Post-Growth, Credit, Interest and Money

As impressively (though unwittingly) shown by Francis Fukuyama, attempts to imagine the future of societies are likely to go wrong. Extrapolation of trends can well be a bad idea. On the other hand, some idea about what the future is to look like is needed when a major transformation of the society is to be attempted. The transformation towards a post-growth society is no exception here. It would be naive to expect an exacting outline of how a post-growth society is supposed to work, but it is important that those advocating it at least try to give answers to some inconvenient questions: what about productivity growth? Can universal basic income, supported by many in the degrowth movement, work? And what about the monetary and financial systems? The latter question has gained some attention recently, and some argue that monetary factors might be a main obstacle for a post-growth society. Their arguments should get proper consideration if we do not want to choose the wrong transition “trajectory”, given path dependencies so common in socio-economic systems. Continue reading

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The Not-So-New Climate Economy Report

An alliance of the most influential global institutions, including the UN, World Bank, IMF and OECD, just issued a report of the Global Commission on the Economy and Climate, chaired by Felipe Calderón and Nicholas Stern. The report’s title is Better Growth, Better Climate: The New Climate Economy. In a nutshell, it says that not only is climate action compatible with economic growth, but the two may actually work as a positive feedback loop: more climate action leading to more growth, “smart” growth-spurring policies reducing emissions of greenhouse gases. By and large, the report does not contain any new arguments, as it is more of a synthesis of existing research. Alas, it is a synthesis of only a part of existing research, which can be already seen in the title: economic growth is a main objective along with the mitigation of climate change. You’ll vainly look for any reference to the degrowth and a-growth debates, and so the report, while valuable in some respects, reproduces many of the common errors of growth-enthusiasts. Continue reading

On Economic Valuation and Sick Mothers

I have spent most time this week at the Fourth International Conference on Degrowth for Ecological Sustainability and Social Equity, which takes place in Leipzig. In one of the sessions today, my doctoral father had the pleasure(?) to defend the economic (valuation) approach to environmental problems in a panel discussion. Most arguments used in this discussion against the economic approach were, I say it frankly, nonsense. Either they resulted from misunderstanding or from confusion or they just didn’t have anything to do with the issue. The only two valid arguments I was able to filter out were: a) that economists often treat ecosystems atomistically in that they value single ecosystem services and then just “add them up”, which is a practice I am very concerned about, too, and b) that the economic approach hasn’t achieved anything so far (which is debatable, but still a valid critique, as there is no systematic assessment of this issue to be checked against). Today, however, I would like to respond to one of the misconception-based arguments, for I think that it shows in an impressive way what economics is (not) and why we need economic analysis. Continue reading

Stanley Jevons’s Prophecy

In his famous treatise The Coal Question: An Inquiry Concerning the Progress of the Nation, and the Probably Exhaustion of Our Coal-Mines, published almost 150 years ago, the British economist William Stanley Jevons described a phenomenon whose importance today might be even higher than back in 1865–the so-called rebound effect, also known under the names of second-order effect, Khazzoom-Brookes effect, backfire or Jevons’s paradox. Jevons argued that the increased efficiency of steam engines shall lead to increased use of them and thus, counter-intuitively, to an increase in coal consumption. His insights have surprising relevance for today’s debates on economic growth and climate change. Continue reading

Productivity Growth in a Post-Growth Society

In Robert Solow‘s (in)famous growth model, perhaps the most important part was what is now called the “Solow residual” or “Total Factor Productivity” (TFP)–the part of economic growth that cannot be explained by changes in the input of the factors “capital” and “labour”, which is, in effect, the result of technological progress. In other words, TFP is a reflection of us learning how to produce more with the same amount of input. A recurrent theme in this blog is that quantitative GDP growth is highly problematic, mainly due to the related pressures on natural ecosystems. However, even if we decide to stop growing–or, better, to stop focusing on growth–, it is not obvious that we can actually achieve it. And TFP is one of the reasons why this isn’t as simple as many in the degrowth movement seem to believe. Continue reading

Talking About Green Jobs Might Impede Action on Climate Change

Advocates of true action on climate change do not have an easy job to do. Scientists keep producing evidence of dangerous man-made climate change, the IPCC keeps producing reports that summarize that evidence, activists keep doing their activism… Meanwhile, politicians, and decision-makers more generally, keep talking and the society at large sticks to business-as-usual. No wonder that the “alarmists”, as we are sometimes called, are steadily looking for new powerful arguments. In hope either that a specific single argument will suddenly make people wake up and act on climate change, or that the accumulated mass of arguments will do. One such argument is about so-called “green jobs”. Clean technology investments are presented as a great opportunity to create jobs, as a growth booster. However, in this specific case, the well-intentioned pro-climate-action argument might actually be a shot in the cause’s foot. Continue reading

3 Reasons Why a Post-Growth Society Is Not Within Reach

For reasons explained elsewhere (see, e.g., this post and that one), I am among those dreaming of a post-growth society. Of course, it is not entirely clear what a post-growth society would look like, and even less is known about the road there. Still, many people around the world–for instance those coming to Leipzig in September for the 4th International Degrowth Conference–agree that one of the greatest problems of the current societal-economic model is that it is heavily dependent on economic growth. And that at least the first steps towards it should be done soon, for the longer we wait the more we put our civilisation at danger of collapse of one kind or another. Nevertheless, there are numerous obstacles that hinder the urgently needed transition. In what follows, I would like to present three reasons why a post-growth society is not within reach, which are related to three aspects of human psychology: laziness, narratives and conservative inertia. Continue reading