March 28. 2024. 2:42

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The case for engaging with post-growth economics


Alternative economic models that want to ditch the current growth imperative are becoming more prominent for a reason. It is important to engage with them productively.

It is fair to say that last week’s Brussels-based “Beyond Growth” conference, where academics and politicians exchanged views on how Europe could get rid of the growth imperative in its economic system, has managed to get a debate going in economic policy circles.

European Commission President Ursula von der Leyen brought attention to the conference by cautiously criticising GDP as a measure of progress and by saying that economic growth was no end in itself.

In the other corner, this week, Belgian Prime Minister Alexander de Croo criticised degrowth, which is one of the sub-currents of the wider field of post-growth economics, as a “strategy of less” that would never work as it was “completely contrary to our human nature,” which in turn caused outrage among Belgian climate activists.

Indeed, it’s not easy to have a productive discussion about post-growth economic models.

On the one side, the most radical degrowthers get jumpy about any implication that technological solutions will have to play an important part in a move towards a more sustainable society, suspecting just another capitalist plot to sustain the status quo.

On the other side, many conventional economic commentators like to take these most radical examples to build their strawmen. Painting the whole field of post-growth economics as a fairytale land in which some upper-middle-class hippies imagine a world of harmony and self-sufficiency makes it easy not to take its ideas seriously.

But the ideas are worth engaging with.

At the core of most post-growth economics is the recognition that the logic of eternal economic growth leads the system to overshoot the planetary boundaries, which will then lead to catastrophic consequences for humanity.

And for all that one might criticise in post-growth economics, the current economic model has not solved this existential problem yet.

Many politicians point to the fact that the EU is now able to both grow in terms of GDP and reduce emissions at the same time – Ursula von der Leyen did so when talking at the Beyond Growth conference.

But climate change is just one of many planetary boundaries. And the fight to reign it in might actually worsen the situation for another planetary boundary, for example, biodiversity.

This fact was brought home earlier this week when EU industry ministers discussed the bloc’s Critical Raw Materials Act, which aims to make it easier to open mines in Europe even if there are environmental concerns.

In the final analysis, what is more important, the access to raw materials needed for clean energy technologies or the national park that might sit on top of a potential lithium mine?

Also, think of the collective effort that was needed to even start reducing CO2 emissions, be it regulatory or financial.

If the EU and the world at large are to achieve this on all the other critical planetary boundaries as well, as everybody should hope, a multiple of the current regulatory and public financial effort will be necessary.

The result could look much more interventionist and with more aspects of a planned economy than the previous ideal type of a free market economy.

Irrespective of whether the GDP will be higher or lower, such an economy would likely have had to channel the growth imperative into such a well-defined channel that it might look quite similar to the economic models of the post-growth movement.

So much for the case for engaging with post-growth economics. Stay tuned for next week, when I will try to put my finger on one of its weakest spots – geopolitics.

Back to a straightforward benefit of economic growth: Low unemployment!

To be fair, post-growth economics also provides some ideas to get to low unemployment, like a public jobs guarantee, but this story is one of good old economic growth.

The EU and the euro area unemployment figures are at historic lows, as the graph below, compiled from monthly Eurostat data, shows.

The most striking comparison is the one between the large, bison-shaped bump, which starts after the 2008 crisis and grows bigger in the post-2010 euro crisis, with the small COVID bump of 2020 looking like a shy rabbit next to the menacing bison.

The Covid pandemic had all the potential to create a catastrophic economic crisis in Europe, but a fast and decisive reaction and a big chunk of public money prevented that.

EU Commission urges member states to reduce spending, but not investments. In its European Semester Spring Package, an annual set of country-specific recommendations for national budgetary policies, the Commission urged member states to follow a more “more prudent” fiscal stance. This was necessary to not “contradict” central banks’ fight against inflation. Notably, they should phase out energy aid granted to households this year. At the same time, public investments should not fall victim to budget consolidation strategies, as happened in the past, Commission officials said. Read more.

EU Council urged to speed up on forced labour products ban, again. On Tuesday (23 May), the EU Parliament’s rapporteurs on the regulation to ban products made with forced labour expressed concerns over the lack of progress made by the EU Council on the file. “I really hope that the Council will start to see this as a priority,” said co-rapporteur Samira Rafaela. Maria-Manuel Leitão-Marques, the other rapporteur on the file, reiterated her call to finish negotiations before next year’s European elections.

Commission: time is running out for Erasmus+ exchanges for Hungarian students. Hungarian students from universities managed by public interest trusts risk not being able to take part in Erasmus+ in the winter semester, Budget Commissioner Johannes Hahn said on 24 May. The EU Council’s decision to suspend EU funds for Hungary due to rule of law concerns prohibits new commitments with Hungarian public interest trusts and the entities they manage, many of which are universities. Hahn said “no adequate proposals” to address the concerns have been advanced by the Hungarian government and warned that time is running out for Hungarian students. While the cut-off date for signing agreements under the Erasmus+ call is mid-July, lifting the measures could take up to two months, he explained.

EU Commission presents Retail Investment Strategy. As was communicated already ahead of the presentation of the proposal, the EU Commission refrained from proposing a ban on sales commissions for financial advisors that sell financial products to retail investors. Fearing too much disruption, it thus decided to go against the preferred option of its own impact assessment, instead proposing a more limited ban on inducements for advice-free sales and better cost transparency. Read more.

EU Council agrees on position on instant payments proposal. EU member state governments agreed on a common text regarding the EU Commission’s proposal for a regulation that should make instant euro payments universally affordable. Compared to the Commission’s proposal, the EU Council wants to have a phased implementation time for member states outside the euro area.

Trilogue agreement on European Single Access Point (ESAP). On Tuesday ( 23 May), the European Parliament and the EU Council agreed on a common text for the ESAP regulation, establishing a single point of access for individuals and companies to digitally and freely access financial and sustainability-related information about European companies. The implementation will only start in 2027, however. Read more.

France needs to invest €66 billion a year on climate action, government report states. France must spend €66 billion every year until 2030 in order to hit its climate targets, a new report by a government advisory body says, suggesting more debt and taxing the rich as a way to foot the bill. Read more.

Belgian, French produce price differences lead to calls for standardisation. Significant price disparities between essential consumer products in Belgium and France have led to calls from some that monitor the sector to standardise prices at a European level. Read more.

The EU’s DEBRA proposal will do more harm than good due to flawed modelling and third country spillover: This blogpost by the tax justice network argues that the European Parliament should stop work on the EU Commission’s proposal for a debt equity bias reduction allowance.

Venture predation: In this article, Cory Doctorow looks at the phenomenon of platform companies keeping up their hype while burning massive amounts of venture capital cash without a clear case for enough future profitability to ever make good on the burnt growth capital.

Additional reporting by Silvia Ellena and Jonathan Packroff

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