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The inadequacies of Gross Domestic Product

August 30, 2010

1) humanity is collectively but unequally using natural resources far in excess of the planet’s ability to regenerate them; 2) when nations focus exclusively on GDP as a measure of progress it creates an unsustainable race for more and more consumption, leading to that resource depletion; and 3) there are alternative measurements, factoring out the effects of environmental degradation, which if more widely and publicly employed would help both individuals and nations make more environmentally friendly economic decisions.

Matthew McDermott in a good article on GDP and its alternatives, on Treehugger.

the model no longer works

August 23, 2010

There is a dawning recognition that the growth model adopted by the industrialised countries over the past half-century no longer works. Our model of growth has simply become uneconomic, with more stuff not only failing to bring additional wellbeing in the so-called rich world, but also storing up impending environmental shocks, most notably peak oil and runaway climate change.

Nick Robins, in The Ecology of Growth, for Resurgence magazine.

The Wilberforce Award

August 23, 2010

There’s been an unexpected twist to the economic growth debate in the last couple of weeks, with the launch of the Wilberforce Award. Australian businessman Dick Smith has offered $1 million to “a young person under 30 who can impress me by becoming famous through his or her ability to show leadership in communicating an alternative to our population and consumption growth-obsessed economy.”

The award will be announced in a year’s time, and there’s no need to apply. Smith will be watching the media to choose his winner, so the only way to win it is to get on with presenting the case for an end to economic growth, and a transition to a sustainable future. And lest anyone be tempted to pursue the award for the wrong reasons, the money will go towards the winner’s awareness raising work.

“It has become obvious to me,” he writes, “that my generation has over exploited our wonderful world – and it’s younger people who will pay the price. Like many people my age, I’ve benefited from a long period of constant economic and population growth – we are addicted to it. But sooner or later this consumption growth will have an end. We appear to be already bumping against the limits of what our planet can sustain and the evidence is everywhere to see.”

The name references William Wilberforce, who argued and won the case against slavery despite a popular perception that the economy could not function without slaves. Economic growth is similarly entrenched, and it will take a visionary of Wilberforce’s calibre to break its hold. That person, says Smith, “will need to have a firm belief that we can have a viable and strong world economy that is no longer obsessed with growth for its own sake, but instead encourages both a stable population and sustainable consumption of energy and resources. They must be able to communicate that we cannot continue to squander the resources that will be needed by future generations, and they must also be able to communicate a plan that offers an alternative to our growth addiction.”

Strangely enough, I’m writing this about 20 yards from the very spot where Wilberforce and his collaborators met. My work office is attached to Christchurch and Upton Chapel in London, and right out the window is the steeple that was donated by the family of Abraham Lincoln to thank the church for its role in ending slavery. It’s a rather humbling place to come to work.

Beyond Growth was devised to help mainstream the growth debate in some small way, and I’ve been watching developments over the last few months. Smith’s award is the most unexpected and interesting turn of events so far, and we shall see what he inspires with his generosity.

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August 6, 2010

STWR at the UK Steady State conference

July 28, 2010

Last month I got to take part in the steady state economy conference in Leeds. Share the World’s Resources were there too, and Anna White shares her perspective:

On Saturday 19th June, Leeds Metropolitan University played host to a unique gathering of over 250 academics, economists, NGOs, local community organisations, business people and even a few deviant politicians, all coalescing behind an idea whose time is long overdue: the steady state economy. Given the worrying truth acknowledged by attendees – that the blinkered pursuit of never-ending economic growth is destroying the planet and endangering human well-being – the mood was surprisingly high-spirited. No one came to rail against greedy bankers or deliver doomsday predictions of a dystopian future. The focus instead was on the burgeoning possibilities for a new economy, one that builds prosperity within ecological limits. Albeit with an admission, of course, that we really do need to get a move on in creating it.

Organised by Economic Justice for All (EJfA) in Leeds and the US-based Center for the Advancement of the Steady State Economy (CASSE), keynote speakers included some of the foremost thinkers who challenge our addiction to economic growth. York University’s Peter Victor, whose book, Managing without Growth offers one of the few empirical analyses of post-growth scenarios in a national economic setting, challenged the “fear of a no growth disaster”. He argued that convincing policy-makers and the public that it is possible to have full employment, no poverty and low greenhouse gas emissions without relying on economic growth requires a comprehensive set of progressive policies, not least of which is fewer working hours.

CASSE’s own Dan O’Neill outlined the qualifications for what a steady state economy would actually look like. Making the crucial point that it is not only stabilising material throughput within ecological limits that is important, he proposed that economic activity must also result in a just distribution of resources and contribute to a high quality of life for all.

In a video contribution, although disappointingly cut short, Tim Jackson linked the structural drive for economic growth to a culture of consumerism. This was apparent, he said, in our somewhat ridiculous tendency towards materialistic social comparison – our desire to “keep up with the Joneses”. Why do we feel the need to constantly buy things we don’t need in order to impress people we don’t know, or sometimes even like? The short answer is that it is one of the more perverse outcomes of a system bent on ever-expanding supply and demand. For the long answer, see Jackson’s excellent publication, Prosperity without Growth.

Andrew Simms, Policy Director at the New Economics Foundation (NEF), gave a rallying call to “harness the transformative impulse for progressive ends”. Venturing into the realm of psychoanalysis, he suggested we could redirect the human desire for novelty and reinvention – upon which consumer culture feeds – by changing the stories we tell ourselves about what is normal and socially desirable. Instead of engaging in the left-wing tendency of navel-gazing and bickering amongst each other, he implored the movement challenging growth to recognise the urgent need to transform ‘business as usual’ and boldly step up to the plate in advocating alternatives.

Inspiring as the keynote presentations were, the real undertaking of the conference took place in the ten interactive workshops convened to explore specific policy proposals for achieving a steady state economy. From suggestions for how to limit resource use to the possibility for developing alternative measures of progress beyond Gross Domestic Product (GDP), discussions centred on the concrete steps required to take the movement forward from the realms of academia and into political action.

One recurring theme of debate centred on how to balance bold transformative measures with some sense of political realism. Attendees pointed out that any proposal that seriously challenges the status quo, and subsequently the powerful interests that benefit from its continuation, is bound to run into stiff opposition. Tempering this concern, however, was realism of a different kind. For, as many participants noted, what could be more idealistic than to suppose that economic growth can continue unchallenged on a finite planet?

A theme that received much less attention, but arguably one of the most important going forward, was the question of what impact such a transformation would have on the so-called ‘developing world’. While steady state economics is clearly tailored for the few countries who are over-consuming the world’s resources, the consequences of altering the dynamics of growth would reach far beyond national boundaries. The creation of more co-operative relationships in relation to trade, aid and global governance cannot be treated as a side issue.

Despite the challenges that lie ahead, the prevailing atmosphere among participants at the conference was one of hope. Alongside the bold policy changes proposed was widespread evidence that the transition is already happening at a grassroots level. Local currencies are springing up around the world, alternative business models are thriving, and politicians and the public are engaging with the issues at stake. Armed with progressive economic ideas, growing political support and – as a few speakers noted – a new name, the movement for a steady state economy has the potential to capture the public imagination and help build a more sustainable and socially just future.

Article reproduced under Creative Commons license, originally posted here at STWR.

Ask a politician: What if growth is over?

July 13, 2010

The Oil Drum has a feature on economic growth this week.

“One of the most surreal phenomena one encounters these days” writes Nate Hagens, “is that no country, no established economic research institute, and no international organization publicly discusses scenarios that don’t plan for a return to stable economic (GDP) growth.”

Every response to the global recession is based on a return to endless economic growth. There is no plan B, despite plan A being logically impossible. Shouldn’t we at least be discussing the possibility that a return to growth might not be possible?

“Given the constraints in natural resources, our currently unprecedented levels of debt on a global scale, and the absence of ideas for the next grand “leap forward” for mankind, it seems plausible that we might have to bid adieu to economic growth, and not just for a year or two, but for a long time.”

Hagens then suggests that we start asking politicians, and even posts a draft letter.

Read the post here.

Growth is the G20’s “highest priority”

June 28, 2010

Browsing the final communique from this week’s G20 summit, it’s hard to miss the emphasis on growth. The 20 most powerful countries have committed to ” a full return to growth” within two sentences of the 27 page document, and the phrase will crop up a further 66 times before the end.

In fact, growth is the first thing on the agenda: “the G-20’s highest priority is to safeguard and strengthen the recovery and lay the foundation for strong, sustainable and balanced growth”

In a world that faces climate change, extreme inequality, massive biodiversity loss, inevitable resource depletion and crushing poverty, what does it say about us that our first priority is economic growth?

David Cameron on Britain’s unsustainable growth

June 7, 2010

In a major speech on the economy today, prime minister David Cameron condemned Labour’s growth strategy.

The previous government, he told journalists, “thought the good times would go on forever; the economy would keep on growing and they could keep on spending. But the truth about that economic growth – and the tragedy – was that it was based on things that could never go on forever.”

Labour’s economic growth was based on financial services, immigration, and government spending, says Cameron. None of these drivers was sustainable:

“Their economy was based on a boom in financial services, which at its peak accounted for a quarter of all corporation tax receipts. But this was unsustainable because the success of financial services was partly an illusion, conjured from years of low interest rates, cheap money and a bubble in the price of assets like houses.

Their economy was based on a boom in immigration, which at one point accounted for a fifth of our annual economic growth. But this was unsustainable because it’s just not possible to keep bringing more and more people into our country to work while at the same time leaving millions of people to live a life on welfare.

And their economy was based on a boom in government spending, with some budgets doubled or even trebled in a decade. This was not sustainable because in the end, someone has to pay for all that spending.”

So far, so good. If Cameron had gone on to say that the UK would therefore be abandoning a growth model of the economy, it would have been a great speech. If he’d outlined a more sustainable way of growing the economy, I’d have settled for that. But he did neither of those things, promising budget cuts instead.

Cutting the deficit and ending the upward spiral of Labour’s debt is a great start, but what is the vision for the ongoing prosperity of the country? How will we enjoy further growth without rising house prices and financial speculation? Government borrowing and spending has been reckless, sure, but so has private borrowing and spending. Average household debt is almost £60,000, and almost two thirds of the UK’s economy depends on consumer spending. What will the new Conservative government do about the unsustainable levels of private debt? How will the new growth strategy break the link between economic growth and CO2 emissions, another unsustainable element of the last decades’ growth? Is there a strategy to wean the economy off cheap oil, which subsidised our economy through the North Sea until 2005?

In short, Cameron is quite right to highlight the flimsy nature of our economic growth under Labour, but if he thinks that there some sustainable alternative way of maintaining growth, he is mistaken.

New MP speaks up for alternative metrics

June 2, 2010

Julian Huppert, the new Lib Dem MP for Cambridge, has questioned GDP in his very first speech to the house:

…economic growth is not all that we should care about. We know that economic growth can lead to environmental damage, but the issue is broader than just that trade-off. We are too fixated on GDP, and make too much of whether it has gone up or down by 0.2%. It does not measure the things we ought to care about – education, health, or well-being. If there is an oilspill off the coast, which we then clear up, more or less well, GDP has increased, but I’m not sure any of us would be delighted with that outcome.

We need to focus more broadly on personal issues such as well-being and happiness. We need to develop rigorous metrics to measure this wellbeing throughout society, and then ensure that we bear them in mind when developing policy. For we already know a lot about well-being – it doesn’t change much with income, above a figure of around 7,000 pounds per annum. It changes with the quality of the environment, with the number of friends and other social bonds we have, with the activities we get involved in, with family and with community.

HT nef triple crunch blog

Degrowth movement growing in Canada

May 5, 2010

Having hosted the first degrowth conference in North America in Vancouver last month, there’s been a little flurry of articles from Canada on the subject. Here’s a bit of a roundup on the debate: