The concept of degrowth remains underspecified – reform or revolution?
(https://billmitchell.org/blog/?p=62231)
December 5, 2024
I have done quite a number of podcast interviews with various hosts over the last few weeks and the discussions often turn to issues relating to the environment and what Modern Monetary Theory (MMT) has to say about those issues. Inevitably, the discussions then meandered into debates about what is possible given that we humans are estimated to be using 1.7 times the regenerative capacity of our biosphere at present. At some unknown point, but sometime, that overuse will have to come to an end as the biosphere asserts its capacity constraints in one way or another. The question that seems to interest people now is whether the existing mode of production (Capitalism) is at all compatible with reducing that ratio. My answer is always the same. Those progressives who promote the notion of ‘green growth’, which is embedded in ‘green new deal’ proposals or their ilk, seem to think that we can make the shift away from fossil fuels and reduce the claim on the biosphere within a growth paradigm while retaining the Capitalist ownership relations. For me, a system where the logic is ever accumulation of capital via the creation and expropriation of surplus value and realisation of that value as profit, is incompatible with being able to live within the limits imposed by the biosphere. If we are to have any long-term future as a race, then we will have to embrace a degrowth strategy and radically alter the way we allocate resources and our patterns of production and consumption. In a sense, Marx’s long discredited notion of the – Tendency of the rate of profit to fall – as an intrinsic feature of Capitalism, which he believed would eventually bring the system asunder, is likely to be realised as the environmental constraints impinge on the accumulation system. Simply put, the logic of Capitalism requires growth and degrowth is the anathema of that logic.
I am currently working on several projects with my team in Australia and also in Japan.
One of the projects, which I hope will manifest as a new book sometime in 2025 is focused on these questions.
The thesis entertained is that – Degrowth – is the only viable strategy for humanity’s future.
When the initial academic degrowth conference was held in Paris in 2008, the participants considered the work of – Nicholas Georgescu-Roegen – who in 1971 published his work ‘The Entropy Law and the Economic Process’, to be the first economist to really embrace the notion that the Earth’s natural resources were finite and that continual growth would eventually deplete them.
French and Italian academics took his lead and by 2008 there was a definable degrowth research agenda.
Of course, the Club of Rome’s work that began in the late 1960s and published the – Limits of Growth – in 1972, had also carried a similar message although that work spawned the zero growth movement rather than awareness of a need for declining growth.
Here are all the papers that were discussed at the – Proceedings of the First International Conference on Economic De-Growth for Ecological Sustainability and Social Equity – which was held in Paris on 18-19 April, 2008.
The 2008 Paris Conference was then followed by a second conference in Barcelona in 2010 which published a one-page – Degrowth Declaration Barcelona 2010.
In that ‘Declaration’, the assemblage in Barcelona agreed that there was a:
… looming multidimensional crisis, which was not just financial, but also economic, social, cultural, energetic, political and ecological. The crisis is a result of the failure of an economic model based on growth.
An international elite and a “global middle class” are causing havoc to the environment through conspicuous consumption and the excessive appropriation of human and natural resources …
The illusion of a “debt-fuelled growth”, i.e. Forcing the economy to grow in order to pay debt, will end in social disaster, passing on economic and ecological debts to future generations and to the poor. A process of degrowth of the world economy is inevitable and will ultimately benefit the environment, but the challenge is how to manage the process so that it is socially equitable at national and global scales. This is the challenge of the Degrowth movement, originating in rich countries in Europe …
The ‘Declaration’ proposed a “wealth of new proposals, including”:
A wealth of new proposals evolved, including: facilitation of local currencies; gradual elimination of fiat money and reforms of interest; promotion of small scale, self-managed not-for-profit companies; defense and expansion of local commons and establishment of new jurisdictions for global commons; establishment of integrated policies of reduced working hours (work-sharing) and introduction of a basic income; institutionalization of an income ceiling based on maximum-minimum ratios; discouragement of overconsumption of non-durable goods and under-use of durables by regulation, taxation or bottom-up approaches; abandonment of large-scale infrastructure such as nuclear plants, dams, incinerators, high-speed transportation; conversion of car-based infrastructure to walking, biking and open common spaces; taxation of excessive advertising and its prohibition from public spaces; support for environmental justice movements of the South that struggle against resource extraction; introduction of global extractive moratoria in areas with high biodiversity and cultural value, and compensation for leaving resources in the ground; denouncement of top-down population control measures and support of women’s reproductive rights, conscious procreation and the right to free migration while welcoming a decrease in world birth rates; and de-commercialization of politics and enhancement of direct participation in decision-making.”
A pretty comprehensive list and many of those proposals will be necessary to implement and follow through on.
But dig into that last paragraph and you see the danger signs, for example:
1. “gradual elimination of fiat money”.
2. “introduction of a basic income”.
3. “taxation of excessive advertising and its prohibition from public spaces”,
4. “compensation for leaving resources in the ground”.
5. “denouncement of top-down population control measures”.
6. “discouragement of overconsumption of non-durable goods and under-use of durables by regulation, taxation or bottom-up approaches”.
I could (and in the book will) discuss each of these ‘danger signs’ in detail.
In my view they reflect a confusion among the progressive side on how monetary systems operate and the capacities of the currency-issuing government.
Whether we have the current system or a localised degrowth system, we will still need a coordinated monetary system at a ‘national’ level, which means that the tenets of MMT will still apply.
Such a system cannot function with a series of ‘localised’ currencies.
I also think at the heart of the 1.7 problem is that there are too many humans and I know progressives want to avoid discussing that topic because they think it leads to eugenics etc.
But sooner or later, by design or pestilence, we are going to have to agree on population control measures to reduce that 1.7.
And localised decision-making is not a suitable scale within which to design and implement such measures.
Further, in any monetary production system (we still have to eat and have clothing), there still must be some correspondence between nominal spending and real output, to avoid shortages and bidding wars that lead to inflation.
Relying on a basic income for equity provides no nominal anchor and would require unemployment buffers (as now) to discipline any outbreak of inflation resulting from an imbalance between nominal demand and real supply.
We can wish for Shangri La for all we want but there are realities that will continue in large-scale human settlements.
So, I could talk about all these issues for ages.
But the point that I want to make today is that within this long wish list that was put forward by the leading proponents of degrowth, there is one significant aspect that is missing.
And that is, the ‘Declaration’ implies the continuation of the Capitalist system of private property rates (for example, paying mining companies compensation not to mine).
So, the participants proposed what has been termed an ‘eco-capitalism’.
This blog post from a few weeks ago – A 78 per cent tax on fossil fuel companies in Australia is not required to fund a Just Transition away from carbon (November 21, 2024) – argued that trying to make progress towards lowering the 1.7 within the capitalist structures, using corporate taxation and green bonds etc, will be a failing strategy.
It is simply inconceivable that a degrowth production and distribution system can be compatible with a capitalist economy where private profit-seeking dominates resource allocation and investment decisions.
Thinking that the world’s financial markets, where the logic is to create winners from losers through speculative betting, without any necessary correspondence to societal well-being being evident, can somehow fund a viable degrowth strategy is delusional.
Corporations are not going to alter production if it systematically undermines their profit ambitions.
The proponents of ‘eco-capitalism’, which includes the ‘green growthers’ and the ‘green new dealers’, seem to think that regulation and taxation will provide the means to temper the accumulation desires of the capitalists and turn them into good environmental citizens.
We have seen the era of ‘social responsibility’ statements that have appeared on corporate WWW pages professing that these large corporations have suddenly decided to be good citizens.
They are just shallow smokescreens and rarely accompany any necessary change.
Some progressives want us to believe that so-called ‘stakeholder capitalism’ where corporations suddenly take into account not only their owners interests but also a broader array of ‘stakeholders’ like workers, the broader community, and the environment.
Apparently this will spawn the widespread rise of entrepreneurs who eschew profits in favour of the planet.
Good luck with that.
When I read the work of notable degrowthers like the retired French economist – Serge Latouche – who has worked in the area of – Postdevelopment Theory – I don’t see anything that inspires a shift to what we might term ‘eco-socialism’.
Sure enough he wants a major shift away from growth being the objective of the economy towards an economy that shrinks.
But there is nothing to tell us why capitalists, who are driven by the logic of ever increasing capital accumulation will tolerate such shrinkage.
It simply goes against the logic of the system.
Think back to the glorious years of the Post World War 2 social democracies where under pressure from voters, governments mediated the class conflict and introduced policies that assured full employment, freedom of association, real wages growth in proportion with productivity growth, redistribution that reduced inequality, public schools, hospitals, transport, communications, utilities etc.
The system that ‘tamed’ the crude greed of the capitalists created dynamics among the powerful that ultimately led to its demise.
Think about the Powell Manifesto in 1971, the capital strikes, the rise of the conservative pro-corporate think tanks, the infiltration by corporate interests into the educational system and the influence they had on curriculum design, the rise of the right-wing, pro-corporate media companies (Fox etc).
Progressives who think that the reduction in 1.7 will come through the implementation of new ‘green’ technologies also misunderstand the dynamics of technological progress.
English economist – William Stanley Jevons – formulated the concept of the – Jevons Paradox – in 1865, whereby:
… technological improvements that increased the efficiency of coal use led to the increased consumption of coal in a wide range of industries. He argued that, contrary to common intuition, technological progress could not be relied upon to reduce fuel consumption.
The application of that insight to “energy conservation policy” is straightforward.
William Jevons noted that “fuel efficiency gains tend to increase fuel use” not reduce it.
Green growthers think that increasing fuel efficiency “will lower resource consumption and reduce environmental problems”.
However, that is unlikely unless they are accompanied by regulative policies that place limits on resource use.
In 1989, the Marxist economist – Paul Sweezy – published an insightful article in the Monthly Review – which was entitled – Capitalism and the Environment.
He argued in that paper that:
Activities damaging to the environment may be relatively harmless when introduced on a small scale; but when they come into general use and spread from their points of origin to permeate whole economies on a global scale, the problem is radically transformed. This is precisely what has happened in case after case, especially in the half century following the Second World War, and the cumulative result is what has become generally perceived as the environmental crisis ….
Since there is no way to increase the capacity of the environment to bear the burdens placed on it, it follows that the adjustment must come entirely from the other side of the equation. And since the disequilibrium has already reached dangerous proportions, it also follows that of the last few centuries …
… we have to ask whether there is anything about capitalism as it has developed over recent centuries to cause us to believe that the system could curb its destructive drive and at the same time transform its creative drive into a benign environmental force.
The answer, unfortunately, is that there is absolutely nothing in the historic record to encourage such a belief. The purpose of capitalist enterprise has always been to maximize profit, never to serve social ends …
It is this obsession with capital accumulation that distinguishes capitalism … As far as the natural environment is concerned, capitalism perceives it not as something to be cherished and enjoyed but as a means to the paramount ends of profit-making and still more capital accumulation …
If this conclusion is accepted—and it is hard to see how anyone who has studied the history of our time can refuse, at the very least, to take it seriously—it follows that what has to be done to resolve the environmental crisis, hence also to insure that humanity has a future, is to replace capitalism with a social order based on an economy devoted not to maximizing private profit and accumulating ever more capital but rather to meeting real human needs and restoring the environment to a sustainably healthy condition.
That was a long quoted section but captures my message today.
Serge Latouche’s response to this sort of reasoning was articulated in his 2010 article – The globe downshifted – which was published in – ‘Le Monde diplomatique’.
He rejects those who believe in ‘Eco-compatible capitalism’ and that “huge multinational corporations, will never set off down the virtuous path of eco-capitalism” on their “own accord”.
He thinks the prospects for a return to the “Social Democratic era” are weak because the “class struggle seems to have broken down … capital won”.
He notes that the “commercialisation of everything” (not this blog I might add!) not only destroys “the planet” but “society”.
In other words he concludes that:
A society based on economic contraction cannot exist under capitalism … (but) … Getting rid of the capitalists and banning wage labour, currency and private ownership of the means of production would plunge society into chaos. It would bring large-scale terrorism. It would still not be enough to destroy the market mentality.
He goes on to talk about evolution through reform or revolution.
I will come back to that topic in subsequent posts.
But until we can provide a coherent answer to that binary, the concept of degrowth will remain lacking.
Conclusion
More on this topic as I do more research and thinking.
