Degrowth economics is becoming a hot-discussed model for how the allocation of scarce resources should be done in the future, and it’s worth thinking about.
What is a degrowth economy? It’s where the point is literally to shrink the economy.
Degrowth advocates a complete reversal of what’s considered positive indicators in a modern economic context. From a macroeconomic view, the main indicator of an economy’s well-being is gross domestic product (GDP), though many economists think that looking at the consumer price index (CPI) is a better way to measure an economy’s well-being. Degrowth economics would do away with both measures on a series of grounds, but mainly that neither measures adequately reflect well-being per se. For example, the United States has the largest GDP in the world but ranked 27th on health and education in a world index study from 2018.
Three objections to GDP are often raised from a degrowth perspective. First, as shown above, GDP doesn’t necessarily mean everyone’s well-being is going up in a nation. Second, and closely related to the previous point, GDP says little about redistribution; GDP could be high in a country while the majority of income goes to the top per cent of earners. For example, if the welfare redistribution policies of the post-WWII era in the US remained, then the bottom 90 per cent of Americans would have earned $2.5 trillion dollars by 2018, a staggering 12 per cent of GDP.
Finally, GDP is a measure of gross produce, meaning what’s valuable at the end of the day is churning out product. Degrowth economics tries to account for the climate crisis as well as the empirical fact that the earth has a finite amount of resources, something that doesn’t factor into mainstream measurements of macroeconomic well-being.
Karl Marx was privy to this final critique over a hundred years earlier when sketching out the imminent antagonisms to capital in his three-volume study of political economy. In the first volume of Capital, Marx notes in a chapter on the transformation of money into capital that what’s unique to capitalism is that the source of product creation itself, labour-power, becomes just another commodity bought and sold in the complicated web of exchanges, consumption, distribution, production and so on, on the market. This is precisely the moment where, unlike anytime in human history, the global economy becomes analogous to its own autonomous machine, feeding off living labour to turn it into dead labour with no one at the wheel. The idea of capital being an abstract parasite, zombie-like in its crushing pressure over our lives, is apt.
Jean Baudrillard, a thinker often roped in with theorists parallel to degrowth wrote of the “violence of global.” The theorist most (in)famous for arguing we live in a hyperreality, Baudrillard turned up the stakes of Marx’s notion of labour-power as its own commodity and saw that prices and labour had become floating signs in an ocean of signs forever severed from their referents as we were now in the age of the simulacrum. One gets the sense in Baudrillard’s fatalism that nothing can be done but degrowth advocates and leftists more broadly today realize that this can’t be a solution with global temperature rises being as threatening as they are. Notions of hyperreality might be pertinent when doing media, linguistic and value studies, but a third of Pakistan being underwater is something we can register as urgent and real.
Degrowth economics has found itself to be somewhat interdisciplinary as it focuses on humanity and human well-being, something all too often disavowed by mainstream economics. Feminism, as an example, has been arguing for centuries about how work in the domestic sphere is not considered valuable in the market. Again, GDP doesn’t factor in domestic work and general upkeep, things like washing dishes, folding clothes, putting the groceries away, and raising children—though one could (and should) argue that without the unpaid work done in the domestic sphere, primarily by women, our societies would stop functioning and would tank GDP, a searingly ironic thought.
Degrowth is also understandably concerned with greenhouse gas emissions. Some strands of thought think something called “decoupling” is possible, that is that you can wean off of GHG while continuing to grow GDP. However, in 2019, the European Environmental Bureau did a literature review that largely debunked this idea.
The truth about degrowth is that it is as radical as it needs to be on fossil fuels. The global economy will have to shrink while moving to renewables as fast as possible.
Take the Amazon Rainforest for example, the massive 550 million hectares of dense forestry is important because it is essentially a massive CO2 sink, though its abilities to be so are already being undermined by climate change.
One thing that rich nations can do in the short term to stop, say, deforestation in the Amazon, is strike upfront stall deals with a country like Brazil so vital ecospheres such as the Amazon don’t fall capture to industry. This is strictly a preventative measure and not the solution by any means.
Degrowth economics is just one option of a variety that could be taken to combat the destruction of the environment, and while objectors say that degrowth will increase poverty, it should be mentioned that the myth that capitalism is a tide that will rise all boats is true between countries, within countries it’s increasingly the opposite.
Not to mention that the tides that will rise with the current system are likely to be from extreme weather events rather than the trickle down of global market shares.
