What comes after growth?

In my previous posts I have looked into the origin of the concept of economic growth and how it was established as the ultimate goal of the economy in the eyes of the classic and neoclassic economists. I then discussed the cost of growth, in the traditional paradigm, and in the initial ideas that looked at changing this goal and the price we pay for it. With this new insight on the cost of growth and its limits that comes from understanding that the economy is a subsystem of the larger, finite, and non-growing ecosystem, we must ask ourselves then, what should the new paradigm be?

Alternatives to growth

In 1893, John Stuart Mill was the first economist to think about a paradigm shift away from thinking of growth as the natural state of the economy. In his vision, as nations grow older and develop deeper social and cultural aspirations, they’ll reach what he called a stationary economy. Daly resurrected this idea in 1974, when he tried to separate the concepts of a steady-state economy and stagnation, which economists of the time were so eager to avoid. As Daly sees it, a steady-state economy is one with regulated growth and stable population, preserving the stock of capital.

Georgescu-Roegen is the main proponent of the concept of de-growth, claiming that what is needed to produce any kind of solution to the inequalities of a world reaching its ecological limits, is a change of values in both developed and developing countries; recognizing the illusion of “growthmania”, the former must abandon their want for futile gadgets and the latter must bring down the size of their populations (Georgescu-Roegen, 2011b). De-growth can be seen as a complementary approach to steady-state economics, as it is used as a method for a planned transition towards it (O’Neill, 2012), to which the concept of a-growth has been juxtaposed. The former focuses on a controlled reduction of economic output while the latter a disregard for economic output metrics to focus on social and environmental indicators instead.

Shifting to a new paradigm will require a careful consideration of the ecological and material boundaries of the planet, and interventions at the macro and micro level to insure equity and social wellbeing as we move towards ecological sustainability. Furthermore, it will require that the traditional functions of the firm and the entrepreneur change towards fulfilling a social and environmental role, where innovation should be geared towards a goal of sustainable development, rather than one of exclusively creating financial value.

What this means to me?

We can’t talk about ethical business, ethical marketing or ethical tech without stopping to consider the how they relate to productivism, and consumerism. Historically, economic thought has established unlimited growth as the ultimate goal and paradigm of the economy; today, we are well overdue for a mindset shift. The idea of growth is a paradox where we need to stop and consider how to provide social and financial security for ourselves, our families, and all the people in the developing world, without exceeding the boundaries of our planet and our resources in the form of our attention, our health and our wellbeing.

There are no easy answers, but two new concepts appear as an interesting challenge to change the paradigm towards a more sustainable way of living: Degrowth proposes a controlled reduction of economic output and a-growth suggest we disregard economic output as a measurement altogether and focus on environmental and social aspects instead. For myself I’ve known for a while that my goal is not to have the biggest company out there, have hundreds or thousands of employees and clients and make millions of euros. I want to create a business that allows me and my family to thrive, that provides for our needs, that gives back to the communities that have nurtured and fostered my development and that makes a difference, however small.

References.

• Ayers, R. U., & Warr, B. (2009). The economic growth engine: How energy and work drive material prosperity. Cheltenham, UK: Edward Elgar. https://doi.org/10.4337/9781848445956
• Daly, H. E. (1974). The economics of the steady state. The American Economic Review, 64(2), 15–21.
• Daly, H. E. (2008). Ecological economics and sustainable development: Selected essays. New York, NY, USA: Edward Elgar.
• Edwards, Mark G. (2021). The growth paradox, sustainable development, and business strategy. Business Strategy and the Environment, 30(7), 3079–3094.
• Georgescu-Roegen, N. (1971). The Entropy Law and the Economic Process. Harvard Cambridge: Cambridge University Press.
• Georgescu-Roegen, N. (2011a). The steady state and ecological salvation (1977) A thermodynamic analysis. In Mauro Bonaiuti (Ed.), From bioeconomics to degrowth: Georgescu-roegen’s ‘new economics’ in eight essays. Taylor & Francis Group.
• Georgescu-Roegen, N. (2011b). Inequality, limits and growth from a bioeconomic viewpoint (1978). In Mauro Bonaiuti (Ed.), From bioeconomics to degrowth: Georgescu-roegen’s ‘new economics’ in eight essays. Taylor & Francis Group.
• Heilbroner, R. (1999). The Worldly Philosophers: The Lives, Times, and Ideas of the Great Economic Thinkers. Revised 7th Edition. A Touchstone Book Published by Simon & Shuster Inc.
• O’Neill, D. W. (2012). Measuring progress in the degrowth transition to a steady state economy. Ecological Economics, 84, 221–231.
• Perkins, P. E. E. (2019). Climate justice, commons, and degrowth. Ecological Economics, 160, 183–190.
• Schumpeter, J. (1934). A Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest and the Business Cycle. Translated from the German by Redvers Opie, New Brunswick (U.S.A) and London (U.K.): Transaction Publishers.
• Spash, C. (1999). The Development of Environmental Thinking in Economics. Environmental Values. Cambridge: The White Horse Press. (4): 413–435. doi:10.3197/096327199129341897
• van den Bergh, J. C. J. M., & Kallis, G. (2012). Growth, A-growth or degrowth to stay within planetary boundaries? Journal of Economic Issues, 46(4), 909–920.