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Goodbye “Shop Til You Drop” Mentality: Renegade Band of Economists Call for “Degrowth” Economy

In this country, shopping is not just a national pastime. Consumer spending, which makes up about 70 percent of the economy, is a sort of patriotic duty — never more so than in the last four years of economic malaise. So news from the National Retail Federation that the country is on track for a record-breakingholiday shopping season — $469.1 billion in sales, up 3.8 percent from last year — could only be a good thing, right? But what if all roads to prosperity don't lead to the shopping mall, as most economists would have us believe? What if, in fact, all that shopping — and the imperative to grow corporate profits quarter after quarter and continuously expand the economy — was actually the root of many of the problems we face today?

In this country, shopping is not just a national pastime. Consumer spending, which makes up about 70 percent of the economy, is a sort of patriotic duty — never more so than in the last four years of economic malaise.

So news from the National Retail Federation that the country is on track for a record-breakingholiday shopping season — $469.1 billion in sales, up 3.8 percent from last year — could only be a good thing, right?

But what if all roads to prosperity don't lead to the shopping mall, as most economists would have us believe? What if, in fact, all that shopping — and the imperative to grow corporate profits quarter after quarter and continuously expand the economy — was actually the root of many of the problems we face today?

That's the view of a renegade but increasingly influential band of economists, who say the myth of perpetual economic growth and “the iron cage of consumerism” are the chief causes of world economic dysfunction and environmental crisis — and the biggest obstacle to our very happiness.

“Overwhelmingly, growth is seen as the solution to all problems, but growth is failing,” says Herman Daly, a former World Bank economist who is also known as the father of “ecological economics,” an offshoot of the same field that spawned Adam Smith three centuries ago but challenges many of the assumptions that classical economists hold dear.

While the term may seem like an oxymoron to some, ecological economics places the economy inside the larger “ecosphere” that supports all life on Earth, rather than seeing the economy and job creation in direct opposition to environmental protection. That's an idea that has gained ground in recent years as businesses have become increasingly compromised by water and raw material scarcity, extreme weather, crop failures and other problems linked to global warming and environmental degradation.

The problem, says Daly, is that the economy, once an inconsequentially small part of the natural world, has become so supersized that — sort of like an ingrown toenail or an evasive Japanese knotweed bush — it's now growing into the remaining ecosphere and jeopardizing our ecological life supports: things like drinkable water, fresh air and a stable climate.

Those ideas can be found influencing, among other things, the slow money movement, D.I.Y. culture, modern barter systems, car sharing, and corporate sustainability rhetoric. They are also reflected in the views of ecologists such as Lester Brown and Jeremy Rifkin, the author, pundit and adviser to the European Union, as well as entrepreneurs such as Yvon Chouinard, founder of Patagonia, which ran an advertisement this holiday season urging consumers not to buy the pictured jacket and to think twice about making any purchases they don't really need. Even Unilever, the consumer goods conglomerate, has embarked on a corporate social responsibility campaign pledging to “decouple” its growth from its ecological footprint.

Daly's work and the related “degrowth” movement have inspired books, academic conferences and documentaries. Even as such ideas struggle to gain purchase with the world's leading economists, they are blurring the lines between the economic and the environmental and acquiring new political dimensions, as well.

“You can see it in the Occupy Wall Street movement; People are finally starting to say, what has growth done for us? It's simply increased the inequality in the country,” Daly says.

While some may see growing income disparity as a political issue and global warming as an environmental problem, Daly sees them both in economic terms.
“What does the economy do when it runs into limits?”

One of Daly's more prominent disciples, U.K. economist Tim Jackson, tends to agree in his report to the British government, later published in book form, titled:Prosperity Without Growth. Even the 2008 world financial meltdown can't be blamed simply on “isolated malpractice or simple failures of vigilance,” Jackson writes, but that the market “was undone by growth itself.” He goes on to suggest, “There is something odd about the modern refusal to countenance anything but growth at all costs.”

And world economic growth has been nothing short of astonishing in recent decades. Jackson notes that the global economy has doubled in size in the last quarter century, at the same time “an estimated 60 percent of the world's ecosystems have been degraded.”

Signs of Crisis

Daly's steady state economy, which he first wrote about in the 1970s, isn't alone in calling attention to problems created by unchecked economic growth. Other works that waved red flags include Rachel Carson's 1962 classic, Silent Spring, widely credited with launching the U.S. environmental movement; and Limits to Growth, the Club of Rome-commissioned study by a group of MIT economists, which caused public consternation when it first appeared four decades ago.

Since then, evidence has continued to mount that humanity may be reaching the end of the road built by our Western industrial model with its assumptions that natural resources, and nature itself, are super-abundant. A few of the problems that have garnered headlines include the following:

  • Critical minerals are on the decline.
  • Experts worry that declining “energy quality” threatens growth, as the world's dwindling fossil fuel stores require more effort to extract.
  • Many countries including the world's biggest grain producers — the U.S., India and China — are depleting their aquifers to keep bringing in the harvests.
  • Carbon emissions are reaching a dangerous level.
  • 2011 broke the record for extreme weather with 12 events costing $1 billion or more to clean up.
  • Plant and animal species are going extinct at unprecedented rates.
  • World population is growing and so is hunger.
  • We have already exceeded some important planetary boundaries.

“One reason growth doesn't work is we've underestimated the ecological cost of growth, and overestimated the benefits of growth,” Daly says.

New Approaches

Most people probably conjure up Federal Reserve Chairman Ben Bernanke or pundits like Mark Zandi, when thinking “economist.” Daly started out similarly. He earned a PhD in economics at Vanderbilt University in the late 1960s, before setting off for Brazil, where he had landed a job in the northeast of the country preparing graduate students to follow his footsteps at U.S. universities. He says it was there that the environmental degradation he observed first made him challenge assumptions about resource abundance and capital scarcity that underpin classical economics.

In the 1970s, Daly published books on the steady state economy, which laid out an alternative path for humanity that would substitute year-on-year growth with a system geared toward keeping the economy within the ecological boundaries of the planet.

The books were received “violently,” Daly, 73, quips today. But he thrived professionally, rising to the post of senior environmental economist at the World Bank until 1994, when he decamped for a teaching post at the University of Maryland and taught for several years before retiring. At the Bank, he was “a lonely voice of dissent in an organization that frowns on unbelievers,” according to a 2003 profile in Grist that compared economics to a religion and Daly to an “arch-heretic, a member of the high priesthood turned renegade.”

Ecological economics got off the ground formally in the early 1980s, with an international professional society and an academic journal of the same name that Daly cofounded with Robert Costanza, director of the Institute for Sustainable Solutions at Portland State University.

Today, U.S., European and Australian societies have also emerged as forums for a wide range of ideas about how best to strike an ecology-economy balance. There's plenty of disagreement within the field about how best to go about getting off the growth trendmill. Daly's steady state economy, which envisions practically no more growth, is perhaps the purist and most cold-turkey approach.

Some ecological economists such as William Rees and Costanza have done groundbreaking work helping to visualize the scope of the environmental-economic conundrum. Rees came up with the concept of the ecological footprint. Costanza was the lead author of a groundbreaking 1997 paper published in the journal,Nature, titled “The Value of the World's Ecosystem Services and Natural Capital.” It tallied up the value of the planet's ecosystems in dollar terms — between $16 trillion and $54 trillion a year.

Others like the UK's Tim Jackson, Canadian Peter Victor and Australian Philip Lawn, a professor at Flinders University, Australia, focus on taking the ideas pioneered by Daly and putting them into practical use — thinking through, for instance, how to “de-grow” the economy, essentially sending it into a planned recession, without throwing large numbers of people out of work.

Daly says he's disappointed that more of the country's leading economists have not embraced his ideas but some experiments in low-growth living are underway around the world.

In South London, the mixed-income BedZED development, and the Findhorn Ecovillage in Moray, Scotland are two developments that slash the carbon emissions of residents nearly in half compared to the U.K. average. They are part of a growing “ecovillage” movement, though critics suggest the promised emissions reductions are sometimes less dramatic than advertised. In the U.S., commercial builders are starting to construct “net zero” homes aimed at middle-class buyers, such as the new neighborhood going up in Fredrick, Md.'s historic downtown that uses a combination of insulation, geothermal heating and solar panels to generate all the energy needed to run the homes.

On the city-scale, more than 1,000 U.S. cities have pledged to reduce their carbon emissions as part of U.S. Conference of Mayors' Climate Protection Agreement, and other cities around the world have taken even more aggressive measures. Malmö, Sweden, for instance, has pledged to be climate-neutral by 2020 and run the entire municipality on renewable energy by 2030.

On a national scale, Daly says only the country of Bhutan has embraced larger changes with the substitution of its Gross National Happiness index in the place of the standard Gross National Product measurement.

New ideas and shifting demographics, however, suggest the mantra of perpetual growth may not be forever after all. The International Energy Agency has released a report showing that it's possible to provide clean renewable electricity to the 1.3 billion people in the world living without it, with only “a negligible impact on energy security and climate change.”

Even Lester Brown, whose thought-provoking work has earned him a reputation as a Cassandra, is upbeat about a wind-powered new economy. He's predicting a 20 percent decline in U.S. carbon emissions by 2020 from the 2007 level. In the last four years, the country's emissions have already fallen by 7 percent, a decline started by the economic recession but accelerating thanks to the phase-in of new lightbulbs and a major shift in the country away from the automobile as baby boomers retire and drive less and young people drive less.

“Young people today are not part of a car culture as my generation was. They socialize with smart phones and over the Internet,” Brown says.

Money + Happiness

Another reason to believe degrowing the economy, while not painless, may make us happier in the long run is a growing body of research comparing health and wellbeing across national borders and economic classes. As a billion poor people around the world already know and many Americans have found out as unemployment has spiked in this country in the last four years, money enough to ensure a roof over one's head, a full belly and other basic needs is very important to well-being. Beyond a certain subsistence level, however, some provocative research suggests money won't buy you love.

In their 2009 book, The Spirit Level: Why More Equal Societies Almost Always Do Better, epidemiologists Richard G. Wilkinson and Kate Pickett argue that a society's overall happiness is linked to income equality. Not only do they argue that equality — not more income or more consumption — make us healthier and more contented, their research shows that less equal societies like the United States have higher rates of anxiety and illness, violence, teenage pregnancies, obesity, drug abuse and eroding public trust. And they tend to consume excessively, among other negative effects.

“Wilkinson's and Pickett's work is unsettling to a lot of people since it basically says 'we the rich are wrecking the planet for no further gain.' In fact, many rich countries are going backwards,” says William Rees, the Canadian economist who pioneered the concept of the ecological footprint.

Public Awakening

The latest report from the Yale Project on Climate Change Communication, released December 7, shows that climate denial is on the decline again in the United States, perhaps propelled by this year's extreme weather.

While the percentage of people who understand global warming is happening has remained essentially unchanged since last May, at 63 percent, belief that human activity is fueling the warming edged up 3 points to 50 percent of those polled. Perhaps even more significantly, “A majority of Americans (57%) now disagree with the statement, 'With the economy in such bad shape, the US can't afford to reduce global warming' — an 8 point increase in disagreement since May 2011.”

Researchers say they were surprised that nearly 4 in 10 people surveyed said they had experienced the effects of global warming firsthand, perhaps signaling a shift toward viewing climate change as a current problem, not one looming off in a vague and distant future. And more than half saw a connection between global warming and growing poverty and said they are worried about running out of natural resources.

A similarly serious public mood was captured in last week's forecast of holiday season sales put out by the National Retailers Federation.

“They're still more cautious than in the past,” Ellen Davis, an NRF vice president, told Bloomberg. While the story attributed the concern to continuing uncertainty over the economy and the political landscape in Washington, perhaps the country's continuing austere attitude isn't such a bad thing, though most observers don't expect it to last.

Daly says he's not optimistic about the direction of the country, despite the growing interest in degrowing the economy and moving toward greener growth. “Green growth is better than brown growth,” he says, “but the key problem is that you are going to have continued growth in a finite and entropic world.”

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