Managing Without Growth: Slower by Design, Not Disaster
Peter Victor, Cheltenham, UK: Edward Elgar Publishing Limited, 2008, 260 pages.
In his newest book, Managing Without Growth, York University professor Peter Victor makes a convincing case that rich nations, such as Canada, can abandon economic growth as a national goal without compromising their citizens’ happiness. He suggests that helping developing nations approach the Western world’s standard of living would provide a better and safer future.
Environmentalists have often criticized the growth economy without attracting much support, and without their doomsday scenarios playing out. Because the “limits to growth” crowd has been so wrong in the past and since the book’s arguments challenge too many of their ingrained assumptions, the majority of economists would read this book with suspicion.
Why should they pay any attention to this new call for an end to growth?
For starters, because Victor is a respected environmental economist, and a clear thinker and writer on this subject. He previously served as dean of environmental studies at York University, and was once an assistant deputy minister in the Ontario Ministry of the Environment. Beyond these solid credentials, the book’s importance is implied by the ominous warning in the sub-title: if we do not intentionally manage ourselves to zero growth, we will get there by disaster.
Victor’s fundamental argument hinges on several key points, starting with physical limits. He notes that natural resources (especially oil, gas, fresh water, agricultural land and marine resources) are in limited supply so we cannot continue to exploit them at current rates, much less at increasing ones. The projected world population of nine billion people cannot, therefore, reach the same standard of living enjoyed in the developed world, and if Western nations remain significantly wealthier than developing countries, conflict and ecological devastation will surely result.
Victor concedes that better technology can reduce resource use per dollar of GDP, but not fast enough to overcome the effects of a growing population or rising incomes. He notes that in previous studies, happiness levels have been shown to rise along with national GDP only up to about $15,000 per capita. After that, it levels out, meaning that the last several decades of economic growth in rich countries have done little, if anything, to increase happiness. Victor’s conclusion is that rich countries should adopt policies to end their GDP growth so that poor countries may approach our standard of living.
To agree with such a proposition, one likely has to believe, along with Victor, that overall happiness would increase if we redistribute wealth within Canada more vigorously from rich to poor. This income gap has grown so large that it is plausible that most Canadians could be lifted out of poverty without causing great suffering among the rich. Victor does not, however, fully confront the political problem of increasing income redistribution through more progressive taxation nor the ways in which the rich can avoid high taxes.
Although the book outlines the changes to our economy that would result from deliberately ending growth, it does not develop any disaster scenarios that would arise from the business-as-usual path of continued growth. Instead, it surveys existing literature on how natural resources limit economic activity, and pulls together those conclusions.
Economists generally dismiss limits-to-growth proponents because they ignore the adaptability of market economies arising from the effects of prices, innovation and technological progress. Victor embraces these things, but shows that history provides no evidence that they can save us from the resource and environmental crunch that is coming. He uses simple but robust simulation models to support his arguments and conclusions, which are ultimately convincing.
In purely economic terms, a no-growth scenario is achievable. But this is a radical position to take politically. It is difficult to imagine a politician proposing no growth plus income redistribution, and actually staying in power long enough to carry it through. This, one could argue, dooms Victor’s objectives.
Instead of pursuing a political path to a no-growth economy, perhaps we should concentrate on stronger limits on resource and environmental exploitation. This would be more palatable politically, and would arguably limit growth more effectively. Our past natural-resource and environmental policies are littered with failures (e.g., the cod fishery, federal global warming policy), so reform in these areas may be all that is required to limit economic growth.
Despite political challenges, this is an important book. Environmentalists will naturally embrace Managing Without Growth because it provides a realistic future path for an economy that they can endorse. But conventional economists should also read it because the book provides a blueprint for the first steps to economic reform that may avoid future catastrophe.
A professor at York University, Dr. Peter Victor researches ecological economics and environmental policy.