Can degrowth save us from destruction?

THE way we lead our lives is unsustainable – and the pursuit of growth is driving our destruction.

That, at least, is the view of a small but growing group of economists. Facing a planet-wide climate and ecological crisis, they now question the logic behind economic growth.

If growth aids development, why are the richest countries not necessarily scoring the best on indicators such as life expectancy and education? More importantly, if growth powered by fossil fuels is the main source of carbon emissions, how can economies transform for sustainability?

For these economists, the answer is “degrowth” – cutting back on production and consumption to reduce ecological footprints.

In Singapore, too, some have objected to the idea of “growth for growth’s sake”. But can this small open economy afford to slow down?

The term “degrowth”, a translation of the French word “décroissance”, may elicit unease. But proponents say it differs from a recession or depression, which are unplanned contractions in gross domestic product (GDP).

Instead, the goal is to “purposefully slow things down in order to minimise harm to humans and earth systems”, according to the 2020 book The Case for Degrowth by ecological economist Giorgos Kallis and three co-authors.

The economic decline due to the Covid-19 pandemic is not degrowth, they add: “We would like to see societies become slower by design, not disaster.”

A deliberate deceleration

In The Sustainability Story podcast by the Virginia-based CFA Institute, ecological economist Timothee Parrique likens degrowth to “putting the economy on a diet”.

Proponents of degrowth believe that humans can live well without a relentless thirst for growth – but this requires a fundamental political and economic reorganisation of society.

At the heart of this movement is a critique of capitalism’s propensity for excess and accumulation, and how it has led to worse social outcomes while widening the rich-poor divide.

In the 2022 book The Future is Degrowth, authors Matthias Schmelzer, Andrea Vetter and Aaron Vansintjan say economic growth “produces alienating ways of working, living and relating to each other and nature”. Many workers feel trapped in jobs that do not feel useful or productive, just to afford goods they do not necessarily need or have time to use.

Meanwhile, in the United States, the richest 1 per cent owned a record 32.3 per cent of the country’s wealth – an eye-watering US$45.9 trillion – by the end of last year, showed data from the Federal Reserve. The richest 10 per cent own close to two-thirds of the country’s wealth.

The richest are also arguably most responsible for the climate crisis. A 2015 report by British charity Oxfam found that 50 per cent of the world’s emissions are caused by the richest 10 per cent.

Furthermore, high GDP does not guarantee a high rate of human development. Costa Rica, which has universal healthcare, has a higher life expectancy than the US despite having 80 per cent less income, says economic anthropologist Jason Hickel in his 2020 book Less is More.

Research shows it is possible to do well on human development indicators while using energy at levels compatible with keeping global warming below 1.5 deg C, he argues.

This, however, requires “an entirely different way of thinking” about development: “Instead of pursuing growth for its own sake and hoping that it will magically improve people’s lives, the goal must be to focus on improving people’s lives first and foremost – and if that requires or entails economic growth, then so be it.”

“In other words, organise the economy around the needs of humans and ecology, rather than the other way around.”

The growth imperative

Is the global economy meant to grow forever – and should we let it?

Even a seemingly low “trend rate” can mean an exponential increase within decades, due to compounding. Consider an average annual growth rate of 3 per cent from 2000. GDP would double by 2025 and quadruple by 2048. By 2071, the economy would be eight times that of the base year; by the century’s end, it would be over 18 times larger.

The last 60 years have seen such a trajectory. Using 2015 prices, global GDP was US$86.7 trillion in 2021, said the World Bank. This was nearly double the US$42 trillion economy in 2000, and eight times that of the US$10.9 trillion 1960 figure.

Even allowing for increases in productivity, such exponential growth rates imply an increase in material extraction and thus emissions. The finite nature of Earth’s resources is why degrowth proponents believe green growth is not a feasible solution.

Not only is time running out, the transition to renewable energy requires massive material extraction – to build equipment such as solar panels and wind turbines – which would worsen the ecological disaster.

It also fails to tackle the root of the problem: that exponential growth is simply unsustainable.

Growth has not always been so hotly pursued. Schmelzer, Vetter and Vansintjan argue that there was “almost no interest at all” in growth as a policy goal before 1950, until the Cold War “fuelled the race for growth, through which governments could show their economic dominance”.

They explain that degrowth takes aim at pro-growth policies precisely because growth does not differentiate between what is useful or destructive, essential or superfluous.

In contrast, degrowth differentiates between economic activities. It aims for the downscaling of harmful industries and the flourishing of helpful ones that address social needs, justice, care and sustainability.

It all comes down to the fact that GDP, a measure of aggregate production, was never meant to be an indicator of human development. Besides Bhutan’s Gross National Happiness Index, New Zealand also began searching for a more holistic indicator in 2019.

The US state of Maryland uses a genuine progress indicator, which factors in costs such as environmental degradation and loss of leisure time. Over the past 50 years, this indicator has not kept pace with Maryland’s gross state product due to rising income inequality and costs from the climate crisis, among other things.

“But changing the speedometer of the car won’t reduce the speed,” warns Kallis and his co-authors. “You also need to change the vehicle: replace a growth-driven economy with degrowth.”

Path to post-growth

Degrowth proponents have various suggestions for moving towards a post-growth world, but the central ideas are similar. The affluent must produce and consume less, while the developing world should be allowed to grow to achieve human development goals – an endeavour that requires international solidarity, say Schmelzer, Vetter and Vansintjan.

Ecologically destructive industries – such as those producing fossil fuels, beef and single-use plastics – can be scaled down, Hickel argues, and their labour redirected towards industries that are beneficial to the environment.

Advertising regulations can help rein companies in and curb consumerist behaviour, he adds. Planned obsolescence should be ended so that products last longer, while companies should offer mandatory extended warranties. Infrequently used equipment that can be shared should be, instead of owned.

With production slashed to a level that is “sufficient”, and with the help of artificial intelligence and automation, working hours can likewise be reduced, degrowth proponents say.

While productivity gains have historically helped reduce workers’ hours, Kallis and his co-authors note that structural changes in recent decades have redirected most productivity gains to profits and dividends. Wages stagnated even as hours increased.

“Government and corporate policies can reverse this trend, reducing working hours through longer paid vacations, parental and family-care leave, sabbaticals, shorter daily hours, four-day work weeks, or facilitation of part-time work,” they say.

Steps for Singapore

Since the latter half of the 2000s, when Singapore pursued a more relaxed immigration policy, some Singaporeans have expressed disapproval of “growth for growth’s sake” and called for more inclusive growth and social safety nets.

Politicians have rejected that characterisation, saying that growth is about creating jobs and resources to invest in Singaporeans. In 2011, then-finance minister Tharman Shanmugaratnam – now Senior Minister – said: “By growing faster when conditions are right, we are not therefore going for growth for its own sake. It is the way for us to achieve an average growth that is in line with our longer-term potential, and thereby grow Singaporeans’ incomes on a sustainable basis.”

The discussion intensified in 2013 after the government unveiled a White Paper that planned how the city-state could cater for a population of up to 6.9 million, from over 5.2 million then. At the 2015 general election, Singapore Democratic Party candidate Paul Tambyah said he believes most Singaporeans would favour a sustainable growth model instead of “growth for growth’s sake”.

Walter Theseira, an economist at the Singapore University of Social Sciences, said most Singaporeans may not feel the constraints of natural resources being depleted, since the country imports almost everything.

“But what we do notice very much is the trade off that we face on this island between having a greater population – which obviously helps to drive economic growth – and the resource constraints.”

He draws a parallel between individual and national dilemmas. “Our individual dilemma is that we may see that there are certain things about pursuing growth which entail a high intensity of competition. We feel a quality of life that we’re not sure that we actually want for ourselves, for the next generation.”

Yet, parents still feel compelled to send their children to tuition and enrichment classes, as these could pave the way to good schools.

“The national dilemma is exactly the same,” says Prof Theseira. “The government might say, ‘Of course there are many things about having a good quality of life which don’t entail just maximising economic growth – but if I don’t maximise economic growth, how is Singapore going to compete?’”

He believes New Zealand can pursue a moderate to low growth strategy because it is self-sufficient in many ways, with a high level of agricultural production and other natural resources. Singapore’s inherent lack of self-sufficiency makes it difficult to do the same here, he adds, as policymakers fear there is no “good future” should Singapore become irrelevant.

Granted, Singapore has consistently performed well in metrics that track social progress. In 2021, it was among the top scorers on the United Nation’s Human Development Index – enabled by the government’s ability to spend in pursuit of this, Prof Theseira noted.

Could Singapore take a first step by focusing on a more holistic measure than GDP?

Sumit Agarwal, Low Tuck Kwong distinguished professor of finance, economics and real estate at NUS Business School, believes the GDP is a “very good measure” but that some countries have focused on the “wrong parts” of GDP growth.

“Many countries still think consumption – which is a major part of the GDP – comes from making housing, and housing is the only way we can actually grow,” says Prof Sumit.

“Even if we’re thinking of housing, we should think about housing that is sustainable, and for us to do that we will actually create more growth – but that is not in the interest of developers who don’t want to innovate and don’t want to change,” he says.

Incumbents are “impediments to innovation and economic growth that is sustainable” because they do not want to innovate, as doing so would hurt existing sources of revenue or profit, he adds.

Changing the focus

Benjamin Horton, director of the Earth Observatory of Singapore, agrees that motives must be aligned: “You have to get shareholders to believe that what they’re doing is just as important in saving Planet Earth as it is increasing their dividends.”

“For example, its shareholders went against Shell’s maximum profit and said they wanted it to be carbon-neutral by 2050, so they’d have to realign,” he adds.

On alternative indicators for Singapore, Prof Theseira notes that in deciding where to site a company’s regional headquarters, one key criterion is the quality of living, since that is what draws talent. Scoring well on such an indicator would be useful, he says – though he recognises the irony in the motivation for adopting such an indicator being, once again, economic growth.

He does think a good future is possible without topline growth, but adds: “For that to happen, it would have to be the case that Singapore is still competitive in the sense that people still consider Singapore to be a premier destination to actually do business in, to run aspects of the economy in.”

“It’s just that the reason why they would be attracted to Singapore would actually be our liveability and our competitiveness rather than our headline growth.”

Singapore is unlikely to be a first mover in this shift, he says, adding that adopting holistic indicators will require some form of international consensus, at least with other like-minded cities.

Beyond indicators, he believes that for a rebalancing of growth between the developed and developing world, there must be a global agreement on sustainability targets under which nobody feels worse off relative to the rest of the world.

There should also be a mechanism to ensure that rich countries contributing the bulk of global emissions do more to reduce these, so that there is room for developing countries to emit more – in a way consistent with sustainable growth – and bring their standards of living closer to those of rich countries.

Singapore undoubtedly falls into the rich category, he adds. “For Singapore, the challenging thing – just like the US and the EU – is going to be that you have to tell people: ‘In the future, we will measure whether you’re better off by whether your lifestyle is more sustainable – but by the way, it often means you can’t eat wagyu beef ... imported from Japan and you also cannot have a car’.”

This requires global coordination, he says; it is more likely that a population’s desires for a consumerist lifestyle will fall if their counterparts elsewhere lead similar lifestyles.

Given the severity of the climate emergency, Prof Horton says radical solutions – both technological and economic – may be needed.

“If you go across these tipping points, there won’t be a market to consider because there won’t be a civilisation. That’s how severe climate change could become in the next 50 years.”