Ted Trainer 24.4.11

Since the 1960s a few people have been trying to draw attention to the absurdity of pursuing limitless growth on a finite planet, with negligible success. However in the last few years a significant "de-growth" movement has emerged and is rapidly gaining momentum. Unfortunately it seems that many within the movement do not fully realise the extremely far-reaching and radical implications of calling for de-growth. It is a serious mistake to imagine that we can take the growth element out of this society, leaving the rest more or less intact. A society without growth would be an utterly different kind of society to the consumer-capitalism taken for granted today.

Growth is integral to the present social system. Most its basic structures and mechanism are driven by growth and cannot operate without it. Growth is not like a faulty air conditioning unit in a house, which can be removed leaving the rest of the house to function more or less the way it did before. Consider the following organic connections, integration and far-reaching implications.

If you do away with growth then there can be no interest payments. If more has to be paid back than was lent or invested, then the total amount of capital to invest will inevitably grow over time. The present economy literally runs on interest payments of one form or another. An economy without interest payments would have to have very different mechanisms for carrying out many processes.
Therefore almost the entire finance industry has to be scrapped, and replaced by arrangements whereby money is made available, lent, invested etc., without increasing the wealth of the lender. That is incomprehensible to most current economists, politicians and ordinary people.

Among related problems is how to provide for old age, when this can't be done via superannuation schemes relying on returns on investment?

The present economy is literally driven by the quest to get richer; this motive is what gets options searched for, risks taken, construction and development underway, etc. The most obvious alternative is for these actions to be motivated by a collective effort to work out what society needs, and organise to produce and develop those things. This involves a quite different world view and driving mechanism. We would have to find another way to ensure innovation, entrepreneurial initiative and risk taking when people can't look forward to getting richer from their efforts.

The problem of inequality would become acute and would demand attention. It could no longer be defused by the assumption that "the rising tide will lift all boats". In the present economy growth "legitimises" inequality and defuses the problem. Extreme inequality is not a source of significant discontent because it can be said that economic growth is raising everyone's "living standards".

If there is to be no growth there can be no role for market forces. Many who oppose growth do not seem to realise this. The market is about maximising; i.e., about producing, selling, and investing in order to make as much money as possible over time, and then seeking to invest, produce and sell more, in order to make as much money as possible. In other words there is an inseparable relation between growth, the market system and the accumulation imperative that defines capitalism. If we must cease growth we must scrap the market system.

The above changes could not be made unless there was also a profound cultural change, involving nothing less than the complete abandonment of any concern with gain. For more than two hundred years Western society has been focussed on the quest to get richer, to accumulate wealth and property. This is what drives all economic activity, especially the innovation and developmental firms undertake, and the behaviour of individuals and firms in the market, and it is at the core of national policy.

But the logically inescapable point here is that in a zero-growth economy there could be no place whatsoever for this psychological motive or economic process. People would have to be concerned to produce and acquire only that stable quantity of goods and services that is sufficient for a satisfactory quality of life, and to seek no increase whatsoever in savings, wealth, possessions etc. It would be difficult to exaggerate the magnitude of this cultural transition from the mentality that is typical in consumer society and that has been dominant in Western culture for several hundred years.

These are among the huge and easily overlooked implications of de-growth, because growth is not an isolated element that can be dealt with without remaking most of the rest of society. It is not that this society has a growth economy; it is that this is a growth society.

If this diagnosis of the situation is valid, our task is far more daunting than most green and left people imagine. Most greens seem to be seeking to reform a system that would still deliver affluent living standards and economic growth via market forces. Many on the left at least realise that radical system change is required, but the left has a strong tendency to think that the changes do not need to go beyond getting rid of capitalist control, and then running the same old industrialised and centralised systems in much the same way but distributing the product more equitably and enabling high material living standards for all. The above account of our situation rules out such thinking. (These transition themes are dealt with at length in Ch. 12 of Trainer, 2010.)

Zero-growth is not the goal!

It cannot be over-emphasised that it will not be possible to achieve a sustainable and just world unless we go far beyond establishing a zero-growth economy. We must develop societies in which all can live well on rates of production, consumption, resource use, investment, trade and GDP that are a small fraction of today's figures. All the major global problems threatening our survival are due to rates of production and consumption and therefore resource and environmental impacts that are grossly unsustainable. For instance the Australian "footprint", i.e., amount of productive land needed to provide for one person, is 8 ha, but this is ten times the amount that will be available if 9 billion people were to live as we do now.

We in rich countries could not live anywhere near as affluently as we do if we were not getting far more than our fair share of world resources. We get them mainly because the global economy is a market system, meaning that scarce things go to those who can pay most for them, and meaning that "development" is only of those industries promising corporations more profit that any others. Markets totally ignore need, rights, justice and appropriate development.

A glance at these considerations of economic justice also show that we in rich countries must move to ways, systems and values whereby we can live well on a small fraction of our present rates of production, consumption, resource use etc. Again this is utterly impossible in anything like the present society. It could only be done in a society with totally different economies, political systems, social arrangements, settlement geographies, and cultural systems. Many in the de-growth movement, and in the green and left circles, do not seem to grasp this.

Is de-growth compatible with capitalism?

Some advocates of de-growth believe we could still have a capitalist economy, again revealing a failure to grasp how radical and enormous the implications of de-growth are. Capitalism is by definition about accumulation, making more money than was invested, in order to invest the surplus to have even invest to get even richer, in a never-ending upward spiral. This would not be possible in a steady state economy.

It would be possible in a stable economy for a few to still own most capital and factories) and to live on the income from these investments, but they would be more like rentiers or landlords who draw a stable income from their property. They would not be entrepreneurs constantly seeking increasingly profitable investment outlets for ever-increasing amounts of capital.

Herman Daly believes that "productivity" growth would enable capitalism to continue in an economy with stable resource inputs. This would be so, but it would be a temporary effect and too limited to enable the system to remain capitalist. (The case is detailed in Trainer, 2010b.) The growth rate which the system, and capitalist accumulation, depends on is mostly due to new production, not productivity growth. Secondly productivity measure used (by economists who think dollars are the only things that matter) takes into account labour and capital but ignores what is by far the most important factor, i.e., the increasing quantities of cheap energy that have been put into new productive systems. For instance over half a century the apparent productivity of a farmer has increased greatly, but his output per unit of energy used has fallen alarmingly. From here on energy is very likely to become scarce and costly. Ayres (2006) has argued that this will eliminate productivity gains soon (which have been falling in recent years anyway), and indeed is likely to stop GDP growth before long.

Thus the scope for continued capitalist accumulation in a steady state economy would be very small, and confined to the increases in output per unit of resource inputs that is due to sheer technical advance. There would not be room for more than a tiny class, accumulating very gradually until energy costs eliminated even that scope. Meanwhile it would become obvious to all that it made no sense to leave ownership and control of most of the productive machinery in the hands of a few who need not work. As Richard Smith (2010) points out effectively, the inescapable implication of de-growth is "socialism" of some kind, but many, including Herman Daly and Tim Jackson (2009) seem to have difficulty accepting this. It would seem obvious that in a situation of stable and limited inputs a society would quickly realise that it must somehow collectively determine production, exchange, distribution, investment and development.

But the overwhelmingly important factor here has yet to be taken into account. As has been made clear above the need is not just for zero-growth, it is for dramatic reduction in the amount of producing and consuming going on. These must be cut to probably less than one-fifth of the levels typical of a rich country today, because the planet cannot sustain anything like the present levels of producing and consuming, let alone the levels 9 billion people would generate. This means that most productive capacity in rich countries, most factories and mines, will have to be shut down. How much scope would there then be for capital accumulation? It is inconceivable that a capitalist society could survive such a transition.

The implications for the form that a satisfactory society must take.

A central theme in Trainer 2010a is that there is a powerful, inescapable logic linking the analysis of our global situation, the solution, and transition strategy. If the foregoing argument about the magnitude, nature and causes of the global situation is sound then it follows inevitably that what is required is far greater social change than Western society has undergone in several hundred years. In my view the general form that a sustainable and just society has to take is clearly given by a grasp of the situation we are entering; i.e., the end of rich-world abundance and the coming of an era of intense and irremediable scarcity. The task is to design a society that would be satisfactory for all on rates of material consumption that are a small fraction of those typical of rich counties today. The essential Simpler Way claims is that this can be done, it can be done easily, and it would liberate us to enjoy a far higher quality of life – but only if very different attitudes and values came to be widely held.

The main goal of The Simpler Way project has been to show that this vision is achievable and attractive. (For the detail see TSW webpage, or Trainer 2010a.) The principle elements are, acceptance and enjoyment of non-affluent, frugal and self-sufficient lifestyles (which does not mean hardship or deprivation), mostly small and highly self-sufficient local economies, local radically participatory government of these communities (which in my view would have most firms privately owned), minimal national and international economies, tiny state apparatuses, and value systems which contradict the competitive, individualistic acquisitiveness that has driven Western society for hundreds of years.

How do we get there?

Again it seems to me that there is a coercive logic leading from an understanding of the limits to growth analysis of our situation, to the form that the alternative society must take, and to implications for transition strategy. The last chapters of The Transition... detail the argument that the most important action we can take is to plunge into the many Transition Town initiatives now emerging, to start developing some of the local and self-sufficient ways that will characterise post-consumer-capitalist society. But our main purpose should not be to bring more of those ways into existence; it should be to help our fellow workers to see that the goal cannot be a reformed consumer-capitalist society with lots of Permaculture gardens in it. Our main goal must be to try to develop in the town or suburb the realisation that a sustainable and just world cannot be achieved unless we go much further and eventually get rid of growth, control the market, develop highly participatory and collectivist ways, and enjoy living in non-affluent ways.

Ayres, R. U., (2006), The economic Growth Engine, Cheltenham, Elgar.

Jackson, T., (2009), Prosperity Without Growth, Sustainable Development Commission, EU, Brussels.

Smith, R., (2010), "If Herman Daly has a better plan let's hear it", Real-World Economics Review, 54

The Simpler Way website:

Trainer, T., (2010a), The Transition to a Sustainable and Just World, Sydney, Envirobook.

Trainer, T., (2010b), "De-growth is not enough", International Journal of Inclusive Democracy