In interest.co.nz's Election Series, the University of Otago's Janet Stephenson and Etienne Nel argue our political parties need a plan for a ‘post-growth’ world

In interest.co.nz's Election Series, the University of Otago's Janet Stephenson and Etienne Nel argue our political parties need a plan for a ‘post-growth’ world
Image: NASA.

By Janet Stephenson & Etienne Nel*
(This article is part of Interest.co.nz's Election Series).

Right now, New Zealand looks like a shining beacon in the global scene. We’ve got on top of Covid (for now, at least) through an early and hard response, and we’re living close-to-normal lives while most of the rest of the world is under some form of restriction, and we’re doing better with jobs and the economy than was predicted. 

But can we expect to return to the same economy that we left behind in early 2020?  Perhaps more importantly, can we expect to be as wealthy as we were before?  Or are global conditions dictating that we need to do better with less?

The dual impacts of Covid and climate change

It is increasingly clear that Covid (in the short term) and climate change (in the longer term) will result in a declining global GDP, loss of jobs, growing poverty and challenging social conditions.

The World Bank is projecting a 5.2% contraction in global GDP in 2020 alone due to Covid, with advanced economies shrinking even more, at 7%. Other recent evaluations suggest global losses from Covid at $46 trillion to  $82 trillion in a worst-case scenario over 5 years. The International Labour Organisation estimates that over 400 million people have already lost their jobs. Global poverty is on the rise again after 30 years of slowly decreasing numbers, and an estimated 100 million people will be pushed into extreme poverty. 

The scale of state investment to support people and jobs during Covid is appropriate but it will seriously aggravate already high global debt levels, and will be felt particularly acutely by low- and middle-income nations that are already highly indebted. Covid’s repercussions will worsen the lives of the world’s poorest, create inter-generational debt, and in developed countries may also force a collapse of property and mortgage bubbles. This situation is potentially reminiscent of both the 1980 debt crisis in the Developing World which often led to debilitating structural adjustment in many countries in that part of the world, and the Great Depression which fundamentally altered state economic management.

But it doesn’t stop there. By the time the global economy is recovering from Covid, the impacts and costs of climate change will be worsening. Globally, hurricanes, wildfires and floods cost the world US$150 billion in 2019 and according to Munich Re, one of the world's largest reinsurance companies, these losses are expected to increase due to climate change. New Zealand’s newly-released National Climate Change Risk Assessment identifies risks to New Zealand’s economy, society and infrastructure that will become extreme by 2050-2100.

Global greenhouse gas emissions are likely to temporarily decrease by up to 7% in 2020 as a result of the Covid lockdowns around the world, but this is unlikely to be sustained. Wealthier nations that implement post-Covid economic stimulus packages, ironically, could worsen greenhouse gas emissions unless they are purposefully invested in establishing a low-carbon economy.

Assuming current emissions trends continue, climate change impacts and costs over the next 30 years will be substantial, affecting human health, food systems, physical assets and ecosystems, and through these, economies and ways of life.  A recent study by The Economist suggests the global economy will be 3% smaller in 2050 than today due to climate change, with $7.9 trillion costs by mid-century from increased drought, flooding and crop failures.  By 2100, if we continue the high-emissions trajectory, there may be a 7% reduction in global GDP.

A future without growth?

Have we passed ‘peak wealth’ in GDP terms?  

If a healthy economy requires perpetual growth in the value of income and expenditure, which is current mainstream economic thinking, such news paints a gloomy picture of the future.  But a negative-growth future looks like something we’re going to have to get used to.  Climate change (and Covid) show that humans cannot endlessly destroy the natural systems we depend on without repercussions to our welfare. If we don’t adjust our consumption expectations we will suffer the consequences of a high-emissions pathway for current and future generations. 

Increasingly, it seems time to rethink current economic assumptions that adopt ‘growth’ as the assumed norm.

The options seem stark: We either stick with the growth orthodoxy and continue on a crash course with global environmental change. Or we adjust our approach to the economy so that growth and financial wealth are no longer measures of success. 

The government has gone a step down this track with the living standards framework, which introduces measures other than GDP with which to assess progress.  And from the early 2000s, ‘green growth’ has been mooted as the way forward, whereby we could have our cake and eat it too by fostering economic growth and sustainable development together. But there is a growing voice even within mainstream economics that endless growth, even if ‘green’, cannot continue without delivering serious financial and environmental consequences for future generations, and serious disparities across different parts of the globe.  

As economist Kate Raworth puts it, the most important role of an economic theory is to simultaneously ensure that we don’t overshoot earth’s life-supporting systems and that no one falls short of life’s essentials. Currently we are failing at both. Occupying this ‘safe and just space for humanity’ will require, for many in developed economies, adjusting our consumption expectations to having less rather than more, and focusing on wellbeing rather than wealth, and on the possibilities of a post-growth world.

GDP growth is central to current economic thinking. But now that we are facing what is possibly the start of the world’s continued slide into negative growth, and the necessity for ‘post-growth’ approaches, it is timely to ask how our political parties plan to respond.


*Janet Stephenson is an Associate Professor at the University of Otago's Centre for Sustainability. Etienne Nel is a Professor at the University of Otago's School of Geography.

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36 Comments

perhaps we passed 'peak debt'?

The most important thing to know about macroeconomics in the 21st Century is that Credit Growth Drives Economic Growth.

https://richardduncaneconomics.com/prosperity-depends-on-government-debt/

Yes we must have reached and passed peak private credit growth. It will only be worse when we get to the over side of public credit growth. If we chose to avoid the reset we will back here again within a decade.

There are signs that the TSY framework is beginning to be applied in a whole-of-government approach. The new National Policy Statement on Freshwater Management 2020 explicitly sets out a prioritisation hierarchy when considering environmental management of freshwater resources:

[First] "prioritising the health and wellbeing of water bodies, then the essential needs of people, followed by other uses."

https://www.mfe.govt.nz/fresh-water/national-policy-statement/about-nps

It's a start in the right direction.

What is needed is for TSY to begin forecasting a decline in GDP growth. Much better to be pessimistic and adjust accordingly.

Yes, fish are now more important than people.

If our water bodies (and indeed ecosystems as a whole) are not healthy then they cannot service the needs of people/humans. One of my favourite quotes on the subject:

"Man's attitude toward nature is today critically important simply because we have now acquired a fateful power to alter and destroy nature. But man is a part of nature, and his war against nature is inevitably a war against himself. [We are] challenged as mankind has never been challenged before to prove our maturity and our mastery, not of nature, but of ourselves." - Rachel Carson, 1962

https://www.millenniumassessment.org/en/index.html

Well that's fair - there are more of us

post growth world?

there are 700mn ppl in China, 300mn ppl in India, 200mn ppl in Africa on the highway to modernization and urbanization. there are full of opportunities for growth.

the only question is that whether this enormous growth opportunity will be captured by China or the West, or shared evenly or unevenly by both.

10
up

This 'growth opportunity' will not be shared by anyone. There are not enough resources left on this planet to allow the continuation of the living standards of the current middle class population let alone any more people.

Agreed. China was too late to the Party :), India didn't make it past the door and the Third World is already in reverse. Beirut is an example of systemic collapse, and we will see more as time goes on. Don't blame creed or ideology.

dp

Agreed. China's economic success is obvious and well known but the rapid economic growth of the rest of the developing world is massively under appreciated (read Rosen's 'Factfulness'). We in the developed world simply don't see the massive lift out of absolute poverty by roughly 80% of the world population all achieved in my life time and mainly this century. We don't see it because those living on $10 a day seem desperately poor to us and they don't have the money to buy our goods (milk, meat, tourism, kiwi fruit, software, etc). However when 5 billion people move from under $2 per day sleeping on bare earth, no education, no medicine, walking everywhere, no electricity to between $4 to $20 per day then they have a pecarious but much better life. Now 90% of the world has access to electricity, education, bicycles, etc).
The developed world (roughly 1billion) may go backwards but nothing will stop further economic growth by the 6billion who live below the developed but above the absolutely destitute.
China and the West? What about Nigeria, Brazil, Indonesia, India, Iran - there are many countries with the population, size and resources to compete with China and the West and now they have a young generation that is educated.

Have we peaked wealth.........wait for more printing and distribution of of free and cheap money by government.

Now that government have got the license to print money under panademic excuse, it is wait and watch as no one knows where all this will lead to besides artificially pumping share market and house price.

Another couple of fully indoctrinated limits to growther pushing a narrative without any evidence or proper reasoning. Eventually the world will decide to deleverage and then growth will start again. For example see Iceland which did deleverage vs Europe as a whole. GFCs and debt are temporary and we will get though them one way or another and COVID will kill off some sectors of the economy it will be reworked and growth will continue. Stop trying to link debt with climate change until you have evidence. Our current problems are financial selfishness and short sightedness (and a lab made virus).

"Have we passed ‘peak wealth’ in [real?] GDP terms?"
This probably is determined by our stage in the credit cycle, so I would say probably yes for a few decades. This has nothing to do with climate change or COVID though. This is a ridiculous metric to measure long-term growth in. Try global food production, habitable space or total stuff humanity has to own. Why are sociologist and geographers(?) talking about GDP.

Not sure what you are getting at. For example, global food production per capita is directly related to our changing climate.

https://link.springer.com/article/10.1007/s12571-009-0026-y

I guess you is referring to the end of second paragraph: If we are talking about major economic and monetary resets GDP will be a meaningless figure and may lose any current correlation to living standards. I did skim over the paragraph at the end where they say GDP may be a meaningless number (if so all the numbers in the article are too) and the government is looking at living standard metrics.
My main point is nothing in there proves growth is over. There are lots of potential crashes with L or even lazy Ls recoveries and slower growth but nothing to suggest they there will be a limit and we should stop chasing growth (of production not GDP).
The authors are much more reasonable than PDK but at least one of them is still trying fit data to the LTG ideology rather than prove something useful.

They only sound 'more reasonable' to you, because they don't address the other resource issues (CC being merely an exhaust-gas issue).

It's the 'growth can be had forever within a bounded system' nutters who are the ideologues.

Just sayin'.

That's because the events of the first half of this year have shown that we are nowhere close to peak oil, its further away than than its been for a long time. There's no point worrying about running of resources when your predicting climate doom in the next 20 years and their use will be banned. It's redundant and confusing to point out peak oil. One of the authors at least recognises that debt is the current problem. I think one is a LTGer and the other is just pointing out difficulties to growth.

Yes, I'm happy with the characterisation that we are in a bounded system but can you prove we have observed the bounds. I'm not remotely convinced we have. We are humans and we will find the next source of entropy and exploit that until it we start talking about peak of whatever that is.

Your last sentence is deficient - lacks logic.

Within a bounded system (earth) you run out of alternatives. When you are growing exponentially, you run out with exponentially-surprising suddenness. No number of substitutes will solve that issue.

The question is: were are all the bounds? Do we know what they are yet (within a few order of magnitude even or how many of them there are)? The bounds keep changing the closer we think we have gotten to them. Have we found all the oil or do we not know that bound yet (we are probably in an order of magnitude there)? How about fissile material (way less accuracy there) we may find a way to make different elements fissile then the energy available suddenly jumps and previous bound was larger or we find another "dimensional space" to expand to. If the bounds are larger by many orders of magnitude that what we currently think, we may have millennia before we hit them.

If you can start proving where they are (most intellectuals are completely ill equipped to do this) then it can be used for meaningful policy discussions. Humans are always expanding to use their available resources.

Nope, you make a quantum cranial leap using nothing but faith.

Try doing some real homework. We are at or about peak just about everything. Except population - we are hell-and-gone away past peak carryable people.

PDK since you don't want to discuss any science, the issue becomes philosophical or maybe psychological or even theological.
I will make a quick attempt to characterise the issue is as follows: Given that it would be both would be undesirable to stop using oil in the short term and to blindly run out of remaining oil before we find a replacement. How should the conflicting goals be managed?
You propose we trust a group of what appears to be intellectuals who cant produce a single piece of solid scientific literature to prove their assertions. I assume your not holding out on us and not publishing it as a source because you don't think your readers would understand it. Without any reasonable proof, that being scientific literature, you are asking us to do this on trust or faith. Do you not understand a narrative is not proof or valid for policy changes to me or hopefully anyone in charge of anything?
I think we should just leave it to the market and people in the industry to warn us when we are running out because they may actually have a clue of when it might happen. This should allow the use of the resource for as long as possible. We may decide to reduce oil usage before then anyway if technology allows it, because we do have good reasons to do so. As I have discussed with you before, everyone is aware of the issue of peak oil.
There is no point discussing differences in who we trust or have faith in in the comments PKD.

That's an attempt to cancel out via 'opinion vs opinion'. Somewhat like lazy journalism.

First principles is all you need. Finite resources, being hoed-into best-first. Meaning all sequential options are of lesser quality. The hoeing-in being done at exponentially-increasing rate(s).

The last doubling, is from 50%depleted to 'all gone', in all cases. Then your substitution allegation; it requires starting at an equalling of that 'all-gone', then has to double, double again...... Very quickly that approach needs 2 planets, 4,8,16..... All the material presumably brought back by some sort of vehicle..... See the stupidity of it? And the doubling-time between 4 planets required, and 8 planets required, is EXACTLY the doubling-time between 4 tons shifted and 8 tons shifted, 'way back at the beginning.

With exponential numbers and within a bounded system, you need no other figures than your doubling-time (after all, at 3% growth, it only takes 72 years from 1/8th-gone to all-gone). Sad to be having this conversation 50 years after the Limits to Growth was published, 40 years after Overshoot was published, and 48 years since the Victoria University of Wellington Department of University Extension held a Symposium on Optimum Population. We were too slow learning......

As for 'leaving it to the market' - spare me. We've moved on, OK?

That simplistic maths is a narrative not science. Put some real numbers to it and give me an estimate of when it runs out (+ or - 50 years if you need to), because this is what changes things (we might not need oil if it will last 50 to 200 years or at least enough people believe we wont).
"That's an attempt to cancel out via 'opinion vs opinion'. Somewhat like lazy journalism."
I'm not a journalist and that's exactly what this has become. Both of think each other evidence and argument is bullshit. There is no point to this.

You put yourself there, with merely an opinion.

https://earthbound.report/2010/11/10/the-limits-to-growth-common-misconc...
https://ftalphaville-cdn.ft.com/wp-content/uploads/2013/01/Perfect-Storm...
https://ourfiniteworld.com/
https://dothemath.ucsd.edu/
https://sustainable.unimelb.edu.au/about/honoraries-and-associates/honor...
https://www.odt.co.nz/lifestyle/magazine/curing-growth-12-step-programme

Then download Catton's Overshoot, Krumdieck's 'Transition Engineering', Wright's 'Short History of Progress', Kunstler's 'Long Emergency', Higgs's 'Collision Course', maybe a Jared Diamond or two, and get back to me. If you're struggling with that lot, try Orkin's The Moron's Guide to Global Collapse.

:)

Thanks for the first link, it's everything I ever wanted to know about LTG. I almost was not going to check for a reply.
https://earthbound.report/2010/11/10/the-limits-to-growth-common-misconc...
So the doomsday is at the end of the century, the model assumes our current (or previous at some fixed point) technology and its extremely generous to call the model a prediction (we should just accept it on faith or spend our life validating it and working out what the limitations are).
This is 2020: up you doom game, we might actually be in control of this one. Its sunny here today, if it is were you are too go out and enjoy it.

"we should just accept it on faith or spend our life validating it" Modelled outcomes are not set in stone, they just give give an indication of an endpoint, should a certain set of circumstances eventuate. We are working hard at proving the World3 model correct. https://sustainable.unimelb.edu.au/publications/research-papers/is-globa...

Figure 1 in the full paper to me shows the model being out by decades and nothing is proved until some of the historical data changes direction. Its a simplistic model for its purpose and there will be a significant amount if GIGO effecting the accuracy. I don't understand how you could factor out the credit cycles and GFCs from the historical data, proving causality to any extent would be essential to me to take this seriously. I would expect to be seeing signs of resource depletion right now if this was happening on schedule (but we got negative WTI futures, the market should sense this a decade out or some journalist would be getting traction with a story). I just don't think we should ever take actions that harm people because of a computer model of this nature. I might read the final paper.

The market couldn't sense a chicken-fart in a perfume factory.

As per 2008, all it does is rear-view mirror.

I look at fracking, and I know there aren't any pressurised Spindletops left to discover. The difference is that I look at the real world, you and the cohort of journo's who got sucked-in to economic assumptions (essentially they elieve in a flat earth) believe in something unreal. In all meanings of the word.

As "the necessity for ‘post-growth’ approaches, it is timely to ask how our political parties plan to respond." Nats response? Silence, followed by demanding we build more roads.

Thanks for starting the conversation on the post growth world.

Good to see this issue raised here. I wonder what would be the top (and most practical) priorities in such a plan? This paper: https://sustainable.unimelb.edu.au/__data/assets/pdf_file/0006/2740731/M... suggests several policies for a post-growth world but concludes:

"Despite a ‘top down’ transition facing huge, perhaps insurmountable, obstacles, governments are going to
act in one way or another, and their influence matters. It follows that we should be pressuring them to do
everything they can to assist in the emergence of a post-growth economy, even if, in the end, we may need
the build the post-growth economy ourselves, at the grassroots level, with or without state support."

From that paper I learned that Sao Paulo actually banned outdoor advertising in 2007 (https://web.archive.org/web/20160418175040/https://www.adbusters.org/art...). I can see the need for that in NZ which is blanketted by ads for SUVs. The new car industry spends $600 million a year in advertising, on the back of sales of $6 billion. To pursue a post-growth world, this would have to be scaled back drastically.

The article rests on a widespread fallacy: that we (as humans) know enough about stuff to, as it states, "ensure that we don’t overshoot earth’s life-supporting systems". A short list of knowledge gaps:

  • 85% of Planet Earth - the oceans. Heck, a substantial proportion of 'em are unexplored at depth.
  • The role of clouds, El Sol, and decadal oscillations in ocean properties, in determining Climate
  • Prediction of certain Earth-altering occurences: earthquakes, vulcanism, Carrington events, asteroid strikes
  • The mass behaviours of our own species - it's certain only that we are living through a period of magical thinking and irrationality

Much more humility is warranted and acknowledgements that we really aren't That Clevver are needed. Else our attempts to "ensure that we don’t overshoot earth’s life-supporting systems" are very much liable to unintended consequences.

But glass half full: the XR path of localised Extinctions is gonna solve, at least for some places and to some extent, the overpopulation issue.

"GDP growth is central to current economic thinking." Therein lies the problem. Successive Governments in NZ have focused solely on total GDP growth instead of GDP per capita growth or productivity growth both of which impact quality of life. Total GDP growth has been relatively high in NZ over recent years due to immigration driven population growth while GDP per capita has barely grown productivity growth has been all but non-existent. Hence most NZers while having been told our economy is a "rock star" have a feeling things aren't as great as they are told. I was hoping that this election we may debate this but it looks like Covid has given both major parties a free pass to campaign on fluff and hot-air.

Yes.