By scaling down our harmful economic activities and reorganising the economic system, we can stay within the limits of the earth without negatively affecting overall quality of life. This is called degrowth.

Degrowth and post-growth are sometimes used interchangeably. At Triodos, we think it’s important to focus on the positive opportunities that an economic change could bring, so we’ll focus on the term ‘post-growth’. Post-growth is about fundamentally transforming our economy.

Hans Stegeman, chief economist at Triodos Bank, has been researching and writing on post-growth and radical change for over 10 years. Here, he breaks down what this concept really means.

What is degrowth, or post-growth?

Degrowth is a planned decrease in economic activity, to achieve an economy that is fairer and remains within planetary boundaries.

In practice, this means that we need to do certain things less, and some not at all, to deliver higher levels of wellbeing for all. Think, for example, of the production and use of fossil fuels. If we do less of harmful activities such as this, then we make more space for other activities that support us all to thrive, sustainably and equitably – and we still stay within planetary boundaries. For example, we might focus on ensuring access to nature, high quality healthcare or education.

Defined more broadly, post-growth is the end-state, after overcoming our growth addiction. It’s about imagining a society that doesn’t rely on economic expansion continuing forever. In a post-growth world, there’s room for all kinds of different structures and ideas that don’t have to fit with the traditional goal of maximising profit for shareholders.

The point is that there are limits to growth. Continuing to grow as we do now is simply not sustainable and not necessary for our quality of life. If we do continue on the current course, then we will exhaust the earth and ourselves along with it. Post-growth offers an alternative.

The current economic system is dependent on growth. How does that work?

From a young age, we are taught to consume – more, better, faster, bigger – and that is not without reason. In today’s economy, companies generally operate with only one goal: profit maximisation. That is because shareholders are ultimately the boss. The more return they demand, the higher the pressure for companies to make a profit. 

In itself, profit maximisation is not a problem. This market-based economy has brought us a lot of progress – in order to maximise profit, companies have been innovating for decades. But there is also a downside. They also need increasingly larger sales markets. Economic growth is a requirement for their existence, certainly for listed companies. However, it is also in the interest of the ordinary worker: innovation and efficiency leads to job losses, because we can produce the same output in less time, and so with fewer people. To ensure everyone can stay in work, the economy needs to grow. 

Governments also benefit enormously from this system – they receive more money when the economy grows and incomes rise, in the form of taxes. Our current system needs growth, regardless of the wellbeing of people and ecosystems.

But can't we stay within planetary boundaries through innovation, efficiency gains, and so on? Then the economic system doesn't need to be overhauled...

I would like to believe that, because it would be super easy – we wouldn’t have to change anything in our behaviour. However, there are a few problems with this idea.

First of all, we don't know whether innovation is enough to stay within the planetary boundaries - there is no evidence for that. Yes, economic activities can become more efficient and less C02-intensive, but climate change is also a race against time. I think the chances are slim that we will win that race within innovation alone.

Secondly, history shows that innovation does not necessarily lead to less use of resources. Say a new, exciting, innovative product is created, which is less CO2-intensive and more efficient, so should result in less of the world’s finite resources being used up to serve our needs. However, such a product is often very attractive to consumers, and easier to produce, and so sales go up. This offsets any reduction and leads, in the end, to more resource use.

Something called the 'Jevons Paradox' is often referenced in this context, named after Stanley Jevons. In 1865, he noticed that the increased efficiency of steam engines did not lead to reduced coal consumption but rather to an increase. As the cost of coal decreased, it became economically more viable to increase production using steam power.

Don't get me wrong, I'm a big supporter of innovation and we should keep innovating. But at the same time, we need to look critically at our current economic system. Can we be happy without so many things? Without such high energy consumption? And without such a large ecological footprint?

Okay, so we need to do things differently. What does that look like in practice?

Moving beyond growth is not about optimising the current system, but about radical system change. To be able to achieve that, you must start by getting the average person onboard and for that the basics have to be right. The starting point has to be ensuring that the economy provides for everyone’s fundamental needs and enables us all to feel secure. Only then you can look at doing things differently, less, or not at all.

It is also important to address certain issues in our current economic system. If we want to stay within planetary boundaries, certain things are simply no longer possible. Why do we all still fly so much? Why do we still eat so much meat? These can be uncomfortable conversations, but we do need to talk about them.

Then there are all sorts of possibilities to restrict economic growth. For example, considering other forms of ownership in companies such as, steward ownershipthat partly removes the profit incentive. We could also adjust our tax system. Instead of taxing predominantly income and profits, which depend on our growth, we could have more taxes based on wealth, pollution by companies and C02 emissions. The current discussion on taxing unhealthy food providers is another example of thinking differently about taxation in a UK context. If we had a broader tax base, then governments would not be so dependent on growth. 

The circular economy is also an important element of post-growth. We’ll need to repair, reuse and simply use products for longer. We’d need to shift from ownership to sharing. For example, not everyone needs to have their own drill, high-pressure cleaner or sewing machine – you can also share those with your neighbours and communities. The more things we share, the fewer things need to be made.

The financial sector plays an important role in this story. In fact, every financial decision that a bank makes should be tested with the question: is this really necessary? All kinds of useless things are currently being financed with new growth incentives as a result. In the end, that doesn't do us any good.

Degrowth, and post-growth, is often associated with 'less' and 'decline', which you’ve said is a misconception. Can you explain that?

Degrowth is indeed about less economic activity and less use of raw materials and energy. That is true, but that is at the macroeconomic level. What is not true is that this means we will go backwards. It is actually a positive story. In an economy where growth is no longer central, and which remains within the planetary boundaries, everyone can do well. It is also an economy in which certain sectors, renewable energy, care, arts and culture, should flourish. Better even.

For example, imagine a refrigerator that lasts twice as long as current refrigerators, but costs the same. Then the individual is better off, but economic growth is halved as only half of the refrigerators need to be produced. And if we share things that we only use occasionally – such as the drill I mentioned earlier – then we can use them as much as usual, on an individual basis, but economic growth also decreases.

I often hear the argument that less economic growth also leads to less employment. I wonder if we’re able to imagine a post-growth world where meeting our needs doesn’t rely on us all working as much as we do now to earn a living. If the economy is rooted in justice, instead of profit maximisation, then it could be designed to support us all equitably and to provide what everyone needs to thrive. In this world, paid work could play a different role in our lives.

I appreciate that this all sounds a bit utopian – and maybe it is still a distant prospect – but I believe it is possible to rewire the current system, with small steps in that direction.

An economy is simply a set of rules that we have all agreed upon. It is a construct. In my opinion, it is high time to make new agreements with each other.