Over the past week, I have already indicated that a major climate activist event was…
The concept of degrowth remains underspecified – reform or revolution?
I have done quite a number of podcast interviews with various hosts over the last few weeks and the discussions often turn to issues relating to the environment and what Modern Monetary Theory (MMT) has to say about those issues. Inevitably, the discussions then meandered into debates about what is possible given that we humans are estimated to be using 1.7 times the regenerative capacity of our biosphere at present. At some unknown point, but sometime, that overuse will have to come to an end as the biosphere asserts its capacity constraints in one way or another. The question that seems to interest people now is whether the existing mode of production (Capitalism) is at all compatible with reducing that ratio. My answer is always the same. Those progressives who promote the notion of ‘green growth’, which is embedded in ‘green new deal’ proposals or their ilk, seem to think that we can make the shift away from fossil fuels and reduce the claim on the biosphere within a growth paradigm while retaining the Capitalist ownership relations. For me, a system where the logic is ever accumulation of capital via the creation and expropriation of surplus value and realisation of that value as profit, is incompatible with being able to live within the limits imposed by the biosphere. If we are to have any long-term future as a race, then we will have to embrace a degrowth strategy and radically alter the way we allocate resources and our patterns of production and consumption. In a sense, Marx’s long discredited notion of the – Tendency of the rate of profit to fall – as an intrinsic feature of Capitalism, which he believed would eventually bring the system asunder, is likely to be realised as the environmental constraints impinge on the accumulation system. Simply put, the logic of Capitalism requires growth and degrowth is the anathema of that logic.
I am currently working on several projects with my team in Australia and also in Japan.
One of the projects, which I hope will manifest as a new book sometime in 2025 is focused on these questions.
The thesis entertained is that – Degrowth – is the only viable strategy for humanity’s future.
When the initial academic degrowth conference was held in Paris in 2008, the participants considered the work of – Nicholas Georgescu-Roegen – who in 1971 published his work ‘The Entropy Law and the Economic Process’, to be the first economist to really embrace the notion that the Earth’s natural resources were finite and that continual growth would eventually deplete them.
French and Italian academics took his lead and by 2008 there was a definable degrowth research agenda.
Of course, the Club of Rome’s work that began in the late 1960s and published the – Limits of Growth – in 1972, had also carried a similar message although that work spawned the zero growth movement rather than awareness of a need for declining growth.
Here are all the papers that were discussed at the – Proceedings of the First International Conference on Economic De-Growth for Ecological Sustainability and Social Equity – which was held in Paris on 18-19 April, 2008.
The 2008 Paris Conference was then followed by a second conference in Barcelona in 2010 which published a one-page – Degrowth Declaration Barcelona 2010.
In that ‘Declaration’, the assemblage in Barcelona agreed that there was a:
… looming multidimensional crisis, which was not just financial, but also economic, social, cultural, energetic, political and ecological. The crisis is a result of the failure of an economic model based on growth.
An international elite and a “global middle class” are causing havoc to the environment through conspicuous consumption and the excessive appropriation of human and natural resources …
The illusion of a “debt-fuelled growth”, i.e. Forcing the economy to grow in order to pay debt, will end in social disaster, passing on economic and ecological debts to future generations and to the poor. A process of degrowth of the world economy is inevitable and will ultimately benefit the environment, but the challenge is how to manage the process so that it is socially equitable at national and global scales. This is the challenge of the Degrowth movement, originating in rich countries in Europe …
The ‘Declaration’ proposed a “wealth of new proposals, including”:
A wealth of new proposals evolved, including: facilitation of local currencies; gradual elimination of fiat money and reforms of interest; promotion of small scale, self-managed not-for-profit companies; defense and expansion of local commons and establishment of new jurisdictions for global commons; establishment of integrated policies of reduced working hours (work-sharing) and introduction of a basic income; institutionalization of an income ceiling based on maximum-minimum ratios; discouragement of overconsumption of non-durable goods and under-use of durables by regulation, taxation or bottom-up approaches; abandonment of large-scale infrastructure such as nuclear plants, dams, incinerators, high-speed transportation; conversion of car-based infrastructure to walking, biking and open common spaces; taxation of excessive advertising and its prohibition from public spaces; support for environmental justice movements of the South that struggle against resource extraction; introduction of global extractive moratoria in areas with high biodiversity and cultural value, and compensation for leaving resources in the ground; denouncement of top-down population control measures and support of women’s reproductive rights, conscious procreation and the right to free migration while welcoming a decrease in world birth rates; and de-commercialization of politics and enhancement of direct participation in decision-making.”
A pretty comprehensive list and many of those proposals will be necessary to implement and follow through on.
But dig into that last paragraph and you see the danger signs, for example:
1. “gradual elimination of fiat money”.
2. “introduction of a basic income”.
3. “taxation of excessive advertising and its prohibition from public spaces”,
4. “compensation for leaving resources in the ground”.
5. “denouncement of top-down population control measures”.
6. “discouragement of overconsumption of non-durable goods and under-use of durables by regulation, taxation or bottom-up approaches”.
I could (and in the book will) discuss each of these ‘danger signs’ in detail.
In my view they reflect a confusion among the progressive side on how monetary systems operate and the capacities of the currency-issuing government.
Whether we have the current system or a localised degrowth system, we will still need a coordinated monetary system at a ‘national’ level, which means that the tenets of MMT will still apply.
Such a system cannot function with a series of ‘localised’ currencies.
I also think at the heart of the 1.7 problem is that there are too many humans and I know progressives want to avoid discussing that topic because they think it leads to eugenics etc.
But sooner or later, by design or pestilence, we are going to have to agree on population control measures to reduce that 1.7.
And localised decision-making is not a suitable scale within which to design and implement such measures.
Further, in any monetary production system (we still have to eat and have clothing), there still must be some correspondence between nominal spending and real output, to avoid shortages and bidding wars that lead to inflation.
Relying on a basic income for equity provides no nominal anchor and would require unemployment buffers (as now) to discipline any outbreak of inflation resulting from an imbalance between nominal demand and real supply.
We can wish for Shangri La for all we want but there are realities that will continue in large-scale human settlements.
So, I could talk about all these issues for ages.
But the point that I want to make today is that within this long wish list that was put forward by the leading proponents of degrowth, there is one significant aspect that is missing.
And that is, the ‘Declaration’ implies the continuation of the Capitalist system of private property rates (for example, paying mining companies compensation not to mine).
So, the participants proposed what has been termed an ‘eco-capitalism’.
This blog post from a few weeks ago – A 78 per cent tax on fossil fuel companies in Australia is not required to fund a Just Transition away from carbon (November 21, 2024) – argued that trying to make progress towards lowering the 1.7 within the capitalist structures, using corporate taxation and green bonds etc, will be a failing strategy.
It is simply inconceivable that a degrowth production and distribution system can be compatible with a capitalist economy where private profit-seeking dominates resource allocation and investment decisions.
Thinking that the world’s financial markets, where the logic is to create winners from losers through speculative betting, without any necessary correspondence to societal well-being being evident, can somehow fund a viable degrowth strategy is delusional.
Corporations are not going to alter production if it systematically undermines their profit ambitions.
The proponents of ‘eco-capitalism’, which includes the ‘green growthers’ and the ‘green new dealers’, seem to think that regulation and taxation will provide the means to temper the accumulation desires of the capitalists and turn them into good environmental citizens.
We have seen the era of ‘social responsibility’ statements that have appeared on corporate WWW pages professing that these large corporations have suddenly decided to be good citizens.
They are just shallow smokescreens and rarely accompany any necessary change.
Some progressives want us to believe that so-called ‘stakeholder capitalism’ where corporations suddenly take into account not only their owners interests but also a broader array of ‘stakeholders’ like workers, the broader community, and the environment.
Apparently this will spawn the widespread rise of entrepreneurs who eschew profits in favour of the planet.
Good luck with that.
When I read the work of notable degrowthers like the retired French economist – Serge Latouche – who has worked in the area of – Postdevelopment Theory – I don’t see anything that inspires a shift to what we might term ‘eco-socialism’.
Sure enough he wants a major shift away from growth being the objective of the economy towards an economy that shrinks.
But there is nothing to tell us why capitalists, who are driven by the logic of ever increasing capital accumulation will tolerate such shrinkage.
It simply goes against the logic of the system.
Think back to the glorious years of the Post World War 2 social democracies where under pressure from voters, governments mediated the class conflict and introduced policies that assured full employment, freedom of association, real wages growth in proportion with productivity growth, redistribution that reduced inequality, public schools, hospitals, transport, communications, utilities etc.
The system that ‘tamed’ the crude greed of the capitalists created dynamics among the powerful that ultimately led to its demise.
Think about the Powell Manifesto in 1971, the capital strikes, the rise of the conservative pro-corporate think tanks, the infiltration by corporate interests into the educational system and the influence they had on curriculum design, the rise of the right-wing, pro-corporate media companies (Fox etc).
Progressives who think that the reduction in 1.7 will come through the implementation of new ‘green’ technologies also misunderstand the dynamics of technological progress.
English economist – William Stanley Jevons – formulated the concept of the – Jevons Paradox – in 1865, whereby:
… technological improvements that increased the efficiency of coal use led to the increased consumption of coal in a wide range of industries. He argued that, contrary to common intuition, technological progress could not be relied upon to reduce fuel consumption.
The application of that insight to “energy conservation policy” is straightforward.
William Jevons noted that “fuel efficiency gains tend to increase fuel use” not reduce it.
Green growthers think that increasing fuel efficiency “will lower resource consumption and reduce environmental problems”.
However, that is unlikely unless they are accompanied by regulative policies that place limits on resource use.
In 1989, the Marxist economist – Paul Sweezy – published an insightful article in the Monthly Review – which was entitled – Capitalism and the Environment.
He argued in that paper that:
Activities damaging to the environment may be relatively harmless when introduced on a small scale; but when they come into general use and spread from their points of origin to permeate whole economies on a global scale, the problem is radically transformed. This is precisely what has happened in case after case, especially in the half century following the Second World War, and the cumulative result is what has become generally perceived as the environmental crisis ….
Since there is no way to increase the capacity of the environment to bear the burdens placed on it, it follows that the adjustment must come entirely from the other side of the equation. And since the disequilibrium has already reached dangerous proportions, it also follows that what is essential for success is a reversal, not merely a slowing down, of the underlying trends of the last few centuries …
… we have to ask whether there is anything about capitalism as it has developed over recent centuries to cause us to believe that the system could curb its destructive drive and at the same time transform its creative drive into a benign environmental force.
The answer, unfortunately, is that there is absolutely nothing in the historic record to encourage such a belief. The purpose of capitalist enterprise has always been to maximize profit, never to serve social ends …
It is this obsession with capital accumulation that distinguishes capitalism … As far as the natural environment is concerned, capitalism perceives it not as something to be cherished and enjoyed but as a means to the paramount ends of profit-making and still more capital accumulation …
If this conclusion is accepted—and it is hard to see how anyone who has studied the history of our time can refuse, at the very least, to take it seriously—it follows that what has to be done to resolve the environmental crisis, hence also to insure that humanity has a future, is to replace capitalism with a social order based on an economy devoted not to maximizing private profit and accumulating ever more capital but rather to meeting real human needs and restoring the environment to a sustainably healthy condition.
That was a long quoted section but captures my message today.
Serge Latouche’s response to this sort of reasoning was articulated in his 2010 article – The globe downshifted – which was published in – ‘Le Monde diplomatique’.
He rejects those who believe in ‘Eco-compatible capitalism’ and that “huge multinational corporations, will never set off down the virtuous path of eco-capitalism” on their “own accord”.
He thinks the prospects for a return to the “Social Democratic era” are weak because the “class struggle seems to have broken down … capital won”.
He notes that the “commercialisation of everything” (not this blog I might add!) not only destroys “the planet” but “society”.
In other words he concludes that:
A society based on economic contraction cannot exist under capitalism … (but) … Getting rid of the capitalists and banning wage labour, currency and private ownership of the means of production would plunge society into chaos. It would bring large-scale terrorism. It would still not be enough to destroy the market mentality.
He goes on to talk about evolution through reform or revolution.
I will come back to that topic in subsequent posts.
But until we can provide a coherent answer to that binary, the concept of degrowth will remain lacking.
Conclusion
More on this topic as I do more research and thinking.
That is enough for today!
(c) Copyright 2024 William Mitchell. All Rights Reserved.
Here’s a crazy idea. Are there not elemental ways to engender massive changes in our neoliberal capitalist way of life, socially destructive and ecocidal as it is? What if corporate law were altered so that the purpose of the corporation was not only to maximize profit but also to promote social and environmental health, and that the former duty was subject to the latter, was constrained by it? This would open a door to shareholder suits and other legal actions to oust the leadership of corporations that were damaging people and planet. Add in a generous, automatic recovery of attorney’s fees to successful plaintiffs in such legal actions, and the courts, long conservatively favoring the rich and powerful, would become powerful engines of a radical transformation of society–indeed, of civilization itself. In essence, consider the consequences of tweaking the legal system in this and other ways such that lawyers and litigants made more money by compelling the right thing to be done than by protecting the wrong that has been and is being done. Greed is not good, that we know, but can it sometimes be harnessed to serve the good? Just a thought.
Hey Bill. How about a piece on the crisis in France?
I’m in the Serge Latouche’ camp in that I don’t think a solution exists under capitalism.
People in general care more about money and products than they do the environment.
By my own actions I’d place myself in the don’t care camp – although my impact on the environment is minimal compared to most of the clowns grandstanding on EV’s and other scams that exist solely for profit.
Newton,
The Capitalist market has driven the Earth’s ecosystems to the brink of extermination
and
you want to place hope and trust in a legal system owned and operated by a business sector designed to protect the status quo, even with tweaking its humanity?
So if the planet is 1.7 times over productive capacity and the majority of the Global South is still in abject poverty that means that living standards in the West must fall drastically. How does representative democracy achieve that? Who will vote for politicians promising to make their lives worse? The only answer for politicians in the West is to prepare for war, hence the recent announcements by the UK military that we need more cannon fodder.
And in respect of population control: it might not be needed at all thanks to the precipitous drops in Total Fertility Rates around the world. Nobody wants to have kids when the world is ending and anyway the microplastics and other pollutants have likely killed human fertility.
Changing the law would be the easy bit, though the obsession with shareholder value is pretty thick glue.
Changing the mindset, corporate culture, ingrained consumerism, societal hierarchy and status inertia is the tricky bit.
Lawyers and beancounters are the drones of the technocracy, and their future employment might depend on the job guarantee..
It is worth looking at both Andre Gorz’s and Murray Bookchin’s writings on a future of non-capitalism. and non-hierarchical social ecology.
I don’t think the “‘ think global, act local ” mantra has been superseded even after 50 years, and federations of small quasi independent communities, both urban and rural, seem the most obvious future social structure, but that would leave massive potential for trivial territorial disputes, and emergence of a baronry in the worst Prussian tradition. But then, the nation state has hardly been a shining example of a socio-political edifice.
The best outline of a post apocalyptic crash I’ve read is “Earth Abides”, George R Stewart’s prescient narrative. It might be fiction, but is very well thought out. Ignore the new TV adaptation, the book is the best marker.
How any centralised and co-ordinated services might be delivered would be up to how folks organise syndicalism. This means a transition away from transactionalism and return to reciprocity – reversing the huge changes documented by Polanyi.
As for a fiat currency ….. forget it, except as an early planned transitional device. Trust in government ?
It is a pity Bookchin is such a difficult read, and seemed so antagonistic to most of his peers, and dismissive of any other ideas on sustainability, as the fundamentals of social ecology are a genuine alternative.
Green growth could be a useful transition from corporate capitalism, but only as a very temporary stage in reaching resource neutrality.
Shifting from full fat corporate capitalism to a sustainable economy is still possible, and addressing degrowth is a priority, but unlikely given the current lack of trust in existing supra-national structures, especiallly with US corporate hegemony.
My faith in the quality and ability of world leaders is so low, I honestly can’t see how any planned downshifting can take place….. so collapse is looking much more likely.
What emerges thereafter is anybody’s guess…
Economics—both heterodox and mainstream—cannot situate itself in an ecological context because economics demands what nature cannot provide: a constant positive growth (interest) rate.
Absent a positive growth (interest) rate, money has a negative time value. Capital investment, in such circumstances, is economically counterproductive—economic losses are guaranteed. (All discounted cash flow models, to give a simple example, will show that all projects have a negative net present value under negative growth.)
So, yes, degrowth is incompatible with capitalism, and with all other growth-seeking socioeconomic organization.
But here’s the question: Have humans ever existed under any socioeconomic organization that did not seek growth?
What did man seek when he developed stone tools?
What did man seek when he harnessed fire?
What did man seek when he migrated out of Africa?
What did man seek when he domesticated animals and plants?
What did man seek in the Axial Age? In the Renaissance? In the Scientific Revolution? In the Enlightenment? In the Industrial Revolution?
Is all of history a story of growth-seeking—of pursuit of the very thing that is ultimately incompatible with nature?
Is capitalism the problem, or is capitalism but the current manifestation of what man has pursued all along?
https://moslereconomics.com/2008/05/22/energy-crisis-solution/
Lower the national speed limit to 30 mph for private ground transportation.
That would:
Directly cut gasoline consumption as vehicles are far more fuel efficient at 30 mph than 60 mph.
Directly cut air and other pollutions.
Reduce long distance driving due to time constraints
Increase the demand for public transportation due to time savings issues
Reduce the needed safety features as you can’t hurt yourself all that much at 30 mph
Lead to much smaller cars and therefore better ‘packaging’ in the cities, reducing traffic and parking demands
Change relative real estate values currently distorted by relatively cheap fuel
The reduction in consumption could be up to 5 million bpd in the US alone, which would:
Provide the net supply shock capable of reducing crude and refined product prices
Improve our real terms of trade and restore our quality of life
Increase national security by reducing dependence on foreign oil
Slow environmental degradation
It’s a political choice- ration by price as we are currently doing, or use other methods, some of which we already do, such as fuel economy standards.
This proposal simply adds the price of ‘time’ to burning gasoline for all private transportation, thereby making fuel efficient, cleaner, less resource intensive, alternative transportation more attractive.
Feel free to try to make it happen if you agree!
Hunter-gatherer societies are steady-state societies. The advent of agriculture changed everything with regard to growth-based societies. The different rates of development of agriculture around the world, and the non-development of agriculture in some places, had nothing to do with natural intellect. Seven of the world’s 12 main crops (cereals and pulses) grew wildly in the Fertile Crescent and they, along with some wild animals, were relatively easy to domesticate, thus indicating why agriculture was likely to first emerge there, which it did. Despite all our agricultural technology, Australia has no domesticable plant and animal species, except perhaps the Macadamia Nut, but you’ll never see it as a staple crop. All agriculture in Australia is based on introduced species.
In my opinion, agriculture led to the rise of tyranny as a form of human management (institutionalised privilege, which is not sustainable in hunter-gatherer societies), which allowed a small percentage people to live like never before and most of the remainder to exist in misery. Tyranny is inherently unstable. Whilst tyranny no longer exists in many countries, modern political systems/institutions have been designed to entrench power with the elites. Democracy is an illusion. The ruling elites make minor concessions to keep enough of the remainder happy to stabilise the system sufficiently to maintain their power. Where they have failed to do this in the past (e.g., France and Russia), they’ve lost their power (and their heads!), although in France the bourgeoisie, who were responsible for the French Revolution and not the proletariat, became the new elites. It is the ruling elites who demand growth at any cost, not society at large, although they have been persuaded into believing that continued growth is the road to salvation. I believe it is possible for a truly democratic, modern society to shun growth in favour of a qualitatively-improving steady-state economy, if only society, not a small number of sociopaths, pulled the strings and pushed the buttons.
Modern money, which emerged hand-in-hand with taxation (5,000 years ago), became a brilliant way for the State (yes, the elites back then) to provision itself. It freed up more people (agriculture was the first stage of releasing some people from food and fibre production), and the societies which adopted modern money gained a massive productive and military advantage over those that didn’t. Modern money spread and coincided and quite possibly triggered the Axial Age.
Once modern money and taxation emerged, financial injections and leakages were possible. Net fiscal injections allowed the plebs to save (accumulate the currency) and for people to offer (sell) their labour and goods to other plebs instead of always to the currency-issuer to obtain the currency to extinguish their tax liabilities. Markets were born – markets inevitably followed the advent of modern money. Money first; markets second.
Both modern money and markets are here to stay. They are functional requisites of a modern, complex, sophisticated society. Markets played a small part in people’s lives until the Enclosure Movement – the most draconian form of institutional deprivation since slavery. People were forced to engage in markets. For all its institutional privilege and other unjust advantages, feudalism’s one redeeming feature was the serfs’ access to the Commons – a welfare safety net of sorts of the times. The Enclosure Movement removed that safety net (Karl Polanyi’s Great Transformation, 1944).
Until the Industrial Revolution, markets were of the pre-modern type – lots of small-scale buyers and sellers at the various trophic levels of the economy who were vulnerably exposed to the whims of markets; shallow production-supply chains (horizontally deconcentrated but vertically concentrated supply chains – most sellers of final goods were also the producers of such goods). The IR led to the rise of privately-owned nodes of central planning – oligopolies (powerful sellers) and oligopsonies (powerful buyers) – and therefore the rise of ‘modern markets’ (horizontally concentrated but vertically deconcentrated supply chains). Modern markets are brilliant co-ordinating mechanisms. They effectively link nodes of central planning, which is abundantly clear to me as I type this comment on a laptop computer (think of the extraordinary complexity of the ‘problem’ of producing and delivering the laptop to me and millions more to people scattered around the world).
The belief that markets are socially beneficial because, when left to their own devices, generate Pareto optimal outcomes where individuals maximise their utility (wellbeing) and efficient (price-taking) firms maximise profits (limited to normal levels) is fanciful. It’s the ability of markets to facilitate the effective co-ordination of nodes of central planning that makes markets useful. It’s not some mythical natural ability to generate outcomes that satisfy a mathematical equation based on a mythical world (i.e., most markets are of the modern not pre-modern kind; individuals are satisfices not utility-maximisers and have lexicographic preferences; most firms are price-setters and what I like to call strategic profit-seekers rather than in-the-moment profit-maximisers). Mainstream economists don’t like this view of the market because the value of the co-ordinating function of modern markets is incalculable. Indeed, their equations don’t include the value of this function, just like they don’t include transaction and information costs. If it’s not mathematically neat and tractable, it’s ignored. If it is neat and tractable, it’s accounted for, even if it is unreal and mythical.
A single node of central planning is brilliant up to the point where the complexity of a problem is overwhelming. As complexity rises, so does the need for more communicating nodes of central planning, not larger nodes. In a lot of cases (private sector), the best forms of communication/co-ordination are modern markets (again, think about my laptop computer).
The problem with modern markets is that they can be easily exploited for personal gain. If not properly regulated (which they are not), they can be used to internalise benefits (usually economic rents and excessive profits through price gouging – upwards in the case of powerful oligopolists; downwards in the case of powerful oligopsonists) and externalise costs (especially the cost of resource depletion and pollution). In other words, they can be mechanisms to be easily exploited by chrematists. Neoliberalism has involved the gradual reconfiguring of economies/markets to allow chrematists to exploit them for personal gain at the expense of society. Neoliberalism is institutionalised chrematistics, which has been made possible because the rich and politically powerful are chrematists. You’ll never hear chrematists approve of policies that confiscate economic rents (taxes which destroy unearned capital gains and natural resource rents); internalise spillover costs; and reduce market power – policies that would make modern markets more effective co-ordinating mechanisms.
It’s delusional to believe a modern, complex economy can exist without modern money (at the very least, needed, along with taxation, to allow the State to access real resources to provide public goods for society’s benefit) and modern markets. It might be delusional to believe that modern markets can ever be appropriately regulated by the State to stamp out chrematistics. If so, why would the State be able to regulate anything to society’s benefit, especially when the system is ruled by chrematists?
Collective ownership of the means of production to have an economy based on oikonomic principles (sustainable management of the human household – the economy – for society’s benefit) is a laudable, but flawed approach. It ignores history and the fact that modern markets (and modern money) are functional requisites of a modern economy. Communism doesn’t make it to first base; chrematistics gets to about second base before it destroys itself. The fact that market economies based on chrematistics outlasted communism doesn’t make the former ideal. Oikonomia is the only way to home base, which requires non-market means of satisfying sustainability goals (resource extraction ‘caps’ based on ecological criteria, which will lead to degrowth in many countries) and equity goals based on ethical criteria (minimum and maximum income and a Job Guarantee), and only then allowing a heavily regulated market system, together with truly democratic political institutions, to effectively link nodes of central planning to make the best of a pre-determined set of sustainable and equitable circumstances (efficient allocation – i.e., allocation of a sustainable rate of resource throughput to highest use values).
Can someone please add a like button to the comments? I want to like Philip Lawn’s above.