The Growth Delusion - Part 3

Arguments against degrowth don't hold up

Today, we’re going to take a look at some of the arguments against degrowth. This one is from popular Substack writer and stalwart defender of the neoliberal status-quo Noah Smith.

Here's the full article. Feel free to read it before you continue:

Degrowth: We can't let it happen here!

Smith opens his piece by pearl-clutching over a spectre that's haunting Europe—the spectre of degrowth. Fortunately, he notes, the American way of life of 12,000 square foot McMansions, gas-guzzling pickup trucks, indoor golf courses and $10,000 gender reveal parties is safe thanks to the brave actions of people like Smith. But the pinko-Commie Europeans are getting some dangerous ideas in their heads, and Noah needs to set them straight:

...there is one region where degrowth has gained both intellectual respect and some measure of popularity, and that’s Europe, where the movement began. The European Parliament just hosted an event in Brussels called the Beyond Growth conference, at which Ursula von der Leyen, the European Commission President, gave a speech...So I suppose degrowth is an idea that has to be engaged with, for Europe’s sake if not for America’s.

Oh my God, politicians are listening to alternative ideas! The horror!!! We can't have that in the U.S. now, can we?

...this conference prompted me to dive a little bit more into the degrowth literature and rhetoric. Unsurprisingly, what I found there makes absolutely no sense at all, either as an academic project or as a plan for policy.

Upton Sinclair explained this a long time ago: "It is difficult to get a man to understand something when his salary depends on him not understanding it."

Now, I think the reason degrowth is so popular especially in Europe is quite simple: The United States. The U.S. economy is far larger and emits much more CO2 per capita than every country in Europe. Yet the U.S. is a nightmarish hell of suburban sprawl, lack of public space, gruesome automobile accidents, opioid deaths, mass shootings, tent cities, crushing medical and educational debt, wildly expensive housing and drug prices, paltry welfare provisions, decaying infrastructure and obscene levels of wealth inequality. Americans work longer hours than almost any other industrialized country on earth with less protection from bad working conditions and arbitrary dismissal. By almost every social metric, the United States is near the bottom of the rich-country rankings, with the average person worse off than people living in the most blighted areas of the UK according to a recent Financial Times report¹.

So Europeans can just look across the Atlantic and see that GDP growth and spewing massive amounts of carbon into the atmosphere fails to produce a high quality of life for the average citizen. Meanwhile Europeans enjoy at least a month off from work, traveling on clean efficient high-speed rail networks to quaint, walkable towns and cities to enjoy high-quality, locally-grown food in cafes, boulangeries and trattorias across the continent while using half the carbon emissions per person of their counterparts across the Atlantic. In Paris, cyclists now outnumber motorists. Tourists flock to Europe from all over the world to experience this lifestyle—including from the U.S. (if they're lucky enough to have any vacation time, that is).

So the United States is proof positive that a high GDP and high CO2 emissions do not necessarily correlate with a higher quality of life. Therefore, it is clearly possible to have a high quality of life while emitting less CO2. So, I don’t think it’s a mystery why Europeans are likely see degrowth ideas as just common-sense—they experience them on a daily basis. For more on this topic, see: Why Does the U.S. Have Twice As Much Emissions Compared to European Countries?

Smith's attitude toward this? We can't let it happen here!

Some of Smith’s criticisms are rather bizarre and laughable. They are what the kids today would call a self-own. To illustrate this, I’ve copied a bunch of text directly from Smith’s article and altered just a slight word here and there. See if you can guess which words I changed:

Economics is a mishmash of libertarian rhetoric, pseudoscience, and occasional tidbits of actual science.

I don’t know the economics literature like I do ecology or sociology. But the reference lists in economics literature suggests that the pattern is pervasive — economists don’t really engage with the existing literature in any of the fields they intend to incorporate into their master schema. Instead they have attempted to do an end run around existing physics, ecology, history, and sociology, creating an alternative sphere of knowledge populated almost entirely by their own people. Within this sphere, the researchers — who are admitted to the club based on their shared acceptance of economics' foregone conclusions — build up each other’s reputation by citing each other.

That web of citations also functions as a barrier to entry; anyone who tries to enter the field of economics has to hop from one econ paper to another, gleaning only tiny bits of additional understanding each time. Ultimately the only people who will be able to fully comprehend the idea package economists offer are the people who were willing to dedicate many many hours of their limited lifespan to reading a ton of the literature — i.e., either economists themselves, or critics who are single-minded to the point of obsession.

Economics is not about finding the truth; economists have already found their truth, which is that capitalism and growth are desirable and good. This is a polemical exercise, not an open-minded investigation into how the world actually works. There was zero chance that these folks would review the research and conclude “Uh, actually, I guess it turns out growth isn't inherently good after all.” Therefore the studies economists cite are guaranteed to not just be cherry-picked, but also to be spun to support a narrative.

In other words, this is very poor science indeed...

The point I'm trying to make is that I've heard these exact same arguments almost word-for word from critics of the economics profession for many years, including occasionally from economists themselves (funny enough, the first line turns out to be the best one-sentence description of economics that I've read, and I'm going to use it from now on.)

It's rather laughable for an economist of all people to accuse the degrowth movement of ignoring the real world in favor of abstract theories. Economist Robert Solow famously wrote a paper in 1974 where he assumed the infinite substitutability of resources in mathematical equations and declared that, “the world can, in effect, get along without natural resources.” Then there's William Nordhaus, who argued that, since 87 per cent of the American economy takes place indoors, climate change will have a negligible effect on the global economy².

And these are hardly obscure individuals. They are the leading intellectuals and most influential people in the entire profession. They have the ear of every decision-maker on the planet, which brings up another howler from Smith:

"This intellectual project is intentionally grandiose."

As opposed to the humility of economics, apparently. "Think like an economist" has become a popular catchphrase; economics purports to explain all facets of life; it ignores the findings of all other academic disciplines—anthropology, sociology, psychology, ecology, physics, chemistry, philosophy and history—and insists that only its philosophical framework is sufficiently rigorous and "scientific." Its core concepts like market efficiency, equilibrium, perfect competition, infinite substitutabilty, rational expectations, and many other concepts have been universally accepted despite having no empirical basis. It is one of the most popular majors in universities around the world whose graduates go on to command highly-paid positions in governments and think-tanks. Its practitioners are consulted by world leaders and write op-eds in major publications. It claims that its “laws” are universal and inviolable.

If that's not grandiose, then what is? Certainly John Maynard Keynes noted a tendency toward grandiosity among economists many years ago, remarking “If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.”

Hilariously, Smith castigates degrowth for not engaging properly with other academic disciplines, implying that his preferred field of economics does:

You obviously don’t have to agree with mainstream economics or ecology or sociology. But if you’re going to criticize and try to overthrow these disciplines, you should at least engage with them; you should at least know what they say, so you can rebut it. And as soon as one comes in contact with degrowthers, it is immediately clear that they don’t have any idea what mainstream research says — at least, not with regards to economics.

Really, the field of economics regularly engages with other disciplines? What kind of economics is he looking at, because that's not what I see. Economic history has been almost entirely purged from the economics curriculum in favor of abstract mathematical formalism. The physical world of stuff doesn’t enter into it at all, including the concepts of energy and entropy—everything is reduced to land, labor and capital inputs, along with exogenous technological change (“exogenous” meaning unpredictable and unexplained). It even ignores the roles of banking, debt and money, which is why it routinely misses financial crises. It claims to be value-neutral and independent of political decision-making, ignoring the role of institutions. Its axioms are treated as true a priori and its fundamental assumptions are buried in mathematics and jargon. It depicts people as inherently rational, disregarding human psychology by assigning it to the ghetto of “behavioral economics.” It stubbornly ignores issues of fairness, inequality and distribution. I could go on and on³. No wonder degrowth ignores it.

Smith dismisses one degrowth scholar who writes that, "The dominant assumption of economics right now is that every industry must increase production every year regardless of how destructive it is and regardless of whether we actually need it," by pointing out the concept of externalities.

Here's the thing: I'm pretty sure Jason Hickel knows what externalities are. But does that invalidate what he said in any way? the fact that the concept exists in economic theory has absolutely no bearing on how the world really works. Think about it: would any CEO address a board meeting by saying, “We have failed to increase profits this year because it would cause an unacceptable amount of externalities.” Would any politician campaign on not increasing GDP? Would any businessperson or engineer question whether increased production was socially necessary without being immediately fired?

Of course not! We instinctively know that this is ridiculous—endless growth is the de-facto goal of every business leader and politician on earth, regardless of what is in economics textbooks. Smith certainly knows this is the case but he's being deliberately obtuse here. It's another example of an economic theory that has no bearing on the real world, yet he claims that degrowthers are the fantasists.

Much of Smith’s argument against degrowth (and those of others in the same vein) rests on the idea of "decoupling." This is the idea that economic growth as we know it will continue forever while producing less and less atmospheric carbon over time. As is common for these arguments, it focuses exclusively on carbon while ignoring all the other kinds of environmental damage caused by overproduction and focuses only on a handful of countries, ignoring the fact that the global rate of CO2 keeps continuously breaking records:

What [papers criticizing the idea of decoupling] all share is a reliance on past trends to forecast future trends — decoupling has never happened, they say, so it won’t happen in the future...That’s a complete fallacy, of course. Just because something is unprecedented doesn’t mean it’s impossible...

...yes, it’s true that we haven’t yet decoupled enough to save the planet. The operative word here being “yet”. It should be apparent from even a moment’s consideration that decoupling of a sufficient sufficient [sic] to save the planet will not be evident in the historical data until the planet has already been saved...without tentpoles like “decoupling is impossible”, the whole edifice becomes merely a collection of disparate pieces of research about environmental harms... (italics in original)

A moment's reflection shows the problem with this argument. If climate change is truly an existential threat, and the consequences are even a fraction as dire as scientists predict, then gambling that something might happen in the future is extremely dangerous. “We won’t know it’s worked until after it’s worked,” is an odd stance to take about any scientific topic. Meanwhile, scaling back unnecessary production is proven to reduce CO2 emissions right now. If degrowthers are wrong, there is no serious downside, but if economists are wrong it will lead to catastrophe.

Similarly, regarding limited resources:

What if we just…used less phosphorus and nitrogen, but kept on growing our economies? We’ve done that with plenty of other natural resources. Degrowthers will wave this idea away...“Green growth is unlikely” is one of their foregone conclusions.

But are there adequate substitutes for these resources? Certainly they cannot be reduced by 100 percent. Economists like Smith don’t seem to care very much about these questions but degrowthers do because, unlike economists, their models are based on empirical reality. If economists are supposedly so interdisciplinary, why don’t they cite chemists or engineers? And the assertion that green growth is unlikely is hardly a “forgone conclusion,” but rather has a massive amount of research to back it up—research that Smith deliberately chooses to ignore or downplay for ideological reasons even as he accuses his opponents of being ideologues.

Smith links to Timothée Parrique, a French ecological economist, which is probably not a smart move because when you actually start reading Parrique’s writing, it is so clear, concise, and factual that it makes Smith look like the disingenuous, bad faith actor that he is. Parrique wrote a response to an earlier article Smith penned back in 2021, and although it might be a bit out of date, it's a pretty robust reply and is worth quoting extensively (sorry for the length):

Noah Smith writes that “in the past, GDP and resources use have always been tightly correlated. But this is just drawing a line through some data – it’s not based on any deep theory.” Let’s start here: the line has been drawn many times – 1,157 times according to the systematic review of the decoupling literature conducted by Helmut Haberl and fifteen colleagues in June 2020. Findings: “we conclude that large rapid absolute reductions of resource use and GHG emissions cannot be achieved through observed decoupling rates.” Regardless of your theory and whether you think it is deep or not, this result is the most solid empirical fact we have: GDP and environmental pressures have until now always been tightly coupled.

So, the author is mistaken when he writes that “currently, rich countries are increasing their GDP while decreasing their resource consumption.” First, the focus on resource consumption is too narrow. A “sustainable” economy in any meaningful understanding of the term must consider all the complex interactions it has with ecosystems, and not only carbon. The CO2 cases of decoupling are ambiguous and worth debating (I’ll get to that in a second), but the decouplings of other forms of environmental pressures are more difficult to assess because they’re hardly studied (80% of all decoupling studies only focus on either primary energy or CO2 emissions). What we do know is that the state of ecosystems is worsening at an increasing pace, with all measures of environmental degradations on the rise.

But let’s talk about carbon for a bit. Have we managed to decarbonise growth? Answer: not really. Don’t take my word for it, read the actual study that green growth advocates brandish as proof that decoupling is underway. What it really shows is that only 18 countries in the world (not many) have managed to reduce (the cut is minuscule) their CO2 emissions (only one environmental pressures among many others) between 2005 and 2015 (a rather small period of time), with part of that decrease being explained by a slowdown in GDP growth rates...This is not green growth, this is a-tiny-bit-kind-of-greener-than-before growth…

Noah Smith’s optimism is not only scientifically unwarranted, it is also dangerous. Imagine someone who would say in the midst of a pandemic that “currently, rich countries are decreasing the number of positive cases,” but then you discover that: (a) the statement only concerns a small, unrepresentative demographic, not all rich countries but only a handful of them, (b) that it only concerns one type of disease and ignore all others, (c) that the “currently” may have meant just a few days, when trends were worsening the rest of the time, and that (d) the rates of decrease of positive cases is marginal. This statement is reassuring but dangerously so because it assumes we’re somehow going in the right direction at the right pace – we’re not.

In fact, this statement is largely false. I say “largely” because it can become true, but only by being extremely vague, like the convoluted, legally jargoned sentences of tobacco lobbyists who would write that “smoking may, under certain specific and not generalisable circumstances, cause varying levels of damage to health.” We know this is bullshit. This is why we now write on cigarette packs that smoking kills. I think that the same should apply to decoupling. Let’s stop saying that “well, maybe, sometime, if this, if that, we may be able to achieve certain degrees of decoupling that might, to some extent, make growth more ecologically sustainable,” and let’s face an inconvenient truth: the growth of rich countries is not sustainable and will probably never be.

A response to Noah Smith: Is degrowth bad economics?

Ouch! I leave it to you to decide who has the better argument. Parrique’s reply is worth reading in full—the above only scratches the surface.

Smith concludes his diatribe with a round of leftist-bashing and hippy-punching, which is pretty standard fare for him, even mocking people's names:

Then there was the youth activist Anuna De Wever Van Der Heyden (yes, that is a real person’s name, it’s Belgium, just roll with it), whose closing speech at the European Parliament’s conference was about the need for “decolonization” as part of degrowth...If you’re scratching your head and wondering “Wait, didn’t decolonization already happen in the 1960s?”, well, yes it did. But there’s this meme in some corners of the Left, especially in Europe, that capitalism is actually colonialism, so actually colonialism is still around. Yes it’s silly, but the point is that the degrowthers are trying to include every possible leftist cause in their rhetoric.

The critique is not that capitalism is actually colonialism. It is that the global trade system established by wealthy, industrialized countries is organized in such a manner as to disadvantage the "Global South," by forcing poorer countries to supply cheap labor and raw materials to the "Industrial North" preventing them from sufficiently developing their domestic economies, to the point of overthrowing any leader who tries to do so. It also traps developing countries in a cycle of predatory loans and debt repayments which restrict human development. Smith criticizes degrowthers for failing to engage with mainstream economics, yet Smith doesn't even try and understand these arguments or engage with them in any way, instead creating a straw man and breezily asserting that, "colonization ended in the 1960s." Take that, crazy leftist Euro-hippies!

There's another part where he says that doing things like building more housing for people and constructing high-speed rail will require growth, thereby showing that he doesn't understand the concept at all. And, as economists usually do, he conflates degrowth with drastically lower living standards, recession, austerity, poverty and decline. But, as critics point out, poverty, recession and austerity are actually byproducts of the current capitalist growth model:

Unsurprisingly, degrowth has come under severe criticism from pundits, mainstream economists, and the jet-setting Davos elite...Indeed, this is how many people understand degrowth: as a call for austerity and a trigger of recession. In reality, degrowth is just the opposite.

To begin with, austerity is always imposed for the sake of growth. We have been convinced, for half a century now, that cutting public services is good for us because it will increase competitiveness, balance the budget, and eventually lead to growth. Degrowth, by contrast, is the argument that we can, and should, move away from an economy that exclusively depends on economic growth.

While austerity increases inequality by curbing public services and benefitting the rich through tax cuts and privatisation of government services, degrowth policies focus on democratising production, curbing the wealth and overconsumption of the rich, expanding public services, and increasing equality within and between societies.

Degrowth is also not a recession: recessions are unintentional, while degrowth is planned and intentional. Recessions make inequality worse, degrowth is about making sure everyone has their needs met. Recessions often cause bold policies for sustainability to be abandoned for the sake of restarting growth, while degrowth is explicitly for a rapid and decisive transformation. (my emphasis)

Degrowth is not austerity – it is actually just the opposite

My previous post pointed out the fact that people actually live longer when economic activity is reduced. Why shouldn't we think of ways to get those benefits without the downsides? Why shouldn't we think of ways to maintain a high standard of living without depending on GDP growth so that our societies don’t fall apart and inflict vast amounts of suffering the minute growth stops, even while rich people continue to profit?

Japan is often touted as another example of a country that is wealthy, stable, safe, healthy and prosperous even though it has had hardly any conventional economic growth for the better part of two decades. In fact, by every conceivable metric, Japan is far better place to live for most people then the "growing" United States. Ironically, Smith writes a lot about Japan, and I believe he used to live there. Apparently, he didn't take away any lessons from that experience. Recently, Current Affairs had an interview with a Japanese economist who wrote a best-seller about the topic: Why We Need Degrowth.

In the end, Smith sneers that degrowth, "wants to "become the central aggregator of every left-of-center utopian dream and every leftist ideology that has been kicking around the Western world since communism collapsed and forfeited that role three decades ago." He doesn’t offer any arguments about why those ideas are bad, though, or even an accurate description of what they are. This seems to be his real beef: it’s leftism, and Smith despises leftist goals like greater equality, worker protections and better public services with a passion. At least he should be honest about it.

Look, when all is said and done, everybody knows that the reason that economists like Smith hate the idea of degrowth is because the vast majority of the benefits of economic growth as currently constituted flow to the rich and powerful, and their prerogatives are what economists are dedicated to protect. Degrowth explicitly calls for more equality, redistribution, and restricting the opulent lifestyles of the richest people on earth (mansions, yachts, private jets, etc.), while asserting that the general welfare is more important than profit. So, of course it is the enemy and must be vigorously opposed by people like Smith who write primarily for an affluent audience in wealthy enclaves like Manhattan, Washington D.C., and Silicon Valley: We can’t let it happen here!

1. See my previous post: https://hipcrime.substack.com/p/is-the-united-states-a-failed-society

2. For the first item, see the article by Parrique, cited. For Nordhaus, see Steve Keen: https://i3-invest.com/2023/08/economist-blasts-climate-risk-assessments/

3. In fact, in 2014, several years after the global economic crash, students in 41 economics departments in 19 countries around the world, fed up with what they were being taught and its failure to engage with the real world, wrote a manifesto calling for a reform in how the subject is fundamentally taught:

The students, who have formed 41 protest groups in universities from Britain and the US to Brazil and Russia, say research and teaching in economics departments is too narrowly focused and more effort should be made to broaden the curriculum. They want courses to include analysis of the financial crash that so many economists failed to see coming, and say the discipline has become divorced from the real world.

"The lack of intellectual diversity does not only restrain education and research. It limits our ability to contend with the multidimensional challenges of the 21st century – from financial stability to food security and climate change," they say in their manifesto. "The real world should be brought back into the classroom, as well as debate and a pluralism of theories and methods. This will help renew the discipline and ultimately create a space in which solutions to society's problems can be generated."

…The student manifesto calls on university economics departments to hire lecturers with a broader outlook and introduce a wider selection of texts. It also asks that lecturers endorse collaborations between social sciences and humanities departments or "establish special departments that could oversee interdisciplinary programmes blending economics and other fields"

https://www.theguardian.com/education/2014/may/04/economics-students-overhaul-subject-teaching

In other words, unlike Smith, the economic students themselves were perceptive enough to recognize the limitations of what they were being taught.