Post-growth economy and future alternatives?

Economic growth, the dominant objective of governments on this planet, is measured by Gross Domestic Product (GDP). GDP is an indicator designed to track total economic activity, developed in the 1930s and 40s during the disruptions of the Great Depression and two World Wars. Its inventor, Simon Kuznets, the chief architect of the United States national accounting system, already cautioned against equating GDP growth with economic or social well-being in 1934. Until today, economic growth is still seen as the pathway to prosperity and wellbeing and the future economic theory will play a defining role. Economics is the mother tongue of public policy and the mindset that shapes our society1. Besides, there are also some aspects of the economy that GDP doesn’t necessarily measure. According to experts, it is clear It does not capture some parts of people’s wellbeing. It doesn’t reflect the environmental impacts of economic growth, such as pollution and the resulting climate crisis. Moreover, the GDP excludes unpaid work, such as housework and childcare, and finally, it may not be accurately capturing improvements in digital technology.

The idea of a post-growth economy starts from a particular statement repeated for over 60 years: the economic thinkers insisted that the GDP growth was a good enough representation for progress and it looked like an ever-rising line. The recent events (COVID-19 pandemic) showed us (one more time) the limitation of this economic paradigm and opened the demanding of new visions and approaches to the rising complexity. Due to the scale and interconnectedness of the global economy, many economic events that were treated as externalities in the twentieth-century theories have turned into defining social and ecological crises. But besides adding new concepts to GDP, such as wellbeing, sustainability and other fundamental factors, it is important to be conscious of why we hold the presumptions about its value. In particular, the lack of analysis of values has massive implications for the distribution of income between different members of society, creating inevitably (or not) a deeper contrast and suffering in areas already in a hard place. 

Even if we have adopted the GDP growth as the main economic purpose, we are lacking in references about what it is going to evolve over the long term.

According to the literature, there are several models representing the long path of economic growth but the most accepted vision is certainly depicted as “logistic growth” or simply the “S curve”. So, starting from the idea of a straight line, the graph shows gradually how the line has been brought to a plateau as the economy comes up against a limiting factor. Then the exponential curve has been considered as a passing phase in the economic journey as annual GDP has matured to become much bigger in size but no longer flourishing. The graph inevitably brings the global economy face to face with the carrying capacity of the Earth. What happens next? Can the GDP be sustained forever on that high plateau or is decline inevitable? Definitely, we must reconfigure the way we interact with the resources offered by this planet.

Maybe is not impossible to overcome the GDP as an economic goal, but it is harder to renounce our addiction to it and the attempt to blame that trend is raising tough questions in high-income but low-growth countries. We need economies that make us thrive, whether or not they grow. Kate Raworth argues we should embrace a radical flip in perspective invites us to become agnostic about growth and to explore how economies that are currently financially, politically and socially addicted to growth could learn to live with or without it.

Designing in the actual economic model is raising some difficulties and recently recording the awareness that we are going to damage the planet and our social structure too. We are driven by an economy which keeps growing and growing without end. And according to Jonh Thackara in his book “In the Bubble”, the difficulties come when we begin of arguing and acting (for reasonable rationales) in a way that should stop the economical growth. To keep growing, a system dependent on economic growth must continually convert natural resources into goods and relationships into services, things once provided to us as shared goods become monetised transactions. Yet past a certain point, the costs of more growth, congestion, pollution, declining quality of life, inequality, destruction of ecosystem services and liquidation of natural capital, start to outweigh the benefits. An infinite economic growth model has created the need to keep our system constantly under pressure until a preventable end.

Talking only about Post-growth economy it’s a misplaced interrogation. There are many references in the recent literature about this economic model. Unfortunately, we’re talking about on frameworks and models based on theories related to the world we know today (COVID-19 consequences is an example) and it is difficult to say if they will be reconfirmed by the facts in the next future. Today, it’s easier to talk about the reconstruction of our society. The next 6 months are the most important ones to understand the direction of the different countries are taking and as humans, designers and economists we have a central role to play, shape the direction of our today’s choices.