What Would a No Growth Economy Actually Look Like?
Whether we're talking about the economics of happiness, exploring living simply as an alternative American dream, or worrying about the potential impact of peak oil on the Global economy, more and more people seem attuned to the idea that the growth-at-all-costs model of economic development is not as robust as it once appeared. But what are the alternatives? If we abandon the idea of ever rising GDP, does that mean we need to turn our back on material prosperity and well-being too? Thankfully, some forward thinking economists are grappling with just these questions. What would a no-growth economy actually look like?Writing over at Mother Jones, Clive Thompson's excellent piece entitled Nothing Grows Forever explores the concept of no growth economics, tracing the idea back as far as Adam Smith and John Maynard Keynes, both of whom suggested it was possible for an economy to max out its natural resources and stop growing and/or reach a state where growth was no longer necessary to meet basic human needs—with humans instead preferring to devote their time to "non-economic purposes".
According to Thomas, elements of this idea have also enjoyed brief resurgences in more recent times. Dutch labor unions, for example, agreed in 1982 to drop demands for higher pay in exchange for shorter working hours—resulting in the proportion of Dutch workers in part time employment rising from 19% to 27% in a decade, the average work week falling from 30 to 27 hours, and unemployment plummeting from 10% to just 5%.
Even in the States, the concept of no growth thinking was gaining some traction during the Carter years:
"Herman Daly, who served for six years as a senior economist at the World bank beginning in the late 80's, was among the researchers inspired by Silent Spring. He remembers the Carter administration having "some openness" to no growth thinking. "But then came the Reagan years and, oh man, forget it."
But what, exactly, would a no growth, or steady state economy look like? It's hard to say, because the modern world has never seen one. But among the ideas discussed are shifting the burden of taxation from employment, and toward resource extraction, pollution and waste; encouraging job sharing, part-time employment and flexible hours; promoting cultural pursuits and other non-material consumption; and finding alternative methods of measuring well-being than mere GDP.
All of this may sound pretty radical in a world where Wall Street is king, but it doesn't take a huge leap of the imagination to accept that GDP may not be the be-all and end-all of human happiness. In fact, as Thomas points out, it is perfectly possible for our collective well being to plummet considerably, and for GDP to rise as a result:
"One of the big problems with using GDP as a yardstick for national well-being is that GDP rises when really bad things happen, too. If a company leaks PCBs into a reservoir and local cancer rates spike, the result is a flurry of economic stimuli: Doctors treat the cancers, crews clean the reservoir, lawyers busy themselves suing and defending the polluter. It's still growth--uneconomic growth."
While the problems with GDP and perpetual growth may be obvious, and while many of the individual elements of a no-growth society may be politically palatable, maybe even desirable, it's hard to escape the fact that growth is such a core part of our collective world view that any fundamental paradigm shift will most likely take years to come about.
As Thomas himself admits, the work of no growth economists right now is more about shifting the parameters of the debate than offering up concrete road maps to an alternative economic model. Tim Jackson, economics commissioner for the UK's Sustainable Development Commission, puts it this way: "The response is often that my logic is flawless, but the policy recommendations are bonkers."
Well, you've got to start somewhere.
More on Economics and Sustainability
5 years From Now, Peak Oil Could Devastate the UK Economy
The Economics of Happiness as a Response to Environmental Crisis (Video)
Confessions of an Economic Hitman (Video)
Living Simply: An Alternative American Dream