Tim Harford and “degrowth”: missing the broader point

In his weekly column last Friday, Tim Harford criticised the concept of “degrowth” now being promoted by some environmentalists. But I think he’s missing the main point.

Degrowth, as presented by Mr Harford, is the idea that the stopping of economic growth must be part of the policy toolkit towards creating a sustainable economy. As such he thinks it is misguided.

His reasoning is sound. The current Coronavirus epidemic has halted and reversed economic growth, and that has indeed has been mostly beneficial to the environment, by reducing carbon emissions for example. But the environmental effects are not proportionate. Even this scale of disruption is not enough to deal with the climate crisis, for example. Much deeper changes are required. Much better to focus on these instead, rather than being diverted into arguments over growth. He further argues that the idea is too blunt an instrument to deal with the environmental crisis, and that policies need to be much better targeted to be persuasive.

I agree on both counts. But Mr Harford quotes one supporter, Ricardo Mastini, as defining degrowth as “the abolition of growth as a social objective.” Put like that, I don’t think it can happen soon enough. Economists and policymakers are far to focused on growth, and its companion, productivity. They need to abandon this if they are going to help with the transition that the global economy surely needs. For conventional economists, the idea that growth will reduce to zero or even reverse is very scary. Our entire financial infrastructure seems to built on an assumption that we will keep growing. There is also an assumption that in order to find the resources to deal with environmental and social ills, the best way is to divert the proceeds of growth. And as growth has slowed in the developed world, these economists are getting increasingly anxious. They moan loudly about low productivity growth and try to find culprits. Instead they should be trying to think through the implications of slow, zero or negative growth, and the best way of promoting public policy in that environment. If that means big changes to the financial system and policy framework, then we have no time to lose in working out what those changes should be.

The first thing that economists need to appreciate is that the main reason that growth is slowing is through the freely made choices of people based on a rational appreciation of their needs. It is not some kind of disease that needs to be cured. That would apply whether or not an environmental crisis was engulfing us. Productivity gains apply to a shrinking proportion of the economy; consumption of goods is long past rational saturation. Productivity improvements in one part of the economy are balanced by losses elsewhere as people pursue less intensive lifestyles (think organic farming), or demand more expensive healthcare treatments. That is the way things are. Get used to it.

Meanwhile, chasing after productivity can be positively damaging. Direct environmental damage is easy to see, for example as modern agriculture decimates biodiversity. But it is also more subtle: the systematic hunting down of resilience in the name of improving efficiency is one of the reasons that the Covid-19 epidemic has been so destructive.

This leaves society with two huge problems. The first is changing lifestyles to the environment to recover, rather than degrade further. The second is to reduce inequality and the piling up idle financial resources while too many others pile up debt. This is what economists need to be thinking about, rather longing for steady economic growth.

To me “degrowth” is about changing the conventional policy mindset. And that is an urgent task. More people need to be talking about it, not fewer.

One thought on “Tim Harford and “degrowth”: missing the broader point”

  1. Matthew – I couldn’t agree with you more. I enjoy Tim Harford’s articles and broadcasts but I agree that the drift of the piece you refer to is wrong. Part of the problem is the quoted definition of degrowth – “the abolition of economic growth as a social objective”. Does it mean the abolition of [economic-growth-as-a-social-objective] or [the-abolition-of-economic-growth] as a social objective? He seems to opt for the latter. To the extent that I am a degrowther, it is on the first version. Rather than growth, I think the fundamental aim of economic policy should be along the lines of “a good life for all within planetary boundaries”.

    He then seems to assume that degrowthers see degrowth as an alternative, as opposed to an adjunct, to technological development in tackling issues such as climate change.

    Technological development may in time (such as seven or eight decades) allow us to enjoy a way of life with net zero carbon emissions but in other ways not hugely different from what we have now. However it probably won’t deliver the very rapid reductions in carbon emissions we need now to keep within the carbon budget for a 1.5C limit on global warming. It seems unlikely, for instance, that carbon-neutral aviation technologies will be available by 2050 at anything like the scale required to keep us flying the way we were before the coronavirus struck. Some behavioural change will be needed but it is difficult to say for sure whether that will necessarily reduce GDP. Rapid development and deployment of energy-saving and zero-carbon energy technologies might for a time be a driver of economic growth, with the investment crowding out expenditure on carbon-intensive household consumption.

    However, even with zero growth, tackling climate change effectively entails very rapid reductions in the carbon intensity of GDP. With growth, that reduction needs to be that much more rapid, hence more difficult and less likely.

    A group in Germany* has put forward what looks like a sensible idea. It is what they call a precautionary approach. In case the changes needed to keep within the planetary boundaries prove to be inconsistent with continued growth, they suggest we should be tackling the things that currently make us quasi-dependent on growth. In other words, prepare for what they call “post-growth” even if it’s not yet clear whether or not it is an inevitable part of sustainability.

    * Petschow et al, Gesellschaftliches Wohlergehen innerhalb planetarer Grenzen: Der Ansatz einer vorsorgeorientierten Postwachstumsposition”, https://www.umweltbundesamt.de/publikationen/vorsorgeorientierte-postwachstumsposition

    A summary of their report is available in English as “Social well-being within planetary boundaries: The precautionary post-growth approach” – https://www.umweltbundesamt.de/sites/default/files/medien/1410/publikationen/uba_texte_89_2018_precautionary_post-growth_approach_executive_summary.pdf

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