Do economies need to rethink their growth and profit parameters?
The mainstream issues always circle back to our economies. “Are they growing? How is inflation? Is the Gross Domestic Product bigger enough to boast about? Is cryptocurrency problematic? Will India be truly a USD 5 Trillion economy?” These are great questions! Sadly, we are at the threshold of a climate crisis, and growth might have to go out of fashion!
(Also Read: Cryptocurrency has a carbon problem)
Economic growth is defined as the increase in the production of economic goods and services over the years. Popularly, economic growth is mapped out by measuring the change in Gross Domestic Product (GDP). The global economic pie has grown 13-fold since 1950, and so far, it has been an unequal pie party on the globe. We have not provided everyone with years of economic growth and forward-looking policies. "The World Inequality Report highlights that the wealthiest 10% of the global population currently takes home 52% of the income". The poorest half of the global population earns just 8%. On top of that, humanity has abundantly overshot at least four out of nine ecological ceilings.
Over the years, GDP growth has entrapped our social, economic and political systems. The sole goal of the economy was set to grow, with no breaks. The economic theories portrayed that inequality will cease to exist at some point, and a clean environment will be accessible.
For decades the politicians have given the same empty promises. Moreover, trickle-down economics soon grabbed the policy sphere, fuelling the need for more growth which can then be trickled down to everyone else. E.F Schumacher, in 'Small is Beautiful: Economics as if People Mattered' points out that "Infinite growth of material consumption in a finite world is an impossibility." Donella Meadows does not hold back in the 'Limits to Growth report'. She insists that growth is the 'stupidest' purpose ever created by any culture.
Circling back to economies, let us ask questions. Who pays the cost of growth? How long can the growth last? How much growth is enough for humanity to thrive? What is the cost of growth to the planet? The 21st-century world has to turn around its economic priorities. Degrowth, on the other hand, has gained rational economic backing. It has been defined as ‘an equitable downscaling of production and consumption that increases human well-being and enhances ecological conditions.’
(Also Read: Who Should Bear Responsibility for Climate Change?)
Digging Deeper in Degrowth
Degrowth was first coined in 1972 when André Gorz examined the relationship between capitalism and growth. Over time, degrowth has translated into a social, political and environmental movement. It originates from the critique of extractive development by the Global South and critiques of consumer society in northern countries.
Degrowth emphasises on the earth’s ecological boundaries and is coupled with an ecosocialist approach. Ecosocialism focuses on the common ownership of means of production and restoring the commons.
It has a democratic origin that re-legitimises public participation, open debate and power-sharing between communities.
Degrowth is moulded by five principle thoughts: ecological, bio-economical, anthropological, democratic and spiritual.
It is argued that degrowth could lead to a decline in human well-being.
The Case For Degrowth in India
After months of pandemic-induced economic slowdown, Chief Economic Adviser V Anantha Nageswaran has expressed that India will become a USD 5 trillion economy by Financial Year 2026. The Indian economy is estimated to grow at 9.2% during the current fiscal. It seems daft to expect India to pursue degrowth amidst a rise in poverty and unemployment. It is also argued that overdeveloped nations must have a first go at degrowth. This will significantly reduce their strain on global resources. Nevertheless, developing and underdeveloped nations must not be left out with their expectations of infinite growth. India is no different.
Need for degrowth
Insufficient Climate Action: India’s climate action is highly insufficient, as per Climate Action Tracker (2021). India’s current climate policies and actions are not yet consistent with the Paris Agreement’s 1.5°C temperature limit but could be with moderate improvements. A degrowth and ecosocialist policymaking can fill the existing cracks within the economic system, redirecting progress in climate action.
Unsustainable Growth Patterns: Although the Indian economy grew at a robust 10% annually (second only to China) for a decade before the global financial crisis, this sustained high growth rate failed to lift everyone. The social and environmental cost of this growth has been colossal. The Centre for Science and Environment states that India’s air, water and land have become more polluted between 2009 and 2018. India’s growth trajectory is accompanied by declining ecological, financial and social indicators.
Wealth Inequality: The covid-19 pandemic has supplemented the increasing inequality in India. According to Oxfam India, the number of Indian billionaires grew from 102 in 2020 to 142 in 2021, the worst year yet for India during the pandemic. The share of the bottom 50% of the population in national wealth was a mere 6% in the same year. Degrowth moves beyond income redistribution. It sets out to redistribute wealth that has been accumulated.
Already in practice: Indigenous populations globally practise a lifestyle consistent with the theory of degrowth. Tribal and Adivasi movements in India have fought long to preserve forests, biodiversity and ecosystems without pursuing the promised destructive development
(Also Read: Tribal Communities: The Final Frontier by Nirva Shah)
Barriers
Ambiguity: Degrowth is confused with the idea of recession. A recession is when economic growth and activity decline for months or years. On the other hand, degrowth is a voluntary and systemic approach to downsizing the economy to be in a steady state while ensuring everyone’s needs and rights are met. This ambiguity stops discourse and action.
Growth Addiction: Addictions have never proven to be fruitful. The dominance of growth-based economics has taken on a ‘structural’ quality in current societies. This makes a just transition to a degrowth era challenging. The inability to bend the political will of global leaders obstructs the chance of exploring alternative economic systems.
Conclusion
Several countries have adopted alternative economic approaches to maintain the ecological balance. A post-growth approach has to be adopted to some extent. India has a shaky social foundation with disheartening ecological indices. Taking a new approach which our culture embrace might lead to a nation where people thrive and not just grow. With the Intergovernmental Panel on Climate Change ringing all red alarms, alternative yet indigenous approaches might facilitate keeping global warming less than 1.50 C. In the end, we are asking you, governments and corporations to rethink everything. Degrowth might not be the superhero in a cape saving the world, but it is yet another chance at a habitable planet.
(Also Read: Rethink your plastic packaging)
References
Kate Raworth. (2020, September 30). Doughnut | Kate Raworth. Kate Raworth | Exploring Doughnut Economics
Gerber, Julien-François; Raina, Rajeswari S. (2018). Post-Growth in the Global South? Some Reflections from India and Bhutan. Ecological Economics, (), S0921800916315567–.
Büchs, Milena; Koch, Max (2018). Challenges for the degrowth transition: The debate about wellbeing. Futures, (), S0016328718300715–.
Oxfam India. (2022, January). Inequality kills.
Schumacher, E. F. (1989). Small Is Beautiful: Economics as if People Mattered 2nd (second) Edition by Schumacher, E. F. (1989) (Later prt. ed.). HarperPerennial.
Duverger, T. (2020). Degrowth: the history of an idea. Encyclopédie d’histoire Numérique de l’Europe.
Meadows, D., Randers, J., & Meadows, D. (2004). Limits to Growth: The 30-Year Update.
Roser, M. (2013, November 24). Economic Growth. Our World in Data.
The Economic Times. (2022, February 1). India on course to become USD 5 trillion economy by FY26: CEA.
World Inequality Report 2022. (2022, February 13). The World InequalityReport 2022 presents the most up-to-date & complete data on inequality worldwide:
Alexander, S. (2014). Degrowth and The Carbon Budget: Powerdown strategies for Climate Stability.
Kovel, J., & Löwy, M. (2001, September). Green Left - a socialist current in the green party. Green Left.