Think Economic Growth Is the Be-All? Think Again

Economists also support more growth because they think that technology will in future somehow “decouple” economic growth from resource and energy use, becoming cleaner, and perhaps even helping the environment, rather than despoiling it. But this is only a hope, and empirical data doesn’t support it.

Over time, advances in technology mean that we do use fewer resources per unit of economic growth, but this is only relative decoupling, not absolute decoupling. So far, more growth always leads to more resource consumption, and more pressure on the environment, not less. There’s no clear reason to expect this to change.

Clarity on these matters won’t come from old-style economic models with their narrow focus on maximizing consumption. Fortunately, some researchers are trying to imagine how economies might work differently.  Over the past decade or so, they’ve developed more than 20 economic models that adapt standard macroeconomic models to include social and environmental factors. These models include employment, inflation and interest rates, but also interactions between economic activity and the natural environment.

This research isn’t aiming for some socialist utopia, it is just trying to realistically explore how policies might enable economies to support human needs – supplying innovation, high-quality goods and meaningful employment – while also avoiding excessive demands on the environment, or creating other social dysfunction such as extreme wealth inequality.

For example, one study compared estimates of likely consequences of high-grow, low-growth, and no growth policies for the Canadian economy over the next 20 years or so, including different possible scenarios for green technologies. The high-growth policies increased GDP by 80 percent, but also led to rising unemployment and emissions. Zero growth policies weren’t good either – except in reducing greenhouse emissions – and led to exploding unemployment and poverty. But a scenario of policies aiming for low growth in the short run, slowing to a no-growth economy in 15 years, reduced greenhouse emissions, poverty and unemployment together in a more balanced way.

One interesting theme that emerges from this work — which might surprise Britain’s Labour Party — is that future economists may need to de-emphasize productivity growth, which tends to occur most in areas where technology can replace labor. Many economists now see artificial intelligence and other technology as the great hope to restore productivity growth, and with it, economic growth. An alternative, the new research suggests, is to keep people employed, but to shift the focus to economic activity supplying human and social services ranging from entertainment and education to the care of children and the elderly. British economist Tim Jackson argues that there’s vast potential for a green services sector to achieve both high employment and meet carbon reduction targets without relying on fast economic growth.

Most economists dismiss this kind of work without much thought. And of course the models deserve critique and refinement. But the research rests on the sensible view that human societies depend on the broader biosphere. From a long-term perspective, a “post-growth” era may be inevitable, and human activity that helps to preserve and enhance that biosphere could be the most valuable of all. Mainstream economists may be mistaken that growth, powered by productivity gains, is absolutely necessary. There may be many other ways forward, and we might find them if we spent more resources and energy looking.

Mark Buchanan, a physicist and science writer, is the author of the book “Forecast: What Physics, Meteorology and the Natural Sciences Can Teach Us About Economics.”