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Green growth or steady state? Rival visions of a green economy

For the UK and beyond, the tensions between ‘green growth’ and the ‘steady state’ continue to battle it out as the main models of an environmentally responsible economy. As the UN's Rio summit approaches, the question of whether economic growth can be reconciled with environmental constraints remains an open one.

Guy Shrubsole
18 May 2012

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International discussions regarding the need to locate a viable economic model to deal with the urgent demands on environmental policy continue to run into difficulty. From the tensions between theory and empirical data to the problem of waste, such negotiations face major political, financial and ideological hurdles. As Guy Shrubsole testifies in this week’s Friday essay - the main question for the UK in this context is not whether to protect the environment but if growth itself must be sacrificed in doing so.

Forty years ago, a team of scientists at the Massachusetts Institute of Technology declared that civilisation had a problem: it was fast approaching a cliff. The Limits to Growth, published in 1972, was a wake-up call for a society then only dimly aware of the finite resources of the Earth. Through its marshalling of hard statistics and what was then cutting-edge computer modeling, Limits to Growth kicked off a debate that is still burning today: can economic growth be reconciled with environmental constraints?

This year, as politicians gather for the Rio+20 UN Summit, discussion of the green economy is top of the agenda. Nowadays environmental concerns are much more widely accepted. But where political establishments are adamant they can be addressed through a process of ‘green growth’, others insist this is a nonsense, a contradiction in terms – and that only through replacing growth with a steady-state economy can we be sustainable. So who’s right?

In what follows, I try to summarise the best arguments and counter-arguments put forward by the two sides. This is a vast and complicated subject, so I don’t pretend to be comprehensive, or conclusive. But as Rio approaches, I hope this can help kick off a deeper discussion about what remains the most fundamental faultline in environmentalism.

Let’s begin by looking back at the original Limits to Growth scenarios – scenarios which have been much-misrepresented over the years. For a while it became fashionable to deride them as far-out predictions by ideological doomsayers. But they were never intended as predictions; they are a set of four extrapolations of what might happen, based on historical data and a set of variables. The ‘standard run’ scenario, based on business-as-usual trends, anticipated rising pollution and resource depletion overwhelming civilisation after 2050. A doomsday scenario indeed, but as a 2008 academic paper reviewing Limits to Growth stated, “30 years of historical data compares favourably with key features of… the ‘standard run’ scenario, which results in collapse of the global system midway through the 21st century.” Still, the model suffers from some major flaws, not least how it fails to define ‘resources’ and ‘pollution’ beyond generalities.

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Since then, our understanding of environmental limits has gained in clarity. Johan Rockstrom’s concept of ‘planetary boundaries’ identifies 9 ecological thresholds across which it is dangerous to cross – and of which humanity is already in breach of 3. I’m going to focus on just one of these – global warming – which in 1972 was only a hypothetical threat but has now become one of the most well-defined and alarming.

Global warming: do we need to end growth?

The reasons for alarm are simple. Emissions scenarios to ensure the world stabilises even at 450ppm of CO2e in the atmosphere by 2050 are all extremely challenging. To do so whilst also compensating for population growth of 0.7% annually – and GDP growth of 1.4% annually – will require 7% emissions reductions year-on-year, a tenfold increase on historical rates (1990-2010).

To which the response of some is – forget about GDP growth, at least in the rich nations. This is the argument put forward by Andrew Simms, in nef’s 2010 booklet Growth Isn’t Possible, and most eloquently by Tim Jackson in Prosperity Without Growth. Their positions echo that of the Limits to Growth team – only they do so with considerably more credibility, now that climate change imposes an inescapable logic on the quantities of carbon pollution permissable and the time window in which to ratchet it down.

Yet stripping out all growth in OECD countries only removes part of the problem, as Andrew Pendleton and Matthew Lockwood point out. Even with no more growth in all rich nations – ever again – the rate of necessary decarbonisation is reduced to a still-terrifying 5.6% p/a (ie. an eightfold increase on historical rates). No-one’s advocating zero growth worldwide, because this would mean denying development to a majority of the world’s population – as Jackson says, “Much of the growth that is desperately needed in developing countries is inherently material in nature.” (Indeed, Oxfam has importantly refined the planetary boundaries concept, to include minimum social boundaries guaranteeing “a safe and just space for humanity to thrive in”.) So even if rich-country growth is halted, we’ll still need to massively ramp up energy efficiency and clean energy measures.

Yet the historical precedents for this level of decarbonisation are almost impossible to find. As the Stern Review pointed out, emissions cuts of greater than 1% annually haven’t been seen in the past outside of economic recessions or revolutionary upheavals – leading climatologist Kevin Anderson to call for a “planned recession” to achieve the requisite carbon cuts (not, er, such a popular idea).

Outsourcing the problem

But for advocates of ‘green growth’, there are few paragons of virtue that can be pointed to. Last year, the environmental commentator Chris Goodall caused a stir by suggesting that the UK has reached ‘peak stuff’ – that we have successfully decoupled consumption from material throughput. But we haven’t; Goodall’s statistics are based on a dataset that’s inconclusive, as a government-commissioned review has shown. Nor has the UK reached ‘peak emissions’. Despite the official statistics which record declining domestic greenhouse gas emissions, when measured on a consumption basis, our carbon footprint continues to grow. That’s because we’ve outsourced manufacturing, consume ever-more imports, and demand cheap goods that don’t price in the cost of carbon. Even the Energy and Climate Change Select Committee now accepts the limits this ought to impose, as it stated in a report released last month: “The UK’s consumption cannot rise indefinitely.”

Green growth advocates have some uncomfortable questions to answer. Whilst the UK has seen some relative decoupling of economic activity from emissions, consumption growth has outstripped efficiency savings – a kind of national-level rebound effect. One of the most eloquent proponents of green growth, Michael Jacobs, suggests that we can sustain low GDP growth of 1-2% p/a, providing it’s matched and exceeded by improvements in carbon intensity. But the UK’s average annual growth rate between 1992 and 2007 was 2.68%, and our total emissions increased by 20-30% over that time. So we’ve not achieved it yet.

Advocates of green growth are therefore rather reliant on its theoretical possibility, rather than being able to point to empirical evidence for it. But then, proponents of steady-state economies can’t exactly point to any precedents either, and have to rely on occasional offhand statements by classical economists (such as JS Mill) and one or two efforts at modeling (such as Herman Daly and Peter Victor) on which to base its pedigree.

It would be naïve to blame steady-state economics for not having all the answers yet. After all, those investigating it are sorely under-funded, remain largely ignored by the political establishment, and are up against the serried ranks of orthodox economists – not to say the might of industrial capitalism. But this doesn’t diminish the thorniness of the questions ‘steady-statism’ has yet to answer, and that some of its champions gloss over.

For example, it’s not enough to explain economic growth as simply resulting from a fetish of ‘growthism’ amongst economists, or due to government’s fixation on GDP measures, or even because of excessive advertising. Certainly these all contribute, and some in wastefully damaging ways. Yet growth is also made difficult to escape by constant technological innovation, which results in productivity gains, reducing the need for labour. Few societies have opted to do without innovation. But end growth, and you produce unemployment. It ought to be possible to avoid this outcome by absorbing productivity gains as shorter working weeks. But how far can you take this? If we reduce working hours at the same rate as productivity advances, so as to maintain high employment but avoid growth, we’d be down to a one-day working week by 2050. Sounds idyllic, but how would we make an economy like that work in practice?

It would clearly be much simpler for everyone if green growth could be made to work. But the sheer dearth of evidence for green growth’s possibility makes the searching questions of the steady-statists entirely legitimate, even if their answers leave much to be desired.

A hybrid theory? Cutting back the waste

I’m forced to conclude in a way that I find very unsatisfactory: by sitting on the fence. I’m not convinced that either side – green growthers or steady-statists – has yet won the argument, even after forty years of doing battle. The historical evidence for green growth is threadbare, even nonexistent – though this should give no-one, not even the steady-statists, any cause for pleasure. What’s more, we can’t assume the past will determine the future (in this debate, if it does, we’re stuffed either way). Rather, the two sides ought to take one another far more seriously, and see the merits of a combined programme for transition.

To address our failure to achieve green growth means, on the one hand, investing far more in green technologies and doing everything in our power to decouple emissions from growth. But it also means taking much more seriously the demands of steady-statists for social change, not just technological change. We need to cut final demand for energy, cultivate satiety, find ways to counter the rebound effect and dismantle a culture of excessive consumerism.

Forty years after civilisation started to appreciate the environmental limits to growth, there’s now much greater clarity on the shape of those limits. Whether we can transcend them – or prosper within them – remains the fundamental question of our age. But we don’t have time to reach a final answer before acting. We need to throw everything we can at both greening growth and reining in its most destructively wasteful aspects, before it’s too late.

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