In 1992, the year of the first United Nations Conference on Environment and Development in Rio de Janeiro, the Union of Concerned Scientists warned that a “great change in our stewardship of the earth and the life on it is required, if vast human misery is to be avoided and our global home on this planet is not to be irretrievably mutilated.” A year later, the World Business Council on Sustainable Development reported that “industrialized world reductions in material throughput, energy use, and environmental degradation of over 90% will be required by 2040 to meet the needs of a growing world population fairly within the planet’s ecological means.”
This is the ecological and geopolitical context for Peter Victor’s outside-the-box exploration of the ways rich countries might learn to manage without growth. Its publication is timely, to say the least. Recent climate-change studies suggest that to stabilize greenhouse gas emissions, even at a catastrophic 650 parts per million CO2 equivalents (ppmv), will require draconian reductions of emissions in excess of 6% per year for highly developed countries. A level of 650 ppmv has a 50% probability of increasing mean global temperature by at least 4° C, enough to turn much of the U.S., China, India, Africa, and South America, home to billions, into uninhabitable wastelands. Unless we can reconcile economic growth with dramatic rates of carbon reduction, this effort will require a planned economic recession.
Managing Without Growth proceeds cautiously, aware of how difficult a sell “no growth” is in a time of unexpected and unprecedented economic challenges. Victor begins by dissecting our idea of economic growth. As a deliberate government policy, Victor argues, growth is a relatively new idea. This might explain why we’re so bad at measuring it. The current pricing system is severely limited in recording ecological and social stress caused by an open economy operating in a closed ecosphere.
Victor quickly debunks the notion that technology can decouple the economy from nature. Gains in technological efficiency have so far failed to alleviate environmental stress. Lower rates of economic growth have produced much greater reductions in energy intensity and CO2 emissions. Neither has growth proven an effective tool for eliminating unemployment or reducing poverty. Beyond a certain point, increases in GDP have little discernable impact on levels of health and happiness. “Growth should be concentrated where it can do the most good … to raise the living standards of the poorest people on the planet, most of whom live in developing countries,” argues Victor. But can the rich West manage a slower rate of growth—or a wholly different system for measuring “progress”—to alleviate poverty in the developing world?
Victor probes this question using LowGrow, a fairly standard economic model that assesses the performance of a hypothetical economy in its response to manipulations of variables such as investment, carbon taxation, trade, government expenditure, productivity, and length of workweek. He shows that it is, indeed, possible to develop scenarios in which full employment, elimination of poverty, more leisure time, and lower greenhouse-gas emissions are compatible with much-reduced growth. All things considered, rapid growth is neither sufficient nor necessary to meet the policy objectives usually claimed for growth economics.
This is a truly novel contribution—no other growth critic has tackled the growth conundrum using a formal model of the economy. It may seem a little churlish, then, to suggest that Victor has actually not been bold enough in challenging convention. His favored low-growth scenarios still produce an increase in real per capita GDP over 30 years in the range of 48 to 69%. If the world is ecologically full—there are still two billion people living in poverty (and we expect two billion more by midcentury)—how can we justify any growth at all in rich countries like Canada? Where are the scenarios showing how well we could manage with a planned scaling down of the economy, rather than crippling recession?
There are also structural questions surrounding the LowGrow model, which calculates GDP in terms of employed labor and employed capital only. This is a standard simplification of mainstream models, but it seems odd in a book based on the premise that the economy is embedded in the ecosphere.
With these reservations aside, Victor’s straightforward, stepwise analysis and simulation models constitute a great leap forward in the limits to growth debate. Perhaps he thought it enough at this stage simply to show other economists, on their own terms, that sensitive application of investment, trade, and taxation policy may be able to produce full employment, maintain fiscal balance, eliminate poverty, and reduce pollution . . . all without rapid growth. However, the message of Managing Without Growth transcends economics. Everyone alive will be affected by how the growth debate—and growth itself—plays out in the real world. Anyone who wants to participate intelligently in what promises to be one of the major political issues of the 21st century should read this book.