Growth Isn't Possible
Why we need a new economic direction
new economics foundation | January 2010
By Andrew Simms and Victoria JohnsonFOREWORD
In January 2006, the new economics foundation published the report "Growth Isn't Working." It highlighted a flaw at the heart of the general economic strategy that relies upon global economic growth to reduce poverty. The distribution of costs and benefits from economic growth, it demonstrated, are highly unbalanced. The share of benefits reaching those on the lowest incomes was shrinking. In this system, paradoxically, in order to generate ever smaller benefits for the poorest, it requires those who are already rich and "over-consuming" to consume ever more.
The unavoidable result under business as usual in the global economy is that, long before any general and meaningful reduction in poverty has been won, the very life-support systems that we all rely on are almost certain to have been fundamentally compromised.
Four years on from "Growth Isn't Working," this new publication, "Growth Isn't Possible" goes one step further and tests that thesis in detail in the context of climate change and energy. It argues that indefinite global economic growth is unsustainable. Just as the laws of thermodynamics constrain the maximum efficiency of a heat engine, economic growth is constrained by the finite nature of our planet's natural resources (biocapacity). As economist Herman Daly once commented, he would accept the possibility of infinite growth in the economy on the day that one of his economist colleagues could demonstrate that Earth itself could grow at a commensurate rate.
Whether or not the stumbling international negotiations on climate change improve, our findings make clear that much more will be needed than simply more ambitious reductions in greenhouse gas emissions. This report concludes that a new macroeconomic model is needed, one that allows the human population as a whole to thrive without having to relying on ultimately impossible, endless increases in consumption.
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