Managing Without Growth?

Imagine, for a moment, a society that had no economic growth.

Now, imagine that this society also had full employment, little poverty, low levels of greenhouse gas emissions, and a fiscally balanced government budget.

To many, this might sound like simply the dream of an idealist. However, to Professor Peter A. Victor, it is anything but.

In his recently published book Managing Without Growth: Slower by Design, Not Disaster, Victor argues that these achievements are indeed not only possible, but are in fact necessary if industrialized countries are to avert ecological disaster and improve the wellbeing of their citizens.

Last month, I reviewed Victor’s book for our summer issue of the Catalyst. A week ago, I had an opportunity to attend a talk he gave at Ottawa’s City Hall on his theories regarding how our economy can be managed without growth.

In his lecture, Victor presented a strong argument as to why economic growth should no longer be a primary focus of industrialized countries.

Growth is not possible in the long term. The scale of manufacturing, production and consumption in wealthy countries is now far outpacing the ability of our natural environment to renew itself and in many cases is threatens to destroy it.

Growth also doesn’t make us happier. Studies have shown that, for the average person, happiness rises with income levels to the point at which basic needs are met. Above this level, income inequality in society has a much greater impact on happiness than real income.

Victor also argued that growth is “oversold” by governments and economists as a solution to social and economic problems. He pointed out that, while GDP has grown substantially in Canada since the Second World War, poverty and unemployment still exist and income inequality has in fact risen significantly.

Through the use of macroeconomic models, Victor demonstrated how careful government management of the economy could reduce growth. He also outlines how government policies that reflect a more holistic understanding of human and environmental well-being could virtually eliminate poverty and unemployment.

However, this would mean significant changes in our society, including limits on material consumption, a reduction in the work week, and pricing that reflects the true value of goods and services.

While his talk didn’t provide many answers as to how these changes could be made, I found both his book and presentation quite thought-provoking. At a time when many economists are advocating for increased consumption as a solution to the current recession, I found the idea of managing without growth offered a refreshing and hopeful alternative for our society.