In a quote heard around the world this week a 16-year-old climate activist threw down the gauntlet.
Greta Thunberg’s passion reached deep into our hearts when she angrily called on our leaders to stop the suffering and dying, to stop entire ecosystems from collapsing.
But with the next sentence in that widely quoted appeal for action, Thunberg did something many of the most powerful people in the world will find harder to swallow: she thrust a knife into the beating heart of conventional economics.
“We are at the beginning of a mass extinction, and all you can talk about is money and fairy tales of eternal economic growth. How dare you!”
To most economists, money and endless economic growth are no fairy tales, they are essential to how the world works, how lives are improved, how people earn their living.
But there is another way of understanding economics that comes under the general title of sustainable prosperity, and a Canadian economist is one of the world’s principal exponents of how such a system would work.
Tomorrow, as students and many others participate in the strike for climate change, there are signs business would like to show support. Mountain Equipment Co-op will close its doors. Upmarket fashion brand Patagonia has offered space for sign-making. Amazon’s Jeff Bezos has announced he will buy electric delivery vans once they become available. Canada’s financial sector has expressed concern.
Asked by host Laura Lynch on CBC Radio’s The Current this week about talk of business contributions to the climate change fight, environmentalist Bill McKibben was skeptical.
“The talk is growing, but it’s not about how the financial sector is fighting climate change,” said McKibben, a founder of the group 350.org, “It’s about how the financial sector is continuing to propel climate change.”
McKibben cited a list of the world’s biggest banks that continue to invest in the carbon-intensive industries that are making climate change worse. Four of Canada’s big banks — RBC, TD, Scotia and BMO — are in the global top 10.
Canadian economist and author Peter Victor, who studied at UBC and taught at Toronto’s York University, says that conflict between words and investment is the crux of the collision between the traditional way of thinking about business — the idea of investing for endless growth — that has to be overcome to stop climate change.
And clearly, for most economic thinkers trapped in the long-held view that boosting GDP with industrial growth is the most important job for governments and business, Victor’s newly reissued book Managing Without Growth: Slower by Design, Not Disaster may be difficult reading.
“Most economists would really take the position that there is no choice: If you don’t have growth, the system would collapse,” said Victor this week from a cabin somewhere near Algonquin Park.
Prosperity without growth
Victor has created a low-growth simulation model for the Canadian economy to demonstrate that there is a choice. Getting from here to there may be difficult, but in principle he says his work shows there are no economic reasons why Canada cannot be prosperous in the absence of traditional, industrial, GDP-style growth.
As he describes in a slightly out-of-date 2013 video lecture embedded below, the concept of economic growth is a relatively recent post-war invention. According to the 2016 book The Rise and Fall of American Growth, the growth era may be ending in any case.
But endless growth could be replaced by shifting growth.
“Even in an economy that is not growing, you can have a lot of dynamic change,” said Victor. “We need some sectors to grow if we’re going to switch from fossil fuels to renewables, for instance.”
And we will still have to keep busy, not least in figuring out ways of making our economy keep ticking in the face of climate change. Building sea walls to protect a city does not increase output like building a new factory or increasing oil output, but it is useful.
So are many things that are not traditionally seen as helping the economy grow, including creating art, looking after friends and family, participating in political activity — things not properly captured in GDP and therefore not contributing to growth. Maybe economists can recalibrate our system to value those activities.
Studies of well-being have indicated that faster growth does not give people more free time or make people happier. A low-growth economy could do that.
Repeated analysis has shown that the current understanding of economic growth is using up the planet’s resources at a rate that cannot be sustained. As the title of Victor’s book implies, disaster would end growth one way or another, just more abruptly.
According to Victor, adapting to a low-growth economy will be complex and demanding, but there will be many compensations, such as not destroying the planet and not driving the rest of the world’s plants and animals into extinction. Of course, that was Thunberg’s point.
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