are last in line.”
Degrowth in developed countries and some developing countries will occur naturally. Political systems require a compliant society, and in most countries, that equates to a lifestyle the planet can no longer afford to provide, and it is why alternative economic indicators are gaining popularity. As South Korea shows, transitioning to a society that prioritises well-being rather than economic growth is an apparent economic crisis seemingly being solved by the same indicators that degrowth advocates want to abolish.
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Ms Adrienna Zsakay is the Founder and CEO of Circular Economy Asia Inc ,?and this article represents her opinions on the circular economy.
References:
'Post Growth and Degrowth' by Andre Reichel, published 11 March 2016.
'Is South Korea Disappearing? ' by Ross Douthat, New York Times, 02 December 2023
'South Korean Population on Cusp of Steep Decline ' by Sotaro Suzuki, Nikkei Asia, 29 March 2019.