JOIN USDegrowth is the way forward
Circa 2020 was annus horribilis, with the Covid-19 pandemic destroying millions of lives and livelihoods across the world. However, it taught families that they could lead a frugal life and still survive. A life in which families were largely confined to their homes. There was no travel either for leisure or for business, whether by air or train or using one’s own car and spewing carbon emissions; there was no going to malls, no eating out in restaurants.
The result was that economies started to contract and report negative GDP this fiscal. There was a frenzied debate in India about GDP contracting by a huge 24% during the first quarter of 2020-21. The improved performance in the second quarter prompted rating agency India Ratings to project a 7.8% contraction for the economy for 2020-21, compared to 11.8% “degrowth” estimated earlier. The question is whether the contraction in GDP can be equated with degrowth.
Degrowth has often been confused with recession but the two are not the same. Degrowth refers to an economic situation in which GDP neither increases nor decreases and the economy is in a steady state. While degrowth is a voluntary process, recession is not.
There has been an increasing awareness, in fact a movement, among academicians and researchers that countries, mainly in Europe and the US, have been plundering and exploiting the limited natural resources for far too long and causing irreversible damage to the ecosystem. The advocates of degrowth feel that growth measured by GDP cannot go on forever and urgent measures are necessary to save economies from a complete collapse when these non-renewable resources are depleted.
Degrowth is based on the principle of awareness of a finite world with limited resources. The idea or philosophy of degrowth can be traced to the French word la décroissance. It refers to a river going back to its normal flow after a flood.
The origin of degrowth itself can be traced to 1972 when the Club of Rome, a think tank based in Switzerland, published a report titled “Limits to Growth,” which highlighted the consequences of growth and advocated zero growth. Degrowth, however, became prominent only after the first international degrowth conference in Paris in 2008, which focused on the ills of capitalism and explained the main principles of degrowth. Since then, conferences on degrowth are held every two years, urging countries to gradually reduce production and consumption and move to a sustainable economy.
However, there are disparities in growth of economies of developed and developing countries. The philosophy of degrowth demands that developed countries, which have enjoyed long periods of growth and prosperity, need to consume less, consume responsibly, waste less and have to make sacrifices while giving up profit maximisation in the name of consumerism. It also calls for balance between the rich and poor countries in living standards and a readjustment of disparities. The poor nations need time to develop their economies and allow the poorest billions to attain a dignified level of existence to be on par with people in developed countries. The developing countries therefore must be allowed to grow and enjoy the benefits of sustained development, with more focus on healthcare, education, infrastructure and renewable energy.
Take the case of India -- where Mahatma Gandhi spoke of Sarvodaya (progress of all) way back in 1908. There has been a major thrust on developing infrastructure and on renewable energy.
Efforts are being made to reduce dependence on non-renewable sources of energy like oil and move towards electric vehicles to reduce pollution and carbon emissions.
The opposition to degrowth is mainly because it has a negative connotation. People recoil when they hear the word, just as they react to the term ‘recession’. Degrowth does not mean giving up all material pleasures and going back to the Stone Age. The proponents of degrowth question the wisdom of the existing economic model and advocate discarding or redefining the model which focusses on consumerism.
American sociologist and economist Juliet Schor, argues in her book titled Plenitude: The economics of true wealth, as to “how do we create a society that provides prosperity to us all without relying on continued economic expansion?” While making an argument against the business-as-usual approach to the economy, she wants consumption to be made less important as a metric of success — while still having gadgets to lead a comfortable life.
She further states that there is a strategy for living that gives people more time, more creativity, and more social connection, while also lowering ecological footprint and avoiding consumer debt. It may lead to a highly satisfying life, without necessarily a high-spending lifestyle.
It is time nations realised that an increase in GDP is not development. GDP does not measure the welfare or the happiness of people.
There is a crying need to use indicators like the Human Development Index (HDI), which focuses on education, health and quality of life. Policymakers across the world must realise that growth without responsibility is dangerous -- that we have overshot and are using more than 100% of the bio-capacity of the earth. Degrowth is not a choice. It is now a compulsion.
(The writer is a former banker and currently teaches at Manipal Academy of Banking, Bengaluru)