Beyond the need for a Growth-Oriented Economy : décroissance ou degrowth
In Neoclassical economics, Solow-Swan model describes long-run economic growth is achieved through capital-accumulation, labor or population growth and increases in productivity, typically through technological progress. The model predicts economies will converge to a steady-state of constant stock of capital growth rate and constant population growth rate. How does this compare to mainstream economics? The conventional idea of bigger economic growth is always preferred.
I first heard of degrowth in my first year of university. An economics tutor briefly concluded, after 12 weeks of our theory-focused, introductory microeconomics content, is that how we measure the economy may not be sustainable in practice. Two years later, with the Australian bushfires, Rio Tinto’s disastrous Pillbara mining blasts and a college mate’s post of an Instagram infographic on degrowth renewed my interest in the concept.
Increase in buildings, corporate investments, government expenditure, more mass consumption and overabundance of production of goods all adds to an economy’s year-on-year GDP’s bottom line.In a growth-oriented 21st century, the world’s intensifying ecological issues are fuelling traction of the concept of “degrowth”.
What is degrowth?
Degrowth emphasises the reduction of utilising an economy’s finite resources to mitigate social and environmental costs.
Origins of degrowth
The economist André Gorz spoke out against the conflict between capital growth and the ecological implications of growth in 1972, and called for the need of décroissance in material production.
Modern day degrowth proponents call for decentering economic growth and development as a primary measure of progress. It aims to emancipate humans from the current existing economic structures in practice and it’s social and environmental implications.Instead of monetary valuation and resource limits, advocate for the autonomy to decide upon a future liberated from bureaucracies and corporations which dictated industrialism and growth.
The use of GDP as a primary means of economic progress is rooted in capitalism.
In a world ravaged by the effects of coronavirus, with mounting health emergencies and economic collapse reinforced the need to re-evaluate certain priorities.As the International Energy Agency have proclaimed, the effects of the virus are temporary, but climate change is irreversible.On the other hand, the unplanned downsizing of social and economic activity due to the pandemic is exemplary of why degrowth is needed.
Australia’s Neglect of it’s Environmental and Social Goals
Alongside stimulus plans, the Australian government lacks conviction in preparations for complementary policies for climate change.The current focus on a mining and gas-led economic recovery throughout the nation strays away from the government’s commitment to meet their goal of zero emissions, despite the fact that increasing energy consumption has been declared as one of the most important underlying contributor to environmental pollution.According to the WWF, Australia’s investments in renewable industries lag behind EU, UK, Germany, France, and South Korea.
Coronavirus has disproportionately affected the most vulnerable in society, such as the elderly , people in social housing, workers who don’t have the option of paid remote work and so on. People are facing a trade-off their health and safety in order to meet their basic necessities.Prior to the pandemic, winners of 2019 Nobel Prize in economics, Abhijit Banerjee and Esther Duflo have indicated a larger GDP is not indicative of a rise in human wellbeing especially without equity.
Banerjee and Duflo aren’t opponents of economic growth. In Foreign Affairs, they noted that, since 1990, the number of people living on less than $1.90 a day — the World Bank’s definition of extreme poverty — fell from nearly two billion to around seven hundred million. “In addition to increasing people’s income, steadily expanding G.D.P.s have allowed governments (and others) to spend more on schools, hospitals, medicines, and income transfers to the poor.” However, for countries in the Global North, policies which slow GDP growth may be beneficial if the benefits of growth is distributed amongst those in need.
“Nothing in either our theory or the data proves the highest G.D.P. per capita is generally desirable.”, Abhijit Banerjee and Esther Duflo
Covid-19 highlights degrowth as a necessity.
