New Internationalist

Growth is like a bicycle

Are democracy and individual rights compatible with the ‘managed contraction’ of the economy? wonders Duncan Green.

Last month I spent an enjoyable hour debating zero growth with Tim Jackson in his back garden, for a slot in the July issue of New Internationalist. Tim is the UK’s first Professor of Sustainable Development (at Surrey University), one of our sharpest thinkers on the limits to growth, and author of the excellent Prosperity Without Growth.

We largely went over the ground covered in my previous posts on his work: Total global carbon emissions = GDP multiplied by grams of carbon per $ of output. To reduce emissions you either improve the carbon efficiency of the economy (fewer grams per $, known as ‘decoupling’), or accept a reduction in GDP, or both.

But Tim reckons that decoupling growth from carbon emissions at the required speed isn’t going to happen, so if we are to avoid catastrophic climate change, the rich countries will have to move to a post-growth paradigm, not least in order to make room for poor countries to keep growing. The justification for the different approaches in rich v poor countries is that, once you get past a certain level of GDP, growth delivers diminishing returns in terms of well-being.

Tim argues that zero or negative growth is not possible in the current system, not least because firms compete to increase productivity, and finance and investment restlessly seek profits based on productivity, and as productivity rises, you have to grow to soak up the newly unemployed. Because of this, growth is like a bicycle – if it stops, you fall off (my analogy, not his). His answer is a broad brush shift away from the emphasis on consumption, and a new model of investment that recognizes environmental constraints on economic activity.

We kicked around some ideas for how this might happen, drawing analogies with other parts of the economy. Carbon accounting systems would have to be developed in a way similar to financial accounting; firms would be required to manage climate risk, for example paying higher taxes on emissions over a certain level.

But what struck me most was when we got on to the political system needed to deliver what is at least in part a war economy, with a centrally agreed figure for total carbon emissions (and usage of other finite environmental goods). Such an economy would require a combination of carbon markets and hard and soft regulation (eg rationing, prohibiting some kinds of technology, or debt-driven industrial expansion; penalties for excess carbon emissions; mandatory carbon emissions accounting).

Politics becomes far harder in a zero or negative growth economy. In a growing economy, everyone can have a larger slice of pie; in a static economy your gain is someone else’s loss and distributive conflicts are bound to rise. Tim sees growth as necessary for political as well as economic stability under the current system. No wonder that politicians routinely dismiss any talk of limiting growth.

Collective action problems would also abound – if one firm or country decided to go for zero growth, for example by stopping investing in new technologies, but other firms continued to do so, they would rapidly gain a competitive edge and push the others out of business. At an international level you would require enforceable coordination mechanisms to a far higher degree than currently exists – something close to global government, in fact.

Which leaves me with the nagging question, ‘are democracy and individual rights compatible with the ‘managed contraction’ of the economy?’ I was left thinking that the systemic obstacles to zero growth are at least as great as those preventing a drastic acceleration of technologies to decouple production from emissions, e.g. through the launch of 20 Manhattan Projects. And both would require a far higher centralization of power.

My conclusion? A successful long-term containment of climate change will come through a combination of partial decoupling, perhaps driven by big climate shocks, and maybe combined with fragmented shifts to a post-growth paradigm, but it will be very messy indeed and may not look very democratic.

In the end we agreed on an unlikely combination of Sherlock Holmes and Antonio Gramsci – ‘When you’ve eliminated the impossible, then whatever’s left, however improbable, has to be the truth’, and ‘I’m a pessimist because of intelligence, but an optimist because of will’.

And as always, it’s far easier to pick holes in other people’s arguments than provide solutions of your own, but it’s important to think through the politics of these kinds of big new ideas. I would dearly love to be convinced that zero growth is both achievable and compatible with human rights – over to you.

Duncan Green is head of research at Oxfam GB and writes a daily blog on development issues at http://www.oxfamblogs.org/fp2p

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