By scaling down our harmful economic activities and reorganising the economic system, we can stay within the limits of the earth without negatively affecting overall quality of life. This is called degrowth.
Degrowth and post-growth are sometimes used interchangeably. At Triodos, we think it’s important to focus on the positive opportunities that an economic change could bring, so we’ll focus on the term ‘post-growth’. Post-growth is about fundamentally transforming our economy.
Hans Stegeman, chief economist at Triodos Bank, has been researching and writing on post-growth and radical change for over 10 years. Here, he breaks down what this concept really means.
What is degrowth, or post-growth?
Degrowth is a planned decrease in economic activity, to achieve an economy that is fairer and remains within planetary boundaries.
In practice, this means that we need to do certain things less, and some not at all, to deliver higher levels of wellbeing for all. Think, for example, of the production and use of fossil fuels. If we do less of harmful activities such as this, then we make more space for other activities that support us all to thrive, sustainably and equitably – and we still stay within planetary boundaries. For example, we might focus on ensuring access to nature, high quality healthcare or education.
Defined more broadly, post-growth is the end-state, after overcoming our growth addiction. It’s about imagining a society that doesn’t rely on economic expansion continuing forever. In a post-growth world, there’s room for all kinds of different structures and ideas that don’t have to fit with the traditional goal of maximising profit for shareholders.
The point is that there are limits to growth. Continuing to grow as we do now is simply not sustainable and not necessary for our quality of life. If we do continue on the current course, then we will exhaust the earth and ourselves along with it. Post-growth offers an alternative.
The current economic system is dependent on growth. How does that work?
From a young age, we are taught to consume – more, better, faster, bigger – and that is not without reason. In today’s economy, companies generally operate with only one goal: profit maximisation. That is because shareholders are ultimately the boss. The more return they demand, the higher the pressure for companies to make a profit.
In itself, profit maximisation is not a problem. This market-based economy has brought us a lot of progress – in order to maximise profit, companies have been innovating for decades. But there is also a downside. They also need increasingly larger sales markets. Economic growth is a requirement for their existence, certainly for listed companies. However, it is also in the interest of the ordinary worker: innovation and efficiency leads to job losses, because we can produce the same output in less time, and so with fewer people. To ensure everyone can stay in work, the economy needs to grow.
Governments also benefit enormously from this system – they receive more money when the economy grows and incomes rise, in the form of taxes. Our current system needs growth, regardless of the wellbeing of people and ecosystems.
But can't we stay within planetary boundaries through innovation, efficiency gains, and so on? Then the economic system doesn't need to be overhauled...
I would like to believe that, because it would be super easy – we wouldn’t have to change anything in our behaviour. However, there are a few problems with this idea.
First of all, we don't know whether innovation is enough to stay within the planetary boundaries - there is no evidence for that. Yes, economic activities can become more efficient and less C02-intensive, but climate change is also a race against time. I think the chances are slim that we will win that race within innovation alone.
Secondly, history shows that innovation does not necessarily lead to less use of resources. Say a new, exciting, innovative product is created, which is less CO2-intensive and more efficient, so should result in less of the world’s finite resources being used up to serve our needs. However, such a product is often very attractive to consumers, and easier to produce, and so sales go up. This offsets any reduction and leads, in the end, to more resource use.
Something called the 'Jevons Paradox' is often referenced in this context, named after Stanley Jevons. In 1865, he noticed that the increased efficiency of steam engines did not lead to reduced coal consumption but rather to an increase. As the cost of coal decreased, it became economically more viable to increase production using steam power.
Don't get me wrong, I'm a big supporter of innovation and we should keep innovating. But at the same time, we need to look critically at our current economic system. Can we be happy without so many things? Without such high energy consumption? And without such a large ecological footprint?
Okay, so we need to do things differently. What does that look like in practice?
Moving beyond growth is not about optimising the current system, but about radical system change. To be able to achieve that, you must start by getting the average person onboard and for that the basics have to be right. The starting point has to be ensuring that the economy provides for everyone’s fundamental needs and enables us all to feel secure. Only then you can look at doing things differently, less, or not at all.
It is also important to address certain issues in our current economic system. If we want to stay within planetary boundaries, certain things are simply no longer possible. Why do we all still fly so much? Why do we still eat so much meat? These can be uncomfortable conversations, but we do need to talk about them.
Then there are all sorts of possibilities to restrict economic growth. For example, considering other forms of ownership in companies such as, steward ownership
that partly removes the profit incentive. We could also adjust our tax system. Instead of taxing predominantly income and profits, which depend on our growth, we could have more taxes based on wealth, pollution by companies and C02 emissions. The current discussion on taxing unhealthy food providers is another example of thinking differently about taxation in a UK context. If we had a broader tax base, then governments would not be so dependent on growth.The circular economy is also an important element of post-growth. We’ll need to repair, reuse and simply use products for longer. We’d need to shift from ownership to sharing. For example, not everyone needs to have their own drill, high-pressure cleaner or sewing machine – you can also share those with your neighbours and communities. The more things we share, the fewer things need to be made.
The financial sector plays an important role in this story. In fact, every financial decision that a bank makes should be tested with the question: is this really necessary? All kinds of useless things are currently being financed with new growth incentives as a result. In the end, that doesn't do us any good.
Degrowth, and post-growth, is often associated with 'less' and 'decline', which you’ve said is a misconception. Can you explain that?
Degrowth is indeed about less economic activity and less use of raw materials and energy. That is true, but that is at the macroeconomic level. What is not true is that this means we will go backwards. It is actually a positive story. In an economy where growth is no longer central, and which remains within the planetary boundaries, everyone can do well. It is also an economy in which certain sectors, renewable energy, care, arts and culture, should flourish. Better even.
For example, imagine a refrigerator that lasts twice as long as current refrigerators, but costs the same. Then the individual is better off, but economic growth is halved as only half of the refrigerators need to be produced. And if we share things that we only use occasionally – such as the drill I mentioned earlier – then we can use them as much as usual, on an individual basis, but economic growth also decreases.
I often hear the argument that less economic growth also leads to less employment. I wonder if we’re able to imagine a post-growth world where meeting our needs doesn’t rely on us all working as much as we do now to earn a living. If the economy is rooted in justice, instead of profit maximisation, then it could be designed to support us all equitably and to provide what everyone needs to thrive. In this world, paid work could play a different role in our lives.
I appreciate that this all sounds a bit utopian – and maybe it is still a distant prospect – but I believe it is possible to rewire the current system, with small steps in that direction.
An economy is simply a set of rules that we have all agreed upon. It is a construct. In my opinion, it is high time to make new agreements with each other.
Very interesting and I agree with most of what is said . We need a reset but it won’t be easy
I have always argued that in a finite world, which is what we have, then for one economy to grow there will be corresponding shrinkage in somebody else’s. I joined a class in economics as a young woman, and left quite quickly when I was informed that women could not understand economics and I was simply naive. I also had a friend who was a lecturer in economics, and he too thought I was simply naive. My reading this year has included Land, by Simon Winchester, Empire by Niall Ferguson and Chomsky’s Who rules the World? All three MAKE CONNECTIONS, and I am more than ever convinced that unless we realise that we are all one human race and that we need to grow up and out of the playground wish to bloody each other’s noses and keep all the toys to ourselves, we are all doomed. It already seems perilously close to that. I live in faith, and hope, that loving our neighbour as ourselves is the only sane way forward.
Interesting concept from a wealthy country perspective, but not applicable to poor countries that aren't anywhere near the inflection point when well-being no longer increases with GDP. For such countries to achieve anything like a decent standard of living, rich countries have to consume very much less resource, and use,and pay for, much more labour e.g. in repairing and recycling to do so.
An excellent article. I am familiar with and supportive of the process but the article gave clear explanations and defined some of the terminology.
Really pleased to read this. Degrowth is the way forward and to have a Bank promoting it shows it is not as utopian as others would have us believe.
Hearing someone in the banking sector acknowledge the limits of the infinite growth mindset and the so-called "decoupling" is immensely refreshing, and fills me with the hope that change is possible. Thanks for this article!
Excellent article and it could mean a better life for everyone. One comment was saying it's ok for developed countries but what about the developing world. The Doughnut Economics acknowledges that in addition to not exceeding planetary boundaries, people in the world without access to clean water, food, health care will need to be supported and helped to reach that sustainable level, the Doughnut. Governments talk about the circular economy but at present are putting scant resources into it, often left to volunteer groups to organise Repair Cafes, Tool Libraries, etc. The Labour Government are aiming for a Zero Waste Economy by 2050, so we need growth in these sustainable sectors, not in manufacturing the latest gadget.
It's been interesting to read and I'm excited to know that Triodos is involved in working-out what this could look like in a future, decarbonised world. Accepting the limits to growth means more equality. A world with no billionnaires and no tax loop-holes would be a huge step forward.
Everyone knows the Earth isn't flat but that is what you would need for infinite growth - so you could always go a bit further for more resources.
Absolutely brilliant. Confirms why I bank with Triodos.
Yes, working thru the ideas into practice is an important step, so thanks for doing that. Someone referred to "poor countries being unable to do these things" - one can see the argument, yet also "poorer countries" do many of the things that you are suggesting, such as sharing resources, so we could see how to keep these things going as their standard of living increases. Longevity is something to try here too, for one can see that longevity might well be deprecated in favour of "cost" or "can I have it sooner".
I’m delighted to read this, and strongly support Triodos in moving in this direction. It’s important for normalising the conversation that challenges assumptions of continuous economic growth and is just one of the reasons I am happy and proud to bank with you
Excellent article - I've forwarded to our local mayor in the hope he will read it and consider doing something. Unfortunately at the moment, this is considered quite "fringe" although doughnut economics is promoted in Carbon Literacy training. Thanks
Helpful and inspiring. Thank you.
I agree with the article. Unfortunately, the rich and big business have huge resources to influence politics and the media in their favour. As an individual, I have a Green lifestyle. I have had loft and cavity wall insulation for 50 years. I now have solar panels and battery storage. I have grown some of my own food and composted for 50 years. I try to make things last, my suit is 37 years old and will see my time out. I do run a car as it is unsafe to cycle in my area.
It’s a way forward for society! How to get people onboard? Not much time left?
Well argued article. Thank you Hans. Doughnut Economics and a just Circular Economy are two ideas that are becoming more mainstream where benefits are being seen in both the Global North and Global South in terms of environmental, social and economic impact. More articles like this Triodos. I am pleased to be a customer of such an enlighted bank.
I loved the article and long for a world where we would live with less - less (fewer) things, less profit-making, less need to work too hard for physical and mental good health to exist, less pollution and so on. I glimpsed it during the pandemic, but we quickly returned to an unhealthy way of living. Also, the word ‘addicted’ was used, and I think it is so accurate. Many people I know change their (expensive) cars too often in my view (I have a 13 year old car that still works wonderfully well). The people who replace perfectly good items will take a lot of persuasion, I think, to change their focus. The post-growth way I hope will come one day. If it were worldwide it feels as if it might even reduce the perceived need for war. Sadly, at 76 I probably won’t see it.
Interesting.
Very interesting, thanks. Please forward to Keir Starmer!
I'd like to hear more direct exploration of the questions: 1. If we achieve genuine local sustainability (living within local means) will we need global trade and finance? 2. What are the socio-economic implications of global ownership of local climatic opportunities?
This is why I have banked with Triodos for 25 years!
Excellent. This clearly articulates something that many of us feel is desperately needed.
I love this article. I have thought for a long time that the pursuit of profit above all else and human greed for more, more,more is what is causing so much destruction, for all life on this planet. Human created constructs are just that, simply a construct. So we can change and allow degrowth. The key challenge is convincing enough people in power to agree to this and to effectively implement it. Before it is too late.
Whilst your analysis is spot on, this report lacks the sense of urgency that these issues demand - too many ‘mays’, nor enough ‘wills’. As experts in the sector, you know the true realities of our situation and the climate, social and economic Armageddons that we face. Please ramp up the rhetoric. Your vision is essential and must be heard.
so succinct, so carefully phrased and framed - bravo. a couple of challenges. 1/ "governments have benefited enormously" - see the worldinequality report that shows how private weath has grown and public decreased over last 50 years 2/ "profit maximisation is not a problem in itself" - well, it is for all the reasons you lay out. it means that all other things are less important which is where we go wrong 3/ "in order to achieve radical change we need to get to a point where we all feel secure" - that in itself is radical, given the urgency we cannot design a transition pathway that requires a radical change to effect a radical change - need a faster, hard hitting approach...
Great article, we were discussing degrowth at a recent WILPF UK Climate Justice Working Group meeting
Excellent.
Refreshing to hear from a bank. Thank you - that’s why we bank with Triodos!
Excellent: clear and concise. I used it in a U3A group I Iead on Costing the Earth
Sorry. Great article, if it was not for the fact we are humans. Money talks. Till we humans can stop putting money at the top of our list, we en't going any were.
Post-growth is clearly essential if there is to be a sustainable future- "The collapse of civilisation is on the horizon" (Sir David Attenborough)- we need to act fast! Reports predict that business as usual could lead to this happening by 2040. How are we going to make this happen- Campaign groups call for action but are generally ignored even when disruptive- Tridos has a respected voice- do you have a campaign to achieve action? How can we make this happen
Enjoyed reading but concerned! I’d like to bank with Triodos but am concerned that my Bank overdraft and loans may mitigate against this!
I'd have to disagree with, "An economy is simply a set of rules that we have all agreed upon." For example, I read somewhere that 90 percent of professional lawmakers (i.e. parliamentarians) do not understand the circumstances under which money can be created.
It is excellent to find a bank pioneering this kind of argument, and I congratulate Triodos for it. There is much work to be done in forwarding any post-growth transition, but this is the kind of initiative that can make a big difference.
It seems quite logical and well thought out.
Sane. There, that's it. I find it useful to imagine a being from outer space, this being knows everything - every language on earth, everything that has ever happened, the truth, how the universe works et al. So take any current issue and put it to the being, you already know the obvious answer will be forthcoming, there will be magic bullet or fairytales saying "drill baby, drill". Our planet is finite as are our resources. Humans really are incredibly wonderful and stupid at the same time.
Post-Growth chimes well with Kate Raworth's idea to be agnostic about growth. GDP is a terrible measure of progress so why give it a serious profile? But what does Post-Growth look like? Follow Christianna Figueres or Jon Alexander on the road to being citizens, not consumers. A century ago Maynard-Keynes predicted we should be working a 15 hour week with plenty of time to engage in cultural and spiritual matters. If wealth is taxed fairly we could enjoy an economy as if people mattered, to paraphrase Fritz Schumacher.
I loved it! I have been reading and thinking about degrowth/postgrowth for some time and this article was perhaps the most clear and forward thinking in a practical sense than any I haave read. Thank you.