Macroeconomics without growth

This post follows from last week’s, which discussed how Richard Wilkinson and Kate Pickett’s The Spirit Level argued against the continued value of further economic growth. This week’s post looks at the work of Tim Jackson, who, as discussed previously, also argues that it is both possible and desirable for modern economies to operate without growth.

Economic growth is not good for our society or our environment, argues Tim Jackson, the author of Prosperity without Growth: Economics for a Finite Planet.

That’s not a new position for someone coming from an ecological perspective. What is a bit more unusual that he also faces up to the economic problems that a “steady-state economy” would face, and goes some way towards demonstrating that they can be overcome.

The new ecological macroeconomics that he is developing has the potential to become an important contribution to the ‘theoretical foundations’ of progressive thought in the 21st century.

But, before addressing this, it is worth touching on another important aspect of Jackson’s book, which is his refutation of what he calls the ‘myth of decoupling’. A standard feature of more mainstream economists’ efforts to take climate change seriously is an effort to show that it is, while not easy, manageable for us to make the transition from our current carbonised economy to a much less carbon-intensive one, which could otherwise carry on much as before. The work, for instance, of Nicholas Stern falls into this category.

Jackson, by contrast, makes a convincing case that this is arithmetically impossible. In 2007 a global population of 6.6 billion had an average income level of $5,900, with a carbon intensity of 760 grams of CO2 per dollar. This produced 30 billion tonnes of CO2 emissions.

The IPCC’s targets for 2050 is 4 billion tonnes of CO2per annum. In order to reach that, assuming a population of 9 billion (the UN’s mid-range estimate) and per capita income growth of 1.4 per cent a year (the same as between 1990 and 2007), we get the following equation: 4 billion tonnes of of CO2 = 9 billion X around $10,700 income X a carbon intensity of round 36 grams per dollar! That’s a 21-fold improvement on 2007 levels of intensity.

If we were to assume a higher-end population projection projection of 11 billion and allow for the developing world’s incomes to converge with those of the EU, the target gets harder again. Moreover, there would then be a need to continue to reduce carbon intensity beyond 2050. By 2100, writes Jackson, “to all intents and purposes, nothing less than a complete decarbonisation of every single dollar will do to achieve carbon targets.” Looked at this way, ongoing growth begins to look rather problematic.

But non-growth (decroissance, to use the French term) has its arithmetical problems too. Jackson points out that our modern capitalist economy has, as its basic driver, investment. And investment produces returns for the investor by increasing the productivity of labour and other resources. Therefore, over time, the amount of labour needed to produce the same bundle of goods and services declines. And so, if growth were to cease, but investment and productivity gains continued, then the economy would shed labour each year.

That would create an unstable spiral, as increased unemployment led to reduced consumption and thus a drop in investment.

Jackson calls this the dilemma of growth: growth is unsustainable but de-growth is unstable. But he believes it is possible to get around this. Drawing on earlier work by Herman Daly, Avner Offer and Peter Victor, he sets out both an idea about the kind of non-growing economy that might be stable and some thoughts about how we might develop a macro-economics to analyse the dynamics of such an economy.

Very broadly, a non-growing and environmentally-friendly would have three characteristics:

  • Firstly, the logic of pursuing productivity growth would be turned on its head by deliberately seeking to focus growth in the lowest-productivity (i.e. most labour-intensive) sectors of the economy, such as ‘personal and social services’.
  • Secondly, there would need to be a deliberate process of sharing out the work, via reductions in working time, rather than allowing the reduced labour hours to be borne by a minority of unemployed people.
  • Thirdly, the drivers and expectations around investment would need to change significantly, with the growth of ecological investment. In many cases, this would have much longer return -horizons than currently, or no returns at all. This would imply a much greater role for the public sector in leading this sort of investment.

Jackson sets out a complex typology of different investment ‘dimension’, each with slightly different  targets and conditions:

He sees a more detailed and complex understanding of the differing dynamics of these different types of investment as a distinctive feature of a new ecological macroeconomics.

Jackson’s model is a work-in-progress, but even in its current form it stands as a powerful rebuke to the notion that ‘zero-growth’ proponents must always be utopian, a bit fluffy and unwilling to really work through the hard analytical issues.

The question of whether progressives should abandon growth, as The Spirit Level counsels, or continue a champion it remains unresolved. But attempts to short-circuit that debate by dismissing de-growth as ‘pie-in-the-sky’ now face the demanding task of refuting this impressive work. I look forward to Im Jackson’s further elaboration of it.

Next week, I’ll look at the claim against GDP as a measure of progress, and particularly the work of the Sarkozy Commission.


  • An electronic copy of a slightly older version of Prosperity without Growth than the one in the bookstores can be accessed via the Sustainable Development Commission website, here.

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5 Responses to “Macroeconomics without growth”

  1. James Caygill says:

    I’ve said it before, and here I am saying it again:

    I think it’s really important in embarking on this discussion that everyone is clear about what ‘growth’ means.

    In a traditional economic growth sense it means growing value. But in a typical environmental critique it frequently gets misused as growing the quantity of stuff done in an economy. They are two quite different things. Add to this your use of future growth to mean population growth, and you’ve got three relevant dimensions to an argument that are very hard to clearly stitch together.

    I’m interested most in your next article. But as you know, for now, I remain a committed ‘green’ social democrat who is not persuaded by no-growth arguments.

  2. David Choat says:

    I see where you’re coming from, James, but I don’t think Jackson does confuse/conflate those things – in fact, I think he’s admirably clear about terms and definitions, though not all of that necessarily comes through in my one-post summary. Have a read for yourself, at the link.

    In terms of the arithmetical example I present, the key measure of carbon intensity is grams of CO2 per dollar. This is multiplied by total income which has two components – income per person and number of people. All pretty conventional stuff.

    What you’re claiming, I think, (reframed into his terms) is that we can by focussing on less-resource activities reduce our carbon intensity 21-fold. Jackson doesn’t think so. That’s a valid debate; but it does illustrate (I hope) that Jackson’s framing is useful one.

    • James Caygill says:

      Thanks for the response David,

      To be clear – I had no idea if Jackson was vague – and reassured to hear from you that he isn’t. It’s just something that is frequently vague when the discussion moves from expert economists to wider audiences that bugs me, so I thought it’d put it out there first by way of preempting confusion :) .

      I’ll certainly have a read.

      And, finally, yes I guess I am saying it can be reduced 21-fold. But that is very obviously a statement of faith, rather than evidentially based at this stage. I’m really interested in the debate, but my starting point is that position of faith – which I intend to challenge with evidence over the next few years. But my knowledge of civilizational history suggests that arguments will need to be stunningly robust to shatter that faith in the short term.

  3. Tim Jackson says:


    Just a quick note to thank you for this review which someone passed on to me. Taking aside the question of decoupling and whether it needs to be 21-fold or indeed as much as 130-fold under some assumptions, I am very pleased that you have picked up the baton on the question of macroeconomics – even daring to plunge into the Appendix for the details of my approach to investment! I recently found a very interesting intellectual pedigree for this dating back to the post-Keynesian literature. And I’m more convinced than ever that this is one of the core issues in a new ecological macroeconomics. It has quite profound repercussions of course not only for the boundary between public and private investment, but also for the structure of the financial markets. But if there’s one key lesson from the financial crisis, it should be the need for a thorough re-appraisal of that structure even in its own terms. Anyway, thanks again for your post… Lots of people have praised the book for its critique of growth, far fewer have seen clearly my intentions in relation to change.


    • David Choat says:

      Thanks for taking to time to respond to my post, Tim. I’m very flattered that you liked it, and pleased to hear that I’ve done an alright job of summarising the macroeconomic side of your argument! Regards, David.