Zero Growth Economy – We can have Prosperity without Growth

“The idea of a non-growing economy may be an anathema to an economist. But the idea of a continually growing economy is an anathema to an ecologist.”

- Tim Jackson


Everytime we look at the news or listen to a politician open their mouths, we hear about the necessity of economic growth. It is the neo-liberal mantra of the modern world.  The media message is obvious: economic growth is GOOD, no Economic Growth is BAD. Yet, how much truth is there in this message? It is said that a lie repeated many times becomes a truth. Is it possible that there is more behind this statement than meets the eye? How many people stop to think about all the ramifications of continuous economic growth?

The false choice that an unbalanced economic system that ravages its own life support system offers its citizens is one between engaging in 1) ecology/people-destroying jobs (which constitutes the majority of today’s employment activities) and 2) ecology/people-enhancing jobs (which constitutes the minority of today’s employment activities).  Most will choose to get what they can…the ecology-destroying jobs but when they do, they are making a Faustian pact because we are now at a point in history when our short term existence may be supported but at the expense of our long term existence.

Yet again we find as in other areas such as the financial markets and environmental issues, that our misplaced trust and blind acceptance in the so-called “absolutes” propounded by the mass media is what keeps getting us in trouble. In monetary reform, global warming, the Occupy movement and the Arab Spring, we find a mass awakening of consciousness that questions existing power structures, existing monetary structures, existing ways of doing things on autopilot. If we apply this independence of thought to questioning the necessity of economic growth, we will also find revealing truths.

Is the mantra of more economic growth the solution to our problems…or is it actually the problem needing solution? Will it deliver prosperity and well-being to a global population projected to reach nine billion?  And if so, what does “prosperity” mean when extreme weather is the norm, biodiversity loss is pandemic and when the perfect storm of economic, ecological, energy crisis is like a stubborn storm that refuses to leave?  Tim Jackson is UK’s first Professor of Sustainable Development and Director of the Research group on Lifestyles, Values and Environment (RESOLVE) at the University of Surrey’s Centre for Environmental Strategy and he makes a compelling case against continued economic growth in modern, industrialized countries.

Jackson’s extensive work in the field has led to the  the UK policy paper: Prosperity without Growth? upon which the book with the same title is based.

Prosperity without Growth? analyses the complex relationships between growth, environmental crises and social recession. In the last quarter of a century, as the global economy has doubled in size, increases in consumption have caused the degradation of an estimated 60% of the world’s ecosystems. The benefits of growth have been distributed unevenly, with a fifth of the world’s population sharing just 2% of global income. Even in developed countries, huge gaps in wealth and well-being remain between rich and poor

Our report proposes a twelve step route to a sustainable economy, and argues for a redefinition of “prosperity” in light of our evidence on what really contributes to people’s wellbeing. – The UK Sustainable Development Commission

Awakening to the New Realities of Economics Growth 

For 5 decades, economic growth has maintained social stability. It did this through a circular process: by encouraging ever increasing consumption, we generate profits for companies, which hire more people who then have more wealth to spend on consumption.  In 2008, the growth based economy became desperately unstable, revealing the flaws of such an economic strategy.

In fact, there is now an awakening consciousness that such a system, in addition to doing all the above does so by:

  • increasing resource depletion
  • increasing pollution
  • increasing global warming
  • exploiting inequity

The world is a much different place than it was 5 decades ago when we adopted the strategy of economic growth as the foundation of our civilization. Our population numbers have swollen to such excessive numbers that the mythology of a limitless world upon which continuous economic growth is predicated is exposed for what it is . Our seemingly limitless planet suddenly seems rather small. Humans now impact up to 40% of the known planetary land mass (excluding the Arctic and Antarctic) and threaten to take more.

Where Economic Growth Needs to Happen and where it Doesn’t


 

Our economic growth has also been been far from balanced and equitable. In particuliar, it has resulted in a small population consuming most of the resources while the majority are living in poverty:

  • 925 million people do not have enough to eat – more than the combined populations of USA, Canada and the European Union;
    (Source: FAO news release, 14 September 2010)
  • Nearly half the world’s population, 2.8 billion people, survive on less than $2 a day.
  • About 20 percent of the world’s population, 1.2 billion people, live on less than $1 a day.
  • Nearly 1 billion people are illiterate and 1 billion do not have safe water.
  • 98 percent of the world’s hungry live in developing countries;
    (Source: FAO news release, 2010)
  • Asia and the Pacific region is home to over half the world’s population and nearly two thirds of the world’s hungry people; (Source: FAO news release, 2010)
  • Women make up a little over half of the world’s population, but they account for over 60 percent of the world’s hungry.
    (Source:  Strengthening efforts to eradicate hunger…, ECOSOC, 2007)
  • 65 percent of the world’s hungry live in only seven countries: India, China, the Democratic Republic of Congo, Bangladesh, Indonesia, Pakistan and Ethiopia.
    (Source: FAO news release, 2010)
  • A few years ago, for every $1 received in aid, developing countries spent $13 on debt repayments.

Figure 1: World map: People living on less than a dollar a day, size proportional to population (Source: Worldmapper)

 

Economic development is vital for this class of people but it is far from necessary for those who already possess so much. While no one denies that development is essential for poorer nations, growing evidence is indicating that increasing consumption adds little to human happiness in the more advanced economies of the world.

Figure 4: Well Being Pie (Source: Prosperity without Growth?)

  

Figure 2:  a: Happiness vs GDP     b. Education vs GDP (Source: Prosperity without Growth?)

The graphs above reveal that happiness levels off after a particuliar GDP threshold ($7,000)  is reached. After that, happiness measures are about the same for everyone. This is correlated to education as well.  These graphs tell us that pulling people out of extreme poverty can increase happiness significantly but beyond a certain point of GDP, it doesn’t impact happiness much.  This points us in the direction of a meaningful economic growth strategy.

The polarization in wealth  is obvious and borne out in statistic after statistic…while people in the developing world still die in massive numbers for want of simple and cheap medicines, people in the developed countries are dying and suffering from diseases of excess….heart attacks, cancers from the multitude of toxins in a highly artificial manufactured environment. (See Centralization of Power)

  

Figure 3:  a: Changes in Life Expectancy over time vs GDP     b. Life Expectancy at birth vs GDP (Source: Prosperity without Growth?)

Feeding our Need instead of Feeding our Greed

We are persuaded to spend money we don’t have on things we don’t need to create impressions which won’t last on people we don’t care about or worse still don’t care about us – all in pursuit of keeping afloat an economic system which is driving itself to instability and the ecology to destruction

- Tim Jackson

Economic growth is so ubiquitous that we have never stopped to question it. Now that it’s effects are crashing down on us everywhere, we have no choice. Such growth requires continual resource extraction and at the same time produces growing mountains of solid, liquid and airborne waste, polluting the very environment which we all depend on for survival.  It is now clear that the ecosystems that sustain our economies are collapsing under the impacts of rising and unsustainable levels of consumption. According to Jackson, we cannot radically lower the environmental impact of our current growth-based paradigm and we have no choice except to devise an alternate trajectory to prosperity that does not rely on continued growth.

Above all else, this model of economic growth depends on continuous consumption. Investments are used to continually expand the pie.  The current model not only feeds into our needs, but into our greed.  Economics sees individuals as selfish, novelty seeking agents of materialism. It needs that model to sustain it. It assumes we will play the game of hedonistic, self-satisfying purchasing agents. Are we really these selfish, novelty-seeking and materialist consumers?  Are do we want to build economic institutions in which individuals are not just consumers?

Continuous and absolute economic growth is no longer possible without breaching ecological limits

The default assumption of continuous growth is defunct. While our economy grew 5x in the last 50 years, it is no longer credible to believe that we can continue growing at this pace. The main constraint is an ecological one; we are already beyond what the resources of the planet can provide to sustain this growth. We have already transgressed the safe operating space of the planet. If we continue our present pace of growth, at the end of this century the economy would be 16x bigger than it is now, and 80x bigger than it was 50 years ago and it still wouldn’t be an equitable world. If we wanted everyone to have a western lifestyle by the end of the century, we would have to have an economy an incredible 200x bigger than it was 50 years ago. It’s impossible to imagine a resource base and industrial capacity that can support such growth. It’s just not credible and we had better think about degrowth and how we can share the wealth we already have more equitably – living within limits and a far less materialistic lifestyle.

Re-engineering the Economy

The ultimate aim of an economy is not to provide income, goods and services or even stability; it is to provide prosperity. In short, it’s time to reengineer our entire modern lifestyle so that it falls within the ecological limits of a finite planet and a no-growth paradigm. This is a profound dilemma because our economy is organized around growth. Attempting to shrink our economy while it subscribes to a growth paradigm risks instability. It will be a tremendous challenge. The first step is education and teaching how to recast all our institutions in a no growth paradigm. In particuliar, we must think of investment quite differently. In the conventional model, investment has been about expanding the pie. We must recast investment in the new terms of protecting ecological assets, achieving prosperity for people by sharing existing resources more equitably and strategies for transitioning our society.

We need investment in long, slow moving capital that sees the future such as the protection of biodiversity, of habitats and produces clean energy technologies and communities. Ultimately what we must see is that it is not the material stuff we need, but the services that the material provides. What people really want are a quality in our lives such as:

  • good health
  • nutrition
  • strong education
  • social care
  • sense of leisure and recreation
  • happiness!

One of the conventional economy’s biggest mistake is that it chases efficiency blindly by getting rid of labor. However, when you chase labor out of quality of time we put into activities that create the value in these services. New sense of enterprise must move away from conventional shareholder capitalism which continually extracts wealth from enterprise into a minority and more towards shared ownership in assets, equitable distribution of wealth and communities involved in their own production, consumption and investment activities.

The 21 Hour Work Week

The New Economics Foundation examined the idea of a shorter work week and found this simple idea can have profound positive changes in society.

The 21 hours report from the New Economics Foundation presents compelling arguments for a much shorter working week. It proposes a radical change in what is considered ‘normal’ – down from 40 hours or more, to 21 hours. While people can choose to work longer or shorter hours, the NEF propose that 21 hours – or its equivalent spread across the calendar year – should become the standard for government, employers, trade unions, employees, and everyone else.

A ‘normal’ working week of 21 hours could help to address a range of urgent, interlinked problems that we face today ranging from overwork, unemployment, over-consumption, high carbon emissions, low well-being, entrenched inequalities, and the lack of time to live sustainably, to care for each other, and simply to enjoy life.

Planet, people, and markets: reasons for change
A much shorter working week would change the tempo of our lives, reshape habits and conventions, and profoundly alter the dominant cultures of western society. Arguments for a shorter work week affect 3 interdependent economies:

  1. the natural resources of the planet
  2. human resources, assets, relationships, inherent in everyone’s everyday lives
  3. markets

Safeguarding the natural resources of the planet. Moving towards a much shorter working week would help break the habit of:

  1. living to work,
  2. working to earn,
  3. and earning to consume

People may become less attached to carbon-intensive consumption and more attached to relationships, pastimes, and places that absorb less money and more time. It would:

  1. help society to manage without carbon-intensive growth
  2. release time for people to live more sustainably
  3. and reduce greenhouse gas emissions

Social justice and well-being for all. A 21-hour ‘normal’ working week could help distribute paid work more evenly across the population by:

  1. provide work for the unemployed and reduce ill-being associated with unemployment
  2. decrease long working hours and too little control over time

It would make it possible:

  1. for paid and unpaid work to be distributed more equally between women and men
  2. for parents to spend more time with their children – and to spend that time differently
  3. for people to delay retirement if they wanted to, and
  4. to have more time to care for others,
  5. to participate in local activities and to do other things of their choosing
  6. to enable the ‘core’ economy to flourish by making more and better use of uncommodified human resources in defining and meeting individual and shared needs
  7. to free up time for people to act as equal partners, with professionals and other public service workers, in co-producing well-being

A robust and prosperous economy. Shorter working hours could help to adapt the economy to the needs of society and the environment, rather than subjugating society and environment to the needs of the economy. Business would benefit from:

  1. more women entering the workforce
  2. from men leading more rounded, balanced lives
  3. from reductions in work-place stress associated with juggling paid employment and home-based responsibilities
  4. ending credit-fuelled growth
  5. developing a more resilient and adaptable economy
  6. safeguarding public resources for investment in a low-carbon industrial strategy and other measures to support a sustainable economy

Transitional problems
Moving from the present to this future scenario will not be simple.  Problems likely to arise in the course of transition include:

  1. the risk of increasing poverty by reducing the earning power of those on low rates of pay
  2. too few new jobs because people already in work take on more overtime
  3. resistance from employers because of rising costs and skills shortages
  4. resistance from employees and trade unions because of the impact on earnings in all income brackets
  5. more general political resistance that might arise, for example, from moves to enforce shorter hours

Achieving shorter working hours. Conditions necessary for successfully reducing paid working hours include:

  1. reducing hours gradually over a number of years in line with annual wage increments
  2. changing the way work is managed to discourage overtime
  3. providing active training to combat skills shortages and to help long-term unemployed return to the labour force
  4. managing employers’ costs to reward rather than penalise taking on extra staff
  5. ensuring more stable and equal distribution of earnings
  6. introducing regulations to standardise hours that also promote flexible arrangements to suit employees, such as job sharing, extended care leave and sabbaticals
  7. offering more and better protection for the self-employed against the effects of low pay, long hours, and job insecurity

Ensuring a fair living income. Options for dealing with the impact on earnings of a much shorter working week include:

  1. redistribution of income and wealth through more progressive taxation
  2. an increased minimum wage
  3. a radical restructuring of state benefits
  4. carbon trading designed to redistribute income to poor households
  5. more and better public services
  6. encouraging more uncommodified activity and consumption

Improving gender relations and the quality of family life. Measures to ensure that the move towards 21 hours has positive rather than negative impacts on gender relations and family life include:

  1. flexible employment conditions that encourage more equal distribution of unpaid work between women and men
  2. universal, high-quality childcare that dovetails with paid working time
  3. more job-sharing and limits on overtime
  4. flexible retirement
  5. stronger measures enforcing equal pay and opportunity
  6. more jobs for men in caring and primary school teaching; more childcare, play schemes and adult care using co-produced models of design and delivery
  7. enhanced opportunities for local action to build neighbourhoods that everyone feels safe in and enjoys

Changing norms and expectations. There are many examples of apparently intractable social norms changing very quickly – for example

  1. attitudes to the slave trade
  2. gender equality and votes for women
  3. gay rights
  4. wearing seatbelts and crash-helmets
  5. not smoking in public places

The weight of public opinion can shift quite suddenly from antipathy to approval as a result of:

  1. new evidence
  2. strong campaigning
  3. changing circumstances, including a sense of crisis

There are some signs of favourable conditions beginning to emerge for shifting expectations about a ‘normal’ working week. Further changes that may help include:

  1. the development of a more egalitarian culture
  2. raising awareness about the value of unpaid labour (for example, if the average time devoted to unpaid housework and childcare in Britain in 2005 were valued in terms of the minimum wage, it would be worth the equivalent of 21 per cent of the UK’s gross domestic product)
  3. strong government support for uncommodified activities
  4. a national debate about how we use, value, and distribute work and time

We are at the beginning of an international debate. The next step is to make a thorough examination of the benefits, challenges, barriers and opportunities associated with moving towards a 21-hour week in the first quarter of the twenty-first century. This should be part of the Great Transition to a sustainable future.

Tim Jackson and Professor Peter Victor or York University  have joined forces at the Institute for New Economic Thinking on the Green Economic Model and Macro Accounts (GEMMA) project which seeks to develop new models of zero growth:

Advanced economies face an unprecedented combination of economic, financial, environmental, and social problems. Some societies may choose not to pursue economic growth as a matter of policy. Others may find themselves unable to achieve growth. In either case, it is essential to consider the implications in advance to avoid adverse outcomes. This project supports the development of a novel macroeconomic model for managing without growth. The model can be used to analyze economic and financial stability, employment, and social outcomes in the context of resource and environmental limits.

Tim Jackson is The UK’s first Professor of Sustainable Development and Director of the Research group on Lifestyles, Values and Environment (RESOLVE) at the University of Surrey’s Centre for Environmental Strategy. Has been at the forefront of research and teaching in sustainability for over 20 years and has led numerous research and policy initiatives on sustainable consumption and production in the UK and abroad. Co-authored the first Index of Sustainable Economic Welfare for the UK (1996) and has served in numerous advisory positions in the UK Government, the European Commission and the UN. Was Economics Commissioner to the UK Sustainable Development Commission from 2004 to 2011 where he led the Redefining Prosperity programme. This work culminated in the publication of his groundbreaking book ‘Prosperity without Growth: economics for a finite planet’ which has been translated into 12 languages worldwide.