Economic growth will continue to provoke climate change

This piece is part of the series “Reimagining economics for a carbon-constrained world”. It argues that economic growth measured in terms of GDP already contributes to environmental degradation and societal harm, and makes a case for the degrowth movement.

The views expressed in the blog are the author’s own and do not necessarily reflect the views of Economist Impact or the sponsor.

Explore another side of the debate with Michael Jakob, who argues that, with the right policies in place, economic growth as it relates to continued improvements in human well-being is possible without overstepping natural limits.

Read his take here.

Is a global economic system based on GDP an outdated measure of progress? Read the explainer article here.

Global scientists agree that wealthy countries must reduce material production and consumption in order for the world to successfully tackle climate change, biodiversity collapse, ocean acidification, water scarcity and other environmental problems. Yet corporate and political insistence on the need to continually grow gross domestic product (GDP) weakens the will to change course.

Research in the field of degrowth examines empirical relations between economic growth, defined as increased monetary value of goods and services exchanged in a market—often calculated as GDP—and material growth, defined as increased biophysical throughput (energy, material and waste flows) of an economy, measured as “societal metabolism”. Degrowth science connects economics with thermodynamics to demonstrate how the transformation of material and energy into goods and services converts generally reliable and consistent (low-entropy) stocks of resources into disordered and chaotic (high-entropy) waste. Measurements reveal that global societal metabolism has surged over the past two centuries, accelerating even more in recent decades.

These data refute certain statements attributed to economist Diane Coyle in the introductory article of this debate series that, starting in the 1990s, GDP growth became “light as a feather”, “made of bits rather than atoms” and “had literally not weighed anything: all the incremental value-added growth was in intangibles of one kind or another”. Instead, they show that economic-material growth maps closely with environmental impacts that are currently pushing—and on some fronts exceeding—planetary boundaries.

Hundreds of degrowth-aligned studies analyse interactions among economies, ecosystems and earth systems. They assess roles of diverse policies and technologies. Quantitative analyses of material, energy and capital flows across global value chains expose unequal exchanges that generate profit for investors while negatively impacting other people and environments. Questions about prioritising GDP growth also address its correlation over the past four decades with unconscionable increases in inequality among and within countries, and its failure to correlate with vital indicators of well-being, above very low thresholds.

These findings inform degrowth objectives: to reduce the quantity of material and energy that wealthy economies use, to curb cultural and personal obsessions with growth, and to reorient societies around care and equitable well-being. Jason Hickel summarises: “Degrowth is a planned reduction of energy and resource throughput designed to bring the economy back into balance with the living world in a way that reduces inequality and improves human well-being.”

Bengi Akbulut, professor of geography, planning and environment at Concordia University in Canada, elaborates: “While it is most straightforwardly understood as material downscaling, degrowth denotes a far more encompassing transformation: a break with the ideology of growth, the repoliticisation of the economy and a reorientation of economic relations along different principles.” Foremost among those principles are democracy, diversity, participation and abundance—in contrast to prevailing notions of hierarchy, competition and scarcity that underpin current systems.

Degrowth scholars and activists seek conditions that support humans to interact with each other and with non-human environments in ways that produce and sustain more equitable, peaceful and caring worlds. They differ from mainstream economists and politicians in their support for diverse and coexisting pathways, and in their resistance to imposing one model of degrowth. In Degrowth & Strategy, 45 contributors address challenges of mobilising alliances and bringing about socioecological transformation, while respecting multiple approaches and sites of action.

The Case for Degrowth, meanwhile, traces synergies among ongoing initiatives in policy, institutions, design, infrastructure, social movements, values and practices. Examples of these include programmes that reduce labour hours, provide job guarantees, enhance public services, support local economies and extend basic care or autonomy allowances. Recognising the synergies at work, policymakers around the world are integrating these with environmental measures.

Understanding that prioritising GDP is not only environmentally harmful, but ineffective in bringing about equitable well-being, many countries are turning to alternate measures such as the Genuine Progress Indicator and the OECD Well-being Framework. Bhutan has pursued Gross National Happiness for decades; Bolivia and Ecuador have incorporated world-views known as Buen Vivir into national constitutions and governance; and the Wellbeing Economy Alliance unites leaders of Finland, Iceland, New Zealand, Scotland and Wales in pledges to prioritise the well-being of people and planet.

These multi-faceted strategies for transition contrast with technical solutions that promise to solve climate crises without altering—or even questioning—the socioeconomic systems that provoked those crises. Although green growth advocates push a fantasy that future technological innovation will allow us to grow economies without environmental impacts, scores of scientific studies find no evidence that GDP is yet decoupled from economy-wide resource use and generation of waste on national or global scales. While it is true that some sectors have started to use less resources or generate less waste with each additional unit of GDP, no economy has grown with zero environmental costs.

Moreover, national accounting systems often displace these costs. For example, the use of biofuels has helped some countries to reduce CO2 emissions domestically, while creating carbon debt elsewhere as production of biofuel stock replaces rainforests and savannas in the Amazon and South-East Asia.

Strategies to increase resource efficiency and reduce pollution are certainly necessary to slow material growth. But technical fixes are insufficient to address climate change if we do not also pursue more courageous societal shifts away from the cult of growth.