An economy that does not focus on growth

This is the third blog in a blog series on ‘Circular & Climate-neutral’. This research programme (KB-34) focuses on research that contributes simultaneously to circular and climate-positive food and non-food production systems. This blog was written by Ezra Berkhout, Senior Sustainable Food Systems Researcher at Wageningen Department of Social Sciences.

While wealthy countries surpass most planetary boundaries by great lengths, many disadvantaged countries fail to provide their population with the basic necessities. Many economists consider green growth a solution to both these issues, but that perspective is under increasing criticism. What if economic growth ceases to be a leading societal principle? How would this affect businesses, administrations and research institutes? These are comprehensive questions, but we must look for answers in these times in which our living environment is under immense pressure.

The paradigm that the economy must grow is a strong one. It is our central conviction and is leading in the policies we design. Not surprisingly, because economists have learned to think this way and to include this conviction in our economic models, and even those who have not studied economics often consider economic growth as a given. Hence, a strong paradigm.

Several WUR institutes study existing economic paradigms and possible alternatives. Can adopting a different perspective on the economy alleviate the pressure on the environment? And how does this apply specifically to our food system? There are many different opinions on the matter. The political and societal discussions in recent years have made us aware of all this. While some focus exclusively on technological solutions to, for example, make livestock husbandry more sustainable, others argue that we must accept that we can no longer do it all and that the livestock sector must be curtailed.

Doubts about green growth

Many see green growth as the solution for the impact on the environment, arguing that technological solutions can reduce adverse environmental effects while enabling the economy to continue growing. But, can economic growth be seen separate from environmental effects such as CO2 emissions? Whether this route toward environmental goals is viable remains to be seen.

Alternatively, you could take a different perspective on the economy by letting go of the idea that the economy must always grow. Authors such as economist Kate Raworth and economic anthropologist Jason Hickel describe such concepts as degrowth or post-growth. This is not the same as green growth. Kate Raworth is known for her Doughnut economic model. In an ideal situation, all countries are located in the ring of the doughnut. Disadvantaged countries, however, often find themselves in the doughnut’s hole, where basic needs such as education, food security and health care are not guaranteed. Rich countries are often found outside of the doughnut, exceeding the planetary boundaries. The fact that we are, on a global level, not busy becoming part of the doughnut ring will not come as a surprise. According to Raworth and Hickel, rich nations should move towards a system that is no longer focused on economic growth.

New business models

What does a system that is not focused on economic growth look like? We can preview it in our current society. It has become clear that many businesses no longer have profit maximisation as their key or only goal. There are plenty of companies that have no desire to grow. They are satisfied with the scale at which they operate and work on societal goals. We also see cooperative businesses emerge in which producers and consumers work together. Such businesses are also found within the food system. Communally owned farms are an excellent example. We want to know what the entire palette of these businesses looks like, on what scale they operate and what obstacles they encounter. We hope to gain more insight in the course of this year.

Economic models

The next question is: how will letting go of the concept of economic growth change our society and living environment in the future? The complete picture of wealth. Consumption, emissions, biodiversity and possibly other indicators as well. Our economic models are not yet suited for such predictions. They don’t work if you enter zero growth and don’t show how a different economic system impacts, for example, biodiversity. Furthermore, it may cause one sector to shrink while another flourishes.

Growth is no longer the central principle. As soon as we can calculate future effects, we will also be able to answer questions. Until then, how we are to achieve the environmental goals for 2030, 2050 and 2070, will remain intangible.