Who is afraid of degrowth?

A Global South economic perspective

October 12, 2021

by Rosario Guzman

Environmental scientists, economists, academics and social movements have been talking about “degrowth” as an approach in dealing with the climate crisis. The concept makes perfect sense, but it has provoked doubts and objections, even among well-meaning environmentalists. It doesn’t mean we have to avoid the conversation, however, playing it safe and being polite. The climate emergency is a ticking time bomb, and at stake is the future of our planet and the people.

A problematic word?

Degrowth is defined as an intended reduction of energy and resource throughput so that the economy springs back in balance with the living world in a way that reduces inequality and improves human well-being.

The point of degrowth is to look for ways to restructure the economy so that it will look after people’s needs, justly distribute wealth, and not exceed planetary boundaries.

Degrowth is about reducing throughput, not the gross domestic product (GDP), although it would likely lead to a decrease of GDP growth rate or even GDP decline.

This is where the concept runs counter to the discourse dominated by mainstream neoliberal economists. The latter argue that we must pursue perpetual economic growth, decouple ecological impacts from the GDP, and make economic growth “green” instead.

But the “green growth” wish does not have any material basis. There is no historical evidence that shows that GDP growth does not have any relationship with energy and resource utilization. We have witnessed how more growth has entailed more energy demand, more fossil fuels use, and more carbon emissions. Existing models project that green growth cannot be achieved even under optimistic conditions. We don’t have much time to expect that the shift to renewables will quickly comply with the 1.5°C to 2°C carbon budgets.

The Intergovernmental Panel on Climate Change (IPCC) in its 2018 special report has already indicated that in the absence of negative-emissions technologies, the only feasible way to remain within safe carbon budgets is for high-income nations to actively slow down the pace of material production and consumption. The IPCC Six Assessment Report (AR6) 2021, yet to be released, reaffirms the urgency of limiting carbon dioxide (CO2) emissions to at least net zero around or after 2050. This should be followed, the report notes, by different levels of net negative CO2 emissions. Science has spoken – degrowth is the way to go.

Adverse reactions are expectedly coming from those who have placed the GDP on a throne as though it is the end-all be-all of prosperity and development. Neoliberal economists, policymakers and politicians have obsessively targeted GDP growth as an indicator of progress, when what they really want is the growth of commodity production, growth of consumption, and thereby growth of profits. Their growth propaganda obscures the fact that GDP growth can only be pursued with the growth of commodified materials and energy and growth of environmental costs.

And in order to argue more against degrowth, they point to recessions such as those precipitated by COVID lockdowns as proof that degrowth is bad. Yet, they remain silent on the growth of the wealth of the world’s super-rich even during the pandemic. Also, although the concept of degrowth should urgently be applied to high-income countries, detractors pretend to be arguing for the Global South. They say that it is not fair that poor countries are being told to slow down when these countries have not yet experienced sustained economic growth. Yet, they continue to ignore the fact that the Global South is poor because of plunder by the growth-obsessed Global North.

The word growth, not degrowth, seems to be the problem.

Traumatized by growth

Growth is a painful word for the people of the Global South. In the past 40 years, we have been told by international financial institutions (IFIs) to equate economic openness to growth, and growth to prosperity.

This paradigm has led us to the unbridled inflow of foreign capital and outflow of super-profits in the form of domestic revenues and natural and human resources. It has consigned our economies to being captive markets of foreign products and frustrated our chances of being able to produce for our real needs and on our own. It has introduced another yet painful term – privatization – and the people have seen public utilities, social services, and the commons being taken over by private corporations and individuals.

Four decades later, some countries from the Global South have emerged economically with tremendous growth rates that surpass the North. An Asian Century is dawning, or so we have been told, to emphasize the growth potentials of the Asia-Pacific. These trends could foster South-South cooperation and finally overall growth, it has been predicted. The Philippine economy, for instance, a laggard in the region, has seen its GDP growth rates increasing especially after the 2008 global financial crisis.

But the Global South has only continued to have the massive unemployment and the highest out-migration of working people. This jobs crisis has been favorable for investors to depress wages even more while overpricing commodities. IFIs and multilateral agencies have insisted that the low wage levels are more than enough for people to live on, also in order to legitimize cheap and flexible labor. Still, millions of Global South populations are living below these understated standards.

At the peak of our growth patterns, we have also reached the brink of ecological collapse. Centuries of colonial logging, large-scale mining, energy and fossil fuels extraction, monocrop plantations, commercial fishery, and chemical agriculture have already devastated our environment. But we have not been liberated from such bondage of feeding the capitalist needs of the rich colonizers even under so-called independence. In the last four decades we have seen the new kind of colonial plunder and pillage of our natural resources and heritage, or whatever is left of it, as we have been told that our attainment of economic growth necessitates liberal and efficient resource utilization. Liberal here is defined as unhampered by protectionist and nationalist policies. Efficiency here is defined as cheapening our resources to yield the highest returns on private investments.

The Global South populations have been disproportionately hurt when COVID struck. This is because our original plague has been the privatization and commercialization of public health systems, which has debilitated our governments’ capacity to effectively respond to the pandemic. Strong health infrastructure is practically absent due to so-called universal healthcare being peddled by IFIs and multilateral agencies. This has veered the public health system away from direct service provision towards being insurance-driven. Public health was downright financialized.

Millions of people do not even have access to clean and safe water during a pandemic where frequent handwashing is basic prevention. Almost half of the populations of 15 studied cities in the Global South by the World Resources Institute lack access to in-house piped water, or to reliable, safe, and cheap water supply. And even this piped water is intermittent for 12 of the 15 cities. Apparently, the paradigm of growth has also led to massive state default on upholding people’s basic rights and welfare.

Debunking the hype

The reality of growth from the perspective of the Global South is that it can be achieved simply by being open and attractive to foreign capital. And our governments have gone to great lengths just to capture this otherwise exploitative capital. Economic sectors are opened up; public utilities are offered; natural resources are surrendered; and social services are turned over – all to private and foreign business.

Then, our governments work on infrastructure and gentrification projects to provide foreign investors and big local businessmen the infrastructure as well as the business they demand. Through public-private partnerships, bilateral or multilateral official development assistance (ODA), and more consumption taxes on the poor, our governments have boosted elite wealth accumulation, a.k.a. growth.

The reality of growth from the perspective of the Global South is that it can be achieved by increasing debt. And then again, IFIs and financial agencies rate the creditworthiness of Global South economies, whether they can actually pay for the debt and therefore can borrow more, and whether they can borrow more to guarantee the profitability of investors. It is such a vicious circle, which has created an equally vicious fetish for GDP growth.

In the Philippines, while the Duterte government was bungling its pandemic response, the economic managers were even looking at the country’s credit ratings, instead of the statistics on COVID, unemployment and bankruptcies of small businesses. Annual gross borrowings tripled during the pandemic from 2019 and the outstanding national government debt doubled since the Duterte administration took over in 2016. But only a small portion of new borrowings actually went to COVID response. As soon as the Duterte government partially reopened the economy, it prioritized infrastructure over health and economic assistance.

The reality of growth is that the Global South is relegated to being an exporter of cheap raw materials and labor, a production assembly line, a sweatshop, a service economy of the North, while the North is the one industrializing, producing a wider range of commodities, consuming more materials, and increasing energy demand.

A brave new world

Should the call for degrowth prioritize the North, then? We’ve seen the reality and the hype of growth from the Global South perspective. The excessive resource and energy use by the North is heavily reliant on the plunder of the ecosystems of the South, on the cheapening of their labor-power and raw materials, and on the erosion of self-sufficiency and their own development aspirations.

The call for degrowth thus must be coupled with the call for decolonization in the South, and there is no better way to start but through the open rejection of the paradigm of neoliberal economics and all its obsession with fallacious growth metrics.

The call for degrowth thus must be coupled with the call for the end of exploitative relations – the underpricing of labor-power, the overpricing of the products of human labor, and the commodification of natural resources and the ecology. The call for degrowth, from the Global South perspective, is a call for sovereignty, social justice and people’s welfare.

At the core are social movements. Degrowth is for those who are unafraid of progressive change and ready to build a brave new world.

*Excerpts were shared in the New International Financial and Economic Architecture (NIFEA) E-Conference “Degrowth – Living Sufficiently and Sustainably”, organized by the Council for World Mission (CWM), Lutheran World Federation (LWF), World Communion of Reformed Churches (WCRC), World Council of Churches (WCC), and Word Methodist Council (WMC), 1 October 2021.