Ways to a Zero-Growth Society - degrowth.info · Ways to a Zero-Growth Society Abstract In this thesis, we will see how economic growth, as it is understood today, cannot be sustained

Ways to a Zero-Growth Society

Abstract

In this thesis, we will see how economic growth, as it is understood today, cannot be sustained into the future. This is mainly due to environmental limits, but also to the fact that economic growth is usually debt-financed and is erroneously measured. In 1972 already, Meadows et al. have proposed a model of society that would be freed from this growth spiral: the Steady State Economy. Such a society would put constraints on purely physical growth, mostly driven by population and production growth. This thesis enumerates policyrecommendations formulated by three influential authors in the field of Steady States economics, namely Niko Paech, Herman Daly and Tim Jackson. The author established a best practice of these policy recommendations and identified education as the most important institutions to bring about the necessary changes for a transition towards a sustainable society.This file was made to be printed both sides on a standard A4 format. Layout by Julien Fischer

A comparative evaluation of different scenarios

18 May 2015

Théodore FischerBvd de Grancy 2, 1006 [email protected] Number: 11–604–709

Bachelor’s thesisProf. Dr. Franz Schultheis

University of St. GallenSchool of Management, Economics, Law,Social Sciences and International Affairs (HSG)

Table of Contents

1. Introduction 32. Economic Growth 52.1 History of Growth 52.2 Sources of Growth 72.2.1 Proximate Causes 72.2.2 Fundamental Causes 83. The Steady State Economy and it’s Context: the Limits of Growth 103.1 Exponential Growth: Population & Production Growth 103.2 Environmental Issues 133.2.1 Renewable Resources 133.2.2 Non-renewable Resources 163.2.3 Pollutants & Wastes 183.3 Debts 203.4 Erroneous Measurement of Growth 213.5 The Steady State Economy 234. Controversy Surrounding the Steady State Economy 264.1 Politics 264.2 Economy 274.3 Society 304.4 Environment 325. Ways to a Steady State Economy 345.1 Niko Paech: Subsistence and Sufficiency 355.2 Herman Daly: Moving from Failed Growth 375.3 Tim Jackson: Prosperity Without Growth 406. Best Practice 437. Conclusion 47 Literature 50

Figures & Tables

Fig. 1: Trends of Economic Growth in 9 Countries from Year 1000 to 2010 6Fig. 2: World Population Growth 11Fig. 3: Female Fertility Rate Declines with Rising Literacy, 1990 12Fig. 4: World GDP, Fossil Fuel Consumption & CO2: 1980–2007 17Fig. 5: Wellbeing VS GDP, 1997–2005 22

3 Ways to a Zero-Growth Society

1. Introduction

That which seems to be wealth may in verity be only thegilded index of far-reaching ruin.” J. Ruskin

Economic growth has been blindly pursued at almost any costs, since the dawn of the industrial revolution. It is seen as the only answer to the main economic, social and environmental prob-lems and is almost always listed at the top of political agendas from the left to the right of the political spectrum. However, the evidence that everlasting economic growth, far from enabling us to achieve higher prosperity, has become uneconomic is all around us. Exponential growth of population and production poses major threats to the environment and brings about deep social problems. Some symptoms are already perceptible across the globe. Climate change, rise of sea level, extreme draughts in California or social unrest due to rising inequalities are just a few of the problems the world is actually facing. However there is a way out of this growth spiral. In 1972 already, Meadows et al., a group of the world’s best scientists, were enrolled by the Club of Rome to study the limits of growth. They have found that exponential growth, as it happens in today’s system is not sustainable, as infinite growth in a finite world is a contradiction. Since then, the dogma of “growth equals happiness” has been more and more discussed and rejected. The “rebound-effect” of growth, which represents the negative side-effects caused by economic growth such as environmental destruction, has even been acknowledged to poten-tially lead to negative growth. For example, in 2005, Chinese experts came to the conclusion that, due to the massive pollution and environmental damage caused by the growing economy, China experienced a negative growth rate: the economic damages caused to the environment where far bigger than the growth of the GDP per capita. This illustrates one of the faults of our economic measures, which do not take into account the negative economic impact of envi-ronmental damage as well as other negative effects of uncontrolled growth on our society. For this reason Meadows et al., and later many others, have imagined a relatively stable economy, which would lie on more profound principles than merely accumulating material wealth. This was the birth of the Zero Growth Model also known as the Steady State Economy.

This thesis analyses the limits to everlasting economic growth in a finite planet and tries to identify feasible scenarios to move towards a sustainable society. In chapter 2, we will define economic growth, analyze its history and identify its sources, as it is vital to understand what growth is and what triggers it, in order to fully understand the fundaments of the Steady State Economy. Chapter 3 will focus on the two most pressing factors of economic growth, namely exponential growth of population and of production, and will identify their limits. Before introducing the Steady State Economy, the author will show that economic growth, as it is pursued and understood today, cannot be sustained into the future. We will first see how the finite stock of environmental sources and sinks will prevent population and output production from growing indefinitely. The point here is not to say that there is a global shortage of natural resources, but rather to state that we are depleting the natural stock at an accelerating, unsustainable rhythm

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and if we continue to do so we will soon face global scarcity of natural sources and sinks. Due to the limited scope of this thesis, this chapter will only focus on the resources that are most critical and have the greatest impact; which are land, water and fossil fuels. We will then analyse the consequences of debt-financed economic growth and the way it will limit growth in the future before considering the erroneous way in which economic performance is measured. The Steady State Economy and the problems it strives to address are far from being widely accepted. Criticism arose in almost all the spheres of our modern society ever since its first publication in 1972. Chapter 4 aims to provide us with the main controversies concerning the Steady State Economy from the perspective of politics, economics, society and the environ-ment. Chapter 5 focuses on policy recommendations by three influential authors (Daly, 2014; Jackson 2011; Paech, 2012), that would allow us to move from our actual growth based economy to a Steady State Economy. Before concluding, chapter 6 will identify the most needed and feasible policies listed in chapter 5, based on the authors opinion. The aim is to establish a best practice of policy recommendations.


2. Economic Growth

Economic growth has become the secular religion of advancing industrial societies” D. Bell

According to the World Bank, economic growth is a “quantitative change or expansion in a country’s economy” (World Bank, 2004) and is conventionally measured as the percentage increase in gross domestic product (GDP) during one year. Today, we live in a society in which the pursuit of economic growth continues to be one of the main objectives. This is due to the fact that the answers to many of the worlds’ problems are attributed to growth. Growth continues to be seen as the main reason for our future development, lower unemployment rates, and the main solution to social, economic, and some ecological problems as well as the recipe for economic reconstruction after a crisis. It is true that growth was the successful answer to the social crisis of the 19th century and to the job crisis of the beginning of the 20th century although there is clear evidence that growth is no longer the solution to the challenges we are facing in the 21st century and beyond. (Hinterberger, 2009, p. 31)Loayza goes even further by stating that “the importance of economic growth cannot be over-stated” (2002, p. 1). For him, and other influential economists (see e.g Mankiw, 2011; Barro & Sala-i-Martin, 2004), a country that grows constantly and strongly over a long period of time is able to reduce its poverty levels, strengthen its political and democratic stability, improve the quality of its natural environment and even diminish the incidence of crime and violence. In order to be considered a growing country by the OECD (2015a, p. 11), the annual growth rates of GDP must be between 3–4%. Growth is still the number one priority of the G20 countries, which stated during their last reunion in 2014 in Brisbane that they will strive for sustained and balanced growth. In their latest report “going for growth 2015”, the OECD fixes the GDP growth objective as coming back to an annual 2% GDP growth rate before 2018 (OECD, 2015a, p. 12–13). These growth rates are comparable with the “Trentes Glorieuses” period or the growth rate of China today, but looking closely at the history and the sources of growth we can see that it is implausible and impossible to grow at such rates indefinitely. As Piketty puts it, “both history and logic show this to be illusory” (2014, p. 158).

2.1 History of Growth

If we look closer at the history of growth, much evidence has shown that there was only limited economic growth before the 18th century, as we can see on the graph below (Acemoglu, 2009, p. 9–11). Piketty (2014, p. 127–128) estimates that the average growth rate of the period preceding 1700 was not higher than 0.1% per year, and was mainly caused by population growth, allowing the standard of living to grow only slightly. Another important feature of this graph is that it shows a clear “takeoff” of world economic growth rates from almost linear to exponential growth after 1700. However, the global average growth rate was not superior to 1.6% per year and was evenly caused by population growth (0.8% per year) and output per capita growth (0.8% per year) from 1700 to 2012 (Acemoglu, 2009, p. 13).

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Fig. 1: Trends of Economic Growth in 9 countries from year 1000 to 2010

Source: Kim & Heshmati (2014, p. 68)

Even if this growth rate can seem insignificant compared to the objectives of the OECD, we must not underestimate the power of exponential growth, which brings enormous changes even in a short period of time. Indeed, although output per capita grew by only 0.8% a year, cumulated over 300 years, this represents a 10–fold increase in average welfare. The average global income increased from barely 70 Euros a month in 1700 to 760 Euros a month in 2012 (Piketty, 2014, p. 125–144). Meadows et al. illustrate and stress the power of exponential growth with a simple experiment: “Take a piece of paper and fold it in half. You’ve just doubled its thick-ness. Fold it in half again to make it 4 times its original thickness. Assuming you could go on folding the paper like that for a total of 40 times, how thick do you think it would get to be ? Less than a foot ? Between a foot and 10 feet ? Between a foot and a mile ? In fact you could not fold a paper 40 times, but if somehow its thickness could be doubled 40 times over, it would make a pile of paper high enough to reach from the earth to the moon. That is exponential growth, doubling and redoubling and doubling again. Nearly everyone is surprised by it, because most people think linearly and think of growth as a linear process” (1992, p. 15).Because of exponential growth, it is not possible to continue growing at such high rates as the ones targeted by the OECD. For example, a continuous growth rate of 1.5% during 30 years may only represent a multiplication by a coefficient of 1.56, but after 100 years it represents a multiplication by a coefficient of 4.43 and a multiplication by a coefficient of 2’924’437 after 1’000 years (Piketty, 2014, p. 130). Continuous exponential growth has also contributed to the widening of the inequality gap between rich and poor countries, due to the fact that many other regions did not experience comparable takeoffs and exponential growth rates, or only


much later (Acemoglu, 2009, p. 13; Kim & Heshmati, 2014, p. 1–3). The ratio of income per capita between the richest and the poorest regions of the world exploded from a 3:1 ratio in 1820 to a 18:1 ratio in 2000. (Chiarini, 2013, p. 6)Infinite growth in a finite planet must eventually end. As we will see in chapter 3, physical neces-sities that we extract from the planet are the basic source of growth. Every human needs food, shelter, clean air and many other resources in order to grow and exploit his human capital. Every machine needs energy, as well as a variety of metals, chemicals, and biological materials in order to produce goods. But not all resources are renewable and there are limits to the rate of regeneration of the renewable ones. In the first version of their book in 1972, Meadows et al. were warning us about the limits of growth in a finite planet, but stated that there was time for us to adapt as the economy and population were still below the planet’s limits. In their 1992 update however, the message was totally different. Humanity had already overshot earth’s limits, but there was still a possibility to move back to sustainable rates. In their 30 year update in 2004, the conclusions were much more pessimistic than in 1972. As they put it in their preface “We do not have another 30 years to dither” (2004, p. XVI) and they called out for international actions. But before moving on to the limiting factor of economic growth, we first have to understand how it is achieved.

2.2 Sources of Growth

For Acemoglu (2009, p. 18–21), we must differentiate between proximate and fundamental causes of economic growth. Proximate causes are labor utilization and physical capital as well as technology, whereas fundamental causes are the “reasons” some countries fail or succeed to invest in human and physical capital and technology.

2.2.1 Proximate Causes

As acknowledged by many economists and basic economic theory (see e.g Mankiw, 2011; Barro & Sala-i-Martin, 2004; Loayza, 2002; Acemoglu, 2009), an economy can grow by increas-ing its two main factors of production: labor and physical capital. Labor is represented by the workforce and, therefore, increases when population grows. Physical capital is the stock of equipment and structure that is used to produce goods and services, such as infrastructure or machinery. Differences in physical capital were identified as being one of the main reasons of growth disparities among the OCDE countries (OECD, 2003, p. 60). Additionally, there is a qualitative component embodied in labor, which is human capital and is the stock of skills, education, competencies and other productivity enhancing characteristics embedded in the labor force. Not only does human capital contribute to growth through improvements in the quality of the workforce, but also through the fact that higher education goes hand-in-hand with innovation, which leads us to our third source of growth, technology. (OECD, 2004, p. 10; Makiw, 2009, p. 531–532)

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Focusing on labor and physical capital is not sufficient in order to understand growth, as we also need to understand why societies differ in the efficiency in which they use their labor supply and physical capital. Economist use the term “technology” to describe factors other than the two listed above that influence growth. It is not only used to describe the differences in the quality of machinery and production techniques between different countries, but more impor-tantly to describe the differences in productivity. For the OECD countries, productivity is one of the main factors of growth as it contributed massively to economic growth in the 1990s (OECD, 2003, p. 35). To make it clear, a country can either grow by injecting more physical capital in its economy, by investing in new technologies or by improving its labor utilization, which can be achieved by population growth, training and education (OECD, 2004, p. 10).

2.2.2 Fundamental Causes

As stated before, it is not sufficient to look at the proximate causes to fully understand economic growth, as there are reasons theses factors differ across countries. If we would only focus on the proximate causes to explain economic growth, it would be as simple as saying that someone is rich because he has money. Fundamental causes are the deeper reasons that prevent or allow an improvement in physical capital, technology and labor, which includes human capital. Using a medical analogy, proximate causes would be the symptoms of a disease and fundamental causes would be the disease itself. Fundamental causes of economic growth are still a widely debated topic among economists. However, there is one fundamental cause that every economist agrees on: institutions (see e.g. Acemoglu, 2009; Sala-i-Martin, 2002; North, 1990). Douglass North, which was awarded a Nobel Price for his researches on institutions defines it as followed:“ Institutions are the rule of the game in a society or, more formally, are the humanly devised constraints that shape human interactions” (1990, p. 477).This definition contains the three main elements of institutions. First they are man made, second they represent constraints on individual behavior, and third these constraints shape human interaction and affect incentives. Examples of economic institutions are property rights or well functioning markets, which set incentives for people to innovate, take risks or save for the future (Sala-i-Martin, 2002, p. 18). The reason why society adopts certain institutions that do not make all of its members better off is because there are trade offs within society as all institutions creates winners and losers (Greif & Iyigun, 2013, p. 534–538; Acemoglu, 2009, p. 119–121). Again, institutions are widely debated and represent a complex topic in themselves, but it is not the goal of this chapter to identify an institution that would make society as a whole better off, but more to state that institutions influence economic growth and therefore are one of the causes of growth disparities among countries.To make it clearer, Sobel (1999, p. 25) compares economic growth to baking cookies, where the ingredients are represented by the proximate causes (both physical and human capital as well as technology) and the fundamental causes (the institutions) represent the oven. If the oven is not working, we cannot make more cookies by simply putting more ingredients in the oven.


This can appear to be trivial but many government policies fail to realize this and keep pouring money into programs that increase both physical and human capital as well as technology when the real problem is with the institutions. Even if a country has abundant natural resources or other inputs, when its institutions are failing, it has enormous difficulties to become prosperous. Argentina and Venezuela are examples of such cases.

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3. The Steady State Economy and it’s Context: the Limits of Growth

The day is not far off when the economic problem will take the back seatwhere it belongs, and the arena of the heart and the head will be occupiedor reoccupied, by our real problems – the problems of life and of humanrelations, of creation and behavior and religion.” J. M. Keynes

The earth is finite. Perpetual growth of every physical thing, including human population, its cars, houses and industries, cannot go on forever. However, the limits to growth are not limits to the physical things themselves but to the rate at which we can extract resources and emit wastes without exceeding the regeneration and absorption rates of the planet. In other words, there are limits to the throughputs of energy that keep people, cars, building and energy func-tioning. (Meadows et al., 2004, p. 9)As we have seen in chapter 2.2, economic growth is driven by increases in the labor force, which depends directly on population growth, or increases of physical and human capital as well as technological innovations, which depend on production. Both population and production growth depend upon constant flows of air, water, food, raw resources and fossil fuels from the earth. The limits to growth are, therefore, limits to the ability of the planet sources to provide our system with the necessary throughput of materials and energy, and limits to the ability of the planet sinks to absorb pollution and wastes (Chiarini, 2013, p. 145). The problem is that we are actually already beyond a sustainable rate of consumption of resources, causing earth’s finite sources to decrease and it’s sinks to overflow. The current flow of throughput that maintains the economy at such high growth rates cannot be sustained for much longer. This is mainly due to the exponential growth of both population and production, which we will briefly introduce in the following chapter. However, there is good news: we do not need such high rates of through-put in order to support a decent standard of living for all, this is the basis for the Steady State Economy. (Meadows et al, 2004, p. 8–9)

3.1 Exponential Growth: Population & Production Growth

With the limited data we have about the pre-industrial era, population growth rates were esti-mated to be at about 0.1% a year before 1700. As we can see on the graph below, population growth rates exploded after the industrial revolution. In chapter 1, we saw that the global average population growth from 1700 to 2012 was 0.8% a year, but if we look closer at different periods in that time lap, we can see that population growth was not only exponential, but “superexpo-nential”. This means that the average rate of growth of the global population was accelerating overtime. Indeed, it went from 0.4% a year from 1700 to 1820, to 0.6% a year from 1820 to 1913 to finally reach 1.4% a year from 1913 to 2012. This is mainly due to declining death rates. Birth

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rates were also falling but more slowly, which eventually caused these tremendous increases in population. This superexponential growth caused the global population to explode from 600 million in 1700 to 7 billion in 2012. (Piketty, 2014, p. 131–133; meadows et al., 2004, p. 28–30)

Fig. 2: World Population Growth

Source: Kim & Heshmati (2014, p. 59)

It is true that there is a slow down in population growth rates in the more developed countries, however the poorer countries still experience unsustainable population growth rates. The most acknowledged theory that explains why birth rates and population growth rates are falling in rich countries is the theory of demographic transition. According to this theory, in pre-industri-alized countries both birth and mortality rates are high, thereby causing the population growth rate to be relatively low. This was the case before the industrial revolution. As medical tech-nologies and nutrition improve, mortality rates decrease, whereas birth rates remain high for a generation or two. This causes population to grow at high rates, as we can see now in developing countries. Finally, as lifestyle evolves in a fully industrialized society, birth rates decrease, causing the population growth rate to slow again. However, it is not enough to say that GDP per capita growth explains declining birth rates. Rather, it is the extent to which economic improvement actually improves living conditions, especially that of women. Indeed, lower birth rates have been observed in countries where priorities are set on education, family planning and egali-tarian employment conditions, as well as a better distribution of income and opportunity. As we can see on the graph below, the education of women has tremendous results in the lowering of birth rates. (Todaro & Smith, 2006, p. 275–277).


Figure 3: Female fertility rate declines with rising literacy, 1990

Source: WWAP (2009, p. 37)

The second cause of economic growth is growth of production, which basically represents everything that is physically produced, like cars or the machines that produced them. Just like population, physical capital has its “birth rate”, which is investment and goes to increase the capital stock and the production capacity in the future. On the other hand, just like death rates, machines and factories tend to break over time or get replaced by newer technology. This is called “capital depreciation” and works exactly like mortality on human population. Physical capital also experienced a transition, from agricultural economies in the pre-industrial era, to the modern service economies. This, however, does not mean that we use less physical capital, because we still need food, buildings, computers and energy to create services. Output production has also exploded from the beginning of the industrial revolution. (Meadows et al., 2004, p. 37–41) In order to sustain exponential population and physical capital growth we need two sorts of ingredients. The first ones are the physical necessities that support human and industrial activities like food, raw materials, fossil fuels or our ecological system, which absorbs wastes. These ingredients are tangible and countable items such as fresh water, metals, forest, the oceans or arable land. The other ingredient for both population and economic growth are social necessities such as peace, social stability, education, full employment, technological progress and so on. In opposition to physical necessities, these ingredients are much more difficult to predict or to assess but have huge implications as they can stop growth even if physical necessities are abundant (Meadows et al., 1972, p. 45–46). As we do not know how to predict possible future social problems, the following chapters will focus on the question of how much growth our earth’s system can sustain, assuming that social stability will prevail. Again, we have to separate the different physical necessities into three categories: renewable resources, non-renewable resources and pollutants. In order to define whether they are used sustainably or not, World Bank economist Herman Daly (1990, p. 1–6) defined three simple rules:


— For renewable resources, the sustainable rate of use is equal or lower than the rate of regeneration of the resource. For example, if we cut a forest at a higher rate than the trees are growing back, it is unsustainable. The question for renewable resources is therefore to know if they are being used faster than they regenerate.

— For non-renewable resources, the sustainable rate of use must be equal or lower than the rate at which a renewable resource, used sustainably, can replace it in the long run. For example, an oil deposit would be used sustainably if part of the profit were invested in wind or solar electricity plant so that, when the deposit disappears, there will still be an inflow of renewable energy replacing it. Therefore, we have to know at what rate non-renewable resources are being used and if the transition to renewable energy is being correctly financed.

— For a pollutant, the sustainable rate of emission must be equal or lower than the rate at which the sinks of the ecosystem can absorb it. For example, we cannot emit more CO2 in the air than trees, other plants or water can absorb it. It is thus important to know if the pollutants are rendered harmless at sufficient rates or if they are just accumulating in the environment.

3.2 Environmental Issues

Globalization allows goods to be produced under circumstances thatconsumers would refuse to tolerate in their own community, and permitswaste to be exported out of sight, enabling people to ignore both itsmagnitude and its impacts.” UNEP

One of the major problems of modern day economics is that natural resources are not con-sidered as basic sources of wealth. Indeed, Neoclassical economists focused only on human and physical capital, treating nature just as another interchangeable form of capital. The former were considered scarcer than natural resources, which were considered abundant relative to demand. Since neoclassical economics only focuses on optimizing the allocation of scarce resources, those whose use constrained alternative economic opportunities, there was little consideration of the environment’s dual role as a source of inputs and as a sink for waste and pollution. Not much thought was given to the possibility that economic activity might reach or even overreach the capacity of the source and sink functions of the environment, which in turn could become binding constraints to growth. (Worldwatch Institute, 2008, p. 15–16)

3.2.1 Renewable Resources

When thinking about resources that enable human beings to be productive, we logically think of food. The world food production in 2005/2007 achieved an impressive production of 2’770

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kcal/person/per day. In other words there is enough food for everyone to be well fed. How-ever, as Alexandratos and Bruinsma put it “global resources are sufficient, but the devil is local” (2012, p. 17). Indeed, malnutrition is still a global issue as 2.3 billion people, which represent 35% of world’s population, are living with less than the estimated daily requirement of 2’500 kcal. At the other extreme, 1.9 billion people are living with more than 3’000 kcal a day. Mal-nutrition is not only due to poverty but also to the failures in the development of agriculture in developing countries as well as to limited access to food. With a growing world population, especially in developing countries, the problem of food will get worse over the next decades as overall demand for agricultural products is expected to grow at 1.1% a year until 2050 (UNEP, 2012, p. 71). In the 20th century, most of food production growth was achieved through growth of crop yields. Nowadays, growth of crop yields has considerably slowed down and increases in food production are achieved by exploiting more of one of the earth’s renewable but finite resources: land. (Bringezu, 2014, p. 46–51)Land is much more stressed than in the past and is becoming scarcer both in quantitative terms and in qualitative ones. Indeed, in order to produce more food, we are not only using more and more land but we are also degrading the land we are already using, causing salinization, desert-ification or land erosion. Today we are using 1.6 billion hectares of the 7.2 billion still available. Even if land use is estimated to increase by only 70 million ha by 2050, we have to consider that not all of the 7.2 billion hectares are suitable for agriculture. Indeed, 2.8 ha are either forests, in protected areas, or are inhabited. The surface of inhabited land is expected to grow along with population growth. Subtracting about 1.5 billion ha, which are of poor quality and therefore not suitable for agriculture, leaves some 1.4 billion ha of arable land. With such a number, we could think that an increase in food production by increasing land use is totally feasible. That would be wrong. Firstly, several costly factors make this land difficult and uneconomic to exploit, such as difficult access due to a lack of infrastructure, the fact that land is located in remote areas, or because it is diseases prone, Secondly, and most importantly, much of this spare land is located in a small number of countries that do not necessarily need more food production (UNEP, 2012, p. 68–69). Thus countries that face land scarcity and would need more arable land will not be able to have access to potential productive land. Thirdly, much of the increase in land use is not devoted to food production as a FAO study from Alexandratos and Bruinsma (2006, p. 4–6) shows. Indeed, most increases in new land use are devoted to the production of oils, such as palm or soy oil, and mostly occurred through deforestation. Agricultural land is also increasingly allocated to grain production that goes to feed livestock rather than people. This goes without mentioning that land scarcity is being further aggravated by the the tremendous increase of soil erosion, due to pesticides, which can be up to 75 times higher than in natural vegetation, or by the growing trade off between food and habitat. It is though that increases in land use for urban purposes could potentially lead to a decrease of 100–200 million hectares in the next 40 years (UNEP, 2012, p. 68–77; Meadows et al., 2004, p. 58). (Alexandratos & Bruinsma, 2012, p. 1–12)Nonetheless, it is important to mention that positive changes are possible. There are many areas in the world were sustainable agriculture has been put in place, mainly in developed countries, and is inverting the tendency. If global policies encouraging these new forms of agriculture were created, we could feed the whole world population with less land, using less


non-renewable resources. However, this is far from reflecting the actual world situation. Unless rapid changes are made, the growing population will have to try to feed itself with a declining agricultural resource base (Meadows et al., 2004, p. 62–66). “In other words, the conventional world scenarios suggest that it is very unlikely that malnutrition will be fully eradicated by 2050 without major policy shifts” (UNDP, 2012, p. 432).

We do not only depend on food to live, but we are also dependent on another scarce resource coming from the earth: water. It is not only vital for our lives but for the life of the whole eco-system. Water is so important because it works both as a source and as a sink. The amount of freshwater on earth is finite and, as land, it is not distributed evenly across the world (UNEP, 2012, p. 100). This was mainly due to natural cycles such as freezing, thawing, fluctuation in precipita-tion, evaporation levels and water runoff patterns. This situation, however, has changed. The UN identifies human activities, mainly population and economic growth, as primary drivers of water shortage across the world. Our perpetual pursuit of higher living standards, which comes with rising per capita incomes, has tremendous effects on our water supplies. As incomes permit, people consume more and more water intensive products, such as meat, expensive clothes or other non-food goods (WWAP, 2009, p. 14–20). For example, in the developed world, the average person drinks about 2 liters of water per day and uses about 100 liters for a shower. However, in order to truly illustrate how high our water consumption actually is, we have to con-sider his daily consumption of food, which required 1’900 liters to produce, the T-Shirt he wears, which required 2’700 liters, or every single sheet of paper of this thesis, which required about 10 liters to produce (Kowitt & Thai, 2009, p. 113). Although 70% of the globe is covered with water, only 2.5% represents fresh water and only 1% is easily accessible for human needs. Furthermore, freshwater is far from being accessible to all in today’s world, its limits can take several forms. Accessibility depends on groundwater recharge rate, snowmelt rates, the water-storing capacity of the soil or it can be limited by the degree to which it has been polluted. Just like land, it makes no sense to look at water on a global scale, since water scarcity is a local phenomenon and is closely linked to poverty. According to WHO and UNICEF (2014, p. 8), 750 million people are lacking access to freshwater in the world and 2.5 billion lack access to improved sanitation. This number is predicted to grow, as water use has been growing at more than double the rate of population growth during the last four decades. The FAO (2013) estimates the number of people to live under absolute water scarcity (<500 m3 per year per capita) to exceed 1.8 billion by 2025, and that two third of the world’s population will live under water stress conditions (between 500 and 1000 m3 per year per capita) until then. On the other hand, while the estimated minimum vital amount of fresh water is set at 20 liters per person per day, European countries and the United States consume between 200–600 liters per person a day. However, it is not the individual use for domestic purposes that leads to over-consumption of water, but agriculture, which accounts for nearly 70% of global water use. This is due to the fact that water for agricultural use is so inexpensive that there is literally no incentive to conserve or protect it. Indeed, in the United States, for example, the average price of tap water is almost 100 times higher than the average price for agricultural water. (WWAP, 2009, p. 22–24; Dumaine, 2014, p. 97)


With ever increasing population, income and people living in water scarce regions, the issue of water scarcity has become so pressing and global that it has not only raised the attention of specialist, such as NGOs, geologists or environmentalists, but also of most leaders of big international corporations, such as Coca-Cola, Nestlé or even Deloitte. Indeed, the water supply crisis has been ranked as the number one risk facing humanity by the WEF in their global risks report 2015 (WEF, 2015). In an interview with Fortune, Willem Buiter, Citigroup’s chief economist, sums up the opinion of many these days: “Water as an asset class, in my view, will eventually become the single most important physical commodity-dwarfing oil, copper, agricultural com-modities, and precious metals.” (Dumaine, 2014, p. 97)Again, this does not mean that nothing can be done. Quite the contrary, there are many ways of using water more sustainably, not by using more but by doing more with less. For example, cutting agricultural subsidies on water would encourage a wiser use, as water prices would incorporate the full financial, social and environmental costs they generate (Meadows et al., 2004, p. 75–76). For the UNEP (2012, p. 98), we could increase irrigation efficiency by one third only by implementing existing technologies. New policies are urgently needed, as one of the major problems with water is that we lack exact information about its global quantity, quality, distribution and consumption. As the WWAP puts it “less is know with each passing decade” (2009, p. 18).

3.2.2 Non-renewable Resources

Per capita energy consumption in Europe rose from 15’000 kcal per day in 1800 to 101’882 kcal per day in 2000. This is mostly due to economic growth as well as higher incomes. However, energy consumption grew faster than the population, it grew 6–fold from 1800 to modern day Europe and 10–fold in the world whereas global population growth was “only” about 3.8–fold during the same period. The transition from vegetal to fossil fuels was the fundament of modern economic growth in the past century and its usage now accounts for about 80% of total energy use (Chiarini, 2013, p. 55–68). Global fossil fuel use has risen dramatically, causing the known reserves to diminish rapidly. It is almost impossible to assess the exact quantity of fossil fuels remaining, since new deposits are discovered regularly. However, it is already predictable that every non-renewable resource will become extremely costly regardless of most optimistic assumptions about undiscovered reserves, technological progress or recycling. Furthermore, most of the reserve indexes are expressed in static terms, which means that they are based on the consumption rate of a given period. This is misleading, since fossil fuel consumption is growing exponentially and would therefore need a dynamic reserve index taking in consideration the accelerated usage, which greatly reduces their lifetime. (Meadows et al., 2004, p. 90–93)


Figure 4: World GDP, fossil fuel consumption & CO2: 1980–2007

Source: Jackson (2011, p. 86)

What we do know, however, is that the amount of fossil fuel on earth is finite and that its con-sumption is projected to grow by more than one third by 2040. This is mostly due to the fact that developing countries have been using more and more energy and now account for 60% of global CO2 emissions (EIA, 2014, p. 4–5). This is due to the tremendous increase in their popu-lation and the severe pressure put on remaining reserves as the 1.3 billion people who still lack access to energy in those countries gain access (OECD & IEA, 2012, p. 532). The main problem arising from fossil fuels, however, does not come from its source. Indeed, the OECD & IEA (2012, p. 63) believe that fossil fuels reserves are big enough to last beyond 2035. Yet intensive burning of fossil fuels generates an overabundance of CO2, which causes dramatic environmental changes. The most pressing and limiting factor in the consumption of fossil fuels is therefore not only the fact that we have a limited amount of it, but that it generates pollution. The global temperature has already risen by 0.8°C since the industrial revolution, causing drought, floods, storms, sea level rise and artic melting. If nothing is done by 2020, global temperatures could further increase by 3.6°C to 5.3°C (OECD & IEA, 2013, p. 9). The United Nations Framework Convention on Climate Change Conference (UNFCCC) in Cancun in 2010 agreed that a global temperature increase must be held below 2°C. Urgent action is needed for it to be realistic. Unfortunately nothing serious has been undertaken since the Kyoto protocol. As the OECD and IEA put it in the preface of their 2013 World Energy Outlook “despite many countries taking actions, the world is drifting further and further from the track it needs to follow” (2013, p. I). If nothing is done by 2020, the cost of getting back on track are estimated to be higher than $5 billion (OECD & IEA, 2013, p. 1–15). Even if this objective seems challenging, it is far from being unfeasible. Since most of the greenhouse-gases are emitted by fossil fuels, the OECD and IEA (2013, p. 10) identified the following 4 policies as being effective to preserve the 2°C limits:


— Adopting energy efficient measures

— Limiting the construction and use of least-efficient power plants

— Minimizing methane emission from upstream oil and gas production

— Accelerating the phase out of subsidies of fossil-fuel consumption

On the contrary, renewable resources such as solar, wind or hydraulic energies have experienced strong growth to achieve 19% of global final energy consumption in 2012. This is mainly due to falling prices, technological advances and innovations. More than 56% of additions to global power capacity were renewable energies, especially solar power. However total investment in renewable energy in 2013 was an estimated 249.4 billion, which is 14% lower than 2012 and 23% lower than 2011 and remains insignificant compared to the 1.6 trillions invested in the entire energy supply in 2013. This is mainly due to the fact that there are almost no economic incentives or appropriate long-term policy support to compete effectively with fossil fuels (REN21, 2014, p. 13–17). Indeed, currently only 8% of CO2 emissions are subjected to carbon taxes, whereas 15% receive incentives in the form of fossil-fuel subsidies. These subsidies totalled $550 billion in 2013, which represents more than four times the subsidies for renewable energies (OECD & IEA, 2014, p. 4).We can conclude that non-renewable resources are being over-used, well beyond their sus-tainable levels. We are so dependent on them that we cannot avoid a global temperature rise of a minimum of 2°C. Even if we impose this upper limit, we have to make tremendous changes on a global scale, especially by increasing efficiency in both production and consumption of non-renewable energies as well as through a massive investment in renewable energies and the creation of policies that support them instead of fossil fuels.

3.2.3 Pollutants & Wastes

We pollute when we add any substance or any form of energy to the environment at a higher rate than it can be processed, decomposed, recycled or stored in some harmless form. We traditionally identify three major kinds of pollution, which are water, air and land pollution. How-ever, it is important to note that in our modern society newer forms of pollution have appeared, such as noise, visual or even light pollution. This chapter will, however, only deal with the classic forms of pollution, as they are the most threatening to our future. (Nathanson, 2014)The planet earth can only absorb a limited amount of pollution, with no effect on its ecosystem. Economic and population growth as well as resource usage is one of the main factors of environmental changes, because they create pollution. It is true that economic growth also has positive effects on the environment, such as through the invention of more efficient ways of using resources, but because of the scale effect, it is largely insufficient in positively influencing the global ecosystem. In total, the opposite effect can be observed: we are producing and


consuming more efficiently than before, but we are consuming and producing more and need more energy to do so. (Hinterberger, 2009, p. 32)Pollution increases exponentially with population and economic growth and, as we can see on Figure 4, the main side effect of pollution, as stated before, is heat. Thermal pollution causes tremendous changes in natural life such as meteorological anomalies and inadvertent climate modifications, which have irreversible results on our living conditions, the biosphere, food pro-duction and water supply (IPPC, 2014, p. 11–16). However, energy usage is far from being the only cause of pollution around the world. Chemicals and waste have gained significant awareness in the last decade, because they play an important role in human life and in economic development, but also because they can have negative consequence on the environment and human health. The main problem is that we lack knowledge of the complex properties and the impact of chem-icals and waste. The major environmental challenge of the 21th century may well arise from the fast-growing stock of electronic waste, which is estimated to reach 20–50 million tonnes a year. (UNEP, 2012, p. 68–69)The main problem with pollution, and the main reason why we only started to care about it recently, is that there is a long delay between release and effect. Indeed, chemicals that are released evaporate and are carried away or absorbed by nature. We can find traces of pollutants in many plants or fish, which will in turn finish in man’s plate. Currently, an alarming 90% of water and fish samples are contaminated and 4.9 million human deaths are attributable to exposure to chemicals (UNEP, 2012, p. 168). One can imagine that the impact on other animal and plant life is just as significant. We are actually eating, breathing and drinking our pollution. If we only take action when we see the appearance of harmful effects, the situation will certainly get worse before it gets better. (UNEP, 2013, p. 13–22) We saw before that there is an upper limit for both renewable and non-renewable resources. The problem with pollution is that we do not know or are not able to observe an upper limit, but we do know that it has irreversible effects on the ecosystem, wild life and humans. This uncer-tainty should cause us to be very cautious with this topic. Pollution does not stick to one place but it is widely distributed around the world. This is why everyone should take action. We do not know the limit but we know that there is one. It is true that there have been international efforts to reduce the ecologic footprint of human society. There have been many conferences tackling the problem, such as the Kyoto Protocol, the Millennium Development Goals or the Agenda 21. However, even if some notable changes have occurred, such as the ban of lead-fuel or the decrease in the concentration of particles in the air in developed countries, a gap of several billion tonnes of CO2 remains between present emissions and those necessary to reach climate targets. These goals could be reached if we would use the actual technological knowhow in renewable energies and if we applied policies that would reduce the risk caused by climate change. (UNEP, 2012, p. 32–34)


3.3 Debts

Cash rules everything around me” Wu-Tang Clan

One of the major non-environmental limits of economic growth lies in its roots: debt.One of the main ingredients of the actual capitalist system is the use of debt. Indeed, in order to foster consumption many governments across developed countries facilitated the access to credit. Because developed economies are widely dependent on consumption, indebtedness was a way of enabling people to consume more than their income would allow them to do, driving economic growth (Starr, 2010, p. 1). For example, in Great Britain, consumer debt doubled in the ten years preceding the economic crisis of 2008. Even in the year of the crisis, consumer debt increased by one million pound every eleven minutes before achieving a monstrous amount of 1.5 billion pounds, more than two times the GDP of the time. Such an indebted economy can maintain itself as long as it is growing. However, as soon as a crisis appears, as it did in 2008, the whole economy experiences severe negative effects, putting a significant part of the population under financial distress. Far from achieving higher prosperity, this culture of overconsumption enabled by debt, does quite the opposite. These high levels of debt were the products of the deregulation of financial markets, which were seen as being the best way to induce consumption and therefore economic growth. (Jackson, 2011, p. 41–44 & 51)Consumer debt is far from being the major problem. Indeed, public debt is even more terrifying. In France, Germany, Canada or the United States, it is higher than 60% of GDP. In Italy, Japan or Greece public debt is even higher than the GDP. These credits are mostly taken to finance growth-driving projects. Furthermore, these huge levels of indebtedness are even increased further in an economic crisis. Indeed, the enormous amount injected into the economy in order to “save” it from the 2008 crisis, were mainly financed by public debt. In only five years, the British government doubled its debt from 40% of GDP in 2007 to 80% of GDP in 2012. Public debt is not bad in such, if it would only come from the savings of its population, as its citizens would be some kind of shareholders. However, when the savings rate is falling, even below zero as in Great Britain between 2007 and 2008, a government has to turn over to foreign debt. This, just like consumer debt, enables a country to indebt itself beneath the asset limits it posses within his borders, making it subject to fluctuations of international money markets. Furthermore, this links countries with one another, making it possible for a crisis to start from one country and spread worldwide, as it happened in 2008. After the crisis, in many countries, public debt was higher than the sum of public assets, which means that even if the government would sell all the buildings, stocks or land it possessed, it could not repay its debt. (Jackson, 2011, p. 44–51; Starr, 2010, p. 459–470)In its effort to bring more growth, indebtedness did quite the opposite and brought up a world economic crisis in 2008, from which the actual policy makers should take a lesson. The world economy did not fail because of irresponsible trading of unscrupulous individuals, but because of all the measures undertaken to foster more economic growth. As Jackson puts it “the very policies put in place to stimulate growth in the economy led eventually to its downfall” (2011, p. 51).

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3.4 Erroneous Measurement of Growth

When GDP accounts were set up in WW2, bombs, bullets, and war productionwere the goal, while the value of children, a healthy educated citizenry,infrastructure, social safety nets, and the environment were all set at zero.” H. Henderson

As correctly illustrated by Henderson, GDP only measures the growth of physical things and cannot distinguish between certain activities and things that have a positive or negative impact on wellbeing. In fact, war, road accidents or natural disaster may register as a positive increase of GDP (Daly, 2014, p. 19; Hinterberger, 2009, p. 19; Todaro & Smith, 2006, p. 471). This does not mean that economic growth is a bad thing as such, but that it is not necessarily good in all cases and at all times. The problem arises from an oversimplification by economic theories. The understanding that more wellbeing comes from more growth is a modern thought. Indeed, it is difficult to assess how much utility one derives from a new car or a new Iphone, as we all have different utilities and priorities. For example, someone really hungry will derive more utility from food than from a private jet. In order to overcome this difficulty, economic theory assumes that the price people are ready to pay for an object reflects the utility they derive from it, which would mean that GDP would be a perfect measure of wellbeing (Jackson, 2011, p. 58). However, more does not imply better. This is also acknowledge by economic theory with the law of diminishing marginal utility, which states that the amount of utility derived from the consumption of a good or a service diminishes with its quantity (Mankiw, 2011, p. 425). For example if I am hungry, I will be happy to eat a hamburger. Nonetheless, eating more and more hamburgers will not fill me with joy but, quite the contrary, it may even make me feel ill. And if I’m tempted to ignore my bodily limits, I will soon find myself on the road to obesity and ill health, which is far from being desirable or satisfying.Furthermore, quantity does not imply quality. Wellbeing is not necessarily derived from higher income or wealth. As we can see on the graph below, up to a certain point (USD 15’000 annual income in purchasing power parity), there is no more correlation between GDP and wellbeing (Hinterberger, 2009, p. 216–217). For example, real income has tripled since 1950 in the United States, but happiness has stayed the same. In Great Britain, a study showed that the number of “really happy” people even went down from 52% of the population in 1957 to 36% in 2011. It is also important to point out that economic growth, far from increasing our happiness, creates inequality as 1/5 of world population receives 2% of world income, whereas the 20% richest people on earth receive 74% of global income. Additionally, middle class’ income has not increased in real term for the last 20 years in developed countries. (Jackson, 2011, p. 57–59)

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Figure 5: Wellbeing VS GDP, 1997–2005

Source: Inglehart et al. (2008, p. 269)

Another major criticism of the current method of measuring GDP, is that it only measures services or goods sold on the market. Out-of-the-market activities, such as housekeeping, vol-unteering or upbringing, are not counted in GDP. For example, in 1995, the UNDP (1995, p. 97) estimated the amount of these unaccounted activities to reach a value of $16 trillion, which is as big as 70% of the officially measured GDP, which stood at $24 trillion. Unaccounted for activities also represented 50% of all production in OECD countries as well as 60% to 65% in developing countries (Henderson, 1999, p. 10). Another significant flaw in the current measure of GDP is that it does not measure negative externalities such as pollution or environmental degradation. This causes our current policies to strive for growth enhancing measures, even if it generates more costs than benefits (Daly, 2014, p. 19). These problems illustrates well that, the commonly accepted theories of growth and the methods used to measure it are out-dated and should be adapted to current economic realties. To sum it up, GDP does not indicate or consider the wellbeing of the population, certain positive and negative contributors, or the extent to which economic growth can be sustained in the future. The goal of the state is to create the optimal requirements for every person to meet his personal goals and wellbeing. In order to be able to do so, we need indicators that show the development of social and environmental dimensions, which is far from being the case of our actual measure of GDP (Hinterberger, 2009, p. 20). The good news is that such models have already been developed but, unfortunately, they are far from being widely used. We can cite the Physical Quality of Life Index, the Index of Sustainable Economic Welfare or the Human Development Index (UNDP, 1995, p. 12; Henderson, 1999, p. 12). However, these models also have their shortcomings since they do not considerate the fact that true wellbeing consists of an equilibrium between short


term pleasures and long term security. The problem is that it is almost impossible to embody these factors in a model and that we do not get the same pleasure from the same activities across the world. However, despite their shortcomings, these models are more comprehensive than the existing measures. The creation of any such model should, again, be discussed globally and include information such as health, trust, security, meaningful employment, a sense of community belonging, and so on (Jackson, 2011, p. 64).

3.5 The Steady State Economy

There are three ways one can deal with earthly limits. The first one is to disguise, deny or confuse the signals and shifting the cost of the overshoot to those who will live in the future or those who live in far away lands. This has been done for many decades by western countries, when dumping thousands of tones of nuclear and hazardous waste in Africa (Gwam, 2010, p. 204). This technique only ignores the limit and, far from solving the problem, it only makes it worse. The second way to respond to earthly limits is to push back those limits with technological means. For example it is possible to use non-renewable resources more efficiently or to replace them by renewable ones. These measures are urgently needed but, again, they do not eliminate the pressure of one day attaining the earths’ limitations. Indeed, if we use resources more effi-ciently but use more resources, the problem is still here.The third way is to work at the underlying causes of this pressure and to acknowledge that the actual system is not viable and has overshot its limits, by changing the structure of the system. For Meadows et al. (2004, p. 235–238), it is the only way we can move from our consumption society to a sustainable society. There are many ways we can define sustainability. In this thesis, the definition of the World Commission on Environment and Development (WCED) will be used: A sustainable society is one that “meets the needs of the present without compromising the ability of future generations to meet their own needs” (1987, p. 16). In order to meet these chal-lenges, Meadows et al. have developed the Steady State Economy, which has been developed further by many others since then (see e.g. Daly, 2014; Paech, 2012; Jackson 2011). The central goal of a Steady State Economy is to enable every single individual on this planet to meet his needs, by providing both sufficiency and security to all without compromising future generations. As we have seen in the previous chapter, the modern economy is just a couple of centuries old. Just like a child that has been growing, the economy has reached adolescence and like all adolescents it must stop growing in physical size and focus on its growth in mental capacity as well as its wellbeing. This is the main idea of a Steady State Economy, which is char-acterized by a relatively stable size. This means that population and output production have to be held constant and will not grow nor contract over the years. In opposition to the actual sys-tem, a Steady State economy will aim for stability or mildly fluctuating levels of population and consumption of energy and materials. This, however, does not mean that levels of population and produced output must be frozen for eternity. As a result of technical and moral evolution it may become possible or even desirable to grow or to recede to a different level. Nonetheless,


such movements would be seen as a temporary transition from one Steady State to another and not as the norm of the economy, as growth is perceived nowadays. (Daly, 2014, p. 1–11) We can easily fall into the trap of thinking that a Steady State Economy is boring, centrally con-trolled and constrains innovation by stating that it is a stagnating system. In fact, we should differentiate between stagnation and stability. It is true that a society living in a Steady State would need rules, laws, standards and boundaries, just like every society. However, they will not be the same as the ones we are now used to, but will strive to protect and create freedom. For this purpose certain behaviors will have to be regulated, such as the use of environmental sources and sinks. Society has always adapted by regulating behaviors, even beneficial ones, that can in some circumstances have harmful effects. However, a sustainable society would be far from being rigid, uniform, undemocratic or boring, but rather quite the opposite. Indeed, it will not be so narrow-sighted as to ban the use of non-renewable resources, if society needs it. But rather, their consumption should meet the sustainability criteria mentioned in chapter 3, namely that they do not overfill the natural sink and that renewable alternatives are being researched and used in sufficient measure to make the whole sustainable. Furthermore resources should be priced correctly in order to discourage an overuse, which would perfectly fit in the present mainstream economic thought of “internalizing externalities”, so that prices would reflect the full costs, even its environmental and social ones. Just remember, it is stable, not stagnating.Take a river for example. It does not grow in size, but there is constantly fresh water running through it. It also represents a complex interplay of different living systems and species, which cooperate and develop over time. Just like a river, a Steady State Economy is dynamic; it changes and develops over time but remains stable in size and balanced with the environment. The key idea is to find the right size of the economy, not too big, not too small, but just right. If we look at it, the earth itself is a Steady State, it does not grow in size but it evolves and develops. There are continual changes, new things evolve, others extinguish, there are births and deaths, production and depreciation. The economy is a subsystem of the earth and can, therefore, not grow beyond the earthly limits. Furthermore if the economy does not want to disturb the func-tioning of the earth, it must itself come to a Steady State before hitting the limits of the latter. It is true that it is difficult to know what quantity of population and output per capita are optimal. Nonetheless, it is better to live stably at levels nearby the optimum, which we will eventually find, than overshooting the earthly limits and experiencing collapse. (Daly, 2014, p. 1 & 12)It is also important to announce what will grow in a Steady State Economy. This concept is a strictly physical concept and does not aim at zero growth in a global sense, but zero economic growth in a purely physical sense, represented by population and output production growth. In order to do so, births will have to equal deaths and capital creation will have to equal capital depreciation. A birth rate of 2 children per women is not impossible, as it is already the case in most of the OECD countries, and would stabilize the population (OECD, 2015b). Combined with a moderate lifestyle, which would depend on higher values than merely material wealth accumulation, a Steady State Economy would unbind the obligation of growth. It is true that the idea of an adequate but not excessive standard of living, which would be derived from a new understanding of “enough”, is not seen often but is not a new idea either as it is included in almost all religious texts. These changes will not come from the political elite but from people’s


desire, goals and understanding of life’s purpose. Not every country will have the same upper limit, in population or in output production, but every single rule that determines the society can be worked out by billions of people, through their ideas, visions and talents. However, it is not enough to just stabilize production and population levels. We also need technology to enable us to lower our ecological footprint and bring it back below the earth’s carrying capacity. (Meadows et al, 2004, p. 238–242)

But what will grow in such a system then ? Every non-physical component, such as knowledge or wellbeing for humans, or technology and design for output, can grow indefinitely. A sustainable society, which would live in a Steady State Economy, would be more interested in qualitative development than in physical expansion. Not only is this a feasible world, but more importantly it is a desirable one. Yet one thing is clear. Every year we wait to move towards a Steady State, makes the choices and trades off of doing so less attractive. Nothing can be known in advance, we must be ready to make mistakes and correct them along the way of transition. We should not see this transition as a sacrifice, but more as an adventure towards a better world. (Meadows et al., 2004, p. 248)

This chapter may have aroused questions on the feasibility of such huge changes. Like you, who are probably experiencing doubts right now, the author doubted that we could actually stabilize population or strive for a better life that would not be defined by consumption. But, before actually explaining how we could achieve such a transition, let us have a look at the main controversies concerning the Steady State Economy.


4. Controversy Surrounding the Steady State Economy

I will spend a few more minutes cursing the darkness of growth,but will then try to light a few little candles along the path to aSteady State. Some advise me to forget the darkness and focuson the policy candles. But I find that without a dark backgroundthe light of my little candles is not visible in the false dawnprojected by economists, whose campaigning optimism nevergives hope a chance to shine.” H. Daly

The aim of this chapter is to discuss the main controversies to which the Steady State Economy is exposed, coming mostly from the mainstream, neoclassical understanding of the economy. This chapter is structured as a debate between mainstream economists and Steady State economists. The main arguments; defending the status quo from the point of view of politics, the economy, society and the environment; will be briefly presented before being challenged by arguments defending the Steady State Economy.

4.1 Politics

The Mainstream, neoclassical view

The mainstream view is that, to be stable, the modern political system relies on economic growth. The argument goes as follows. During recessions or economic crises, companies battle for survival, people loose their jobs or even their houses, thereby creating social unrest and political instability. The goal of our governments and their economic policies is to increase the long term wellbeing of all the people in a given country. As Stiglitz et al. put it, “few things matter more to society than economic growth and stability” (2006, p. 1). For them, issues of political and social stability cannot be separated from economic growth, since a lack of growth creates unemploy-ment, inequality, crime, violence and poverty (Stiglitz et al., 2006, p. 29, 31 & 128). In a period of crisis, short term policies that enhance growth and, therefore, create jobs and avoid further collapse, are desired by both society and the political elite. A collapse of the economy brings the danger of worsening the living conditions of the population. On the other hand, economic growth brings security to the political system and prevents social unrest. A government that does not react rapidly to counteract an economic crisis, will not be re-elected or will even be replaced (Acemoglu, 2009, p. 834; Jackson, 2011, p. 115; Makiw, 2011, p. 540–541). A study from Jeitschko and al. (2014, p. 13–28) even showed that economic performance is linked to the degree of democracy of a country. A country with a strong economic performance tends to be more democratic or, at least, makes democratic regimes more stable. So why would a government voluntarily implement a system that creates a stagnating, crisis-like economy ?

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The Steady State Economy View

“The difference between a sustainable society and a present-day economic recession is like the difference between stopping an automobile purposely with the brakes and stopping it by crashing into a brick wall” (Meadows et al, 1991, p. 211).In a mainstream, neoclassical view, it is though that economic growth is needed in order for the system to be stable. This is due to the fact that the efficiency of factors of production (labor, capital and resources) is given enormous importance. Technological improvements enable higher labor efficiency and thus to produce more with less labor, causing costs to decrease and demand to be stimulated, which in turn fosters expansion. In other words higher labor efficiency implies that a company needs less workers to produce the same amount of output. As long as the economy grows enough to compensate the increases in labor efficiency, there will be no problem. However, if this is not the case, the increasing labor efficiency will cause less and less workers to be employed and will therefore cause unemployment. This, in turn, diminishes the purchasing power and eventually the demand for goods, which causes the economy to enter into recession. A recession brings enormous costs, such as lower tax income for the government or high social costs due to unemployment. In order to fight the recession, government will have to increase their debt in order to establish growth-enduring measures. If the economy grows again, the government will have to foster this economic growth, not only to stabilize the system, but also to be able to reimburse its debt. On the contrary, if the economy contracts again, it triggers the domino effect and recession starts over again. It is because of this mechanism that modern economies are forced to grow. It is true that, in a growth driven economy, economic growth is needed to stabilize the system (Jackson, 2011, p. 77–80). Binswanger (in Held, 2011, p. 192–199) qualifies this as a forced growth, since economic growth is the price to pay for a stable society. A more sustainable system, such as a Steady State Economy, would reduce this growth pressure because goals other than everlasting economic growth would be pursued. For example, as we will see in chapter 5, the pressure of increasing labor efficiency could be com-pensated by a reduction in working time. This would mean that the gains in productivity would be reinvested in the employees instead of in increased production. There would, therefore, be no more obligations to grow in order to counteract unemployment. It is actually the mechanism of growth itself that cuts the branch on which it lies.

4.2 Economy


We have seen in chapter 3 that one of the main limits to growth is the final natural resource stock. However, most influential economists, such as Mankiw (2011, p. 534) or Barro and Sala I Martin (2004, p. 285–313) for example, argue that technological progress offers a way to avoid this limit. Indeed, if we compare the economy today to the economy of the past, we see various ways in which technology has allowed us to avoid the shortage of natural resources by improving


the way we consume it. For example recycling has allowed us to reuse some non-renewable resources, the development of electric cars will allow us to substitute non-renewable fuel with renewable energy or the air-mixing tap has allowed us to reduce the water we waste while brushing our teeth. Technology has the ability to substitute scarce resources with human made capital, which means that human creativity can overcome diminishing marginal returns of nature. Furthermore, technology enables us to reduce the ecological footprint through decoupling. The mainstream conclusion is that, through a more effective use of resources, more can be achieved with less (Jackson, 2011, p. 81–82). Thus there is no need to constrain growth, as tech-nological improvements, which are dependent on economic growth, will enable us to grow forever. Additionally, they argue that economic growth is the only known measure to eradicate poverty in developing countries. A study from Sala-i-Martin and Pinkovskiy (2010, p. 1–39) showed that poverty has been falling in Africa since 1995 thanks to economic growth. The mainstream view is that, with increased globalization, the economic performance of poor countries is especially sensitive to the economic success of richer countries, as Bangwayo-Skeetee (2012, p. 304–315) attempts to show. Thus, if we would stop economic growth in developed countries, it could negatively influence the growth performance of developing countries, as evidence from the financial crisis of 2008 has shown. Gossel and Biekpe (2014, p. 824) argue that developing countries rely strongly on exports and imports to grow. Adopting a steady state economy model would imply that developed countries would produce and consume less, which would in turn constrain the possibility of developing country to grow.


Steady State economists actually agree on both of these points: we need technological innova-tions to bring our ecological footprint down and we need to help developing countries to grow. However, they do not believe that global economic growth is necessary for this and they believe that technological progress alone cannot overcome earthly limits. Let us first address this last point by distinguishing between relative and absolute decoupling. Relative decoupling means that we use resources more efficiently. It enables us to increase economic activity with less impact on the environment, to create more goods and services with less resources and pollution. This is empirically observable, as energy intensity is now 33% lower than in 1970 (Held, 2011, p. 174; IPCC, 2007, p. 3). This could be attractive at first sight, but we should have a look at absolute decoupling before drawing a conclusion. Absolute decoupling means that the economy as a whole is subject to less resource usage, less pollution and less emissions. When relative decoupling (or resource efficiency) grows slower than economic per-formance, there is no absolute decoupling. This means that we are actually producing more resource efficient products but in too high a quantity, which does not solve the problem as we create more pollution. This is called the rebound-effect: when technological progress allows us to use a resource more efficiently, we tend to use more of it (Jackson, 2011, p. 82–83). Indeed, even if relative decoupling can be observed on a global scale, absolute decoupling is far from happening, since GDP and population are growing faster than resource efficiency. As an example,


global emissions have increased by 40% since 1990, despite the Kyoto protocol, and are pro-jected to continue growing yearly at a rate of 3%. Since technological progress is outpaced by economic and population growth, there is no possibility to grow endlessly with technological progress alone (Jackson, 2011, p. 82–90; Held, 2011, p. 174). This, in turn, does not mean that we do not need technological innovations. Quite the contrary, we are dependent on it, since it is one of the ways we can significantly reduce our ecological footprint. However, it is not possible to grow indefinitely with technological innovations, as it only pushes back the problems of earthly limits without solving it (Meadows et al., 2004, p. 222–225).Concerning developing countries, it is true that we have no better solution than economic growth to help them develop. As we have seen on figure 2, small increases in GDP for poor countries have tremendous impact on wellbeing (Jackson, 2011, p. 59). It is important for these countries to come out of their actual poverty trap for two reasons: first we cannot leave them in poverty and they should not be held accountable for it. Second, as we have seen in chapter 3, poverty goes hand in hand with population growth and if we want to have a stabilized global population, we should help developing countries through the process of demographic transi-tion. Therefore, the Steady State Economy model should first be applied to already developed and prosperous economies. First of all because, as shown before, rich countries do not need further growth to increase their wellbeing, and secondly because we should allocate a stock of natural sources and sinks necessary for developing countries to catch up their counterparts. This would make room for poorer nations to expand and develop their economies, since they are the only ones who still need the benefits of economic growth (Victor & Rosenbluth, 2007, p. 492–504). For the last 200 years, only a small group of countries achieved steady growth rates, mostly at the expense of other countries, which remained stagnant at low levels of well-being. It is only since the 1950–60s that they began to follow (Maddison, 2003, p. 225–239). Because of this, there are enormous disparities among developed and developing countries. 20% of the world population resides in developed countries, which control and enjoy 80% of world resources, while the 80% remaining controls less than 20% of world resources (Gwam, 2010, p. 204). Meanwhile more than 2.2 billion people are living in extreme poverty, struggling to survive (UNDP, 2014, p. 3). For these reasons, wealthy nations should free enough material resources to allow the rest of the world to grow and develop. When talking about developing countries, we also have to differentiate between economic growth and economic development. As seen in chapter 2, economic growth is merely the result of population and production growth. However, economic growth does not always bring about improvements in the living standards of all citizens of a society. For example, most existing evi-dence showed that during the beginning of the industrial revolution in Great Britain, which is the starting point of economic growth, the living standard of the majority of the British population fell or at best stayed constant. (Acemoglu, 2009, p. 9)As correctly stated, economic growth for developing countries can be helped through trade. However, far from improving the situation, international trade exacerbates inequality as shown by studies by Zhu & Trefler (2005, p. 41–42) and by Meschi & Vivarelli (2009, p. 296). Economic development goes beyond traditional economic growth, as it strives not only to work on the proximate causes of growth, but also on the fundamental ones. In addition to being concerned


by efficient allocation of resource and expansion, policy must also deal with social, political, institutional and economic mechanisms in order to bring large-scale improvements in the stan-dard of living of the whole population of a developing country (Todaro & Smith, 2006, p. 9). Too high a focus on economic growth, without considering development, could be a possible explanation of why the UN Millennium Development Goals, which mainly focused on poverty reduction and the provision of basic needs, have not been achieved (UNECA, 2014, p. 122–125). Eventually, economic development through economic growth in poorer countries should come to an end and should lead them towards a Steady State that is at least as high as ours.

4.3 Society


It is not contrary to reason to prefer the destruction of the wholeworld to the scratching of my finger.” D. Hume

In a Steady State Economy, prices would include the environmental and social costs of pro-duction, which would imply that they would be significantly higher than in a growth based economy. Thus consumption of certain goods as well as their import will necessarily decrease. In other words, it would reduce the purchasing power as well as constrain the choice of the average consumer. This is inconsistent with economic theory, which states that consumers have unlimited wants and they prefer to have more, than less (Mankiw, 2011, p. 440). For Sen (2001, p. 290–295), who was awarded the Nobel Prize in Economic Science in 1998, prosperity comes from the freedom and capacities, which arise from the process of decision-making and achieving a valued outcome. In other words, people should be free to “have the opportunity to achieve outcomes that they value and have reasons to value” (2001, p. 291). His point is that in a liberal society, people should have the right to choose what they consume, if they want to par-ticipate in the labor force or not, what job they want to do, if they want to be socially active and so on. It is more the capability to flourish, rather than our decision to do so that is important. As he puts it, “freedom of exchange and transaction is itself part and parcel of the basic liberties that people have reason to value” (2001, p. 6). Additionally, deliberate constraint on consumer choice through higher prices is not desired by consumers, as we can see with the results of the Swiss vote on the 8th of March 2015 concerning the replacement of the VAT by an energy tax. The initiative was rejected by a massive majority of 92% of the population (Confédération Suisse, 2015). People want to consume, so why would they deliberately constraint their choice and capability to do so ?

“



For Varman and Vikas (2007, p. 118–120), we have to distinguish between the two forms of free-dom: negative and positive freedom. Negative freedom is the power to determine one’s actions without constraint and is the form of freedom defended by capitalist systems. In order to achieve this, removal of resource constraint and government regulation are required. Positive freedom, on the other hand, is based on self-control and decision-making coming from one’s own will, not what we have been thought to want. Scientists researching positive freedom are not only interested in this subject because they feel concerned about declining availability of resources and worsening production conditions, but also because modern consumers are more and more manipulated by medias and advertisement. Indeed, it is true that since the industrial revolution we have experienced tremendous improvements in our ability to satisfy our material needs. However, it is questionable whether a further increase of this ability fosters our wellbeing or not. We now have more choice in our consumption than ever before. As an example, in 2002 in Germany only, there were more than 2’700 different mobile phone subscriptions that you could choose from. Nevertheless, such an expansion of freedom of choice has not led to higher cos-tumer satisfaction. Quite the contrary, it has worsened the process of selection, making it less transparent, which has eventually led to a decrease of the degree of control of our own behavior. We, as consumers, have less and less time to deal with this hyperchoice and have to take decisions based on what we see or hear: advertisement. (Neuner, 2005, p. 195–206) Additionally, overconsumption has led to troubling consequences, such as severe environmental damage or the exacerbation of inequalities in access to goods and services between the privileged and the disadvantaged. The spirit of consumerism has even colonized non-market spheres such as family, religion and politics through labeling, which has increased the role of shopping as entertainment and spectacle, creating a new, not stigmatized illness: shopaholism. It is proven that overconsumption, far from coming out of our own decisions, brings materialism, superficiality, hedonism and bad taste, while wise and moderate consumption develops posi-tive character traits leading to human flourishing. (Garcia-Ruiz & Rodriguez-Lluesma, 2014, p. 510–511) Furthermore, in a finite world some freedoms are either impossible or immoral. For example, the freedom to accumulate unlimited physical goods in a world of finite resources, the freedom of increasing ones social status through consumption of goods that include child labor in the production process or the freedom to live at the expense of future generations (Jackson, p. 62). Just like any kind of freedom, freedom of consumption should be constrained when it has bad effects. To what extend should I be free to consume a good that has negative outcomes on someone else’s life ? We should stop believing in the fallacy that we define ourselves through consumption, but rather, as it was done in the pre-modern era, we should define ourselves through our relationship with our environment, both social and natural. (Neuner, 2005, p. 206; Garcia-Ruiz & Rodriguez-Lluesma, 2014, p. 510)


4.4 Environment


We have seen in chapter 3, that one of the main limits to growth is the scarcity of non-renewable resources, which are limited from both their sources and sinks. However, in a market economy, scarcity is reflected by high prices. This implies that, if the planet was actually running out of natural resources, their prices would increase over time. But, in fact, the opposite can be observed in today’s world as the inflation adjusted prices of natural resources are constantly falling in the long run, even if they exhibit substantial short-run fluctuations. This leads Mankiw (2011, p. 534) to conclude that market prices, give therefore no reason to believe that natural resources are a limit, since our ability to conserve these resources is growing faster than the supply is falling. Furthermore, Shafik (1994, p. 757–770) tries to refute the belief that more economic growth will inevitably lead to environmental degradation and eventually to ecological collapse. Indeed, he tries to demonstrate in his study that it is possible to grow out of environmental problems. As he puts it, after achieving a certain income, “most societies choose to adopt policies and to make investments that reduce environmental damage associated with growth” (1994, p. 770). This view has also been supported later on by the Environmental Kuznet Curve (EKC), which states that pollution follows a particular pattern that is linked with economic growth. Countries with low per capita income tend to pollute a lot. As income rises, pollution gradually levels off and then eventually falls again, which proves that economic growth will address environmental problems more or less automatically. (Vogel, 1999, p. 11)


We have seen in chapter 3 that the most developed economies around the world depend heavily on energy, especially fossil fuels. We have also seen that billions of dollars are spent by govern-ments to subsidize fossil fuels in order to foster production and, therefore, economic growth. For example, approximately 30% of the United States’ oil price is subsidized by the Pentagon, which clearly proves that, we are not in a pure market economy and prices do not always reflect scarcity. The saying by Mankiw that oil prices are low because they reflect the unlimited quantity still available is a fiction. In fact, the pentagon uses most of its resources to keep prices low (Chomsky, 2001, p. 38). Concerning the EKC, what it actually states is that becoming rich is the best remedy to environmental problems. This is practically impossible to achieve since if everyone would consume as much as the richest countries on earth, we would need more than 3 planets to fulfil our needs (NEF, 2009, p. 11–12). Furthermore recent studies have shown that the EKC model is overly simplistic and cannot be used to draw conclusions regarding the relationship between economic growth and environment, as rich countries are not character-ized by improved environment conservation (Mills & Waite, 2009, p. 2087–2095). In addition, the EKC focuses only on the relationship of certain pollutants, which are only a small part of environmental concerns, and economic growth. Therefore Caviglia-Harris, Chambers and Kahn (2009, p. 1149–1159) have tested the validity of EKC by using the ecological footprint instead of


just a few pollutants and have found no evidence in the relationship. This is mainly due to the immense use of energy in developed countries, which has accounted for the majority of our ecological footprint. They found that, in order for the EKC to be true, we should decrease our energy use by 50%.


5. Ways to a Steady State Economy

“The communist growth god has already failed. Surely the capitalistgrowth god will not fail! Let us jump-start the GDP and the Dow-Jones!Let us build another Tower of Babel with obfuscating technical termslike sub-prime mortgages, derivative, securitized investment vehicle,collateralized debt obligation, credit default swap, “toxic” assets,and so on... Well, let us not do that.” H. Daly

In fact, let us rather focus on what policies the proponents of the Steady State Economy propose to adopt to ease the transition from an uneconomic growth driven society to a Steady State. It is clear that changes in the actual system and way of thinking have to be made. Changes are not easy but they are not impossible either. In the course of history, mankind has already expe-rienced two groundbreaking changes of society and the economy: the agricultural revolution and the industrial revolution. In order to question and change the status quo, we have to lead the way to a sustainability revolution. It is true that this process will take time to fully unfold, just as the two previous revolutions did. However, as the limits are becoming more and more pressing, we have to act now. We have to acknowledge that our present economic system is outdated, that it does not work and is leading us into the wall. For Meadows et al. (2004, p. 269–272), the most important things to change are the feedback structures, the information links in the system, which basically means the data, the goals, the contents, the incentives and the costs that motivate behavior. The same people can behave completely differently, if they see a good reason to do so. Meadows et al. believe that the sustainability revolution will happen organically though the efforts of every single individuals of this planet. It will not emerge from a small group of elite who will get the credit but rather from you and me. Meadows et al. (2004, p. 272–284) lay the first bricks of the wall of policy recommendations towards a more sustainable society by providing five tools that every single human been could or should use. Those five tools are: visioning, networking, truth-telling, learning and loving. This list can seem a bit feeble, especially when we look at the immensity of the task. However, many discussions led in the field of sustainability have only treated the necessary but insufficient parts of the sustainability transition, such as recycling or emission trading, which at least we know how to handle. Those five tools, although much more complicated to use, should be used more often, with sincerity and without apology. At first, Meadows et al. were hesitant to discuss them because, as they put it, “we are not experts in their use and because they require the use of words that do not come easily from the mouths or word processors of scientists. They are considered too “unscientific” to be taken seriously in the cynical arena” (2004, p. 271). Further contributions have been flourishing since then. In the following chapter you will find a selection of recommendations I think to be the most feasible and accurate. These policies can seem “a bit radical by present standards, but not insanely unrealistic” (Daly, 2004, p. 78).


5.1 Niko Paech: Subsistence and Sufficiency

Paech (2012, p. 113–147) builds his suggestions around two concepts: subsistence and suf-ficiency, which basically means that we should not choose between “either or” but between “more or less”. For him, the most important things to change are the behavior of the consumer as well as the behavior of private societies. To achieve such a thing it is first of all necessary to “unbuild” the actual global economy and transform it into a local economy, which he calls “ökonomie der Nähe” and means moving from a global production chain to a local or regional one. The point he tries to bring here is to keep the system “so regional wie möglich, so global wie nötig” (2012, p. 118). This would bring the following major benefits:

— Transparency: the biggest problem of international corporations is that there is no consis-tency between the interest of shareholders and the interests of stakeholders, particularly the end consumer. A more regional model would imply that the capital providers would be part or at least close to the end consumer, and would share the same interests.

— Empathy: more regional corporations would focus on the community they are serving, because they can identify with it. This would relieve the constant pressure of only produc-ing more profits and add an interest of “caring” for the community.

— Interest congruence: because shareholders would at the same time be end consumers, they would have no interest in asking for higher capital yields, since they are mostly derived from higher prices. This would soften the pressure to grow.

— Usage control: when the investors have the choice of choosing in which branch of the corporation they will invest, there will be no avoidance of investing in low interest projects if they benefit the local community (such as arts, social work and other projects with low interest yields).

A decrease in industrial production goes hand in hand with a conversion back to an economy in which products are made to last and are repaired rather than disposed of. The economies in which our parents and previous generations lived shared many of the positive traits, which have disappeared with the advent of globalization. Paech argues that industries and the economy in general should serve the interests of society and the environment and not the other way around. Instead of always building new industries, we should transform the actual ones to meet the present goals and needs of society, by constantly optimizing the products they produce. Instead of producing more and striving for higher sales, industries should focus on reducing their production chains and direct it on regional actors, increase their creativity, create better products that last longer and should be directed on the employees’ interests. Additionally, productivity gains, which allow a corporation to produce more with fewer employees, should not be used to produce more, but to use more people that are working less. For Paech,


the perfect employment time would be 20 hours a week instead of the 40 hours we are actually working. This would allow the economy to keep a constant employment rate, without economic growth. It is true that such a deconstruction of global production chains will also imply some sacrifices. Indeed, product variety and our material purchasing power will significantly drop. For Paech, this should be compensated by a sufficiency effort and subsistence practices. The first concept implies being satisfied by much less products, which are created locally, and being less dependent of monetary income coming from work in corporations. The second concept would come from our own ability to substitute the products we are buying by our own creative subsistence. Indeed, since people would benefit from more free time but less income, there will be a necessity to substitute our actual consumption with what we can produce. Paech identifies three main ways of being self-subsistenced. First of all we must intensify the use of every product through community usage. This would imply a substitution of material production through social relationships. For example, instead of buying your own washing machine you could by one with your neighbors and share it. We have a lot of products that we do not need the whole time and that we could easily share with other people. This would also mean lending objects more often that we now do. Second the products we are buying should be used much longer than we are now used to. This would be achieved through higher care, maintenance and reparation of the products we possess. Instead of throwing it away as soon as it is broken and buying a new one, we could relinquish this additional consumption by just repairing the product. For Paech, we could halve the actual global production only by doing this. Therefore, we could maintain our actual consumption function even if the production function is lowered. Third, we should produce more by our own means instead of just buying. Gardening, painting or building are just a few examples of things that we can do by ourselves, but we lack the time to do so. If we would only work 20 hours a week, this would enable us to have more time to grow our own salads, or create our own computer software instead of buying it. Not only does it create tradable goods (you could exchange two salads with your neighbor and he will help you repair your computer), but it would also totally change the actual consumption patterns that have tremendous consequences on the environment. Those three outputs are the foundation of a life with less income and can be combined depending on one’s capacities, disposition and environment. Paech argues that such a new way of living would not imply a lower living standard, since the lost in production would be compensated through a longer and more intensive usage of products. We would no longer consume based on utility maximization, but based on our personal manual, social and substantial capacities. For this lifestyle, we only need three things, which are time, social relationships and workmanship. Happiness does not come from consumption but rather from recognition of our abilities, self-efficiency, health and so on. In contrast to consumption, those components of happiness do not need money but time only. Financing an ever increasing material wealth, means sacrificing your free time in order to maximize your income. This implies less and less time for out of the market activities such as child education, social work or house-keeping, which are then transformed into services that we must pay for. This consumption spiral implies an ever diminishing time-capital. Like everything else, consumption needs limits: in small quantity it has positive effects, but taken in too high quantity, it can have bad effects on health


and society. In order to generate utility we need to devote a minimum amount of time and con-centration to a certain object. Nowadays, we have too much “stuff” and an always diminishing time stock to devote to them. We are not experiencing a decrease in purchasing power, but in our time capital, as we need to devote more time to our growing amount of belongings and to get to know new “stuff” that we can be interested in. We need to take time and consume less. As he puts it, “souverän ist nich wer viel hat sodern wer wenig braucht” (2012, p. 130).

5.2 Herman Daly: Moving from Failed Growth

Daly (2014, p. 74–86) identifies three anathemas as the main arguments to defend a growth-based economy. Firstly, without growth we could only eradicate poverty by sharing, but redistribution is the first anathema. Secondly, the only cure to overpopulation without growth is through population control, second anathema. Thirdly, the only way to increase the amount we can invest in environmental preservation without growth is through a drastic reduction in our consumption, anathema number three. Daly argues that this is because our modern day institutions are actu-ally not working as we would want them to and, therefore, loose their legitimacy. Private property cannot work if it is unequally distributed, markets cannot work if prices do not reflect the full cost they generate and the macro-economy becomes absurd when it wants to grow beyond the biophysical limits of the earth. Because more growth becomes uneconomic, which means that the costs of growing are becoming greater than the extra benefits, he formulated 10 policy recommendations, which represent radical changes compared to our present system. However, for him, we should implement them gradually to ease the shift towards a more sustainable society.

1. Establish quotas for basic resource depletion and pollution: These quotas should be applied at the input end of a resource as it makes it easier to monitor and has influence on both depletion rate and, indirectly, on pollution. The ownership of these quotas should initially be public and then should be auctioned, which enables an equitable redistribution and efficient allocation to highest use. The revenues of these quotas should replace regressive taxes, reduce the taxes of the lowest incomes and be invested in renewable energy.

2. Ecological tax reform: This would be embodied by a shift from a value added tax to a tax “on what value is added”, namely nature’s throughput. Value added is something good, that we should encourage and therefore stop taxing, while resource depletion and pollu-tion should be avoided and therefore taxed. This would enable the unpriced contributions of nature to be priced, in order to internalize external costs and would, at the same time, raise revenues more equitably.

3. Rethink income distribution to limit inequality: In short, establish a minimum and a maxi-mum income. In order to reduce poverty without growth we have to redistribute income


and understand that both complete equality and unlimited inequality are unfair. We can already see such patterns in the military, civil service or universities, where income inequality stays within a factor of 15 or 20. In today’s corporate America the range of inequality exceeds a factor of 500. Daly (2014, p. 80) suggests that we limit this factor to 100, as too high inequality almost creates different societies within one. This should be reinforced by an inheritance tax, which would restrain the accumulation of unearned wealth over generations. Maximum wages have been unpopular mainly due to the fallacy that rich people stimulate growth, which would in turn make everyone rich. This idea, however, has become more acceptable “thanks to the banksters and their bonuses” (Daly, 2014, p. 80).

4. Reduce the working time in a day, a week and a year: This would allow greater flexibility for part-time or personal work and enable full employment in a stable economy. Work-life-bal-ance is one of the most important choices people are not allowed to make. Furthermore, advertisement, which stimulates more consumption and more labor to pay for it, should no longer be treated as a tax-deductible expense of production. “Is it really a good thing to subsidize the expenditure of billions of dollars to convince people to buy things they do not need, with money they do not have, to impress people they do not know ?”

(Daly, 2014, p. 81).

5. Re-regulate international commerce: This would mean for every country to move away from free trade, free capital mobility and, generally, globalization. Not every country will take the decision of internalizing environmental costs, which will raise prices and put countries that did apply these policies in a competitive disadvantage at the same time. Therefore, instead of “old protectionism”, which was designed to protect inefficient domestic firms from more efficient foreign ones, we need a “new protectionism”. This would mean adopt-ing compensating tariffs on foreign firms, which are not required to pay environmental cost they generate, in order to protect efficient national policies of cost internalization.

6. Downgrade the WTO-WB-IMF: to something that Daly calls a “multilateral payments clear-ing union” (2014, p. 82), which would charge financial penalties on exaggerated national surplus and deficits to avoid large foreign debt. For example, the United States would pay the clearing union a charge for its immense deficit or China for its surplus. The union should also create a world reserve currency, because it represents a privilege that no national currency should enjoy alone, which would work like gold under the gold standard. The WTO-WB-IMF preach “the gospel of globalization” (2014, p. 82), which basically means free trade and free capital mobility. Far from serving the common good, it only allows transnational corporation to escape from national regulations.


7. Move towards a system of 100% reserve requirement for banks: This would undermine the ability of private banks to create money out of nowhere and lend it at interest, while putting the control of money supply in the hands of the government. First of all, it would re-establish the classical balance between abstinence and investment, since a dollar loaned to a borrower should have been previously saved by a depositor. Second, money would become neutral with respect to growth as there would be no more need to increase the number of loans in order to prevent the money supply from decreasing. Third, the financial sector would not be as important as it nowadays is (for example around 40% of the US’s GDP), freeing smart people for more productive, less bloodsucking activities. Fourth, it would soften the cyclical tendency of the economy, as money supply would no longer expand during a boom and contract during a recession. Fifth, no bank would be “too big to fail” as the failure of one or two banks would not make the whole credit pyramid collapse. Sixth, a constant price index would reduce the fear of inflation and the conse-quence of accumulating more as a protection. Even if such policies could sound extreme for our current financial system, the 100% reserve system has already been proposed in the beginning of the 20th century. “The fact that this idea is hardly discussed today is tes-timony to the power of vested interests over good ideas” (Daly, 2014, p. 84).

8. Stop treating the scarce as if it were non-scarce and vice versa: This would mean pricing the rival natural goods, while freeing the non-rival knowledge and information from private enclosure. Knowledge is not divided when it is shared, but multiplied as it creates the basis for new knowledge. The cost of sharing knowledge is zero and we should provide international aid more in the form of knowledge than in big interest-bearing loans. On the other hand, shorter patents should be granted to fewer “innovations”. The cost of production of knowledge should be publicly financed and then freely shared, as it is a cumulative social product and the most important inventions have been developed without monopolies and royalties.

9. Stabilize population: It is surely the most controversial policy recommendation, as it is often compared to the one child policy of the Chinese government and would have to regulate immigration. However, it is one of the most important ones as we have seen in chapter 3. For this, we should make contraception available freely everywhere, support family planning and enforce reasonable immigration laws. It is true that it is at the boarder of “political correctness”, however most of immigration goes at the expense of the working class of a country and benefits the employing class, as it represents cheap labor. Further discussion on the topic of immigration is needed, even if the idea of a stabilized population cannot be abandoned.

10. Reform national accounts: First of all, acknowledging that GDP growth does not necessarily increase wellbeing. As already stated in chapter 3, we need newer accounts for economic performance, and need to stop an activity when it generates more marginal costs than benefits.


5.3 Tim Jackson: Prosperity Without Growth

For Jackson (2011, p. 175–186) there are two ways of changing the status quo. The first one is through revolution, which he rejects, as it would mean starting everything from zero again. The other solution would be to engage in social transformation, which he supports with 12 policy recommendations. His recommendations are built around 3 simple concepts, which are estab-lishing the actual environmental limits (policy 1 to 3), fixing the present economic model (policy 4 to 7) and changing the social logic (policy 8 to 12). Again, those are only recommendations, which cannot all be achieved immediately, but can bring meaningful and long lasting changes:

1. Establish resource and emission caps: In order to bring about a sustainable society, we need emission and resource caps and need to establish reduction targets under these caps. It has already been done with, for example, the Kyoto Protocol or the IEA guidelines. However these limits should be integrated in an economic framework in order to be fully effective.

2. Fiscal reform for sustainability: The goal of such a reform would be to tax the “bads” (such as pollution or resource depletion) and not the “goods” (income, for example). This would mean that we would tax something that is socially, economically and environmentally not wanted and encourage what is wanted, by internalizing the real costs of production and relieving the taxing burden of business and individuals.

3. Support the transition to a sustainable society in developing countries: We need to make room for poorer economies to grow and help them achieving this growth without massively polluting and consuming resources. This could be achieved through investment in renewable energies and energy efficiency or the protection of forests (which are carbon sinks) and could be financed by a Tobin tax on international currency transfers.

4. Developing an ecological macroeconomics: In order to be able to do this, we have to completely rethink and reframe the way we understand consumption, investment, labor employment and productivity. We should stop the eternal pursuit of labor productivity and start investing in projects that are seen as “uneconomic” because they do not generate high yields but social welfare. This is an area where we need much more research and innovations, but one of the first steps to be undertaken should be the full integration of costs in prices.

5. Investing in jobs, assets and infrastructures: This is one of the basics of a new macro-economy. We need ecological investment in order to build energy-efficient infrastructures, ecosystem maintenance and protection or more public transportation. Investment in jobs and skills is also necessary in order to improve and maintain buildings and infrastructures. Furthermore we should rethink the way we perceive ownership of assets.


6. More financial and fiscal prudence: The fact that our present economic system is based on debt-financed consummation destabilized the global economy and brought up the 2008 crisis. In order to avoid such global crises, we urgently need regulations of financial markets in order to ban unscrupulous and destabilizing financial practices (such as short selling), to reduce excessive bonuses for managers and establish higher protection against ver-indebtedness of consumers. Another, widely acknowledged solution, could be to establish a Tobin-tax on financial transactions. This could, in the first place, reduce the volatility of financial markets and its negative consequences and reduce the mobility of capital. Additionally, the money raised from this tax could easily finance the needed devel-opment program in developing countries that we have seen in point 3. A small tax is still feasible, when we consider that the amount of global currency trading reached US$ 1.5 trillion per day (Henderson, 1999, p. 2). However, in order to fully control investment and debts, the government should have a better overview of the money flow in the economy. Because banks only need a small amount of the credit they grant in their reserves, they actually create money. This money creation is not controllable by governments, unless a bigger amount has to be kept as a reserve. The higher the mandatory money reserve is, the lower the money creation and therefore the higher the control of the government on money flow.

7. Revisiting the measurements of economic performance. As we have seen in chapter 3, GDP only measures the “busy-ness” of an economy. In order to have a complete instrument, that does not only measure economic activity but also welfare, we must consider integrating variables that have been ignored until now. Among other numerous variables, it should take into account the loss of welfare due to income inequality, the external costs of pollution, wars, crime and traffic accidents, or out of the market activities, such as household or volunteer care. (p. 182)

8. Regulation of working time: a reduction of working time is necessary for two reasons. First, in an economy where labor productivity is improving but production is limited, the stability of the system is only possible if the available labor is shared. This means that, instead of employing fewer workers that are working the same amount of time, companies should hire more workers that are working less. Secondly, shortened working time has beneficial consequences on labor productivity. Indeed, people that are working less have more time to rest and are therefore more efficient, motivated, attentive, flexible and fit.

9. Tackling systemic inequalities: It has been proven that a society, which has high inequality in income, experiences health and social problems. Furthermore inequalities encourage status consumption and, therefore, material over-consumption, which is the main con-tributor to pollution and resource depletion. Fighting inequalities diminishes social costs, increases life quality and changes the dynamics of status consumption. In order to do so, we need to change our actual approach to income, by facilitating access to education, establishing a bottom and top income or changing the way we measure income taxes.


10. Measuring prosperity and competences: In other words, we should measure “what matters”. As we have seen in chapter 3, there is a big difference between wellbeing, consumption and economic performance, which brings about a growing need for an instrument mea-suring prosperity and flourishing capabilities. The difficulty of such an instrument is that it must be redefined for, at least, every country, since we do not have the same definition of happiness. It could entail such variables as life expectancy, education, health or our contribution to society. There have been some contributions towards this end with, for example, the “Chanceindex” that was developed in the Nederlands. However, we still need further research and contributions in this field.

11. Strengthening social capital: Wellbeing comes mostly out of the ability to participate in the life of society. There are numerous things a government can do in order to foster community and strengthen social capital such as creating public spaces, bringing the workplace closer to the living space or offering access to museums, parks or libraries. There have been significant improvements in social capital in the last years, even governments begin to understand its importance, but again it remains isolated and sporadic.

12. Break down the culture of consumerism: Consumerism is the base of a system mainly driven by economic growth, but has tremendous negative effects on social and psy-chological matters and fosters status consumption. This culture has been conveyed by institutions, social norms and especially advertisement. One of the major solutions is to drastically reduce advertisement, which can also be seen as visual pollution. There are numerous example of this across the world, like Sweden and Norway, which banned com-mercials targeting kids under 12. Another major contribution could be a closer control of planned obsolescence, in order to protect the interest of consumers. Alternatives to a consumer lifestyle should also be worked out.


6. Best Practice

The dogmas of the quiet past are inadequate to the stormy present.The occasion is piled high with difficulty. As our case is new, we must thinkanew and act anew. We must disenthrall ourselves and then we shall saveour country.” Abraham Lincoln

Even if Abraham Lincoln was talking about challenges concerning his time, his point remains, nonetheless, relevant in the 21st century. In order to overcome the totally new challenges and needs our modern society is facing today, we have to act and think anew. It is true that the policies listed in the previous chapter are only recommendations, but they are nonetheless accurate and feasible. It is also true that we cannot be sure of their outcome, as we have never done such things before. However, we must be ready to make mistakes and correct them along the way. As Albert Einstein once said, “anyone who has never made a mistake, has never tried anything new.” It is also normal that ideas, which run ahead of their time, confuse the crowd, are ridiculed and face strong opposition before being widely acknowledged. For these reasons, and because I sincerely believe in the feasibility and necessity of those policies, I have selected 6 policy recommendations that I personally think to be the most effective, needed and easy to implement. In the selection process, I have disregarded the policy recommendations I do not agree with, or that I do not see as urgent or relevant. Because of the limited scope of this thesis, I will not list every policy recommendation I did not choose and why I disagree with it, but I will give two examples. As a first example, I do not totally agree with Paech (2012, p. 113–147) as, for him, society as a whole could be transformed only by changing the behavior of corporations and individuals. I personally believe, that in order to bring about the necessary changes towards a sustainable society, we also need an adequate and, therefore, reformed institutional frame-work. As we have seen in chapter 2, institutions are the fundamental sources of growth and have the power to either foster economic growth where needed, or put an end to it where it has become harmful. I am, therefore, convinced that we both need a change in institutions and in the behavior of individuals as well as private corporations in order to bring about a sustainable society. As another example, I do not totally agree with Daly’s (2014, p. 81) 5th policy recom-mendation, as he argues that countries, which made the decision to adopt a Steady State Economy, should protect themselves from countries that did not take this decision. I do not believe that a country alone can make a significant difference by adopting a Steady State, but that this concept should rather be applied globally in order to stop the pressing growth-spiral. For this reason, I see a Steady State Economy more as a global consensus that rises out of a new understanding of “enough” and the consideration of environmental limits, rather than a competitive advantage that countries should adopt individually. For these reasons, I have selected policy recommendations that do not only work on the proximate causes of growth but mostly on institutions. The challenge is to put these policies into global practice, instead of just applying them in a few countries, as we are overshooting the limit together:

“


1. Price the unpriced: This would mostly be achieved through emission and resource deple-tion caps and could be supported by tax reforms as proposed by both Daly (2014, p. 78–79) and Jackson (2011, p. 177–178). This would imply that prices would reflect the full cost of production, including the environmental cost. However, I believe that we should also add a social dimension, as the majority of the cheap products that are offered in developed countries are produced in unhealthy facilities and for ridiculously low wages. This would imply that we would no more consume “low cost” products at the expense of the environ-ment and disadvantaged societies. Furthermore, it will completely restructure the way we consume and would have to be compensated by a sufficiency effort as Peach (2012, p. 114–147) described.

2. Support the transition to a steady state economy in developing countries: There are three reasons why I see this point as relevant. First, developing countries are in their actual pov-erty traps because of developed countries and they should not be held accountable for it. Secondly, we have seen in chapter 3 that most of global population growth happens in developing countries. If we want to stabilize the population in developing countries we have to help them through the process of demographic transition. Thirdly, there are not enough environmental sources and sinks for them to pollute and consume as much and as inefficiently as developed countries did to grow. For these reasons, I believe that rich countries should help poorer countries to grow sustainably in order for the latter to reach the wellbeing levels of their counterparts. For this, I am convinced, just as Daly (2014, p. 84–85), that we should provide international help more in the form of knowledge than in financial aid. We have achieved much more research in recycling, renewable energy and efficient consumption, which we should share for free. Nevertheless, I believe that this should also be supported by international financial aid, which could be financed by a Tobin tax.

3. Regulate financial markets: First of all, progressively moving towards a 100% reserve requirement for banks, as I do not support the idea that private corporations should have the ability to create money. In my opinion, this is a power that should be let to the gov-ernment. We have seen in chapter 3 that debt is one of the major problems of a growth driven society. A too low reserve requirement for private banks enables banks to create credit ex nihilo, which can accentuate the indebtedness of a society. Furthermore, I see a Tobin tax as not damageable to the financial system. Even if an insignificant percentage of transaction would be taxed, let say 0.1%, due to the enormity of the daily traded vol-ume on financial markets, it could still raise an interesting amount of money that could be used to finance international aid or projects for the common goods, which are today seen as “uneconomic”. Additionally, unscrupulous and dangerous financial activities, such as agricultural commodity speculation, should be banned. Indeed, the World Food Price Index from the FAO (2015), which consists of the average price of meat, dairy, cereals, vegetable oils and sugar, rose by 221% from 2000 to 2014. A study from Kleinau and & Lin-Hi (2014, p. 685–698) showed that this extreme volatility is mostly due to speculation on


agricultural commodity, which does not contribute positively to society and is therefore not in line with a sustainable society. As we have seen in chapter 3, food is a major global issue, and I, therefore, believe that we should not be able to speculate on it, when billion of people on earth are starving.

4. Decrease our working time: I have just read a study saying that 98% of managers, when retiring, regretted that they spent so much time working and such a ridiculously small amount of their time with their families and beloved ones doing what they wished. Why is it so ? I do not believe that working as much as we are doing is healthy or contributes to our wellbeing, but quite the opposite. Our consumption spiral implies an ever diminishing time-capital, which means less and less time for our self-enjoyment. As Peach (2012, p. 114–147) proposed, we can easily substitute this decrease of income by a subsistence effort: Intensify the use of every product through sharing, using products longer by caring, maintaining and repairing, and produce more by our own.

5. Reduce income inequality by fixing a maximum and minimum wage: As Daly puts it, “we have to seek fair limits to the range of inequality” (2014, p. 80). The inequality we are now experiencing, up to a factor of more than 500 in corporate America, is totally unjust. However, complete equality would not be fair either. Therefore we have to set limits for both maximum and minimum income that we all see as fair. Since we have never done this before, we have to try and adapt if this does not work. I believe that a factor of inequality of 100, as proposed by Daly (2014, p. 80–81) is a good starting point.

6. Rethink the way we measure economic performance and Wellbeing: We should actually measure “what matters”, which is wellbeing. As stated in chapter 3 and 5, there have already been some contribution towards this end, but more research is needed. Further-more, we should also reconsider the way we measure economic performance, since the present measures do not consider activities that are performed out of the market, or the loss of welfare that some activities generate (pollution, war, inequality and so on).

There is one point, however, that I see as even more relevant than the ones I could find in every single book I read about sustainability and the Steady State Economy. It seems so important to me, that I was surprise not to find it listed in any of the policy recommendations mentioned in the previous chapter or in other relevant literature. Most of the authors recognize that we need a mentality change or that we need young motivated new thinkers in order to bring changes. But how do we achieve that ? How do we convince people that it is better to consume less ? How do we make them understand that the environmental limits are so pressing ? And most importantly, how do we provide them with the knowledge and motivation to bring about such changes, and to face the challenges of the 21st century ? In my opinion, the only achievable way to bring about a sustainable system is to transform one of the oldest institutions of our modern society: Education.


Education, formal and informal, has forever been a force that has shaped our destiny and brought about progress and sometimes its opposite. However, today, our educational system is based on ideologies of the 19th century and was designed to meet the needs of the industrial revolution, not the challenges we are now facing. It was designed to accustom the working class with habits and disciplines, such as prescribed rules, timetables, standardization, conformity or the ring of bells, which were essential to industrial production. Education was, at the time, seen as a vital institution to generate long-term economic growth. But how can we drive into the future by looking in the rear-view mirror ? Our actual academic system lies on two pillars. The first one is economic and is shaped by expectations of labor markets, which are completely out of date. This forces schools to prioritize subjects that seem more relevant to the economy, such as math, science or economics, ruling out other subjects that are just as important to our human development. We are actually not educated to be able to cope with the present challenges, but to be prepared for the labor market. This law of supply and demand can be applied to standardized goods, but we cannot force human lives to follow this linear process. Why do we think that some disciplines are “more useful” than others ? Additionally, schools are being more and more managed as service com-panies, treating knowledge as a commodity and students as customers (Schultheis, Cousin & Roca i Escoda, 2008, p. 7–16). The second is intellectual and defines intelligence by academic abilities, without considering any other kind of intelligence, making its definition dangerously narrow. There are two predominant ideas that dominate popular conception of intelligence: our ability to think logically (IQ) and our memory for factual information. It is true that mathematical and verbal reasoning are part of human intelligence, but it is far from representing its totality, otherwise most of human culture would have never happened. We also need people who are trained to do things, to construct buildings or to save us from fires. A world filled with acade-micians, businessmen or mathematicians could not meet its basic needs. Furthermore, such standardization of intelligence kills our creativity, as it makes academically successful people, as measured today, fail to discover their other abilities. But what we urgently need now in order to bring changes is creativity! (Robinson, 2011, p. 30–245)

In order to bring the changes needed for a transition to a sustainable society, we need a diver-sity of talent, not a singular conception of ability, and a new way of perceiving the goals of our personal lifes. I do not only believe that education is an important solution to bring about long lasting changes, I believe that it is the key that will open a brighter future for our modern society. For this reason, we need to abandon our ideological comfort zone and drastically change our educational system. Listing the necessary changes that should be brought to education would go well beyond the scope of this thesis. In fact, it could be the subject of a thesis itself. However, I believe that in order to solve the problem and bring about a sustainable society, we have to come back to the basics and ask a new question:

What is education in the 21th century for ?


7. Conclusion

In this thesis, we have seen that the economy cannot grow beyond the earthly limits and should, therefore, be reduced to follow the interests of the environment and society, and not the other way round. In the beginning of this thesis, we have defined economic growth and briefly intro-duced how it was blindly followed. Its history enabled us to make some interesting conclusions about the effects of exponential growth and its relative youth. Identifying the sources of eco-nomic growth, enabled us to figure out both how to foster growth in developing countries and how to put an end to it in developed countries. Due to the limited scope of this thesis, envi-ronmental limits have only been approached briefly, since the interplay of the environmental sources and sinks as well as the domino effect it triggers are not fully understood yet. Further research on other renewable resources, such as forests, non-renewable resources, such as metals, or pollutants, such as chemicals, can be found in several works listed in this thesis (see e.g. UNDP, 2012; IPCC, 2014; EIA, 2014; OECD & EIA, 2014).Even if earthly limits could be overcome, we have identified two economical limits to growth, namely the fact that it was mainly debt-financed and that it was erroneously measured. Despite abundant research in these areas, efficient measures have still not been undertaken. This situa-tion has opened the door to the policy recommendation listed in chapter 5. After analyzing the recommendations, the author created his best practice of policy recommendation and iden-tified one of them as the major contributor to a shift towards a sustainable society, namely education. Surprisingly, education has never been listed in the policy recommendations of the most influential authors in this field. However, changes in education are far from being a luxury, as good education is essential to make lives that are worth living in a world worth living in. Future generations need to be able to meet the needs and understand the challenges of their present and the future. For this, we cannot trust a system based on the ideology of the 19th century, but we need a modern educational system based on modern needs. Some people may argue that the policies proposed in this thesis, both for a transition to a sus-tainable society and for a transformation of education methods, will kill creativity and fossilize the world in its actual state as it puts too many constraint on human behavior and would be far too costly to implement. However, creativity does not come out of an endless freedom and a lack of constraints, but quite the contrary it emerges by working with constraints and overcoming them. Additionally, the rules and laws applied in a Steady State Economy should not be seen as barriers, but more as guides to redirect our ambitions towards activities that generate more wellbeing than merely material wealth accumulation. Nonetheless, it is true that it is far from easy to price such changes but two things are sure. One, we cannot afford a failure. Two, the benefits are well beyond what we can possibly imagine. For these reasons, a journey towards a sustainable society should not be seen as a painful and costly walk but more as a fulfilling adventure towards a better future.

However, this thesis also raised some issues. In the case of Steady State Economics, it is argued that wealthy nations would free enough material resources to allow the rest of the world to grow and develop. But little has been said about how development could actually be attained, and


how both types of economies (Steady State and traditional) could coexist. Furthermore it is a fully “western” perspective on the economy, the environment and society. Until now, more attention has been given to what countries should do once they achieve a certain scale and a certain level of development, rather than how they could achieve this in a sustainable way. Developing countries, and different opinions on what is just, how big is too big and the definition of enough should be considered. If we want to make the Steady State Economy a robust model, these issues have to be addressed.


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I hereby declare

— that I have written this thesis without any help from others and without the use of documents and aids other than those stated above,

— that I have mentioned all the sources used and that I have cited them correctly according to established academic citation rules,

— that the topic or parts of it are not already the object of any work or examination of another course unless this has been explicitly agreed on with the faculty member in advance,

— that I will not pass on copies of this work to third parties or publish them without the Uni-versity’s written consent if a direct connection can be established with the University of St.Gallen or its faculty members,

— that I am aware that my work can be electronically checked for plagiarism and that I hereby grant the University of St.Gallen copyright in accordance with the Examination Regulations in so far as this is required for administrative action.

Date and Signature

18 May 2015

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Ways to a Zero-Growth Society - degrowth.info · Ways to a Zero-Growth Society Abstract In this thesis, we will see how economic growth, as it is understood today, cannot be sustained