Is this the moment to change the way we think about economic growth?

Dr Carla Liuzzo, QUT Graduate School of Business

The International Monetary Fund in its World Economic Outlook and Australian Treasurer Jim Chalmers have forecast slowing economic growth in industrialised economies.

But perhaps the current crisis is an opportunity to discuss an alternative to the economic orthodoxy of constant growth.

Supporters of economic theories known as “degrowth” or “post-growth” say that capitalism’s pursuit of growth, along with the relentless consumption and production needed to sustain it, has run its course.

They point to rising inequality, exceeding natural planetary boundaries and  geopolitical struggles over scarcer energy resources.

If slower economic growth is where we’re heading, degrowth and post-growth thinkers have already been exploring ways to make that transition smoother.

The push for reform

Leading post-growth and degrowth advocates include economists Tim Jackson and Giorgos Kallis. They see a radical departure from capitalism, especially in its current neoliberal form, as a necessary next step in economic and political reform.

Degrowth proposals seek to redirect policy and economic activity away from how fast or how much the economy grows. Instead, the focus is on:

• the quality and purpose of what is produced
• who benefits and
• whether growth genuinely improves people’s lives.

Global supply chains have been disrupted by the Strait of Hormuz closure. The prospects of energy shortages and usage restrictions may mean reorientation away from economic growth is happening out of necessity.

A planned policy shift

Degrowth proponents argue for sufficiency over constant growth in gross domestic product (GDP). They want to see shorter supply chains and localised ownership of companies producing goods and services. This would simplify supply systems and reduce overall consumption.

In practical terms, this means fewer ships carrying cheap or single use goods, a focus on localising food production and expanding the lifespan of the products we do consume. In degrowth, less is more.

To achieve this in an energy-constrained world, degrowth involves reducing or eliminating some resource-intensive industries, such as fast fashion, through taxation and regulation. The European Union’s fast fashion tax is a good example.

Scaling back is occurring already, with regional supply chain strategies for the Association of Southeast Nations (ASEAN) and some pharmaceutical firms localising manufacturing to produce drugs and vaccines closer to end users.

What differentiates degrowth from stagflation or recession is an intentional, planned political shift away from GDP growth, to reorient economies around the idea of “buen vivir” (living well). This concept, originating from South America, is based on collective wellbeing and meeting basic needs.

It may be hard to pin down how much is enough and what a “decent” standard of living is for everyone. But a recent study has suggested it’s far less materially than we might think. It’s more about ensuring universal access to the essentials like food, housing, healthcare and education.

Basic needs for human wellbeing are defined in measures such as the UN’s Human Development Index and global happiness and wellbeing indices.

Environmental concern

War is leading to fuel shortages and rising food prices on top of a deepening cost of living crisis in Australia. With that backdrop, faith in the economy’s ability to deliver for people may be strained further.

Compounding this are concerns our current growth-dependant lifestyles are exceeding what Earth can support. One study just released found 58% of people in 92 countries surveyed placed a higher priority on environmental protection than economic growth.

Measures of economic growth such as GDP do not measure human wellbeing. In Australia, the government published an alternative set of measures known as Measuring What Matters, although wide policy influence has been limited.

Discussions on post-growth are happening at the international level of the OECD and World Economic Forum.

The United Nations just held its first meeting of the Beyond GDP Global Alliance in April, where leaders discussed shifting the measures of economic success away from GDP.

Is it just a thought experiment?

Despite worthwhile aims, degrowth and post-growth theories face significant challenges to feasibility in our current capitalist economies.

No industrialised country has ever deliberately shrunk its economy – though some cities such as Amsterdam and Copenhagen and regions are trying it. That means most ideas about what degrowth policies could achieve remain theoretical.

A saying within degrowth circles is that the end to economic growth will happen either “by design or by disaster”.

Does the slowing of economic growth in industrialised economies signal “degrowth by disaster”? And if so, perhaps it is time for businesses and governments to think about how to prepare for “degrowth by design”.

This article is republished from The Conversation under a Creative Commons license. Read the original article.