The economic growth debate

Alternative economic models that challenge the current growth-driven paradigm typically include proposals for reducing the size of economies (degrowth) or, at the very least, a shift away from the pursuit of economic growth as an objective. They also feature a search for alternatives to growth (typically expressed as GDP) as measures of societal and economic success (Roulet & Bothello, 2020; Bennett Institute for Public Policy, n.d.).

The degrowth theory

The degrowth theory suggests that the solution to conserving natural resources and reducing the strain that humanity is placing on the planet is through decreasing production and consumption, and thus shrinking global economies (Roulet & Bothello, 2020). Supporters of the degrowth paradigm argue that we need to overcome our dependency on economic growth as a measure of prosperity to reach net zero emissions. This argument is based on the notion that living within finite environmental limits is incompatible with continuous economic growth (Demaria, 2018).

Opponents to the degrowth paradigm argue that it raises difficult questions around human welfare, employment and economic stability (Kallis, Kerschner & Martinez-Alier, 2012). There seems to be a strong correlation between economic growth, social development and other non-monetary things of value, such as access to healthcare and education, equal opportunities, scientific progress and financial security (Mattauch et al., n.d.). Consequently, it is argued that degrowth may prevent people in low-income parts of the world from being lifted out of poverty.

Both the arguments for and against degrowth are based on the notion that economic growth equates to growth in material use and pollution. While this may be intuitively appealing, there is room to question the assumed correlation between these developments.

In Video 1, Matthew Agarwala, Project Leader at the Wealth Economy, elaborates on the dilemma of degrowth and questions whether shrinking the economy would, in fact, lead to environmental prosperity. He also introduces the concept of decoupling explored in the next section, and suggests how it could become a reality, emphasising the role of innovation and the circular economy.

We now have the technology to make it happen.