At the intersection of a sinking economy and a new administration in the White House, there is no shortage of ideas on what the new president should do to rescue our butts from the abyss. Seems like all the pundits are formulating their “Letter to the New President” with their strategies on how we should proceed forward. But could the cure for our ills be no economic growth? To many this seems counter-intuitive, but this is the premise of Peter Victor’s new book “Managing without Growth – Slower by Design, not Disaster” (Edward Elgar Publishing, 2008). Victor, an economist on the faculty of Environmental Studies at York University in Toronto, believes the big problem we should be addressing is the Earth’s biophysical limits. Can our environment sustain continuing economic growth, thus far the basis for all Western economies, and for many the fix for our current crisis? Victor offers this opinion, “If the financial system breaks down, we’ll suffer for a while, but we’ll get through it. If we succeed in destabilizing the climate, we may not be able to get through it.”
In the book, Victor challenges the long-standing premise that constant economic growth must be the center piece of economic policy and is synonymous with progress. He also believes the concept of “sustainable development” that came from the 1987 Brundtland report (which popularized the notion of sustainability) has become mostly diluted and meaningless because it was never fully defined. The ensuing commitment from several governments to sustainable development has become “more of the same rather than a radical departure from economic growth as the top policy objective,” which is the departure Victor is advocating.
He presents three arguments on why we should pursue other objectives more focused on personal well-being and resource preservation. First, all the data shows continued growth is unsustainable based on current environmental and resource constraints. And as the developed countries continue to burn through these resources, there is less available to developing countries. Secondly, Victor believes that wealth improves happiness and feelings of well-being only up to a point, a point Western countries have long surpassed. In other words, acquiring more wealth has not made us more happy. Lastly, he believes the promise of economic growth has never materialized: that is, full employment and the elimination of poverty.
Victor began his book as academic inquiry to answer the questions: What would happen if we slowed the growth rate to zero over the next 25 years? Would poverty increase? Would employment decrease? Would greenhouse gas emissions fall? Would governments be able to finance their operations? His analysis is focused on the Canadian economy but the assumptions he tests and conclusions he draws can be applied to any Western economy. He concludes that a number of factors ranging from population growth to tax policy would need to be addressed and “People would have to live differently – work less, buy less and pollute less. Values would have to change. The economy would have to fit within the biosphere.”
Does he really believe we can change? “It’s hard to say which way it will go,” Victor said in a recent interview. “People are willing to consider new possibilities. The danger is that they’ll focus exclusively on the financial crisis and ignore the deeper crisis.” He expects many readers will have trouble accepting life without economic growth. It’s contrary to everything classical economic theory teaches us and he describes it as “a fundamental value of contemporary society.” But he asks readers to consider the possibilities. “If I can at least get them to open their eyes to alternatives, I’ll think I’ve accomplished something.” “The really exciting part comes later when enough us in the rich countries are convinced that it’s the best if not the only way to go. Then we shall have some real work to do.”
PS. For those of you who love charts, graphs, and equations, the book offers plenty of econometric tools. You can also go to the book’s website and download four of his simulation models to test your own scenarios.