Farewell, economic growth?

The last 200 years, we lived in a capitalist society where growth is fundamental for the stability of the system. From the Global Financial Crisis to budget surpluses, from tax cuts to austerity measures, economic management, growth stimulation, and prosperous economies are ever-present themes for all governments.

Consciously or subconsciously we have woven our lives in a vicious circle of needs; wants and notional wealth accumulation. Money is lent to people and growth is needed to repay the debt created. Consumerism has emerged as the way to promote well-being and growth. Whereas the reason for all the ills ( discord; crime; health; stress; aggressive competition et al) is this chase for a very hollow definition of prosperity. 

A cycle of consumption and debt drives economic growth at any costs. For far too long, economic prosperity has been rising as we destroy the natural capital of the planet. Whilst some people benefit more than others, no one is in control. Everyone is a victim. Year after year, we have aggressively plundered the planet’s resources in the pursuit of ‘economic growth’, which has and will undermines the future of the human race, and that of other species.

Degraded ecosystems may be slow to recover or may not recover naturally even after their exploitation stops. This may negatively affect the provision of food, increase health hazards and risks of natural disasters, and more.

At the current rate of consumption, we consume earth’s one year worth of resources within seven months. For example, if India continues its current rate of consumption, the country will need resources of 2.5 countries to meet its demands, says a recent research. Already in the case of India, 70 per cent of our surface water is polluted and 60 per cent of groundwater resources are in critical stage.

“The estimated level of resources and ecosystem services required to support human activities at their current rate equals 1.7 Earths, fast moving to 2 Earths by 2030,” says GFN 

Citizens living in the countries with the lowest per capita consumption of resources consume two tons of materials per person per year for their food and shelter; while those living in countries with the highest per capita consumption use 60 tons of materials per capita per year (often for skyscrapers, artificial islands and desert snow-domes.)

We face a bit of a conundrum. Economic growth lifts people out of poverty and sustains material prosperity; yet it is reliant on the use of declining resources and results in unacceptably dangerous environmental impacts, and the breaching of planetary boundaries. We cannot rely on global economic growth for long-term development and prosperity.

Adam Smith’s "invisible hand" is not working in the way we need it to work. The problem runs deep and can’t be solved unless we look at the world differently.

Like a snake eating its own tail, our growth-chasing civilisation suffers from the delusion that there are no environmental limits to growth. We feel challenged on rethinking growth in the current socio-economic structure cannot be avoided. What shall become the fate of our pensions and our mutual fund portfolios ? There is no reassuring answer to that but for certain, if we keep prioritising growth at any cost, it will have repercussions and whether that will be by design or disaster only time will tell.

Despite decades of extraordinary technological advancement and huge efficiency improvements, the energy and resource demands of the global economy are still increasing. This is because within a growth-orientated economy, efficiency gains tend to be reinvested in more consumption and more growth, rather than in reducing impact.

This is the defining, critical flaw in growth economics: the false assumption that all economies across the globe can continue growing while radically reducing environmental impact to a sustainable level. The extent of decoupling required is simply too great. We vocally declare allegiance to “green” capitalism, however our actions fail to keep up with our words and the planet continues to be carelessly exploited.

The very lifestyles that were once considered the definition of success are now proving to be our greatest failure. Any further convictions to endorse such affluence would be catastrophic. There is absolutely no way that today’s 7.2 billion people could live the “Western” way of life, let alone the 11 billion expected in the future. Genuine progress now lies beyond growth. Tinkering around the edges of capitalism will not cut it. Given our growing population pressure and increasing life expectancy- only with lower economic development requiring minimal resource use, the planet could support many.

With the current level of affluent lifestyle, the planet’s optimum global population could be as low as 2 billion.

We need an alternative unless we are waiting for Thanos to pay us a visit and snap us out.

Degrowth is the name given to the planned, deliberate process by which we can transition from an economy in ecological overshoot to one that operates within its host planetary environment. One definition would be the "equitable downscaling of production and consumption that increases human well-being and enhances ecological conditions at the local and global level" (Schneider et al., 2010).

The idea of deliberately degrowing the global economy may sound outlandish, but it has nonetheless gained considerable traction in academic circles in recent years. The global economy is already in the process of "de-growing” whether we would like to acknowledge it or not. 

#globaleconomy #degrowth #prosperity #climatechange #tradeoff #sustainability #transition

More on this to be continued, do share your thoughts, whether you agree or disagree.