Nothing Grows Forever

by Joshua on May 10, 2010 · 18 comments

Mother Jones is asking some fierce questions

The most recent issue of Mother Jones, a magazine that credits itself for “smart, fearless journalism,” tackles some serious issues. The cover get’s started with the question “Who’s to blame for the population crisis? (A) The Vatican, (B) Washington, or (C) You?” Inside you’ll find some even more interesting stuff, including a 6 page article about “no-growth economics” entitled “Nothing Grows Forever: Why do we keep pretending the economy will?”

The article’s author, Clive Thompson, compiles a pretty good introduction to steady state thought. He starts by discussing how Peter Victor (author of Managing Without Growth and professor at York University) came to realize that the Earth really does have limits – limits that impose themselves on our growing economy.

After a brief history of the field and the economists that founded the ideas, Thompson inevitably arrives at  Herman Daly, “being the most prominent… of the key thinkers in the no-growth theory.” The first topic Thompson has Daly counter is the neoclassical economist’s idea that our economy will eventually decouple from environmental impact and resource use as it continues to grow.

In the past Daly has the idea of decoupling the economy from resource consumption a chimera. Daly’s view on this topic drives home the point that developed economies are still using more resources as they grow, they just outsource their resource use to developing countries. This, in turn, creates “blood-diamond-style conflicts” for the often exotic materials needed to supply continued economic growth. Thompson notes that “the growth of greenhouse gas emissions likewise demonstrates that the free market alone cannot deal with planet-threatening pollution.”

Uneconomic Growth & The Ultimate Debate

“The whole idea that we could have a constantly growing economy that doesn’t use natural resources is just crazy, and the last couple of decades have basically proven it”, says Daly. Thompson triumphs Daly’s work on the concept of “uneconomic growth,” where growth of the economy actually pushes down standards of living and well being – the costs outweigh the benefits.

America has reached this point already. After World War II, sometime in the late 50’s, the connection between rising GDP and well-being degraded. Whilst our incomes have nearly doubled since that time, the society’s level of happiness has remained virtually stagnant (see GPI). This is either because our GDP is growing as we produce more products and services that don’t add to our well being or, worse, our GDP is growing as we spend money solving the problems created by (or along side) growth itself: oil spills, cancerprisons, et cetera.

As we already know, Daly is not alone in his ideas. The debate over growth has itself grown over the past decade. Peter Victor‘s Managing Without Growth, Tim Jackson‘s Prosperity Without Growth, Brian Czech‘s Shoveling Fuel for a Runaway Train, and many more books have been published over the past decade – some of the most influential and inspiring, I think, in the last few years. Even a 30-year revised version of the landmark Limits to Growth was published recently (and this blogs’ current book of the month).

There’s Something to Think About Here

The article points out a few good examples along the way; the “Dutch Miracle,” for instance, where labor unions in the Netherlands in the 1980s agree to limit higher pay in exchange for working less. Within the decade part time work rose from 19 percent to 27 percent and the average workweek fell from 30 to 27 hours, ultimately stomping down unemployment from 10 percent to under 5 percent. (Ironically, criticism of this “miracle” includes the faltering of the Dutch economy’s growth) Thompson also mentions the Austrian and German policies that allow employers to avoid layoffs by reducing work hours, while the government foots the bill for the salary difference.

While the Mother Jones piece focuses a lot of attention on the idea of working less, which is definitely an important and attractive component of the steady state economy – spreading the work out to reduce unemployment and production/consumption cycles – overall Thompson paints a fair picture of the steady state field. While the benefits of working less, possibly having a social revitalization, and creating an economy that does not degrade our supporting biosphere are compelling, the truth of the matter is steady state thinkers don’t have much to say about life on the other side of the rainbow… yet.

Daly suggests that we need to scale back to a 1960s level of energy consumption, while Victor says 1983 was the last time our economy was at a level where the planet could support it. Neither of these times were poor living standards for the average American. In fact, in the 1950s you could support a family of three on a single income, own your house outright in 5 to 10 years, with a car and a dog and all debt free. Today’s picture is a little different: two incomes working to support a debt-fueled house, car, lifestyle.

Not a Walk in the Park

The policies and actions required for us to transition to a steady state economy will be politically difficult (okay, close to politically impossible in some cases) to enact: reducing consumption, capping wage gaps, encouraging population stability, and (in the developed nations) scaling back our incomes. However, none of these things necessarily means living in a lower standard of well being. Victor is used to point our in the article that “we’re better at making things now” so our living standards could be achieved with less.

“So, not exactly a walk in the park,” Thompson writes. “But for all the troubling questions it raises, there’s one thing you can say about steady-state thinking: It is almost cosmically ambitious… The no-growthers regard their job as not promoting specific policies, but widening the field of debate.” Thompson ends where the steady state portion of the story began, with Daly:

“Daly, who’s been arguing his case for four decades, has begun to think that only the Earth itself will compel people to act. In a few decades, if basic resources become scare, prices spike, and climate change is causing global conflict, no-growth thinking would arrive whether we like it or not. ‘It’ll be forced on us,’ he says. In the end, when it comes to determining the shape of our economy, the planet may possess the most powerful invisible hand of all.”

You can read the full magazine issue, including this article, online here.

{ 17 comments… read them below or add one }

Dave Gardner May 10, 2010 at 10:04

Outstanding review of the state of the the steady-state revolution! This issue of Mother Jones is sitting on my coffee table, begging me to spend an afternoon with it. I can’t wait.

I suppose one reason a lot of steady-staters aren’t painting a picture of the post-growth world is it seems premature in many respects. Once we have a critical mass of believers, or at least minds that are open to the notion of limits to growth, alternative scenarios will sprout up and people will be ready to embrace them. I like to say, before we can change their minds, we have to change their mindset. And we still have a ways to go on that one.

This is not to say that some of us should not be busy painting a picture of the wonderful, fulfilling life that awaits us in a post-growth world.

Dave Gardner
Producing the documentary
Hooked on Growth: Our Misguided Quest for Prosperity
http://www.growthbusters.org

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Joshua May 10, 2010 at 10:10

Dave,

Thanks for the comment! Yes, you’re right in regards as to why there are not a lot of definitive pictures of the post-growth world. I think we will be happier and better as a global society in a post growth world. This article does highlight this lack of a defined “dream,” but I agree with you.

That’s one of the reasons I joined up with a few others to start the Post Growth blog, to get a discussion going about what the post growth world will look like. We’ll all shape the new world once we start moving into it.

Cheers,
Joshua

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Ryan May 10, 2010 at 20:18

This was an excellent article.

Has anyone addressed the political climate as it relates to the transition to a steady-state economy? As Peter Victor was quoted in this article, that a politician backing such an idea could make the “politicians unelectable”. A politicians incentives are by definition short-termist. I would love to hear about some ideas of how to re-align such motivations, and a framework for doing so.

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Joshua May 10, 2010 at 22:20

Ryan,

There are a lot of ideas out there, for sure. Personally, I think a big step in the right direction would be mandating term limits in congress and outlawing corporate lobbying. Of course, I would go a step further and remove all rights of person-hood from corporations, but the first two are definitely more politically feasibly in the short term.

Cheers,
Joshua

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Sandwichman May 13, 2010 at 14:11

See also Juliet Schor, “Beyond Business as Usual,” in the May 24 issue of The Nation.

http://www.thenation.com/article/beyond-business-usual

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Joshua May 13, 2010 at 15:05

Thanks for the comment and the link – that’s a great article. I think it might just be inspiration for a future post, actually – the shorter work week is something that I am totally behind. I don’t hold this view out of laziness, far from it, but believe that 40hours a week is far too much of my time and energy to be devoted to working. It is physically and mentally draining, not to mention encourages environmental destruction. Aside from those points, there’s really no need for us to work so much!

Good stuff! Thanks again,
Joshua

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Ryan May 14, 2010 at 06:05

I understand what the reduced work week does for unemployment. But how does this effect the cost of living?

If it thought that the net effect of reducing people’s work hours, so that others can be employed, will have a net effect of reducing consumption and inflationary pressures? Since people who work less, spend less. However that doesn’t really stand with people who were formally unemployed, who will now be working. They may spend more. But only more on needs, than frivolities?

My question about the reduction of the work week is that, if the cost of living doesn’t decrease, this will incentise people to find second jobs, etc.

I know there is a lot more too this, which I am probably missing out on. Could someone school me a little bit here on this line of thinking?

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Joshua May 14, 2010 at 09:12

Ryan,

You should definitely, if you haven’t already, read that article in the Nation that Sandwichman posted above.

Generally speaking, if we worked less we would likely make a little less as well. However, this decrease would be pretty much equal in the costs of your living expenses – generally speaking. Now, if the majority of us are already overstrectched financially (which may not be an unrealistic assumption), then it might be slightly more precarious. We would buy less, work less, produce less, consume less – but we would still consume something, still need to produce something. In areas that suffer losses in demand, others will likely see an increase (less TV dinners, but more bicycles or camping gear).

Ultimately you spend a lot of money around your work life (commuting, cars, work clothes, tv dinners on late nights, et cetera). One of the great things mentioned in that article is the ability for people to have more time to become more self-reliant (grow our own food, make our own stuff – like we used to do a lot more of 50 years ago), require less stuff (no more second car), and find alternative means of transportation (more biking, more mass transit, et cetera). Sure, you make less, but you are also using less resources that cost you money.

For me, a big one would be childcare. We only have our son in childcare half days, but it is still super expensive. I have a co-worker that works three days a week to basically cover the cost of her childcare while she’s at work. So, less work = less child care & less money = not a big deal. Sure, some people might have to or choose to work another job or keep their 40 hours – but overall most people would be able to continue to get by financially and enjoy life.

Also, we should take into account the value of time. The average american works 46 hours a week and should be sleeping 8 hours a night (although this is more like 6.5 hours during the weeknights, as they stay up late to work more). That means work takes up about 40% of your waking life, weekends included. If this was reduced the payback wouldn’t be in dollars but it would, I think, be even more valuable: more life time, less work time.

So, to answer your question more directly – yes, the cost of living versus your income might shift a little. However, it should not be a dramatic enough to make tons of people go out and get another job or go bankrupt. (Kellogg Company did a 6-hour work week during the depression to keep staff on, workers voted to keep it until the 1980s) As with any transition there would be some gray area between the 40 hour standard and the 21 hour standard, but once there life would be pretty similar on a financial front (costs being less than or equal to income) – but with more time to live life.

Does that answer it well enough? My apologies if I rambled a little. Also, check out these articles: 21 Hours: Why a shorter working week can help us all to flourish in the 21st century by the new economics foundation, the work less party, Workers of the World Relax (video), and What’s wrong with a 30-hour work week? (I’ve only skimmed through this article, but plan on reading it all soon – let me know what you think of it).

Cheers,
Joshua

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Ryan May 14, 2010 at 06:07

Sorry for the horrendous grammar. I just wanted to get this question out before I went to work. As you can see, it was a tad rushed. Sorry for that.

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Joshua May 14, 2010 at 09:55

Another quick note, I just read this: “John Maynard Keynes in 1930 predicted that by 2030 a fifteen hour work week would be sufficient for all but the most extreme workaholics.”

He came to that conclusion because technological improvements where meant to partially increase growth and partially decrease the required amount of work performed by each worker. Keynes was a man with the vision of economic growth being the means to the end – the end being the more utopian-like existence after growth (aka, a steady state economy).

I’m ready for 21 hours, we can work towards 15 hours in 2030 too if you like 🙂

Cheers,
Joshua

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Sandwichman May 14, 2010 at 14:52

Ryan,

It is difficult to give a quick, clear answer to your question within the frame of conventional economic analysis because such analysis requires that we arbitrarily hold one or more of the many variables involved constant while we observe what happens when we change the selected variable, e.g. hours of work. The short — but ambiguous — answer is that, in fact, everything changes. A given work time reduction will ALSO alter productivity, labor costs, intermediate costs, consumption preferences, income distribution, etc.

Historically, a number of economists have noticed the complexity and interdependence of the work intensity/duration question and its pass through effects on consumption and final demand. But their insights have been set aside in favor of “more convenient” methods, namely making unrealistic assumptions (the standard labor supply model) whilst calling people names if they make different assumptions (the “lump of labor”).

Partial answers to your question can be found in the work of Marx, Veblen, Keynes, Sydney J. Chapman, Ira Steward (as interpreted by Dorothy W. Douglas), Charles Wentworth Dilke and Luigi Pasinetti. There is no published synthesis of this alternative paradigm. The manuscript is “in process”.

I got a “404” message the last time I tried to post this so I’m guessing there’s a word limit on comments. So this one is continued…

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Sandwichman May 14, 2010 at 14:53

continued…

The quick and dirty answer is that hours of work in the U.S. have become so distorted and prolonged over the past 30 years by both government policy and employer diktat that a reduction in hours is likely to bring tremendous improvements across the board: in income fairness, conservation and sociability.

That is to say, incomes would go UP for lower income workers even as hours came down. For middle income earners any small loses in take home pay would be more than offset by increases in both quantity and quality of leisure time. The only losers would be those who are currently positioned to collect rent on the distorted and inequitable arrangements.

The key here is the reciprocal relationship between work-time reduction and productivity. Increased productivity makes work time reduction possible and, ultimately, necessary. But work time reduction also further increases productivity (thus both enabling and necessitating further work time reductions).

Advocates of work sharing often make the mistake of assuming that productivity gains reduce the total numbers of jobs available. Productivity does indeed eliminate jobs… but it also creates jobs elsewhere. Whether net job creation is negative or positive is a matter not just of hours and output but also of policy.

Meanwhile economists typically make the much stupider and utterly contradictory mistake of, on the one hand, assuming that productivity gains necessarily result in increased employment but on the other hand ignoring the implied employment gains resulting from productivity effects of work time reduction.

Juliet Schor did discuss the productivity effect of work time reduction in her earlier book, The Overworked American, but admittedly didn’t follow through with an analysis of the full feedback effect on employment. I’ve done some projections that estimate that between 1982 and 2010 an additional five million jobs would have been created, strictly from productivity effects, if hours reduction had continued at the historical trend that prevailed from the 1909 to 1957 (those dates were chosen because of availability of statistics). To put that in perspective, those five million jobs would knock about 3.5% off the unemployment rate.

A number of precautions are in order here. The above are not “redistributed hours” work-sharing jobs. They are productivity dividend jobs. Whether we would actually want or need the implied extra output is another question, which goes to the heart of “nothing grows forever”. But the other possibility the above analysis raises is of a MUCH greater reduction in hours of work coupled with a HUGE reduction in “intermediate consumption” that is to say consumption, such as commuting to work, that is only done to facilitate working more.

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Joshua May 14, 2010 at 15:17

Sandwichman,

Thanks for the response, very well put. No worries on the two comment thread – wordpress has been acting very odd about content, even in post and pages, when an update or submit results in a 404 error it is wordpress not me – I swear! I’ve tried to track down the error and have had a couple questions on the wordpress forums that remain unresolved after months.

I think you make a good point, though, regarding the productivity increases and work hour decreases. Obviously, like just about everything, there is an “optimal scale” of when reduction of work hours, on it’s own, increases productivity. However, technological advances and changes in the supply/demand (ie consumption) relationship would further this trend, especially if we remove focus on economic expansion and allow these advances to correlate directly to work hour reductions.

It should be noted that the figures you mention include productivity advances that both increased overall production (economy expansion) and decreased average work hours. In a steady state economy the first condition (growth) would be removed and these advances in efficiency and productivity would translate into less work hours required.

That wouldn’t (or shouldn’t) mean pay cuts – because you would still, in theory, be making the same profits – it would simply mean working less to produce the same amount at the same gross pay. Like being on salary and getting more vacation time because you can do more in less time.

I think a lot of this stuff comes down to a simple question: “If what we’re doing isn’t working, isn’t going to continue to work, why not give it a shot and see what happens?” I know it’s a bit ambiguous, but those against the more progressive ideas like this often fight back that it won’t work – but we won’t know that for sure until we try it, and there is a good indication that it will work in the first place to give us the go ahead to do it.

Cheers,
Joshua

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Sandwichman May 14, 2010 at 16:45

Joshua,

The Naysayers on the work time reduction issue have an astonishingly consistent record of prediction failure going back to the early 19th century. Marc Blaug wrote a now classic article back in 1958 chronicling the adamant negativity of political economists toward shorter work time and the paucity of substantive analysis to back up those opinions. It comes down to this: “We don’t like it.”

The counter-arguments presented in the 1930s and 1950s were even worse. “Quick! Look over there!” How such buffoonery got published, let alone regarded as authoritative is almost beyond belief. Except… I have a theory. Embedded at the core of conventional economics is an assumption (or set of his assumptions) which cannot withstand the radical uncertainty implied by the volatile relationship between hours of work and output. Economic Man, with his exogenously ordered preferences and rational pursuit of maximum utility, is rendered a total cipher by the simple fact that output doesn’t vary in proportion to hours worked.

Economists are adept at rescuing the phantom of Homo Economicus by offering various relaxations and disclaimers regarding Economic Man’s omniscience, etc. But what happens if the bloke can’t even tell UP from DOWN? The notion of rational economic behavior (and all that follows from it) becomes nugatory. That is to say, not “constrained” but absolutely worthless. Rationality is the exception, not the rule. Of course people like Stiglitz and Akerlof have been trying to tell us this for years.

Dispelling the rational economic actor myth doesn’t mean dispensing with any and all tools of quantitative analysis. It simply means subordinating the mathematical tools to a narrative frame in which the possibility that people may or may not act rationally in a given circumstance is given its due. Nothing “irrational” or “non rational” about that. Simply cognizant of the limits.

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Sandwichman May 14, 2010 at 17:32

Joshua,

As you pointed out, my figures reflected productivity increases that would result in both larger output and shorter working time. I’m almost reluctant to point out how much more output. I used “Okun’s Law” to derive the employment effect, so the estimated effect on GDP was twice as large. The corollary to that is that if you could produce, say, 7% more in 14% fewer hours, you could also produce the same as currently by working 28% less.

That is to say, the proverbial “30 for 40” (forty hours pay for 30 hours work). But because your expenses would also decline, you wouldn’t need 40 hours pay to maintain the “same” material standard of living (this is even discounting the contribution of the extra free time to your Standard of Living).

Throw in a few elements of self-provisioning and a bit of preferential simplicity and 21 hours isn’t looking so Utopian after all. The catch is that we’ve got a pretty narrow window of opportunity to make the transition. This is something that should have started thirty or forty years ago — not five or ten years from now in the future.

People are working ten extra hours a week digging trenches nobody needs (and that spoil the environment) and another ten hours a week filling them back in again. And they can’t figure out how they could possibly get by without working so many hours! Easy. Cut out the colossal, systemic waste. And don’t get me started on the military-industrial and medical-pharmaceutical complexes. Would you care for some corn-syrup impregnated treats with your diet soda?

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Ryan May 14, 2010 at 18:46

Some great answers! Thanks for that. I’m still “cutting my teeth” so to speak in this “field” so I have a lot to get up to speed on.

I had a few followup questions, but I need to think about what was written more before I ask. I have a feeling that they have already been answered in the text above, I just don’t fully comprehend the implications of what was written 🙂

Thanks again!

Joshua: have you thought of perhaps including forums to your site? It may make the discourse a bit more managed. I’m not sure if that’s feasible or not. Just a thought.

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Joshua May 14, 2010 at 20:21

Ryan,

Thanks for the feedback. I have thought about adding forums and if there is an interest in it I would be happy to create them. Honestly, I am happily surprised by the discussion we’re having on this post – I have been wanting to engage in more dialog for some time. This is one of the main reasons why I started my work with Scott and Sharon on the Post Growth blog.

I’ll look into the forum and see if I can find a good system for it – if you or anyone else has a suggestion, please email me.

Cheers,
Joshua

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