The impact of the climate crisis is evident everywhere. Finance ministers meet in Washington DC this week for the annual meeting of the International Monetary Fund in the wake of two devastating hurricanes in the US within a month. Parts of the Sahara have been flooded for the first time in half a century.
Scientists attribute the growing number of extreme weather events to a planet that continues to get hotter as the result of rising concentrations of greenhouse gases linked to human activity. Global temperature records are being broken with every year that passes and the idea that this can continue indefinitely is a fantasy.
As António Guterres, the UN secretary general, said on World Environment Day in June: “Our planet is trying to tell us something. But we don’t seem to be listening.”
Even so, the fantasy lives on. Last week, BP announced it was abandoning plans to cut fossil fuel production by 2030 and was cheered on by its shareholders for doing so.
Businesses have picked up the message from governments that looking after the planet is currently a lower priority than higher growth – even though those two objectives are clearly incompatible if the growth comes at the cost of ever-higher concentrations of greenhouse gases.
Yet coming up with alternatives to the business-as-usual model is proving hard. Critiques of the status quo who come from the de-growth and post-growth movements have so far had little purchase on the political debate.
In part, that’s because the idea that more growth is good and less growth is bad is so entrenched. Governments assume – with some justification – that they become more popular when a growing economy raises living standards. Periods of weak activity, which is what most western countries have experienced in the past decade and a half, make governments even more relentless in the pursuit of growth.
As a result, the first problem for the degrowthers is that voters in rich countries have experienced a form of degrowth since the Global Financial Crisis of 2008 and they don’t seem to like it all that much.
A second problem is that, under the current economic model, weaker growth leads to shrinking tax revenues and pressure on governments to impose austerity to balance the books. Degrowthers certainly don’t want less to be spent on health, education or the arts. Rather, these are sectors of the economy they want to see expand. They have work to do to show that it is possible to get rid of the bad growth without also jeopardising the good growth. Simply calling for higher taxes on the wealthy so that the growth is more evenly distributed doesn’t really cut it.
Yet, there is a third problem – the biggest of all – which is that degrowth has no resonance in low- and middle-income countries, where governments see by far the biggest policy challenge to be eradicating poverty.
A report from the World Bank this week illustrated the point, noting that on current trends it would take more than three decades to lift the near-700 million living on less than $2.15 a day out of extreme poverty. Moreover, 44% of the world’s population – about 3 billion people – are surviving on less than $6.85 a day – which is the poverty benchmark the World Bank uses for upper-middle income countries such as Argentina and Brazil.
Tackling extreme poverty for the 700 million on the lowest daily incomes does not come at a big cost for the planet because the poorest countries contribute so little to global emissions. The Bank estimates that lifting everybody above $2.15 a day would increase emissions by less than 5% above 2019 levels. It is a different story if the objective is to move the incomes of the 3 billion people above $6.85 a day. This would lead to an increase of 46% in emissions above 2019 levels.
Even if countries in the rich west speed up the de-carbonisation of their economies the impact will be massively outweighed by the pro-growth, anti-poverty policies that will inevitably be pursued in other parts of the world. Understandably, poorer countries want the living standards rich countries enjoy and are not going to take kindly to suggestions that they need to grow more slowly for the benefit of the planet. They see degrowth as something thought up by people living in rich countries.
All that said, the basic premise of the degrowthers – that global capitalism is running out of control – is surely correct. There’s a genuine problem here, one sketched out by Kate Raworth in her book Doughnut Economics, which recognises the need to lift people out of poverty but in a way that is consistent with the planet’s ecological boundaries. This is a more sellable idea than de-growth and is not that revolutionary a concept.
At present, economic policy is governed by the idea that growth – measured by gross domestic product – should be maximised consistent with meeting an inflation target. Governments know that pressing too hard on the accelerator leads to self-defeating inflationary pressures. It’s time to adopt the same approach to global heating.
Just as there are policy instruments – taxes and interest rates – that enable governments to hit inflation targets so there are measures available to deliver decarbonised growth. They could, for example, levy higher carbon taxes to disincentivise use of fossil fuels. They could take action to reduce the debt of low-income countries to free up extra spending on tackling climate change. They could invest and regulate more firmly.
Degrowthers say sustainable growth is also a fantasy. Let’s hope they are wrong, because if it is and things go on as before, we will get degrowth eventually anyway, only in the most damaging form imaginable and when it’s too late to change course.