Prosperity without Growth: A Conversation with Tim Jackson

 

Editor-in-Chief Adam Stromme talks with Tim Jackson, ecological economist, author of Prosperity Without Growth, and University of St Andrews alum.

Adam Stromme: How did you first become interested in sustainability?

Tim Jackson: I would say it began in April 1986. I was living in London, having just finished a PhD in Physics from St Andrews but actually intending to write plays, when I heard about [the Chernobyl incident]. And at that moment, I realized that I had these skills for helping to build safer and more sustainable technologies, and that I should use them. So I got involved with Greenpeace, and that was the beginning of it. They put me to work on the economics of renewable technology, and that was where the economics bit of my interests came from.

AS: So why the economics of renewable energy?

TJ: I think at the time, everyone knew they existed, and yet they weren’t being deployed anywhere. The economics of it were a big part of the reason for that. Everyone knew that [sustainable technologies] were very expensive, particularly compared to things like coal. And while they were very successful with nuclear, I figured in light of recent events we should go for something a bit less risky. The best part of all of this was that the economics of renewables served as a sort of training ground for understanding the economics of sustainability more generally.

AS: What is the biggest misconception people have about a sustainable economy?

TJ: Not everyone would agree that a sustainable economy has to be a no growth economy, and a lot of misconceptions flow from that. When people hear about a no growth economy, many people ask “what about Africa?”, “what about all of these other developing countries where people don’t have energy or running water?”

Naturally, I am not talking about those economies, I am talking about developed economies. Many people see a zero growth economy as a matter of sacrifice, but I see it as a matter of providing a better quality of life, living better with less materials, and doing so without all of the harms of an expansionary economy.

AS: When you speak of ‘prosperity’ and ‘growth’, to many economists you are talking about the same thing. What does “prosperity without growth” mean?

TJ: Talking about prosperity without growth is really about making the very simple point that prosperity is not the same thing as economic output. You can be very rich but your health could be very bad, or you could be very rich, and you could not have access to education.  But if you focus on prosperity, if you focus on a broader measure of what it means to do well, then you have a much better chance of developing an economy that works without trashing the planet.

AS: What is wrong with our economy’s current relationship with growth?

TJ: I would say that there are 3 things wrong with our economy’s relationship with growth.

  • The first is that we pay so much attention to growth, but comparatively little attention to the impact of that growth. In other words, our current way of thinking about economics is such that we often neglect to realize when growth is uneconomical: when it is doing more harm than good.
  • In in focusing on growth at all costs we kind of neglected the distributional aspect of that [growth], so it tends to come out quite unequal.
  • Finally, we’re starting to see that growth of the advanced economies doesn’t really seem to be there in the same way that it was in the past. This has meant that we have become kind of lost in our policymaking, because we don’t have a simple guiding principle to our actions anymore, and addressing that is what talking about “prosperity without growth” is really about.

AS: To some, the existence of interest payments is a natural source of growth inherent to market societies. In order for a society to pay the interest on its debt, it must grow to accommodate. I know this is a theme you address in your book, but for those who have not read it yet, why is this not the case?

TJ: This is a really interesting problem we addressed in my book. I myself believed it was the case growing up, despite listening to people like Richard Douthwaite, and Hans Binswanger, both of whom were environmental economists who railed against the idea that growth in and of itself was beneficial for the economy. Douthwaite in particular wrote a book in 1992 called “The Growth Illusion” that was very influential for me.

The idea that an interest rate creates a growth imperative is of course brought up by many people who want to bury the idea of a low or no-growth economy, but it was also quite popular, and so at first I took it for granted. But when we first started modeling it we used something called “Stock-flow consistency” which is a way of ensuring that your economic model actually behaves like reality, that all transfers flow through the system of accounts correctly.

And what we found is that that assumption of economic growth in the presence of positive interest rates, except for its marginal impact on profits and rent, is not correct. It was quite a surprising finding, but it has been established by a number of other people, and it seems the reason for it is that the positive interest rates don’t affect the growth of the economy of the whole, but rather just form an added part of transfers between sectors. So although positive interests rates create an imperative for growth written into the DNA of companies, it’s not a fundamental necessity for economies to abolish interest rates in order to be low or no growth.

AS: In your work you quote George Monbiot when he says: “The belief that economic growth can be detached from destruction appears to be based on a simple accounting mistake”. What did you mean by this, and what is the ‘myth of decoupling’?

TJ: A lot of advanced economies look like they are becoming more sustainable, and they are doing this because they are able to reduce their economic throughput (throughput is the measure of all of the material goods economies use). The idea of teasing apart the material aspect from the growth aspect of the economy is decoupling. But quite often, the way that we count up the material aspect of our economies doesn’t account for trade.

This is important because developed economies have exported a lot of their manufacturing overseas, and so there has been a dramatic failure of accounting when developed world economies claim they are becoming more sustainable. If you look at those global figures you find that the numbers surrounding things like material extraction and carbon pollution (the main drivers of economic throughput) are still rising. Even worse, things like environmental destruction are rising even faster.

AS: How is the question of sustainability connected with other problems, like inequality and financial reform?

TJ: The connection is really about the kind of economy that we have. There are certain problems that belong together. I would argue to some extent that the way that we have grown our economies has very much been a part of the development of structural inequalities we’ve seen in the last 30 or 40 years. [Additionally], that growth paradigm is connected with financial instability. So there is a set of problems that go together, and they all have their root in the kind of economic model that we have.

AS: With another election now just around the corner, and a likely Conservative victory, what are the prospects for moving towards a sustainable economy?

TJ: It remains to be seen what will come out of the election, and there are a number of different scenarios. A very much strengthened Conservative government with a harder line towards a number of issues, Brexit, etc could be disastrous. But there are also indications that a Tory government might maintain things like the Climate Change Act, and if there were any possibility of an alliance between Progressive parties then that could provide another incentive for countries to keep their eye on the ball.

The task in a way hasn’t changed very much, and it’s more just about finding a way to carry it out with a different set of people.

AS: Which major political movements or parties have taken the challenge of moving to a low or zero growth economy most seriously?

TJ: There are two. They aren’t massive by any means, but the British Greens and a movement called Alternativa (Denmark) which have explicitly developed ideas around being agnostic to a growth economy in order to be able to talk about a no growth economy.

But there are also some interesting examples in Latin America, Ecuador in particular, which are at least tempering the growth models of those countries. Even in China, although it is of course growing, they have quite explicitly downgraded their growth expectations in order to be able to achieve certain social or environmental objectives.

It isn’t that there’s no conversation going on around the world, but it’s easier in some places than in others

AS: What is the likely fate of the Paris Accords?

TJ: [The Paris Accords] were an extraordinary moment in the history of international policy, particularly because of the strength of ambition of those that went into the talks in Nov 2015. The idea of getting targets down to 2 degrees was always seen as aspirational, so getting below that was a major achievement. But it was also clear that the intended national commitments were well below what was necessary to meet those agreements. So that’s where we are right now: it’s a very difficult situation to read and to hold fast to. It’s a political quagmire, and while there is still a body of political support for the Paris Accord and for the targets which were set, we’re still a long way from being able to say that we will be able to reach those targets with any reality at the moment.

In part, the outcome is going to depend on the response of the United States.

AS: What are the biggest obstacle to a sustainable future, and how can we tackle them?

TJ: I would characterize them into two or three issues, but a lot of it has to do with our institutional structures, and the way that we have built our economic institutions, partly because they have been in place with the primary aim of delivering growth, and partly because they induce behavior in the finance sector and even in government itself which encourages people to be unsustainable, selfish, hedonistic, at the expense of the more sustainable or altruistic alternative. So having created this set of behaviors, we tend to see it as human nature.

But that’s a misconception. The real issue is that we have a set of economic institutions which incentivize this kind of behavior. I think the key is to recognize that these institutions are all basically social constructs, and that they have been instituted with the idea of helping us. The task is to recognize that they are institutional and not foundational in nature.

Everywhere you look, you find that these things are laid down in legislation and institutional structures and that they are therefore all absolutely changeable.


The St Andrews Economist would like to warmly thank Mr. Jackson for sitting down with us, and the University of St Andrews Department of Geography & Sustainable Development for inviting him. The St Andrews Economist is the official student-run publication of the St Andrews Economics Society. The above content has been edited for clarity.

Featured image courtesy of TED.

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