Friday, November 18, 2011

A Post-Growth Economy FAQ

Read the original article: A Post-Growth Economy FAQ.

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By Jeremy Williams:

“Does a sustainable economy mean an end to progress and change?

‘I don’t want to live in an economy where everything is the same, where progress is halted and human creativity is stifled’, is a common response to post-growth theories. I agree absolutely – I wouldn’t wish to live in that kind of economy either. The new economy doesn’t hit the pause button on progress, innovation, science, creativity, culture or change, and neither does it go backwards. It just sets some new parameters, and will therefore deliver a different kind of change. Instead of bigger, we’ll have to develop better; qualitative change rather than quantitative. We may not consume as much, but our lives may well improve in all kinds of other ways – more leisure time, greater involvement in the arts and in local democracy, better health, and a cleaner environment.

This is where the term ‘steady state economy’ is a little awkward, as it sounds static and immobile. Other writers even describe a ‘stationary state’. The reality is much more interesting. Rather than picturing a flat-lining graph, imagine riding a bicycle or walking a tightrope – this is balance and poise, a dynamic equilibrium, and the new economy will similarly react to new technologies and adapt to changing situations.

Without growth, won’t the poor be abandoned to their poverty? This is one of the first ripostes to anyone who questions growth. In fact, the opposite is more likely to be true – the growth model of economics cannot solve poverty. Poverty is relative, and growth is distributed unequally, which means that when the economy grows, the rich get richer much faster than the poor get less poor. Even if distribution was equal, a rise in incomes for everyone means the proportions would stay the same. As I’ve shown elsewhere, Britain’s economy has grown fivefold in the last thirty years without reducing the number of households living in poverty.

The new economy would not have growth as an excuse, and so it would need to focus much more on equality and opportunity, dealing with the root causes of poverty and creating a just society.


Will ending growth create massive unemployment?

Under our current system, there are disastrous job losses whenever the economy goes into recession. It’s an inherently unstable system that is guaranteed to deliver a jobs cull every ten to twelve years, until it eventually runs out of steam altogether. The transition may be rocky, but a steady state should be much more stable in the longer term.

In the new economy, growth in materials will be limited, but there will still be plenty of change within the system. New businesses will start and jobs will be created. Some sectors will shrink – aviation, oil extraction and so on, but other sectors will boom. Renewable energy is going to be a growing industry for some time to come. Without cheap oil, some aspects of globalization may go into reverse, bringing manufacturing jobs nearer to the point of sale. Food sources will relocalize, re-invigorating local agriculture.

On my walk to the station I pass a tailor, a lawnmower workshop and a TV repair man, all of which are unusual, but these kinds of businesses will be returning to a street near you. As we move away from a throwaway culture, repairing, renovating and recycling will be more important. As resources become more expensive, the price of material goods will rise. Those with disposable income may choose to spend it on services rather than products – a spa visit rather than a shopping spree. This is often referred to as the ‘Cinderella economy’, and it has a healthy future.


Isn’t the Steady State Economy just Socialism in disguise?

There is a real fear in some quarters that anything to do with sustainability sets us off on a slippery slope towards socialism. I presume that this is because stewarding resources will mean tighter regulation in some areas, but regulation doesn’t necessarily mean bigger government. For it to work, the new economy will need to put a price on pollution, and a cap on declining resources. Both of those will require government intervention to start, but healthy markets to deliver.

Nature draws no distinction between ideologies, and the world doesn’t fit into our political constructs. Something is either sustainable or it isn’t, and neither capitalism nor socialism is ‘the answer’. No philosophy or political party is right on everything, and we’re going to have to draw ideas from all over the place, asking what works and combining it all to form something new. The final picture may include capitalist market structures, but socialist cooperatives, with elements of Islamic finance perhaps, some ’Buddhist economics’, and Christian ideas of stewardship. Maybe we’ll learn from the Agrarians in valuing farming, with a Distributist view of land and the non-revolutionary approach of the Fabians. The new economy needs to build on the best ideas of the past, and stay open to new ones.


Would world trade still be possible?

Globalisation has blown the doors of free trade wide open, and international trade is one of the big drivers of economic growth. This trade would not disappear in the new economy, but it would be subject to a different set of priorities and therefore very different.

For one thing, wasteful trade would come to a natural end. For example, Britain exports potatoes to Germany, and imports almost exactly the same tonnage from Germany back to Britain. There’s no need for government to step in and regulate that kind of thing – the rising costs of oil will make it uneconomic. Cheap oil and free pollution make shipping costs negligible at the moment. As that changes, the comparative advantage of cheap labour overseas will evaporate. As Jeff Rubin explains, that could mean a ‘homecoming’ for many off-shored production businesses.

There is, of course, an appropriate level at which things should be manufactured. Potatoes can be grown locally, but we’re never going to have a village microchip factory. The new market conditions of a sustainable economy would gradually re-order production priorities at the local, national, regional and international level. Advanced technologies, large items and luxury goods will still be traded internationally, while other things will be traded more locally.


What about population?

There are two kinds of growth – linear growth and exponential growth. The first is a fixed increase, which gives us a steady upward line. The second is growth that builds on what is already there and accelerates over time, giving us steep rising curves. Capital increases in this way as interest accrues, and so does population. (If a couple has three children, and each of those has three of their own, you have nine new people. If they all have three children, the original couple now have 27 great grandchildren. If the pattern carries on, by the tenth generation you’d have a town of over 60,000 descendants.)

What population growth does is put an exponential spin on everything else – giving us the distinctive hockey stick curves that have defined this century, in water use, food production, deforestation, and of course CO2 emissions.

The new economy is predicated on a stable population, one where the birth rate roughly equals the death rate. Many countries are already addressing this, including Bangladesh, where mothers had an average of 6.2 children in the 1970s and now have 2.74. There is no need to fear the issue, since the best ways of encouraging people to have fewer children are things we can (almost) all agree on: education, empowering women, healthcare, and poverty alleviation.”

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