Recently there has been a massive push for change in our highly consumeristic society, on the basis that exponential increase in consumption canceled the efforts in developing clean energy solutions and geo-engineering infrastructures ( e.g C02 capturers, aerosols, etc. ). Finding the root cause of our inaction and indifference towards our living environment worldwide chicken-and-egg situation. On one side, capitalism should be blamed for perpetuating our obsession for producing and consuming more goods and services, and the fact that the top 100 companies are responsible for most of the GHG emissions. On the other side there are arguments that our constant pursuit for having more possessions and experiences are the root causes of environmental destruction, and that all economic ideologies are just as bad as how we apply it.

Even the public reaction is somewhat mixed and inconsistent. Politicians and policymakers would imagine an apocalyptic world of widespread famine and global resource wars, but they wish people were comfortable with living below their means. Ideologists and activists would picture a beautiful and peaceful world where people would finally chill from the consumer hype and finally live in the present, but at the same time fearing that the human race would stop evolving and progressing.

To sort things out of this mess, this article aims to determine what economic degrowth is, what is it about the concept that makes it such a big deal and what it will mean to us humans who have, by nature, view economic growth as a source of hope and meaning.

What is economic degrowth ?

According to Wikipedia, de-growth is a social movement or a set of theories advocating for a drastic and radical reconstructing of our economic and political paradigms leading to sharp reduction of energy and product throughput (Maria Rita Guercio, 2015). Proponents of degrowth seek to find other alternatives to GDP in order to gauge social prosperity and measures to increase standard of living despite minimal economic output.

How do we know if degrowth is not a joke anymore ?

The limitations of capitalism

Capitalism is an ideology constructed from countless assumptions. Among the boldest ones is that the market is almost, if not entirely, driven by demand. It is based on yet, another assumption that consumers will always make rational decisions and that the allocation of resources is best managed by the every day decisions of rational buyers/sellers, and it can be logically deduced that more people will enjoy high standards of living so long as they consume more and more. The final assumption validating this whole economic system is that once the resources run out, the inexhaustible well of human ingenuity and innovation will quickly generate solutions to replace them.

The fathers of capitalism was right about few things but also got a lot of things wrong. It somewhat accurately predicted that there is "an invisible hand" that equalizes supply and demand, and that there is no better agent that does the better than it does. But the major blow to this economic system is that humans by nature do not make the most logical decisions. In fact, we make decisions almost entirely out of feelings and emotions. We seldom stand back for a moment and consider whether you would really need to have those products at home, or whether the stakeholders such as the environment or the workers ( people who directly make those products ) be worse off from our purchase.

Marketers and advertisers have known this all along, so they profited from it by accentuating our feelings of inadequacy and sell promises that buying their products will alleviate the malaise. People buy trucks not because it helps them move more stuff easily, but because it gives them the visceral feeling of dependability and toughness. Consumerism alone proves that the supply and demand chart is unachievable, simply because demand and supply would influence each other, just like the push-pull system you learned from a proverbial Marketing 101 course. In other words, emotions and impulses are the actual "invisible hands" and our world as we know it runs on feelings.

Another byproduct of this "feelings" economy is that supply can actually create demand itself ( think of Say's law ). For high end luxury goods, the more expensive it is, the more meaning and prestige we will associate with it. That's why artworks can be auctioned at hundreds of millions of dollars and designer Nikes/Adidas are increasingly being sought after despite price hike. Numerous brands have reportedly burned their unsold merch in order to control prices and preserve prestige (Chavie Lieber, 2018).

The constant need to create profits pressures companies to use up more natural resources to increase production and to maintain the steady flow of profits for its shareholders. To maintain the status quo, company advertisers need to artificially generate demand for their products. The dynamic here is that suppliers create more demand and demand, in return, creates more supply. This positive but vicious feedback loop can wreak havoc on our living environment and the amount of waste it generates can proliferate to levels that human can no longer manage.

Perhaps the biggest mistake of the economic system is the actual value of everything in this world can be approximated with market price. And that could, perhaps, be the heart of the problem as given something as inconsequential as Gucci bags and Ferraris can be mistaken for high socioeconomic value while the most important ones such as caring for family members or saving the environment is regarded as socioeconomic deterrents. According to Merriam-Webster, the term "invaluable" is used to express something valuable beyond estimation, but for capitalists though, the word is synonymous with "worthless".

Ecological economics seeks to reconcile capitalism with our need to promote human well-being and environmental justice, by means of increasing the efficiency of production and decrease energy throughput. However, the sad truth is that efficiency can never be compatible with scale. In fact, more efficiency incentivizes manufacturers to produce more in the first place. It is reported that that each 1% increase in GDP is associated with a 0.6 to 0.8% increase in carbon emissions (Burke, Shahiduzzaman and Stern, 2015). While the Energy Return on Energy Investment (EROEI) for oil and coal has been on a steady decline in some parts of the world (Hall, Lambert and Balogh, 2014) and renewable energies ( solar, wind, etc. ) can be cheaper than oil and gas, exponential increases in consumption can easily outstrip clean energy production.

Long story short, there is nothing wrong about capitalism. In fact, capitalism had been around for centuries and the system lifted more people out of poverty than all others ( mercantilism, communism, etc. ). But again, it is the countless assumptions about the infallibility of cost/benefit analysis and overestimation of the world's adaptability that limited the effectiveness of the system in the first place.

Why degrowth could be a good economic theory ( to an extent )

Many people view degrowth as one form of artificial recession. Some may even think this is some sort of an utopian policy. For me though, it is not strictly necessary to implement this idea too literally. Achieving complete degrowth is unrealistic and even dangerous, because there are some evidences of eco-economic decoupling (McAfee, 2020) and growth is conducive to social mobility and meritocracy. Without it, societies would descend into chaos and humans will not evolve. In fact, economic growth to a certain extent can actually bring many desirable effects.

We can see that the political agendas across the world is geared towards growth as the validity of political institutions are based on how well they generate economic prosperity. Degrowth policies are designed to shift our focus away from this problematic tendencies by supporting activities that promote collective wealth and public well-being. Goods example include repairing or giving away old stuff instead of buying new ones, borrowing stuff-you-don't-use-much from your neighbors, making dinner for your kids and volunteer in public service.

Degrowth supporters also advocate for downsizing the economy by means of producing less and spending less. Imagine an elephant and a mice jumping off a high-rise building. The mice will be relatively left unscathed with a few bruises here and there, but the elephant unfortunately would burst violently. Same goes for small and large companies/economies. Therefore, not only the economy is more manageable and resilient to supply/demand shocks, workers can work for fewer hours. Those people would have more time for leisure and family activities, and the work-life balance would likely to increase worker productivity which drives growth despite fewer working hours. All of this would create a self-reinforcing loop that ensures the harmony will stay intact for generations. Surely enough, growth would not be as rapid as it is now, but it reflects our progress in humanism and public well-being.

The relevance of degrowth during and after COVID

The concept of degrowth has always been vilified and mocked by economists as an"irresponsible nonsense" and "blatantly ignorant". It is natural for humans to believe that growth is essential to alleviate suffering and the idea of living in a stagnant economy is abhorrently cruel. We pretty much associated the term with hope and prosperity and everything in the world should revolve around growth like how pop music revolves around love.

But during the quarantine, the virus actually gave a big reality check for many of us. It sort of challenged our beliefs on how the world economy should be like and whether having more is always better. There is a good chance we avoid thinking about them or refuse to settle with less, but there is always a likelihood you would think that life before corona isn't always as awesome that we imagine it is, and you only need 50% of what you have. Whatever our beliefs are, the pandemic prepped us mentally for inevitable economic slowdowns ( or even stagnation ).

There are calls for restructuring the economy so that the opportunities during this difficult time do not go to waste. Among the proposals are localizing agricultural and industrial production ( aka. localizing the supply chain), others include integrating new technologies to the economy. These policies resembles that of economic degrowth, but on paper they do look promising.

There are yet empirical evidences that proves degrowth will actually do work and only time will tell how the post-growth economy will look like. But what I do know is that there is be a massive shift, in cultural beliefs and how businesses are operated after this hell of a virus recedes. Maybe there will be less ads and billboards on the streets, or the sharing economy will somehow take off, or maybe the human species would simply get bored about growth and focus on something else.

Reference

Alexander, S. (2014). Life in a “degrowth” economy, and why you might actually enjoy it. [online] The Conversation. Available at: https://theconversation.com/life-in-a-degrowth-economy-and-why-you-might-actually-enjoy-it-32224 [Accessed 16 Dec. 2020].

Burke, P.J., Shahiduzzaman, M. and Stern, D.I. (2015). Carbon dioxide emissions in the short run: The rate and sources of economic growth matter. Global Environmental Change, [online] 33, pp.109–121. Available at: https://www.sciencedirect.com/science/article/pii/S0959378015000746?casa_token=HvVL34l49F8AAAAA:V15Aay0M7-OELjOXXuLA-MFLEgEw-3yqXWkzEHQETS68AVOjGnOnrfE3-xacrmO8Pt-IvBQpWw#tblfn0005 [Accessed 10 Dec. 2020].

Chavie Lieber (2018). Burberry, H&M, and Nike destroy unsold merch. An expert explains why. [online] Vox. Available at: https://www.vox.com/the-goods/2018/9/17/17852294/fashion-brands-burning-merchandise-burberry-nike-h-and-m [Accessed 14 Dec. 2020].

Kallis, G., Kostakis, V., Lange, S., Muraca, B., Paulson, S. and Schmelzer, M. (2018). Research on Degrowth. Annual Review of Environment and Resources, 43(1), pp.291–316.

Maria Rita Guercio (2015). Sustainability and economic de-growth. [online] Available at: https://sustainabledevelopment.un.org/content/documents/6534116_Guercio_Sustainability%20and%20economic%20degrowth.pdf.

McAfee, A. (2020). Why Degrowth Is the Worst Idea on the Planet. [online] Wired. Available at: https://www.wired.com/story/opinion-why-degrowth-is-the-worst-idea-on-the-planet/ [Accessed 16 Dec. 2020].

Park, J.T. (2015). Climate Change and Capitalism. Consilience: the Journal of Sustainable Development, [online] 14(2), pp.186–209. Available at: https://www.jstor.org/stable/26188749 [Accessed 5 Dec. 2020].

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