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:

"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/)

More Information

1. Hazel Henderson and Fritjof Capra: Qualitative Growth