Malign Confusion about Growth, Economic Growth or “Degrowth”: Which Way Forward? – Pt 3

Variation in Fossil Fuel Dependency Among Developed Countries and Degrowth

As action is required today and in the near future, though, it is reasonable to assume that production will be organized via some form of a capitalist organization of firms and the motivation of economic actors to achieve monetary profits/savings. In the period of transition to a new energy economy, the government sector and budget will play an enlarged and leading role in financing and regulating the transition.

Targeting net degrowth over a period of years, perhaps a decade, might or might not inhibit the development of the “greener” sectors of the energy and transport economy exactly because these sectors have to play “catch-up” in the area of infrastructure. The most secure way to build out these sectors in terms of minimizing technology risk, is to deploy renewable energy generators, some on a vast scale, heavy and light electric rail infrastructure, electric road and other grid-tied systems not dependent on advances in battery technology or availability of moderately scarce elements like lithium. These systems require as construction materials emissions-intensive steel and concrete on a very large scale. Innovations may cut these emissions substantially though in the foreseeable future not completely. Various commercial interests are claiming they have a breakthrough on the energy storage or generation side which would diminish the need for these investments but currently there is no certain alternative to the creation of some massive earthworks.

Anderson and Bows’ degrowth agenda takes the risk of stifling the growth of the greener sectors of the economy with initial embedded emissions costs, for the sake of what is hoped to be early and dramatic emissions reductions in the developed world and allowing some of the remaining atmospheric resources to be taken up by emissions from developing countries.

To avoid social collapse, Anderson and Bows’ degrowth perspective would require that a fossil fuel-independent basic community and transport infrastructure is in place in those countries that embark on a radical degrowth program. They also assume, I believe, a robustly unified polity and sacrifice-ready members of the top 10-20% in wealth, who would assent to degrowth targeted at their consumption, with much sacrifice required of people of more modest incomes and wealth. The countries where it would be easier but by no means easy to institute a degrowth program would include the densely populated countries of the British Isles, Western, Northern, and Central Europe that still have extensive rail and public transport networks, though have become dependent on fossil-fueled trucking for freight and fossil fueled personal transport for convenience. Not only do these regions possess these potentially zero- or low-carbon networks but they also have from pre-capitalist times, structures of urban and community life which pre-date the fossil fuel age.

By contrast, the United States, Canada, Russia, Australia, and much of Latin America do not have a low- to zero-carbon potential infrastructure already built. In many areas of these countries, commerce and community hinge upon the ready access to fossil fuels, as urban planning and more recent economic development, were predicated upon automobility and far-flung supply chains for goods and services. Some of these nations have had oil deposits and a large oil industry presence in their political and economic systems.

So in some of the Annex I countries, UN-speak for the most developed countries, as well as other highly fossil fuel dependent countries, a degrowth-first strategy has a high probability of attenuating the communication, commerce, and social support networks that are vital in the initial and longer-term in combating climate change. Much of the radical conservation measures that Anderson and Bows are counting on require a unified polity and community integrity in order to make the proposed degrowth bearable for ordinary folk. The choice is easier for Western, Northern and Central Europe, which in many countries enjoys an overall quality of life at fractions of the per unit GDP carbon emissions than other countries in both the developing world and in non-European and Eastern European Annex I nations (US, Canada, Russia, Ukraine, etc.). Besides the density of population and choice of transportation services in these more fortunate Annex I countries, they can export their emissions by relying, increasingly on manufacturing and emissions-intensive resource extraction from other nations with laxer environmental standards or reserves of fossil energy. As also mentioned above, they benefit from some of the highest levels of state-funded public services in the world, which, one assumes and rightly would remain largely in place as a degrowth program was put into action.

By contrast, the more recently built and sparsely populated parts of the world both in Annex I and outside it, a sudden reduction in emissions from degrowth without a massive countervailing program of social integration will lead to social and commercial disintegration rather than a path to a more sustainable society. The effort to address climate change will involve in these countries, a simultaneous effort to reconstitute society, a society that is more resilient, future-oriented, nature-aware, and community-oriented. While European countries fractured by austerity, the rise of right-wing anti-immigrant parties, and neoliberalism could also benefit from such a program of social integration, they are not as dependent upon large scale infrastructure projects to “green” their common spaces.

Clearing the Field: It’s Between “Green” Growth and Degrowth

We have over the past several years been living in a period of malign, toxic confusion about economic growth and how it is achieved. This has been spurred on by the deficit hysteria/austerity campaign that has served only a small fraction of the elite in our financialized economy yet has dominated discourse in Washington and many other capitals. The deficit hysteria campaign has capitalized on the deep flaws in academic economics and economics education to distort the understandings of politicians and lay people about how our capitalist economy works, in particular the functions of government spending and overall demand in regulating the rate of economic activity and growth. Claiming to support growth, the austerity campaign has undermined it, yet continues to convince lawmakers otherwise, continuing to lead them or have them lead us, into an emissions-intensive economic abyss.

The political and economic predators who have pushed deficit hysteria have politically capitalized on sincere concerns that some individuals and political leaders have had about lax financial standards in the private credit industry, debt-fueled consumption and overconsumption more generally. They have misattributed the private debt-fueled consumption boom of the last decade to government, exonerating the role of private lenders eager to profit via offers of credit from people’s wish to consume essential or luxury goods and services. They have politically capitalized on the confusion of laypeople and many economists between financial and real resources especially as regards government finance, treating conservation of a limited pool of financial resources as equivalent in virtue to conserving the finite resources of the earth.

A critical casualty of the deficit hysteria campaign is the instrument of government itself, a necessary institution for the process of transforming our energy and transport systems to face the challenge of climate change. In pursuing their perverse campaign for political power, the policy space for government has been hemmed in by false accusations and notions about money and the role of government.

An honest discussion about the standards according to which we might organize and regulate our economies must exclude the false notion that there exists for a monetarily-sovereign national government a limited pool of financial resources even though we are fast approaching real limits in the planet’s ability to absorb the effects of our economic activity. The difficulty of this mental and political feat in an era where we have two versions of the austerity narrative, a reluctant “Left” or “liberal” one and an enthusiastic, sadistic right-wing one, is quadrupled: not only do listeners need to distinguish between the two but a sham political conflict between the two flavors of deficit hysteric can further confuse. It is no progress to content oneself with the sympathetic version of deficit phobia that laments that government does not have the financial resources to address the existential social and environmental threats facing us.

This leaves among the tripartite choice offered in the title of this piece between the current “malign confusion”, growth and degrowth, only the latter two as options to be taken seriously. Of course confusion about growth, stoked by our ambivalence about consumption, remains the dominant political-economic discourse, so to have this serious discussion about the choice between growth and degrowth requires considerable focus, mental effort and research.

A government’s growth orientation, once disentangled from the ideological morass of neoclassical economics, neoliberalism, and the deficit hysteria campaign, however faces some real rather than financial constraints as well as real constraints that will become financial constraints. In the former category, as discussed above, economic growth as currently conceived is predicated upon a diminishment and in many cases destruction of the non-human biosphere, most sharply and critically by fossil fuel use.

With climate change that destruction is not merely a passive deformation and diminishment of non-human nature and that nature growing more scarce as a resource for humans but rather a rebound by climate forces that will destroy large parts of human civilization. In the area of financial constraints, the fossil resources required for growth in our current technological regime are not unlimited in supply, contrary to industry propaganda and government complicity with the industry; increases in demand for fossil energy lead to increases in prices and puts pressure on supply. These shortages and price rises in turn put a damper on growth, yielding a negative feedback loop.

The only currently feasible and realistic growth orientation then would mobilize available resources upon the task of freeing society from the scourge of fossil fuel dependence, even as some of the activities involved in that process will inevitably use substantial amounts of fossil fuels for at least a decade and a half. As my Pedal to the Metal Plan demands, as well as other “Green New Deal” proposals, copious government spending with or without compensatory tax increases are required to build infrastructure, fund innovation, and subsidize nascent industries. Taxes, the “degrowth” side of the economy, would need to target those activities that yield high emissions with some exemptions for those activities that are life-essential or on a path to zero net emissions during operation.

Another orientation that we have considered as serious is a degrowth orientation, which attempts to front-load emissions savings by strict conservation and small-scale energy efficiency measures that themselves do not represent large emissions investments. Degrowth advocates seek to engineer a controlled economic recession that would guarantee yearly emissions reductions. As currently understood, these efforts would in developed countries leave some of the nascent green industries or infrastructure projects in a state of limbo as well as have negative employment effects unless counteracted by something like a job guarantee program, itself with a low emissions profile. Instituting a degrowth politics and strategy would require an extraordinary commitment on the part of a large swath of the population to break with the economic and social status quo, as well as experience some forms of deprivation. The role of state support and leadership, while critical in the Pedal to the Metal Plan, becomes even more central in an economy that would degrow over the period of perhaps a decade.

Managing Growth and Degrowth under Threat of Climate Apocalypse

Ultimately, if economics is to become a relevant and realistic discipline, it must confront the real physical world which economies have transformed but economics has not measured or accounted for in relevant physical aspects like carbon emissions and other dimensions of ecological footprint. An exclusive focus on growth or degrowth as “good” or “bad” or vice-versa will lead to mismanagement of an economy, even one that is attempting a crash-course in emissions reductions.

The management of growth will depend critically upon carbon emissions incurred during production and consumption of goods and services, which currently are known in estimates but often not in detail or in measured reality. If we take the Pedal to the Metal Plan as a model, the exact timing and prioritization of elements of that plan may depend on engineering analysis and real world data collection regarding actual emissions required to provide certain economic services in the present and results in future emissions reductions. The interaction between those emission expenditures and economic benefits will feed into an iterative process whereby incentives and subsidies can be adjusted to lower emissions and/or increase economic output per unit emissions. The focus on projects that reduce overall consumption, such as energy efficiency and conservation projects, would seem an intuitive place to start.