Is It Time to Stop Chasing Economic Growth?
The radical idea to transform economic thinking and save the planet 🌍
Does “more” always equal “better”? When it comes to things we enjoy – holidays, money, gadgets, convenience – it seems obvious that the answer must be a resounding “yes.”
We equate “more” with progress. Businesses promise more products for their customers and more returns for their shareholders. Charities aim to provide more support to greater numbers of people. Content creators hope for more readers, views and subscribers (there’s a link below if you’ve not signed up already!). Politicians continually promise more economic growth.
This assumption is so ingrained that it seems ludicrous to consider the alternative. Imagine a government launching an election campaign with a pledge to shrink the economy!
However, there is a growing argument that this is precisely what we should be doing – and that Earth’s future could depend on it.
This is the basic premise of Degrowth: a radical idea to overhaul economics and save the planet.
Watch my short explainer to find out more:
Is economic growth always a good thing?
“In the 20th century, the definition of progress seemed clear. It was growth, measured in terms of national income, or gross domestic product (GDP). And that growth was to be endless, an ever-rising curve. No matter how rich a nation already was, its politicians and economists would consistently claim that the solutions to its problems – from poverty to pollution – depended on yet more growth.” – Economist Kate Raworth, author of Doughnut Economics
Few things epitomise the “more, more, more” mantra better than economic growth. In most countries, ever-increasing GDP is the top priority. As the Bank of England puts it: “Growth in the economy matters for everyone.”
It’s easy to see why we have become so convinced that “growth = good”. In the couple of hundred years since the Industrial Revolution, economies have grown at unprecedented rates and societies have been transformed. As GDP has risen, so have living standards, education, income and life expectancy. This isn’t just a historical phenomenon. Since 1990, economic growth has lifted more than 1 billion people out of poverty.
Where criticism arises, it is usually a call for the benefits of growth to be shared more equally. But degrowthers argue that the problems are more fundamental.
GDP measures economic output in monetary terms. It’s arguably the most important metric on the planet. Yet it's deeply flawed.1 As Jason Hickel, author of Less is More, points out:
“Growth simply means an increase in aggregate production, as measured in market prices. So, according to GDP growth, producing £1m worth of teargas is considered exactly the same as producing £1m worth of affordable housing or healthcare.”
Some call for better metrics – finding a way to measure growth that captures the value of what is being produced beyond just cash.
But what if the problem isn’t just how we’re trying to measure economic growth? What if the issue is growth itself?
Degrowth advocates point to nature, where growth cycles always come to an end. As an old German proverb popular among bankers and investors goes: “Trees don’t grow to the sky.” It’s a fitting analogy because one of GDP’s big blind spots is its impact on the planet.
Those backing Degrowth believe that just transitioning to a more environmentally responsible form of growth is ultimately doomed to fail (more on that later). The problem isn’t how we keep growing the economy or even how we measure it – it’s that we believe it should keep growing.
As environmentalist Edward Abbey starkly puts it: "Growth for the sake of growth is the ideology of the cancer cell."
The limits of growth
In 1972, a group of academics known as the Club of Rome used innovative computer modelling technology to see what might happen if populations continue to grow and use up food and natural resources at the same rate. Their model suggested that we would overshoot the planet’s inbuilt “Limits to Growth” within the next 100 years.
And then? “The most probable result will be a rather sudden and uncontrollable decline in both population and industrial capacity.”
The only way to prevent this future, they warned, would be to abandon the pursuit of endless economic growth and instead focus on meeting people’s needs within the limits of Earth’s finite resources.
Critics dismissed this as a “doomsday fantasy”. Yet recent analysis suggests the Club of Rome’s predictions were worryingly accurate.
Researchers from the University of Melbourne revisited the original report to assess how accurate its modelling had been for a scenario where the world continued to chase economic growth. Dr Graham Turner and Cathy Alexander wrote:
“As the MIT researchers explained in 1972, under the scenario, growing population and demands for material wealth would lead to more industrial output and pollution. The graphs show this is indeed happening. Resources are being used up at a rapid rate, pollution is rising, industrial output and food per capita is rising. The population is rising quickly.
“So far, Limits to Growth checks out with reality.”
Why now?
The Club of Rome academics intended their report to serve as a wake-up call rather than a doomsday warning. And, encouragingly, awareness of environmental issues has surged in the decades since its publication.
Almost every country in the world has now committed to tackling climate change by transitioning away from fossil fuels.
Last year, clean energy (like wind and solar power) generated 40% of the world’s electricity – the biggest share since the 1940s, when hydroelectric power from dams still dominated.
The amount of power generated by solar panels has doubled every three years since 2012.
Extraordinary advances in large-scale batteries – a technology that barely existed a decade ago – mean that we are rapidly increasing the amount of renewable energy that can be stored to use when the sun isn’t shining and the wind isn’t blowing.
But there’s a catch.
The burning of fossil fuels – the damaging practice that clean energy should be phasing out – is increasing too. Last year, carbon dioxide emissions hit an all-time high.
Efficiency gains and advances in renewable energy haven’t reduced our consumption – they’ve just enabled us to do more.
Countries pledge to be environmentally responsible, but ultimately compromise on their green commitments when they come up against the drive for economic growth.
It’s why some have concluded that “green growth” isn’t going to work. For all the advances we’ve made in renewable energy, improved efficiency and recycling, pollution isn’t going down – it’s just increasing less rapidly.
Environmentalist Jonathon Porritt argues that:
“... the abiding truth of our times is that sustainability and conventional consumption-driven economic growth are incompatible – and the sooner we get good at coping with that reality, the rosier our prospects will be.”
Redefining success
Advocates for Degrowth argue that the end of economic growth doesn’t have to mean recession and hardship.
Yes, they concede, economic growth is beneficial when a country’s population is stuck in poverty. But once people’s needs are met, it offers diminishing returns.
Influential Canadian scientist Vaclav Smil counts Bill Gates among his fans. He says:
“Look at Japan. They are pretty rich but they are among the unhappiest people on the planet. Then who is always in the top 10 of the happiest people? It is the Philippines, which is much poorer and smitten by typhoons, yet many times more happy than their neighbours in Japan. Once you reach a certain point, the benefits of GDP growth start to level off in terms of mortality, nutrition and education.”
UN special rapporteur Olivier De Schutter argues that, rather than obsessing over GDP, we should focus directly on reducing inequality and improving lives:
“Whether an economy grows or not matters less than whether progress is achieved for those at the bottom.”
If GDP doesn’t capture what matters, what should we measure instead?
Economist Kate Raworth’s Doughnut Economics offers an alternative. Instead of one economic target, it proposes a “doughnut” framework. The inner ring represents the essentials we need for a good life, like food, shelter and education. The outer ring represents Earth’s ecological limits. The goal is in the sweet spot between the two – meeting everyone’s needs without overshooting the planet’s resources.
As Raworth argues:
“Instead of pursuing endless growth, it is time to pursue wellbeing for all people as part of a thriving world, with policymaking that is designed in the service of this goal.”
Cities including Amsterdam have adopted the doughnut model to guide their policymaking, aiming for social goals while cutting emissions and waste.
Similarly, countries like Finland, New Zealand and Scotland are exploring “wellbeing budgets” – measuring their success in terms of health, education and happiness rather than just GDP.
It’s an idea that seems to be attracting significant public support, too. According to a recent major global poll, 68% of people agree that the economy should prioritise the health and wellbeing of people and nature, rather than solely focusing on profit and rising wealth.
So, what could this look like in daily life?
It might mean cities with fewer cars and more bike lanes, more local shops and farms, and a culture shift that prioritises communal experiences over consumption.
Some point to unexpected positives experienced during Covid lockdowns – a slower pace of life, less commuting and more time for hobbies and reconnecting with nature.
Ideas being championed by degrowthers include:
A shorter working week. Pilot studies around the world have shown that shorter workweeks improve productivity and wellbeing while reducing emissions. Could a four or even three-day week become the new normal? Even more radical is the idea of a Universal Basic Income (which we looked at in a previous iluli video).
Free public transport and green jobs. Reducing our dependency on cars and investing in green infrastructure could significantly reduce emissions while still creating jobs.
Reduced production of “unnecessary goods”. Do we really need endless cycles of fast fashion and throwaway plastic packaging for everything we buy? Degrowthers believe we need policies that help us prioritise quality, longevity, and minimal waste. At the more extreme end, influential thinkers like Kohei Saito believe it would be beneficial to abolish entire industries like advertising and packaging, which “stimulate people’s desire for things they don’t need.”
Taking inspiration from nature’s design book. The natural world has inspired countless human-made innovations. One of the significant advantages of biomimicry is that nature’s designs tend to be much better at working in harmony with the rest of the natural world. The Biomimicry Institute shares ideas from nature to help solve design challenges and create sustainable and environmentally friendly products, processes, and systems.
More of what matters?
The concept of Degrowth may be one of the most radical ideas in human history, so it’s little surprise that it remains a controversial one.
Critics point to valid challenges. Some argue that Degrowth could unintentionally disadvantage poorer nations or restrict funding for essential green technologies. Others complain that the details of what this actually looks like are still too vague and lacking in evidence.
As the Financial Times’ Soumaya Keynes summarises:
“Degrowth contains two big ideas: that growth is or may be incompatible with sustaining the planet; and that radical economic change is required as a result. Since one can disagree with either or both of these, it is hardly surprising that there is controversy over what exactly ‘counts’ as falling within the field. And given the scale of the change degrowthers want, it isn’t surprising that empirical evidence on the journey or the destination is a little thin.”
Ultimately, even if Degrowth doesn’t offer a blueprint for the future, its real value might be in daring to question some of the fundamental assumptions that we’ve taken for granted – and consider whether infinite economic growth is possible or desirable on a planet with finite resources.
Recommended links and further reading
Green growth or degrowth: what is the right way to tackle climate change (The Conversation)
Bigger isn’t better – the renegade ‘Buddhist economics’ of E F Schumacher (Aeon Essays)
Can slowing down save the planet? (The New Yorker)
What does progress look like on a planet at its limit? (The Guardian)
Degrowth: slowing down rich economies to deal with climate change is a flawed idea (The Conversation)
Vaclav Smil: ‘Growth must end. Our economist friends don’t seem to realise that’ (The Guardian)
In the news
Topical updates on subjects covered in previous iluli videos:
Amateurs solve computer science problem: In an incredible success for crowdsourced science, a group of amateurs on Discord has solved a six-decade-old computing conundrum. The “Busy Beaver” challenge involved analysing over 16 trillion five-state Turing machines to identify the one that runs the longest before halting. The magic number? 47,176,870 steps. Learn what it all means in this fascinating write-up in Quanta Magazine.
Augmented Reality: Apple is reportedly developing a new version of its virtual and augmented reality headset. The Vision Air is expected to be lighter and thinner than the Vision Pro, which was released to rave reviews but was too expensive and impractical to become a must-have gadget. Will it have what it takes for VR to finally catch on? It’s a question we explored in a newsletter last year.
Remember Goodhart’s Law? “Once a measure becomes a target, it ceases to be a good measure.”