what is it?
Put simply, it's economics without growth – that doesn't aim to keep producing more and more 'stuff', in other words. The bigger a country's economy, the more stuff people have. But the earth has a 'carrying capacity' as regards humans and their stuff, and that carrying capacity has 2 components: 1. the things it provides – food, water, air, fuel, minerals, timber, soil; and 2. the things it absorbs – pollution, ecological damage, waste, destruction of habitats and loss of species. The book Limits to Growth labels these two components 'throughput'. Nature is finite, so this throughput can't rise above a certain limit. 3 things increase throughput: population growth, inappropriate technology, and economic growth. Population will stabilise this century (although it may need to fall to be sustainable); inappropriate technology (e.g. coal-fired power stations) is becoming cleaner and smaller; but the global economy is still growing and all governments are promoting it. Growth is inevitable under the current system because shareholders want a return on their investments, interest on debts has to be repaid, advertising encourages more consumption, and because of fractional reserve banking.
As an economy grows, it brings benefits in terms of health, happiness and fulfilment. Infant mortality rates fall and life expectancy grows. Welfare states appear, along with health care, education and reliable infrastructure. But as an economy grows past a certain per capita size, benefits stop increasing, then start to fall - stress, congestion, crime, pollution, noise, ugliness, boring work, lack of community. But it’s the ecological damage that growth causes that presents the greatest threat to humans.
Low-impact economics is not just about giving monetary value to the environment – that means that you can still trash it if you can afford to; and it’s not just green taxes either - taxes will be spent on something else, and the economy still grows. And not recession. We're talking about stabilising the economy in a controlled way. Some economists are already proposing alternatives.
Herman Daly's Steady-State Economics involves working out how much ecological impact is sustainable, then ensuring that we stay below that level with (tradeable) resource depletion quotas (for each resource) and a ‘maximum wealth’ policy. Income from depletion quotas would then be used to build the infrastructure to move to a renewable, low-carbon society. It also involves moving taxation to throughput and away from income.
Richard Douthwaite (in the Growth Illusion) proposes another tool - that governments tweak interest rates until they're in effect zero, and so there's no incentive to invest. But people would still use banks for security, cashpoints, cheques, transfers, salaries etc, and this can be loaned to small businesses.
No country can abandon its quest for economic growth unilaterally, because other countries will then outcompete them for resources and markets, which will lead to poverty. Contraction and convergence and the Simultaneous Policy are ideas that could help solve this problem.
what are the benefits?
Poor countries need growth, but rich countries are still behaving like poor countries. In the West, we don't need material growth any more. We are far enough down the road of bland consumerism as it is. The benefits of non-growth are best illustrated by pointing out the problems with growth. Growth in human economic activity appropriates more natural habitats and resources for human use, and creates more waste. This causes an acceleration in extinctions, which, if it continues, will prove fatal for us. Economics is a subset of and should be subservient to ecology if we are to survive, let alone prosper. Few economists understand ecology (and why should they if they're not taught it?), but striving for perpetual growth is as absurd as striving for perpetual motion.
Herman Daly puts it very well. He says that conventional economics views the economy as an isolated system, and doesn't recognise that it is a subset of the environment, completely dependent on inputs from it (low-entropy, or useful raw materials), and outputs to it (high-entropy, or useless waste). The earth's ecosystem is finite and non-growing. Therefore any subset of it must be finite and eventually non-growing. This stabilisation can come about sensibly, deliberately and safely, or it can be resisted until it is imposed by nature, in which case it will be extremely dangerous.
The demise of various civilizations around the world have been put down to overexploitation of their surrounding environment. We're doing the same thing globally now, and we have nowhere else to go. The world spends over $100 billion annually on advertising to persuade, cajole, pester and shame people into buying more stuff. No amount of green technology, organic food or recycling will stop environmental destruction as long as our economy is constantly growing – it will be one step forward, two back until ecology just won't support us any more.
The aim of steady-state economics is human and ecological well-being, rather than just more material goods, and so a happiness index has been suggested to replace GDP, to indicate how well we are doing. GDP includes cleaning up pollution, weapons manufacture, prisons, therapy and prozac but doesn't include things that are free, like love, sex, walking in the countryside or talking with friends – so how can it measure happiness?
what can I do?
The economy won't change unless people want to live differently - not just to consume more, earn more, fly more, get a second home, and all the usual aspirational stuff. As long as people want big brands, and lots of possessions, we'll keep getting governments committed to growth, and towns dominated by corporate chains. A steady-state economy has to be founded on stabilising individual consumption at sustainable levels.
First you can calculate your ecological footprint, and try and get it under one planet, by downshifting. Personal downshifting is steady-state economics in microcosm. Don't believe advertising hype. The advertising industry exists to manufacture disatisfaction and persuade you to buy things. Although it may be difficult, perhaps the most effective thing you can do in support of a steady-state economy is to avoid products that you've seen advertised on TV, billboards and in the media, and try and buy locally-produced things instead (which reduces fuel needed for transport as well) – or not buy certain things at all. And if you consume less, you may be able to work less. The reduction in productivity that comes about through more people working part-time balances the reduction in consumption mentioned above. No jobs would be lost, and there would be no pain.
Read more about non-growth economics, join LILI, CASSE, NEF or Feasta, and don't vote for a party that promotes perpetual growth. Debate with friends and work colleagues – let's get it on the agenda. We never hear any discussion about the purpose of economic growth. It's just assumed that it's a good thing. Let's start questioning it. And don't fall for the economic growth myths.
If you're a member of an environmental organisation, a political party, a union, a book club, a Transition group, a WI group – bring these ideas to their attention; see if you can get your group to officially support a steady-state economy. Don't bother boycotting specific corporations (unless particularly heinous) – another one will take its place; corporations are just doing what they legally have to do - growing, to maximise returns for shareholders. Apart from individual life changes, we've got to try and make alliances to get a consistent, coherent message across – to the mainstream and to decision-makers. They may never have heard of these ideas before, but might have wondered when the economy is supposed to stop growing, or how anything can grow forever, but assume that they must have missed something. They haven't. Let's tell them that the emperor isn't wearing any clothes, and bring steady-state economics into the mainstream.
miniaturisation can help to stave off the damage caused by constant growth - but many things need to be human scale, and can only be miniaturised to a certain point
'most cited living author' Noam Chomsky has this to say about economic growth: