Why the Coming Social-Ecological Transformation Needs Democratic, Macroeconomic Coordination
And how to get there.
By Post Growth Fellow, Elena Hofferberth; and Matthias Schmelzer
One of the most promising paths to preventing or slowing runaway climate catastrophe comes from post growth and degrowth scholars and practitioners, who have long engaged with the possibilities of reorganizing our economic system to meet the goal of universal wellbeing within planetary boundaries.
This year marks another alarming record in human history: September was the hottest one on record and with “around 1.4°C above pre-industrial average temperatures”. 2023 is well on track to be the hottest year ever recorded. The necessity for greater speed and scale of action to avoid “hothouse earth”, and thus prevent even worse ecological and social devastation, becomes ever more clear.
Numerous ideas exist for, as Jason Hickel puts it, “planned reduction of energy and resource use designed to bring the economy back into balance with the living world in a way that reduces inequality and improves human well-being” (emphasis added). The focus of degrowth and post-growth is on the Global North that has contributed disproportionately to the environmental crisis and whose material wealth is intricately connected to exploitative relations with other world regions.
Proposals range from the establishment of eco-communities and urban gardening at the local level to policy interventions such as the imposition of absolute caps on greenhouse gas emissions and resource use, working time reduction, and the introduction of Universal Basic Services. While all these proposals can play an important role in a transition towards a post-growth economy, there is one crucial blind spot: that of democratic macroeconomic coordination beyond growth.
As we argue with Cédric Durand elsewhere, the need for democratic coordination of economic activity arises out of the ambition for a profound and fast social-ecological transformation of the economy and the practicalities this involves. A few examples illustrate the challenge. The key demand of degrowth to establish absolute caps on CO2 emissions and resource use necessitates decisions over the acceptable size of respective budgets as well as societal priorities for their use, i.e. the distribution of remaining CO2 and resource budgets to specific economic activities, sectors, and regions.
The necessary speed and scale of social-ecological transformation underpins the call for democratic macroeconomic coordination.
Given the size of the necessary emissions reductions in Global North countries, economic transformation will need to entail the reduction of less necessary and emissions-intensive goods and services such as aviation, industrial farming, planned obsolescence, and luxury commodities — ascribing ecological planning and democratic macroeconomic coordination of industrial downscaling and ‘exnovation’ utmost importance. These processes of downscaling would liberate resources for strengthening future-fit and socially necessary economic activities — e.g. ramping up sustainable public transport, retrofitting housing, and rewilding — all of which require the allocation of necessary material and infrastructure.
By the same token, (de)prioritizing certain activities and sectors implicates changes to the world of work which would need to be democratically deliberated and governed. The phasing-out of the fossil industry and an increase in care, for instance, imply not only decisions over the quantitative increases and decreases of jobs in respective sectors but also qualitative changes in work patterns as well as education and training. The appreciation of un-commodified work, such as much of care work, heightens the challenge, especially when aiming at its recognition without commodifying it (see Chowdhury for a discussion). Beyond the fair, just, and sustainable distribution of natural resources and work, decisions over adequate technologies arise.
Designing purposeful institutions for the coordinated transformation of our economic system is a necessary and formidable task.
The elaboration of these decisions and their subsequent implementation pose central challenges for “planning beyond growth”. This is even more so as both elaboration and execution must be fundamentally democratic and participatory — not only to live up to the ambitions of degrowth but also to ensure legitimacy and garner people’s acceptance of the transformation processes. Accounting for today’s globally interconnected economy, the goal of restorative (climate) justice as well as local and regional diversity necessitates decision-making at and coordination of multiple levels. The design of purposeful institutions for the coordinated transformation of our economic system is a necessary and formidable task.
Luckily, there are rich bodies of literature and historical examples that can serve as inspiration in this undertaking. First, there is a growing literature that explicitly seeks to elaborate democratic processes with the aim of ensuring wellbeing within planetary boundaries, including Half-Earth Socialism by Drew Pendergrass and Troy Vettese; Jan Groos and Christoph Sorg’s forthcoming edited volume on “planned economies in the 21st century”. There are also older proposals for democratic multi-level economic decision-making and organization such as the Participatory Economy Project and an article by Pat Devine et al: ‘Participatory Planning through Negotiated Coordination’.
Luckily, there’s plenty of inspiration out there to help guide the way.
Going beyond theoretical developments, we can learn from the successes and failures of actual attempts at economic planning. This includes a critical scrutiny of socialist planning experiences as well as forms of planning in capitalist economies. A historical example of the latter are analyses of the war economies of the 1910s, in particular the Austro-Hungarian war economy, by Otto Neurath. More recently, the rapid reorganization of the British economy during the Second World War, when the state sought to simultaneously fight Nazi Germany and cater for people’s need satisfaction, offers insights into possible measures of strong state interventions, economic coordination, and the rationing of scarce goods and services, as well as their acceptance by the population. Another example is the French Central Bank’s use of monetary and credit policy as means to shape size and qualitative orientation of economic activity in the decades after WWII.
We can also learn from previous attempts at economic planning.
Moving forward, it will be key to scrutinize these models and experiences to extract the technical and political lessons to address the aggravating social and ecological crises of our time. For that, we need criteria to compare and evaluate the adequacy of different models and approaches to abide by ecological and social goals. It will also be crucial to identify and use windows of opportunity to democratize macroeconomic decision-making and align it with social and ecological targets.
In France, for instance, both the left coalition and the president put forward proposals for “ecological planning”, while offering different visions for the form this should take. The recent resurgence of industrial policy in the US, the EU, and other places can be seen as a sign of governments’ stronger engagement to directly shape the economy, including the green transition.
By the same token, it is key to appreciate the planning effects of monetary and fiscal policy and exert pressure on governments to deploy them in socially and environmentally sustainable manner. Finally, the democratization and diversification of the planning debate itself is pivotal. This means, for instance, learning more from theories and experiences of economic coordination from the Global South and groups marginalized or oppressed e.g. due to gender, race, sexuality, class, nationality, or disability. Their views may give rise to very different visions of economic coordination than the hitherto dominant ones. The discussion on ecological democratic macroeconomic coordination for the 21st century has only just begun.
Inspired? Here’s what you can do next:
- Sign up to the Post Growth Economics network, an international group of researchers and practitioners interested in the emerging fields of post-growth and ecological macroeconomics. Their aim is to advance economic theory, methodology, and policy to address climate change, rising inequality, and financial instability. All welcome, whatever your background or level of knowledge! You can also follow them on X.
- Read the Monthly Review special issue on planned degrowth, including an article by Elena and Matthias.
- Listen to Future Histories, a podcast to “expand our idea of the future”, covering the wide debate around democracy and planning.
- Support and donate tothe Laboratory for New Economic Ideas, which works towards an ecologically sound and socially just economy by all and for all through educational work, engagement in public debatesm creation of alliances and collaboration with social movements; and Exploring Economics, an open access, e-learning platform on pluralist economics to discover and study a variety of economic theories, methods and topics.
- Follow and get involved with Diversifying and Decolonising Economics (D-Econ), a registered charitable organization that aims to decolonize and diversify the economics field, both in terms of its academic content and its institutional structures, in order to ultimately support movements and struggles for global justice and achieve a more just society.
