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.