Relation Between Poverty, Economic Growth and Ecological Thresholds

Discussion

Jason Hickel and Dylan Sullivan:

"Some researchers have speculated as to how much growth is necessary to end poverty at a decent threshold (see the discussion by Malerba & Oswald, 2022). This is an important question, and it is critical to establish at the outset that the benchmark should not be simply access to basic goods like food and shelter (as represented by the extreme poverty line), but also the higher-order goods and services necessary for decent living: nutritious food, modern housing, healthcare, education, electricity, clean-cooking stoves, sanitation systems, clothing, washing machines, refrigeration, heating/cooling, computers, mobile phones, internet, transit, etc., of which billions are deprived.

One approach to addressing this question is to start with a “high” poverty line of $30/day (PPP), which is comparable to those used in many high-income countries. Next, identify a country that is known for relatively low poverty at this threshold, in addition to low inequality and strong social outcomes. Denmark is sometimes used for this exercise, where mean household income per person is $55 per day (and GDP per capita is $46,000 in 2011 PPP). One can then identify all countries with lower mean income than Denmark and calculate how much their household income would need to grow to reach Denmark’s level, thus presumably enabling them to achieve similar social outcomes (assuming they distribute income as equitably). Malerba & Oswald (2022) show that this would require increasing global output by at least a factor of four (focusing on household income only, not including government expenditures). In other words, at least four times more aggregate production than the global economy presently generates. From this perspective, a massive quantity of growth is needed to end deprivation.

This approach introduces some very unsavory dilemmas. Achieving this quantity of growth is likely to take a very long time, especially given that growth rates have generally been slowing. Moreover, it raises serious ecological questions. High-income economies use resources at a rate that substantially exceeds sustainable boundaries – indeed, they are the primary drivers of excess global emissions and material extraction (Hickel 2020; Hickel et al. 2022c; Hickel and Slamersak, 2022, Hickel et al., 2022a, Hickel et al., 2022b, Hickel et al., 2022c). If the existing relationship between global GDP and throughput were to hold, this scenario would mean a 4x increase in global energy and material use. Even if all countries achieved the current GDP/throughput ratio of the “advanced economies” and converged at the their existing per capita levels, global energy use would be 1,305 EJ per year and global material use would be 240 Gigatons per year (3.1x and 2.5x higher than existing global levels, respectively).2 Without a dramatic and rapid change in material and energy efficiency, both scenarios would substantially exacerbate ecological breakdown and make the Paris Agreement objectives extremely difficult to achieve (Hickel and Kallis, 2019, Vogel and Hickel, 2023).

Taking this approach forces us to confront a brutal trade-off between poverty reduction and ecological stability. Those in favour of poverty reduction must call for massive growth even if it risks destroying the biosphere, while those in favour of ecological stability must accept perpetual impoverishment of the masses. Neither of these futures is defensible.

Furthermore, given the unequal structure of the capitalist world-economy, it is not possible for all countries to raise their aggregate consumption to the level of high-income countries. High consumption in the core of the world-system depends on the appropriation of cheap labour and resources from the periphery and semi-periphery, which perpetuates deprivation and underdevelopment and precludes the possibility of meaningful convergence (Cope, 2019, Patnaik and Patnaik, 2021). Input-output data show that 43% of the material resources used by the “advanced” economies is net-appropriated from emerging and developing economies (Hickel et al. 2022a). This arrangement cannot be universalized. It is by definition impossible for all emerging and developing countries to rely on this development model (Pérez-Sánchez et al. 2021). Where would the net appropriation come from? Indeed, for more than half a century, economists in the global South have pointed out that universal “catch-up development” is not feasible (excepting some relatively small states that have been integrated into the core for geopolitical reasons, with direct US support, such as South Korea and Taiwan), and that meaningful development in the South will require a structural transformation of the global economy (Amin, 1978, Emmanuel, 1972, Wallerstein, 1999, Patnaik and Patnaik, 2021). If ensuring decent living standards for all requires aggregate production and resource use similar to that of high-income countries, we would have to conclude that states can only eliminate poverty within their borders by denying essential resources to people elsewhere.

These are devastating dilemmas, which lead to untenable positions. But the dilemmas are unnecessary. We do not need to accept a trade-off between well-being and ecology, and we do not need to accept the continuation of imperialist arrangements."

(https://www.sciencedirect.com/science/article/pii/S2452292924000493)