Two world-renowned economists, Stiglitz and Piketty, have come out of the closet. They have admitted to the world that they are degrowthers. Writing in The Guardian, they argue that “economic growth is a doomed strategy.”
If the goal was to grab attention and shock people, they succeeded. If the goal was to help solve poverty and environmental problems, they missed by a wide margin.
Right at the outset, they write that the idea of growth benefiting everyone has failed. Yet, growth is precisely the one method, tested by time and evidence, that has lifted hundreds of millions of people out of extreme poverty. In the 1970s, roughly half of humanity lived in extreme poverty; today it is around 9-10%. Over the same period, global income inequality has also declined.
The one place poverty has not been broken is Africa, where the second half of the 20th century saw extensive experimentation with the alternative of development aid. That aid often failed to spark sustainable growth, ending up instead in corruption schemes and propping up local dictators.
The authors also touch on the environment – and here again they ignore something well established: the so-called Kuznets curve. It describes how, in poor countries, the environment initially worsens as the economy grows, but the trend reverses once a certain standard of living is reached. Wealthier people can afford to care about the environment, to invest in it, and they have access to newer, cleaner technologies.
We see this in Europe too. Our air and rivers are cleaner than they were half a century ago, forested area is expanding, and in some regions biodiversity loss has actually been reversed. The same holds for CO₂ emissions: since the 1990s they have fallen by roughly 35-40%, while the European economy has grown by about 75%. We can grow the economy and reduce total emissions at the same time.
Stiglitz and Piketty also couldn’t resist the cliché that “infinite growth is impossible on a finite planet.” But economics is not physics. As I explain in my book O pôvode prosperity (On the Origins of Prosperity), economic growth has long since stopped being primarily about having more atoms to work with – it’s about useful knowledge and innovation that let us squeeze more value out of scarce matter.
And that kind of growth can continue for a very long time – at least until we have discovered every principle governing how the universe works and learned to harness them all in our service.
We are, however, still a long way from that point. Plenty of people evidently have not even grasped the basic principles of how society functions. Otherwise Stiglitz and Piketty could hardly have arrived at solutions this unworkable – assuming, that is, that they were actually after solutions, and not simply the attention mentioned above.