How To Do Degrowth
In four easy steps.
She’s reading how to transition to a post-growth economy.
Photo by Nhel ian Jayme on Unsplash
I started this blog over two years ago because I thought more people need to know about degrowth - an intentional downsizing of production and consumption to eventually get humanity to a wellbeing economy within planetary boundaries.
I’ve been heartened to see more conversation around ecological economics and degrowth in that time. Case in point, the recent blog by Research and Degrowth International - here on Substack.
Don’t read this blog … read this one:
Towards a degrowth policy sequence addresses the question of just how do you move from where we are now to a post-growth economy. If you do things all at once, the shock to the system would be to much and the effort would likely fail. If you move too incrementally, it will be 100 years before we get to a proper post-growth economy, and much damage will have been done. So what is the “just right” approach.
I will be brief here and implore you to read the above blog by Emmanueal Damdeis.
The blog is a summary of an academic working-paper titled; Towards a post-growth green macro-financial regime? Implications for the Global South of imperfect technologies and sufficiency policies in the Global North. (May I politely suggest a more succinct title for the final paper?)
The authors are Emmanuel Bamdeis and Elena Hofferberth.
For those so inclined, please read the academic paper for more detail.
The blog summary
Bamdeis starts out stating that limited progress has been made in defining clear degrowth policy priorities and articulating them in a structured and dynamic manner that appears feasible from a material and technical as well as technocratic and democratic perspective.
The author concedes that to establish a post-growth economy we need to create institutions, especially macro-financial institutions and policy arrangements, whose stability and viability does not depend on continued growth.
Growth-dependent economies (the authors use the more specific term “Macro-financial regimes”) cannot sufficiently discipline private capital and support degrowth policies required in the Global North, because their stability and viability depend on continued growth.
The paper discusses the following policy sequence to move from an economy with a growth imperative to one without.
Financial markets - This would involve governments taking back the task of money creation - which currently is left to banks, with no guidance from the public sector. Governments should expand their fiscal spending and redistributive power to ecological and social purposes.
Labour markets - A phase out of fossil fuels and the growth it engenders, will leave the most vulnerable in society in a situation in which their jobs and the ability to get buy in society may be in jeopardy. The second phase of the plan then, should include policies such as a universal basic income, a jobs guarantee, a public services guarantee and other policies that take the sting out of an economy moving to a post-growth paradigm.
Energy markets - Only after such a “just transition” is in place can economies begin to more aggressively phase out fossil fuels. Doing so before the policies of a just transition are in place will leave too many in society vulnerable.
Intervention in other markets – A decline in production and consumption, no matter how orderly will require intervening in some markets. For example, price controls and rationing schemes to avoid profiteering and hoarding may be needed during the transition period.
I just paint a brief picture of the entire plan here, just to give you a taste of the great work my Bamdeis and Hofferberth. I encourage you to read the whole paper if you can, and to share it with others you know are degrowth curious. Papers like these that talk about the steps needed to transition to a post-growth economy should be more common in the coming months and years. The more people that know how this works, the quicker we can get there.
Please pass this paper around to help make that happen.
It may be the answer, but it is not what the ruling class has chosen for us. Plan accordingly, or become a statistic.
Rather than talk about "financial markets”, imagine a conversation about financial technologies, where fintech references the mathematics used by financiers as transformers of savings by individuals into capital for business to calculate the cost of money charged to business for the use of savings aggregated from others as capital in their business, as the capacity to pay cost-for-value for transformation into value-for-price.
From these cost calculations we get the qualifications of business for capital ( = demonstrated ability to pay the cost); the time and timing of when the savings becomes available for use as capital, and for how long; and the terms that must be honored in how the business does business, in order to keep those savings in the business, for use as capital, as originally agreed.
Through this trifecta of qualifications, timing and terms, Finance curates the businesses that curate the technologies that curate the choices that curate the economy that curates society that curates the future as our true frontier.
Fintech determines those rubrics of curation.
The markets are one fintech, that uses the mathematics of Exit by Extraction, as gain on sale, for securities bought at market clearing prices, for sale, at market clearing prices, to extract profits for volatility and growth in market clearing prices for those securities in markets for maintaining volatility and growth in those prices.
That fintech, of Exit by Extraction of profit from selling price, curates an economy according to the rubric of Growth.
The purpose of a system is to do what it does.
What the market system does is finance Growth. That is its purpose.
If we want an economy financed for something other than Growth, we need a fintech system that qualifies businesses for something other than Growth.
One existing fintech system that has the capacity to qualify businesses for something other than Growth is pensions.
But pensions need a technology upgrade before they can exercise that capacity.