When Growth Fails Us

Economic growth was the driving force behind the unprecedented development and prosperity enjoyed by the Western world in the second half of the twentieth century and to this day, it remains the defining feature of the societies in which we live and the cornerstone of the neoliberal economic model.

For decades, the tendency has been to measure progress predominantly in terms of increasing GDP, despite the shortfalls of such a narrow criterion becoming increasingly clear. To this day, however, the orthodox wisdom of growth-driven economics remains widely unchallenged, with solutions to the current problems facing the West often couched in terms of a “return to growth.”

There is however, a growing school of thought that suggests we may reach (or indeed for that matter already have reached) a point at which further growth becomes unnecessary, or even counterproductive—a point at which growth begins to cancel itself out.

The real contribution made by growth to our well-being stops at around US$7,000 per person. The truth is that everybody knows that the growth machine is going nowhere. The problem is that no one knows how to stop it without the process being traumatic. Perhaps though, the current crisis is pointing the way: the machine is coming to a halt on its own and the cost is extremely high. We were afraid things would change, but they are changing. The process is painful. Why not grab the bull by the horns and consciously face up to the path down?

Ernest Garcia is one of the main proponents of this view and in this interview he explains why growth is no longer sustainable and discusses the implications for the way we live.

Can you explain why you believe we have reached a point at which further growth offers little to improve the way we live?

For more than two decades, economic growth has not improved the life of the majority of people. All the evidence points to the fact that if we break from the current paralysis and do return to growth, it will make things visibly worse.

The argument is as follows: we experience well-being when we satisfy our needs and there are three sources of this satisfaction, three “spheres of well-being.” The first is the economy: goods and services produced and distributed by the market or the state (e.g. food, clothes, furniture, education received at school or medical care in hospitals). The second is non-mercantile, non-bureaucratised personal relationships, which provide us with care, love, identity and social recognition. The third is the useful functions of nature, such as drinking water, clean air and sunlight, which are not and cannot be produced. All three can be traded off against each other, but only up to a certain point. We all need someone to love us, but common sense dictates it would be undesirable to have to pay for this love. Likewise, there is no “economic product” able to replace clean air or fertile land. Development is precisely economic growth at the expense of the other two spheres, and like anything else, there are benefits and drawbacks. It is useful while the benefits outweigh the drawbacks, as was the case in Europe, generally speaking, between the end of the Second World War and the end of the 1970s: during this period, economic growth helped improve our well-being. However, since then, the contribution has diminished to the point of stagnation: the economic machine requires considerable effort to maintain the status quo and it is highly possible that the current crisis is a sign that even this zero contribution is coming to an end and that a new phase of growth would result in irremediable deterioration.

Ivan Illich laid the philosophical foundations for the idea that it is possible to reach a point at which growth becomes counter-productive and there are those who have attempted to quantify this using ideas proposed more than 20 years ago by the economist Herman Daly. In fact, it has been shown that the real contribution made by growth to our well-being stops at around US$7,000 per person. The truth is that everybody knows that the growth machine is going nowhere. The problem is that no one knows how to stop it without the process being traumatic. Perhaps though, the current crisis is pointing the way: the machine is coming to a halt on its own and the cost is extremely high. We were afraid things would change, but they are changing. The process is painful. Why not grab the bull by the horns and consciously face up to the path down?

Most people would accept the idea that there are limits to how much we can consume. Others, however, argue this is merely a value judgement, that we will somehow manage to keep pushing back the boundary through technological wizardry and scientific progress. How do you respond to these concerns?

In my work as a sociologist, I have studied perceptions of the ecological crisis. If, for example, the matter comes up in a discussion group, the concern often manifests itself in a knot of anxiety (comments such as “we are destroying the planet”), but this knot comes undone when someone says: “they’ll invent something.” There is always someone who says it. This is an expression of faith, of an irrational and extremely strong faith.

This faith, when all is said and done, is one of the pillars of the modern religion of progress. The other is the belief in social reform (or revolution when pushed to its limit). There is a belief that we will be able to find a technological or organisational solution (or a combination of both) to any problem we encounter. Modern social theory in its entirety, all the political ideologies of industrial society, are different versions of the same faith. The idea that there are problems without a technological or political solution is almost unimaginable. Ecological limits are, however, one such problem: in a world with a population of nine billion there will be just 0.16 hectares per person to produce food. This means we will have reached the limit, with hardly any room for manoeuvre. There is no technical miracle that can prevent the situation from being extremely challenging.

Furthermore, all this has happened extremely quickly, making it even harder to assimilate. When we talk about how we have exceeded the limits of the planet, we are talking about a phenomenon that has occurred in just a few decades. As recent as 1950, the world was still half empty. Thirty years later, powered by the religion of development, both the population and the economy were already unsustainable. In just 30 years, we have gone from a situation in which the Earth was half empty (sustainable, in today’s speak) to one in which it is full. This kind of process is unprecedented, a sort of mega-crisis caused by globalisation and acceleration. In a nutshell: the physical scale of human society is too large and the speed of its actions too fast. De-growth is inevitable: and de-growth will lead to de-globalisation and slowing down.

How might we adapt our economic models to tackle these challenges? How feasible is such a project in the short to medium term?

There is no doubt that it is feasible. We know what needs to be done: promote policies that free up time for our personal lives and reduce environmental costs. Succinctly put: work needs to be better distributed, inequality moderated and excesses curbed. There are already good approaches that show how to measure the results, such as the Genuine Progress Indicator or the Happy Planet Index. The truth is, there’s no great mystery. What, then, is missing?

Perhaps the most urgent task is to find the courage to really look at the world differently. The Fitoussi report was telling. Just a few years ago, the then president of France, Nicolas Sarkozy commissioned a panel of experts to design a new framework for economic accounting, inviting the economists Joseph Stiglitz and Amartya Sen to preside over it. Upon reading the news, I felt hopeful. Unfortunately, the opportunity was squandered and the final report was of little substance: in the end, when all was said and done, GDP wasn’t so bad and the alternatives were not mature enough… But in spite of all this, there is much to be learnt from the episode: everybody (even those on the right!) now know they are looking at economic reality through deforming glasses and that the information they provide is no longer valuable but deceptive. We need to find the courage to throw these glasses into the bin once and for all and try out others.

For ordinary people, what matters most is everyday life. In, Spain, it is becoming increasingly common for pensions to be used to support the recipient and their partner, their long-term unemployed sons and daughters, and perhaps even their grandchildren who are in education. People living this reality would perhaps be more inclined to accept cuts to their pension if they saw their relatives were able to find jobs with minimal career prospects and a stable income, or that university fees were falling instead of the current outrageous rises. Yet they face a different reality: a shameless, thieving government, backed by intellectually corrupt experts from the universities, Brussels and the IMF, threatening further cuts to their pensions without changing the conditions of those around them in the slightest. There can only be frustration, depression and resistance to change.

It is striking how reality is becoming reduced to a simplistic and deceptive schema based on austerity, which must be overcome, and growth as our modus operandi. Indeed, given that more growth is impossible, austerity in fact becomes inevitable. It is an inevitable consequence of the ecological overshoot and monstrous financial bubbles. The planet won’t give more and we can’t go on living on credit. In other words, our circumstances will force us to live with less. Luckily, in some aspects, we can live better with less. The dominant voice of the European left in this debate strikes me as rather incoherent: how can there be “no cuts, no austerity, no rescue of the banks,” and at the same time be no problem in continuing to increase debt, both public and private. This is the flip side of the same ideological lunacy of “bubble plus innovation” that has got us into the current mess.

In the midst of the crisis during the 1970s, Enrico Berlinguer, European Communist leader at the time, stated that “under the current circumstances, a genuine and effective fight for a better society is unimaginable without starting from the essential requirement of austerity.” This was true at the time, in spite of being widely misunderstood. It is even truer now.

Can you outline some of the main aspects of such social changes?

In a word: de-growth This will entail re-localisation, decentralisation, scaling down, etc. The difficulty, however, lies in the fact that these things can take on diverse and contradictory forms. In practice they may be associated with all sorts of opposing effects, functioning by trial and error. Re localisation implies more weight for the community. Yet while the community is associated with greater levels of cohesion and solidarity, it is also associated with greater uniformity, control and restrictions on individual freedom. We know that decentralisation does not result in generalised improvement or deterioration, but diversity. We also know that small can be beautiful, but it can also be fragile. The crisis of globalisation may favour curbing unnecessary excesses but may at the same time result in the temporary scarcity of basic resources. Finally, a stationary state favours equilibrium, but this also means less social change and that it comes at a slower pace. All this may seem unattractive from the point of view of the prevailing values of our industrial society: as early as the nineteenth century, Stuart Mill was criticised because a stationary state would be boring. In the end though, what is so wrong with a prospect of comfortable boredom?

And the political implications?

When faced with the question of where de-growth will be felt, I always come to the conclusion that it is hard to say in specific terms. Inevitably, however, it will be noted in everything in our social existence with a physical dimension. Both socio-mass, a somewhat ugly but suitably graphic term coined by Kenneth Boulding to refer to the population of individuals and artefacts, and throughput, which refers to the flow of energy and materials that sustains the socio-mass, must be reduced. When you look at the bigger picture, this much is more than clear.

The problem, however, is that the reduction in scale will be achieved by reducing one thing at the expense of another. Choosing what to target is, at least in part, political, and this will become an essential feature of politics over the coming decades.

If the environmental impact of the activities of our societies is too high, it will be necessary to reduce the underlying factors. In other words: the population, patterns of consumption and the aggressiveness of technology. Moreover, we must act on all these factors, not just one, since if we only act on one, the others will cancel it out. This is de-growth The role of politics, then, is to devise and implement benign forms of de-growth that are compatible with maintaining sufficient levels of well-being and freedom. It goes without saying that this won’t be easy, but since de-growth will take place regardless, perhaps it would be best not to leave it in the hands of a dangerous combination of the requirements imposed upon us by nature and the free market. We can all find unpalatable aspects of demographic control, restrictions on consumption or giving up the right to certain technological playthings, but it is hard to imagine this being even remotely as unpleasant as the effects the aforementioned combination is beginning to produce and those it promises in the near future.