Limits to Growth
The third and final factor which comprises the case for degrowth is that growth might be coming to an end. From the 1970s onwards there is evidence of a downward trend in the rate of economic growth in advanced capitalist economies. GDP growth has continued, but at a noticeably slower rate. As Brenner (2017) notes “since 1973… the growth of GDP, investment, productivity, employment, real wages, and real consumption (of advanced capitalist countries) have all experienced a historic deceleration”. This long-term trend is depicted in figure 1, which shows the average declining rate of growth experienced by thirteen OECD nations since the 1960s.
Most Western countries have now settled into annual per capita growth rates of 1–2% (Bonaiuti 2014; Piketty 2014). A downward trend in the rate of GDP growth is also observable at the global level, though here the rate of decline is marginal, dropping from 4% per year from 1950–1990 to 3.4% per year between 1990–2012 (Kallis 2018).
External Limits to Growth
The declining rate of growth experienced by advanced capitalist nations has given rise to the notion that growth is potentially coming to end as it encounters both external and internal limits (see Bonaiuti 2014; D’Alisa et al. 2015; Victor 2015; Gordon 2012; 2017; Andreucci & McDonough 2015). The external, or biophysical limits to growth, which were alluded to in article 4, highlighted the unfeasibility of infinite economic growth on a finite planet. Given the uncertainty surrounding green growth, resource depletion and other ecological barriers present clear challenges to endless growth. The most pronounced of these natural limits are peak oil and climate change.
Another external limit which could potentially restrict growth is the lower energy return on investment (EROI) of renewable energies compared to fossil fuels. While the EROI of renewables has been increasing with improvements in technological efficiency, there is doubt over whether it can increase at a pace sufficient to maintain continuous growth (Capellan-Perez et al. 2017; Kallis 2018). The scarce nature of the raw materials that are required for the construction of renewable technologies, as well as the physical land requirements of the infrastructure itself, present further limits to the up-scaling of renewable energy.
In other words, renewable energy might not have the capacity to provide for growing energy demand — it is likely that a global civilisation that is entirely powered by renewable energy will only be able to support smaller economies. Two other potential external limits to growth are a declining rate of population growth (Piketty 2014) and a slowing down of technological innovation (Gordon 2012).
Internal Limits to Growth
In addition to these external limits, there are two main contradictions within capitalism itself that present potential internal limits to infinite economic growth. The first of these internal limits is reflected in the idea that growth in advanced capitalist nations is coming to an end due to these countries entering a phase of declining marginal returns (DMR) (Bonaiuti 2014). The principal idea behind DMR is that in complex systems diminishing returns will arise once a certain threshold of growth or size is crossed. In economic terms, this translates to the expectation of diminishing returns as GDP rises beyond a certain threshold.
The second internal limit to growth comes in the form of secular stagnation, or what Harvey (2010) terms the capital absorption problem. As illustrated in article 3, for growth to continue surplus must be continually reinvested into productive activities. In Harvey’s (2010) words, there is a “perpetual need to find new fields of activity to absorb the reinvested capital”. There are difficulties and limits, however, in creating effective demand and productive outlets for investment for increasingly large surpluses of capital.
When capital accumulates without productive outlets for investment the risks of devaluation and financial crises greatly increase. To date, the problem of overaccumulation has been partially circumvented by privatisation and the deregulation of credit, which has enabled an expansion of debt and financial speculation. While these ‘solutions’ have provided further profitable outlets for investment in the short-term, their ultimate effect has been to increase financial instability whilst shifting the capital absorption problem to the future.
Throughout its history, capitalism has displayed an incredible capacity to overcome its contradictions and barriers to continue growing and expanding. In a world of complexity, there is too much uncertainty to accurately predict when growth will come to an end and what its ultimate cause will be. One hypothesis is the interaction and amplification of the external and internal limits presented here. Another is that the end of growth could come from completely unforeseen, emergent developments. In building on the arguments developed in articles 4 and 5 I contend that, regardless of its ultimate cause and end date, growth is in all likelihood bound to come to an end eventually. These three arguments: that degrowth is ecologically necessary, socially desirable and that growth cannot continue indefinitely, compose the case for degrowth.
However, even if one agrees with these three arguments, this does not automatically render degrowth a desirable destination. As illustrated in article 3, the stability of contemporary capitalist economies is dependent on growth. A lack of growth in growth-based societies can lead to disaster, with financial collapse triggering an array of harmful consequences. The degrowth hypothesis, however, is that a planned reduction of energy and material throughput, and the anticipated economic contraction that will likely accompany such a societal transition, can be achieved in high-income countries whilst sustaining and even improving living standards and ecological conditions (Hickel 2019; Kallis 2018; Kallis et al. 2018; D’Alisa et al. 2015). The next section provides a brief investigation into the conditions under which the degrowth hypothesis might be brought into being.
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