A few weeks ago I posted a rant about Michael Moore and Jeff Gibbs’ atrocious film, Planet of the Humans. At the end of that post I included a critique of depopulation, touching upon ‘degrowth’ as an ideology.
I also recently shared a link to a critique of degrowth in the FT by Tim Harford (which went down like a cup of cold sick amongst some advocates) alongside some interesting analysis of emissions during the COVID-19 crisis.
Since then, I’ve done quite a lot of reading and research to try and digest a lot of the arguments around degrowth. I am going to try and summarise my main issues with the ideology of degrowth, and how it fundamentally misunderstands some aspects that I think are critical to achieving both a net-zero world and greater prosperity for all.
What degrowth is, and is not
Harford had quite a brief explanation of degrowth, summarised as “The abolition of economic growth as a social objective”. This wasn’t good enough for some, so the fuller version, from the same source, would be:
“Degrowth means primarily the abolition of economic growth as a social objective. This implies a new direction for society, one in which societies will use fewer natural resources and will organize and live differently from today. Ecological economists define degrowth as an equitable downscaling of production and consumption that will reduce societies’ throughput of energy and raw materials. However, the shift should not only entail a smaller social metabolism, but more importantly a society with a metabolism that has a different structure and serves new functions.”Riccardo Mastini, Degrowth: the case for a new economic paradigm
Degrowth is not depopulation, as I mentioned in my previous post, and depopulation is only espoused by a small minority of advocates. (The depopulation aspect does have it’s own dark past.)
The central thrust of degrowth is around the subject of decoupling of emissions (or, more broadly, resource use) from the growth of our economies, as outlined by Tim Jackson and Peter Victor in their Science opinion piece.
You can achieve ‘relative decoupling’, whereby we carry on growing, but each unit of growth requires fewer resources – quite simply, we are more efficient at using stuff. Or, you can aim for ‘absolute decoupling’, which comes when we manage to grow our economy whilst using fewer resources in absolute terms.
As an example, for CO2 emissions this would mean GDP would grow but emissions would fall, as has happened across the EU over the past three decades. (Yes, I agree, not properly counting our consumption-based emissions matters in many cases. Maybe look at forest cover in Europe instead over the last 100 years.)
The degrowth movement has a long history in ecological economics, and has more recently grown into a mainly-European movement. This New Yorker piece is a great introduction to some of its main concepts and proponents, and Kate Raworth’s Doughnut Economics is also a worthwhile outline to some key concepts, although she prefers the term ‘growth-agnostic’, rather than degrowth.
What I like about it
Degrowth does two things well: it critiques our current economic system (from a pretty strongly Marxist/socialist viewpoint), and also tries to force more of a debate about what society and world we would like to live in.
Degrowthers do have a point in making us think about materiality and human prosperity. In a society where we worship new phone releases and fast fashion, and any traditional festivity is turned into a marketing ploy, you can understand this anti-consumerist backlash.
Perhaps the most eloquent (and numerate!) exponent of this is Mike Berners-Lee with his book There is No Planet B. It is well worth pausing to contemplate whether our resource use is within sustainable planetary boundaries, and how it can be combined with bringing prosperity, health and wellbeing to billions of people who currently lack it.
On this point, I am in full agreement with what degrowthers say. Over-exploitation of resources and ignoring or misusing “common” goods are both major issues, and we should shift away from them.
The movement also rightly points out that GDP is a pretty poor measure of human welfare. This is hardly news to anyone (Simon Kuznets, who first coined the term, pointed out its inadequacy immediately), but it’s a valid point and it is why we have developed other metrics like the Human Development Index.
Degrowth advocates also have a pretty clear understanding of how beneficial technological development can be, and are very willing to acknowledge the benefits it has brought us, as argued in Vaclav Smil’s book Growth. They simply do not believe these advancements will take us far enough, fast enough.
Further, many in the degrowth movement are rightly sceptical of the past four decades or so of ‘neoliberal‘ economic narrative. It is often a heavily-loaded term, but it is only fair to criticise the type of economic narrative that led to Greece’s harsh bailout terms under the Troika, financial liberalisation that eventually led to the Great Recession, or the gradual erosion of the power of labour in the USA.
Still, none of these latter arguments are particularly ground-breaking insights, to be honest. They are, at best, a reheated version of previous criticisms.
Diane Coyle (all-round badass economist) has been pointing out for over twenty years that, although GDP may not measure human wellbeing so well (she should know, she’s written a book on it), it also far from a pure measure of resource intensity, as many degrowthers portray it to be. The absolute decoupling that degrowthers love to talk about is actually being achieved in many sectors in advanced economies.
We’ve also understood for a while that innovation is key to improvements in human prosperity (think about it: would you use medical procedures from now, or the 1950s? a computer from now, or the 2000s, let alone the 1990s?), and is also crucial to achieving decarbonisation.
And Josef Stiglitz was onto critiquing neoliberalism some decades ago over the IMF and World Bank’s interventions in emerging markets and developing countries, notably in his book Globalization and its Discontents.
So, whilst I fully support the continuation of these critiques, they’re hardly new. Still, with regards using fewer natural resources and raw materials and requiring less energy – these are all things I would sign up to.
Where I disagree
My bone of contention with many aspects of what I have read has been that, broadly, it doesn’t stand up to any sensible scrutiny.
To illustrate this point, I am going to criticise Jason Hickel’s manifesto, Degrowth: a theory of radical abundance, and base my argument on three main strands. In plain English, these are:
1.) You need money to pay for shit
2.) Most of the shit you want to do will lead to “growth” anyways
3.) Degrowth is politically toxic and selfish
In more detail
1.) First, Hickel does not seem to realise that most of the things that he argues for necessitate a lot of money.
To achieve net-zero emissions we still need to work out ways to decarbonise heating or home construction, expand electric vehicle charging networks, radically re-haul many industrial processes and more. Much of that requires large-scale infrastructure spending: think of swapping all petrol stations to EV charging stations, or re-purposing gas networks to carry hydrogen. All of this costs money.
You’ll also need significant amounts of government spending on subsidy schemes, R&D incentives and much more, and what we’ve seen until now is far from what is required.
(Of course, Hickel doesn’t actually mention any of this, because it’s all quite difficult and requires a lot of thought, and he’d rather go on spurious tangents discussing the London housing market…)
As I outline below, many of the other goodies that Hickel would like, from a universal basic income through to a higher minimum wage, would also cost money, much of it from government.
So, this money would have to come either from higher taxes or issuance of debt, i.e. government bonds.
Now, to be clear: I have no issue with this, per se.
I am extremely far from the Osbornite proponents of ideologically-imposed austerity, and I am also no fan of straw-man attacks regarding “fiscal irresponsibility”. I tend to think that the only thing worth worrying about is how much government debt costs you, not how high its level is.
However, the amount it costs you each year does matter as it carries an opportunity cost: it’s money that could be spent on building hospitals, training teachers or whatever else you want government to spend on.
For example: if you have debt that is 100% of GDP, and interest of 1% to pay on it, then it’s costing you only 1% of GDP each year – arguably, quite acceptable, as it’s less than a few percent of government spending (around 40% of GDP in the UK). However, if debt reaches 500% of GDP, then even an interest rate of only 1%, you’ve got to pay 5% of GDP each year – suddenly, that’s quite a lot: in the UK, it’s what we spend on education.
By the way, waving your hands and saying “GDP is a shit measure” is not a valid argument. If you want, we can re-do it using the actual numbers in £, $ or €. It’s just maths.
The main determining factor of the cost, aside from the amount of debt, is what interest rate you pay on it. Arguably, that is entirely down to what other people (the people buying your debt) think of your ability to pay it back. If they’re confident you can pay it back, e.g. as with the USA and UK, you pay low interest rates on it. If they’re less confident, as with Argentina or Zambia, your interest rates are much higher. If your interest rates are very high, then even much lower levels of debt can still become very expensive to pay off.
So, if you are going to significantly increase levels of government spending, and therefore debt, you’d better be convincing the people buying up your debt that you’re fully capable of paying it back. If you’re making some vast generalities, as Hickel is, not even bothering to consider some basic maths, and also arguing to decrease your GDP year-on-year (leading to a higher debt-to-GDP percentage), what do we expect those interest rates to do? Rocket.
So, to spell it out:
In order to decarbonise, you require a radical transformation of the economy. This can only be achieved by involving some large-scale government action, which costs money. This money comes from taxes and borrowing. Borrowing means interest payments matter. Interest payments rise if you cannot demonstrate the ability to repay. If you’re actively aiming for degrowth, that ability to repay is severely compromised.
2.) Hickel, or degrowthers, do put forward some reasonably sensible ideas. For example, aiming for a 4-day working week, boosting minimum wages, redistributive taxation or shifting subsidies away fossil fuels and towards green infrastructure. Many of these are shared with proponents of a Green New Deal.
Let’s set aside that these are not feasible in a degrowth scenario, as I outline above, and also below in an appendix with some numbers.
Degrowthers in any case seem to wilfully neglect the fact that many of these policies would actively lead to growth.
Take boosting wages for the low-paid or progressive taxation. This puts more money in the hands of people on lower incomes. Those people tend to spend a much higher proportion of their income than richer people. So, if your proposed policy suggestions boost the income of the low-paid, they’re going to spend more – leading to growth. (Which we’re meant to avoid…)
How about all of those incentives and splurging on green infrastructure? They’re pretty likely to boost the productive capacity of the economy, as well as help us decarbonise. So, because we have increased productivity, if we keep everything else running exactly the same then our GDP would increase.
Now, you could use that boost in productivity to aim for fewer working hours, and I would be pretty fine with that. But it is neglectful at best to deny that the policies being suggested would themselves lead to growth.
In fact, some of these policy recommendations (funnily enough, the ones I tend to agree with) are not as radical as degrowthers would like them to seem, and I address this point more below.
3.) Let’s finish off with the politics of all this.
I outline the numbers below, but in essence, as much as degrowthers would love for you to think of this as reshaping our economy, or a “gentle slowing down”, the reality is one of lower incomes per person in western/developed economies over the short, medium and long-term.
I simply cannot see how aiming for this would ever be electorally successful. In fact, the most coherent critique I’ve come across is from a left-wing socialist who has warned against degrowth as inhibiting many progressive objectives.
Even if you managed to convince a few people to buy into the cuddlier aspects of the degrowth platform, you’re always leaving yourself open to the attack that you do not have the interests of those struggling most at heart. There is no way that this would command a plurality, let alone a majority of public support.
This is the great irony of a bunch of white, western, middle-class academics proposing impoverishment of the masses, for some abstract “greater good” or for a world full of “abundance”.
It is pretty hypocritical for someone like Hickel to argue that people prefer subsistence farming to earning a higher income in a city (yes, really), or that people will be enamoured with their new-found love for collectivism and nature rather than worrying how to make ends meet at the end of each week when their income has been cut drastically.
It’s also political suicide.
This is where a good dose of realpolitik is required to shake some of these people from their student-politics-esque approach to things.
In order to achieve wide-scale transformations, be it economic, societal or environmental, you need to be able to hold the levers of power.
It is not enough to simply shout loudly, and say that you’re “shifting the debate”. You might be, at the margin, and good for you for doing that. It’s just not that helpful, and likely to turn people off as much as draw them in.
I’m much more interested in the real, large-scale changes that become feasible once you have government machinery at hand.
So, if you’re willing to subscribe to degrowth as a central plank of your political manifesto, then you are basically saying you’re willing to give up on gaining power and implementing any sort of progressive changes, for the sake of some misguided, inflexible ideology that is electoral suicide.
That is simply not good enough for the advancement of progressive causes, and is both toxic and selfish.
Truly radical thinking?
Beyond this, it feels like degrowthers see themselves as this independent new group plotting a radically different path for society.
With regards actively seeking GDP growth of less than or equal to zero, maybe they are.
But in terms of the outcomes they actually desire, and the way they’d like to get there, most of what they say is not radical at all. Degrowthers like to tarnish all of economics with the “neoliberal” brush, wilfully choosing to treat the entire field as one monolith. That’s simply naive, and a straw man.
In fact, there’s plenty of scope within economics as a field to have broad disagreements and to have people pushing in quite radically different directions. There’s even a goddamn lecture course about “Rethinking Capitalism” at UCL, freely available online, which covers far more in much better detail than any degrowth article I’ve come across. (I’ve watched a few – I think they’re pretty good.)
From better pre-distribution of income through to a less concentrated economy, from green infrastructure investment to a desire to focusing on human prosperity rather than GDP – it’s all up for discussion within economics, and it’s all pretty conventional social democratic stuff.
So, although degrowthers like Hickel like to misrepresent anyone a millimetre less extreme than them as “neoliberal”, I would say there’s more nuance to it than that.
For example, consider Tim Jackson, whose original report on “Prosperity Without Growth” came out of Labour’s Sustainable Development Commission. Or Julia Steinberger, one of the more eloquent and informed proponents I’ve come across and heard speak (check out her cool research on life expectancy, energy and electricity use).
I would say that, although they might pretend otherwise, people like Jackson or Steinberger are much closer to where social democrats stand on a wide variety of issues.
Indeed, more recent proponents of “degrowth” have realised that telling people they would actively like them to become poorer is not so palatable. Instead, many now speak of changing the make-up of GDP, or altering the priorities of our society, becoming “growth-agnostic”, in Kate Raworth’s words.
Well, in that case – I’m all for it. I too care much more about improving people’s lives than GDP growth.
But let’s not pretend that if you sat down Keir Starmer, Jacinda Ardern, Pedro Sanchez, or even Diane Coyle and Jo Stiglitz, that they would say they’d sacrifice anyone to the altar of GDP growth. They’d probably look at you, nod in agreement, and say they too don’t see GDP growth as the end goal, and they’d also much rather shift our focus onto quality of life, more equitable health outcomes, enjoyment of nature and so on.
Let’s not pretend that degrowthers are all that different to standard social democratic politics, whether in Europe or elsewhere. The more sensible advocates of degrowth (i.e. not Hickel – see below) would probably fit in quite happily in (the outer edges of) most social democratic parties.
Let’s try and wrap this up; I appreciate I’ve covered quite a lot.
I outlined three reasons why I don’t think degrowth is sensible as an ideology: it fails to engage rigorously with the fiscal implications of its policy; it doesn’t realise some of its broad policy aims would boost “growth”, broadly defined, making it self-contradictory; it would be politically foolish.
Further, many of the more sensible suggestions from degrowthers are actually already part of mainstream progressive/social democratic thought. They just need to be decoupled from the more radical, less sensible, toxic parts of the degrowth movement.
So, if you feel any attraction towards those who propose degrowth, take a step back and think about it.
Is what they’ve suggested sensible, and thought-through? If it is, what are its consequences? And, is it already on offer by mainstream centre-left parties? Most of the time, you’ll find that there’s no need to subscribe to the ideology of degrowth in order to pursue progressive policies. And if you do, well then, I look forward to debating this with you.
First, here’s some extra reading and sources I found useful:
- Two more free-market takes on growth and its benefits, both on the Econtalk podcast
- Andrew McAfee on the same podcast discussing his book More from Less, giving lots of examples of lower resource use and dematerialisation
- A short primer on debt, on the Capitalisn’t podcast, in the context of COVID-19 (the first section is the most relevant)
- A short piece reviewing non-western arguments around degrowth, giving some more interesting perspectives
- This piece, providing a good critique of degrowth (from an actual trained economist, no less)
Below, I go into more detailed criticisms of Jason Hickel’s piece and various other nonsenses that I came across.
Appendix I: Academic rigour
I would like to highlight that this field is not what I would call the most academically rigorous. This might seem like a low blow, but I think it stands: to engage in constructive debate you have to be willing to stand up to proper scrutiny.
A review paper points out that, “Until 2012, articles largely constitute conceptual essays endorsed by normative claims.” Although it does point out that more empirical and modelling-based approaches have since emerged, it is worrying that an academic field can base itself on what are effectively little more than opinion pieces, and they go on to say that, “The academic discourse could benefit from rigid hypotheses testing”.
To illustrate this, let’s look at two points in Hickel’s piece where he cites references that do not support the claims he makes in those sentences.
First, he misrepresents a study by the Global CCS Institute with regards to the amount of CO2 storage globally available, to try and shove this issue under the carpet, avoiding difficult questions and genuine debate around it.
Second, Hickel misrepresents a paper by D’Alessandro et al. where they include a degrowth scenario. Spoiler: the degrowth pathway achieves higher unemployment, less income share going to labour and the same reductions in energy intensity versus a ‘Policies for Social Equity’ scenario (which, golly gosh, does allow for GDP growth), whilst only achieving 7-8% lower emissions by 2050.
It may seem like a small thing, but this behaviour is actually close to plagiarism and a serious breach of research integrity. Anyone reading these papers should do so with a healthy dose of scepticism, and should keep this in mind when considering the broader legitimacy of degrowth proponents.
Appendix II: Mathematical rigour
Because I love numbers (and one day, so will you, dear reader), let’s walk through a couple of examples from the wilder policy proposals we have heard.
In this back-and-forth between Hickel and Branko Milanovic, an economist, Milanovic highlights that if we took current GDP and ‘froze’ it, redistributing it equally worldwide, each person would get around $5,500 each year. This would entail those living above this level, most of whom live in the West, cutting their income by around two-thirds. Let’s keep that in mind.
Now let’s look at two proposals that Hickel mentions in his manifesto:
“Wage losses due to a reduction in working hours can be prevented by increasing hourly wages with a living wage policy.”
I’m all for a living wage policy. However, to pay a living wage, you need enough GDP and tax revenues to enable it!
Let’s think about median income in the UK for a moment. We’re currently at £29,600 p.a., which translates into an hourly wage of roughly £15.20.
Our current living wage is £9.30 per hour, and people struggle enough on that.
If we’re cutting income in the developed world by 2/3, our hourly wage is coming down to £5 or so… How’s that for a living wage?
Even if you redistributed a shitton of wealth *and* income, most of that redistribution is going to the global south, so couldn’t be kept in the UK. So, tough luck to the bottom 50% in the UK, or the rest of the OECD – at least we’ll all be poorer together.
Never mind that these are the same people you’re meant to convince to vote for you!
“To protect small businesses that may find it difficult to pay significantly higher hourly wages, a universal basic income scheme could be introduced, with dividends funded by taxation on carbon, wealth, land value, resource extraction, and corporate profits.
As I said above, we currently have median income of £29,400. So, if we proposed a UBI of £12,000 per person, well below what a living wage gets people working full-time, that is still approximately 40% of the UK’s GDP purely on the UBI.
That is the *whole* of the UK government’s current spending, give or take a few percent. No money for buses, hospitals or schools. Just your good old, UBI. Even if you halved it, we’d still only have enough government spending left over only for healthcare and welfare.
And you’re suggesting to me that we also need policies to support a jobs guarantee and living wage, and boost infrastructure spend on renewables, and so on?
But wait, Leo, you’re forgetting all of those new taxes!
Fine, if you look into raising new sources of revenues, here’s some more maths:
UK total wealth is around £13 trillion, which is roughly six times our GDP. Let’s pretend we’re not North Korea, so we only tax it at a three percent a year instead of all in one go.
Because we’re in degrowth, or “growth-agnostic”, we don’t have an annual 5% growth rate in capital to offset the tax. So, we’re just steadily going to erode that capital stock.
Forgetting about transferring all that wealth to the global south, as we were meant to (whoops!), let’s redistribute it in the UK. So, 3% of wealth gives around £400 billion, or around £6600 per person. Great! That might cover half the UBI. But the year after, it’s only going to be £6,300. And the year after that, a bit less again. And so on. Not so useful, then, in our degrowth scenario.
There are good arguments for, but also against, a land tax. Still, if you have a wealth tax and applied the land tax too, you’d probably be double-counting, so neither would work out quite as lucratively as you’d expect.
Carbon taxes are great, I’m personally very keen for them. They also hit the poor hardest. So, the most palatable form might be revenue-neutral with cash handouts. In that case, it’s of no use to us here.
“Taxation on resource extraction?” I don’t really know what that means when it’s put that broadly, and it would likely depend significantly on how and where it’s applied. Still, given that mining contributes around 2-3%, and agriculture contributes 6%, of global GDP, you aren’t getting much there either.
Appendix III: Other idiocies
There’s a bunch of other economic illiteracies that show up the lack of understanding of our current system of some degrowth proponents.
As usual, here at heart there is a genuine issue that is a problem and is worth debating: the fact that many households are overly reliant on debt to fund their spending, and this can be highly detrimental.
Still, this doesn’t mean that you then go and throw your entire banking system out of the window. Even degrowthers have said that this wouldn’t be particularly useful!
Ask any small business, or any person looking to buy a house, whether they’d be able to manage without the system of debt issuance that we have worked out, and they’d look at you with some amusement.
Even the Nordic countries, those paragons of equal opportunity, low income inequality, high life satisfaction and social democracy, have debt-based fractional reserve banking. And that’s because they’re not morons.
It’s a classic case of identifying the issue at hand, but then suggesting solutions that are completely at odds with reality.
Another example, in Hickel’s original piece, is the suggestion to “cap the price of housing at half its present level”, and in another piece they suggest to “stop the construction of new houses”.
What planet these people on?
First off, placing a cap on house prices (or rents) removes any incentive whatsoever from improving that home (for example, by insulating it properly or adding double glazing – both of which would reduce its energy consumption!).
But not building any more houses, either? How does this fit alongside the UK’s past decades of under-building of housing, especially social housing, leading to significant issues around housing affordability?
Finally, there’s the weird stuff I mentioned around development and sustenance farming.
The well-placed original critique is that, broadly, development economics from the 80s and 90s was highly neoliberal in its approach. It benefitted many, but also caused lots of issues, as Stiglitz has raised in his books.
Still, it doesn’t immediately follow that industrial farming is some big, evil conspiracy, and that small-scale subsistence farming is the be-all and end-all?
I would be interested in knowing whether someone working as a cocoa farmer in Ghana would agree, whether they would prefer some industrialisation and technological help to boost crop yields and reduce their workload? There is a reason that, as countries develop, people choose to move to cities in order to earn higher incomes for less strenuous work.