The No Growth Economy

The need for continuous economic growth is one of the main forces driving our planet to crisis. As we face the need to drastically reduce our carbon footprint, we are beginning to realize that our current and foreseeable clean energy sources will never be able to supply the ever growing energy demand of our growth dependent economy. When our economy is not growing, we are in "recession", and we all recognize that as a bad situation: loss of jobs, faltering tax revenues, higher prices, and a sea of tepid consumption.

As we look at the likelihood of living in recession with either a no growth or a degrowth economy, should we all slit our throats now or is there hope or, dare I say, prosperity in a no growth future? This is the first of what I hope will be a number of articles exploring a much wider spectrum of economic alternatives brought together in a wonderful book published last December. Sacred Economics, by Charles Eisenstein, brings back a whole world of economic thought that has been sitting on the shelf since we bet all our marbles on the growth economy model. Here I’d like to explore the no growth economy.

A growth economy, as I understand it, means growth above and beyond the needs of population growth. Profit is an increment of growth: wealth that heretofore did not exist. It’s not difficult to see why growth economics won out. We needed shovels, can openers, tractors, etc. The result has been unprecedented prosperity (although perhaps not uniformly distributed across the globe!).

We measure the economy with the Gross Domestic Product (GDP). Every time something sells, it is added to the GDP. Everything from Broccoli to disaster relief goes on the plus side. If a partner in a household is required to take a job to cover increasing expenses, the work they previously did for free, childcare, housework, gardening, must now be paid for. Often, what remains of the extra wages is marginal after the additional costs of childcare, maid services, and food they previously grew themselves are paid. Those additional services are a big plus for the GDP, but is that person really better off?

Whether we like it or not, the transition to a no growth economy is already well under way. Having literally mined all our natural resources to produce commodities for sale, we have turned to intellectual property, i.e., research, music, movies, etc. to fuel profits. The internet has been on the forefront of frustrating this effort. Beyond the cost of initial creation, the production costs of intellectual products on the internet are essentially zero. Attempts to create artificial scarcity to maintain a dollar value on these products is proving increasingly futile. Many are now embracing this paradigm: software creators readily make their products available. Wikipedia contributions are entirely voluntary with the compensation being the satisfaction of providing useful information. Meanwhile, they destroyed billions in net monetized value (GDP) for hard copy encyclopedias.

Another trend on the "net" is called "disintermediation", or, more simply, eliminating the middleman. Craigslist is estimated to have destroyed $10 billion in annual revenue from classified ads, replacing it with only $100 million of its own revenues. By being far more efficient, they have greatly expanded the reach and ease of advertising at a tiny fraction of the cost. This is clearly a win-win for producer and consumer, but a big ding for the GDP. Right here on Vashon, we have some great examples. Vashon Freecycle and Vashon All are internet services provided to us by moderators that offer their services as a gift to the community. Freecycle stipulates that no money is to change hands; the quantity and value of goods exchanged there is mind boggling! Anybody who has watched it for any period of time can attest to the speed with which requests for amazingly specific and often valuable items are usually provided: a big plus for us and a big ding for the GDP. Vashon All came into existence to allow a little more flexibility for compensation. Again, these are usually used items at bargain prices or valuable information, sometimes available nowhere else, almost instantaneously provided. It also connects work offers and work seekers. Other than the work connections, I doubt that much of the money exchanged there is represented in the GDP.

Examples of disintermediation outside the internet are Community Supported Agriculture (CSA’s), yard and estate sales, Granny’s Attic, Food Coops, and Fair Trade.

The big question that rears its ugly head through all this is: What about all those jobs that were eliminated? As we build more and more community and restore currently monetized commodities to the commons, we will see an expansion of the gift economy (like Vashon Freecycle), more sharing of resources (like Carshare), more direct production of our own resources (gardening, home brewing, homemade music), and ...less need for money! Less need for money means less need to work, which means we could share jobs as well. A no growth economy also tends toward a more even distribution of wealth, lessening the need for additional income still more.

Don’t let the "experts" tell you that there are no alternatives or that a better world is out of reach. It isn’t and it is already happening!

Comments? terry@vashonloop.com