Managing without Growth

Book: Peter Victor. Managing without Growth: Slower by Design, Not Disaster. 2008.

URL = http://www.pvictor.com/MWG/About_the_Book.html

Amazon: http://www.amazon.com/Managing-Without-Growth-Ecological-Economics/dp/184844205X

Description

Compiled by Peter+Trudy Johnson-Lenz:

• "At last, Managing without Growth, a book that puts economics in its proper place within the real world and points the direction we must go in confronting the ecological crisis of the planet. As an economist, environmental studies professor Peter Victor is eminently qualified for the task. He examines some of our most fundamental assumptions and beliefs about the market, pricing, free trade and growth, prosperity and happiness that too often preclude a serious consideration of the environment and economy. His book couldn't be a more timely and important analysis of the destructive consequences of aspiring to endless growth and downloading the costs onto nature itself. He makes a powerful case for the need to work deliberately towards a steady state economy where the real world of the biosphere should set the limits to our activity. Victor's book should be at the basis for our discussion of these critical issues today.

- David Suzuki, broadcaster and activist

• Peter Victor analyses the critical policy question of our time, how to manage our economy equitably and efficiently without growing beyond biophysical limits. He reasons carefully and rigorously, yet pulls no punches in drawing conclusions that some will consider radical. A superb book!

- Herman E. Daly, University of Maryland, US

• Overcoming our addiction to economic growth is one of the most important challenges for the 21st century. Peter Victor's masterful summary of the history and fallacies of this particularly pervasive and increasingly dangerous addiction will be a great help in getting over it. A sustainable and desirable future requires clearly differentiating between "bigger" and "better" and a recognition that in the overdeveloped West these two have parted ways. Peter Victor's book will help us slow down by design, not disaster, and understand how that slowing down will in fact increase our quality of life."

- Robert Costanza, The University of Vermont, US

Interview

Author Peter Victor interviewed by Transition Culture's Rob Hopkins:

Part One

Excerpts:

"One of the ideas that I found really surprising from the book was that the whole idea of growth and that economies should grow on a continuous basis is actually a relatively new idea. I wonder if you could give us a quick potted history of where the idea of economic growth came from?

The idea of economic growth per se could probably be dated back at least as far as Adam Smith who was interested in the wealth of nations. What I think is new, and I think what you’re referring to, is the idea that governments should take responsibility for trying to ensure that economies achieve a certain rate of economic growth. That is relatively new, and only really came to be around about the 1950s / 1960s.

It happened more or less along these lines. The work of John Maynard Keynes in the 1930s convinced most in the economics profession that full employment was not a natural outcome in capitalist economies and that the government could play a useful role in stimulating demand to generate employment when the economy was not capable of doing that itself. This was adopted as a policy by many western governments after the Second World War, but then it was pretty quickly realised, in the space of a decade or so, that when you encourage expenditure to stimulate employment, some of that expenditure is likely to be on new equipment and infrastructure which expands the capacity of the economy, and therefore you have to keep increasing the amount of expenditure simply to keep your growing capacity employed.

This of course is just another way of saying what economic growth is. So economic growth was first adopted by governments in about the 1950s as a measure, as an approach to achieving full employment. In other words, not for its own sake, but as an employment measure. However, within about a decade or so things got switched around, and you can see by looking at some of the older literature, that governments started to put the pursuit of growth as their number one priority and employment was reduced to a second level consideration.

Can you give us, in a nutshell, the argument you set out in Managing Without Growth as to why that is something that we should be thinking of doing?

What’s happened in the last half century in particular is that we’ve become very aware that our ever-expanding economies require more and more energy and materials to support that expansion. Now I’m not saying that economic growth as measured by changes in Gross Domestic Product (GDP) is automatically and inextricably related to increases in materials and energy because of gains in efficiency over time, but the historical record is such that clearly there’s been a positive link between the two.

What we’re seeing is mounting evidence that the planet can’t cope with all this extraction of materials and disposal of waste and occupancy of land by humans that we’re imposing on it. And so the question I decided to address was whether we could manage without growth, at least in advanced economies, which are pretty rich certainly by historical standards.

Could we achieve full employment? Could we eliminate poverty? Could we significantly reduce our greenhouse gas emissions? And could we do all that without the government going bankrupt and in the context of an economy that isn’t growing? That’s really what I tried to look into and concluded that it is possible at least from an analytical point of view to show that you can have an economy that can do all that and doesn’t have to grow.

Is your argument that growth is undesirable or that it’s no longer feasible?

I’m interested in both of those lines of argument. I did cover in the book some of the fairly modern literature on the disconnect between economic growth and happiness. If that’s true, if really getting richer doesn’t make us happier then you really have to wonder why we put so much effort into doing it. But then there’s also the question of feasibility. It doesn’t look like it’s feasible to continue to have economies that just keep growing and keep growing.

It’s good to know, I think, that if growth is not the secret to a happy life, certainly after you’ve achieved a certain level of material well-being, that not having something that’s not particularly desirable is not such a bad outcome! I think both lines of argument are really important, that there are likely to be ways of leading more fulfilling lives if we pay much less attention to the pursuit of growth and that in doing so we’ll lighten the load that we’re placing on the biosphere.

...

You wrote the book in 2008. In terms of economics, rather a lot’s happened since then! If you were updating the book or re-writing it now, how would the crash and the implications of the last three years strengthen or weaken or change what you would have put in the book?

The book was published in 2008 by an academic publisher, Edward Elgar, a very good publisher, but they took about a year to produce the book. I completed it in 2007 and I wrote most of it in 2006, so it’s actually a longer period of time than the three years that we’re talking about here. Anyway, when I wrote the book, Canada was in a particularly healthy economic position as is currently understood. In particular, our governments were running substantial budget surpluses, (of course it’s changed now, they’re running deficits) so that alone makes the problem of a transition to an economy which isn’t madly pursuing economic growth somewhat more problematic, but I don’t think it brings the whole pursuit to an end, if I can put it that way.

What I think of course has happened is that we know a lot more about the fragility of the financial system than was apparent when I was doing my research and I didn’t pay much attention in the book to that aspect. I simply assumed that the central bank in Canada, the Bank of Canada, would continue to try to keep the level of inflation in the standard range, something like 2% plus or minus a little bit, and adopt a monetary policy that would do that. That wasn’t an unreasonable assumption, and I think it’s the same sort of assumption that I would make going forward if I was doing the work again, but they’d be starting from a more difficult position because of the other problems the economy’s having.

I should say though that Canada has been patting itself on the back during these last three years because our banking system turned out not to be as vulnerable as those of many other countries, because they didn’t get involved in some of the more suspect and precarious investments. That was as much by luck as it was by judgement I think, but that’s another story.

In fact, that’s some of the work that I’m doing right now with my good friend and colleague in Britain, Tim Jackson. We are building a better macroeconomic model of national economies in which the financial sector is much more front and centre so that we can better understand the links between the financial sector, the real economy and the biosphere – trying to track all those three systems at one go. But, you know, I think on the one hand the financial system and its situation has to be better understood, but on the other the fact that we’ve gone through these very difficult economic times has led a lot of people, who used to think that everything was moving along pretty nicely, to question just how robust our economic and environmental systems are.

That’s been good. I think it’s generated much more interest in this kind of work than was there when the book first came out. I think this is positive. On the negative side I think that the information we have about the state of the world’s eco-systems just tells us things are going from bad to worse. So the urgency has actually increased over the last three to five years to say we’ve really got to look at alternatives and take them on board. I think one of the encouraging things of the Occupy movement which sort of started from nothing and went around the world very fast, indicates an appetite for change that wasn’t there three years ago.

...

Can we have capitalism without economic growth?

I’m going to give two answers to that question. First and foremost, although I talk about managing without growth for pragmatic reasons and because I want to take part in the current dialogue I focus on GDP, the growth that we really have to stop, and in fact turn back, is growth in the use of materials and energy and land use. Clearly water is also one other material, but I don’t otherwise mention water separately. Those are the points at which we as a species really interact with the biosphere, and that’s where we’ve gone too far.

We have to, I believe, find ways to discipline ourselves so that we are much gentler on the planet. What our economies will then be capable of doing within that set of constraints is hard to say. I personally don’t think that the pursuit of growth as measured in conventional terms is a good way to deal with those biosphysical limits because they get sacrificed in the pursuit of growth. Can capitalism survive if it has to operate within limits? You see when it’s put that way it sounds like a very ordinary question because the standard definition of economics is about making the best use of scarce resources.

Economics and economists have understood for a long time that economies are always constrained by available resources, so that in itself has never been a threat to capitalism, the efficient use of limted resources has always been seen as one of its virtues. So I don’t think that a stricter limit on the extent to which we draw resources from nature and put waste materials back is necessarily a threat to capitalism.

If I have to look for support for this idea, there was a quote that I refer to many times by Robert Solow, a great economist particularly known for his work on economic growth, who says very much the same thing, that he sees no reason why capitalism can’t survive with low, or even no-growth. Now that doesn’t mean that there aren’t many questions to be answered, such as what sort of institutions could work if the economy was not pursuing growth or wasn’t growing? To what extent and in what ways do our institutions have to change?

These are questions that I and some others are investigating right now and whether we end up with a view of an economy that we’d say doesn’t look anything like capitalism, we don’t really know yet. My own sense at the moment is that if we do effectively come to terms with these limits on how we interact with the biosphere, we’ll be looking back maybe half a century or a century from now and saying well, there was no one time when the economic system was transformed but it has evolved into something which we may or may not chose to call capitalism at that time.

So the end of economic growth doesn’t necessarily mean an economic collapse?

It could mean that, if you have an economic system that relies on growth. That’s the dilemma we’ve got now. It seems to be that unless the economy is growing it flirts with collapse or it does collapse. The challenge to us is to try to configure an economy that doesn’t grow and doesn’t collapse. I think that’s really what I try to do in my book. As some of the simulation work suggests, and it’s no more than a suggestion because the work is somewhat preliminary, that yes, of course you can have a steady state economic system, just like you can have a steady state eco-system.

Think of a forest that is in what might be called a mature state. It doesn’t mean it stays that way forever, but for a good length of time its total biomass is roughly constant. Now within that, trees are being born and are growing and dying all the time. And I think that’s quite a good parallel to make with a steady state economy. In some overall sense it’s in a steady state. Perhaps that’s because the material and energy flows through the economy are being maintained at a more or less constant level, but what’s going on in the economy can be very vibrant and exciting, just that the whole system’s not growing." (http://transitionculture.org/2011/12/20/can-we-manage-without-growth-an-interview-with-peter-victor-part-one/)

Part Two

Excerpts:

"Could you, tell us or describe to us, what does a post growth economy look like to you? Can you describe it? What would it look like, smell like and sound like? How would we know we were living in one? What’s the kind of vision that that conjures up in your mind of what it would be like?

I can give you some dimensions of it. This is something that requires a much broader public discussion than we’ve had to date. But the sorts of things that I would see are first of all, when we look at how our economy uses resources, and produces waste and occupies land, those numbers would be going down instead of up. So, efficiency of course offers us some possibilities there. We can and we have become somewhat more efficient in how we use our resources and we’ve produced less waste of many kinds per unit of economic output. The trouble is the growth of our economic output has gone up faster than the gains in efficiency, so it’s sort of overwhelmed them.

If we’re not growing so fast but we’re still getting the gains in efficiency and I do believe that’s possible, then we would see a lightening of the burden we’re placing on the biosphere. In terms of how our lives would be lived, transportation is one aspect to look at. We’ve got a transportation system particularly in North America that’s built largely around the car. There is plenty of room, I believe, to move to much more use of public transit, so that’s a fairly simple thing to do.

I would see a shift to renewable energy, away from fossil fuels. Some of that’s happening, but it’s happening partly as an addition to our use of fossil fuels as opposed to a replacement of the fossil fuels which is what we have to accomplish. One of the things I discuss in my book quite extensively is the idea that if we continue to become more productive as workers and employees, but the overall output of the economy’s not growing, it could be a formula for massively increased unemployment.

One answer is to work less. That would free up our time, we’d have more discretionary time. To me that’s a great element of personal freedom that I highly value. So that would be important. Some people, like Juliet Schor have taken this a bit further to consider what people might do with that extra time. This comes back, I think, very much to the Transition idea and to the use of time for more self-provisioning and local provisioning, which could be outside of the market system. That would be interesting.

They’ve done better at this in continental Europe. Maybe Britain isn’t much better than Canada, but in continental Europe they have benefitted from shortening the amount of time spent at work as compared with Canadians. It’s even worse in the US where people work some 100 -150 hours a year more than other people. I think this is a real missed opportunity: that we should be benefiting from increased productivity by working less rather than by producing and consuming more.

I think we would likely see less physical travel and less physical movement of goods, partly because I do expect energy prices to rise anyway and that will discourage these activities. The electronics revolution is a partial compensation for that. We can all now, well those of us with access to the equipment at any rate, see other parts of the world without actually physically having to go there. I’m not sure that would be a perfect substitute, but maybe it’s the kind of sacrifice we have to make as we pass seven billion and head towards nine billion inhabitants of the planet. These are some of the things that I see, but as I say this is a subject that requires widespread public discussion and debate.

One of the things that’s put forward here is the idea of the Green New Deal, as a kind of Keynesian project of borrowing massive amounts of money in order to try and stimulate a green economy. What’s your sense of the degree to which we should go further into debt in order to create this?

Ah well, there’s so much in your question! First of all, if Keynes was writing now he’d be on side with those of us who understand that the economy is embedded in the biosphere and that that relationship has long been neglected and now can no longer be. If you read his 1931 paper on ‘Economic possibilities for our grandchildren’ you see that he was a man of great vision, not that his expectations for the future all came to pass, but just that he could conceive of a time when, as he put it, the economic problem would be solved. We’d be producing enough and we could divert our attention to, even in his own terms, much more important things, such as the arts.

I think Keynes would have been with us in this discussion. The ideas that he produced in the 1930s were for dealing with short-term unemployment. The question now is to what extent do those ideas have to be changed because of these additional considerations that we have. I’m still enough of a Keynesian to think that there’s no reason why governments have to balance their budget, except on average over a goodly length of time.

So the idea of a green Keynesianism, the idea that when governments see the need to stimulate the economy they should do so by either spending money or inducing the rest of us to spend money on activities that will help transform the economy in a green direction, I think that makes good sense. But, you know, Keynes did make it very clear in his writings that most of his interest was in the short term.

This discussion we’re having is not just about the short term. This discussion is about the medium and the long term. What’s the new direction we should be heading in? The sort of short term stimulus that he stressed shouldn’t just be expenditure on anything. It should be geared towards the transformation of the economy to something that’s more viable in the long term.

Do you think there is a case to argue that economic growth makes an economy less resilient? Can you kind of correlate it in that way? Would a more resilient economy by necessity be one that has moved beyond economic growth?

One of the main, if not the main arguments, for globalisation, by which I mean the deliberate dismantling of national restrictions on the flow of capital and trade in goods and services, has been that it’s good for economic growth. I think that that agenda has led to the decline in resilience of national and sub-national economies. We see this very much in what’s happening in Europe at the moment, where individual nations are very vulnerable to circumstances outside their borders, so it’s not so much growth itself I would say that threatens resiliency and undermines it, it’s the measures that we take in pursuit of growth that move us in one direction only.

That is, they continually weaken the capacity of communities at all levels, from local up to national and even a little bit beyond that to really have much control over what’s happening to them. That’s the problem. So it’s a little bit more complicated than saying growth it’s growth that threatens resilience, it’s what we’ve allowed our institutions to do or prevented them from doing that, as much as anything, has made our economies and our society less resilient." (http://www.energybulletin.net/stories/2011-12-21/can-we-manage-without-growth-interview-peter-victor-part-two)

More Information

1. Hazel Henderson and Fritjof Capra: Qualitative Growth