Degrowth

Degrowth in Economics Meaning

Degrowth refers to a theory suggesting the planned shrinking of an economy to decrease the utilization of the world’s resources and energies and prioritize well-being over profits. Implementing policies or strategies based on this idea can play a vital role in stabilizing economies and achieving ecological and social goals.

Economies can help the planet and themselves to become more sustainable by pursuing degrowth policies. Practical actions concerning degrowth may include purchasing less stuff, utilizing empty houses rather than building new ones and growing their own food. This theory argues that any economy’s growth gauged by gross domestic product (GDP) must be rejected as a policy target or objective.

• Degrowth refers to an idea that calls for the downscaling of consumption and production to establish more socially sustainable communities. It can assist economies in fulfilling social and ecological goals. Moreover, it can help stabilize economies. 
• A policy that is based on this theory may include higher taxes on goods having higher social costs. 
• This concept can offer various benefits, according to its proponents. For example, it can help ensure a more sustainable future. Moreover, it has the potential to prevent unemployment in nations that cannot grow.

Degrowth Explained

Degrowth refers to a theory that proposes utilizing coherent and planned policies to decrease inequality, mitigate ecological impact, and enhance the well-being of an economy. This theory aims to improve ecological conditions and ensure better well-being, reducing the global economy’s size to make sure it fits within the biophysical limits of the planet. Research and ideas from various disciplines, for example, ecological economics, development studies, economics, environmental sciences, and economic anthropology, form the basis of the concept.

This theory argues that modern capitalism’s unitary focus on growth with regard to the monetary value of aggregate services and goods results in widespread ecological damage. Moreover, it argues that this unitary focus is unnecessary for the further improvement of the standard of living. According to the degrowth theory, economic policies must concentrate on social and economic metrics such as health, education, housing, ecologically sustainable work, and life expectancy as indicators of human well-being and ecosystems. Proponents of this theory posit that this can improve the standard of living even if GDP drops or slows down.

To sum it up, the concept recognizes that economies must focus on environmental and social concerns more than profits and establish businesses that operate in harmony with the environment and society instead of fighting it on fringes via measures concerning tick box mitigation while continuing with the same assumptions and financial growth trajectories.

Some key objectives of this theory are as follows:

• Encouraging inclusive economic participation
• Facilitating equitable income and wealth distribution
• Reducing environmental injustice and harm

Policies based on this concept may include:

• Higher taxes on goods associated with high social or environmental costs
• New regulations that ban single-use items
• Making human well-being a parameter for budget choices

Principles

Degrowth policies are based on the following principles:

• Less consumption and production means improved ecological and social welfare.
• The global economy prioritizes democracy, redistribution, individual well-being, and sufficiency.
• Environmental justice and capitalism cannot exist at the same time in a social framework.

Note that this theory aims to achieve the real or actual abundance resulting from solidarity as well as working with nature. The achievement of this objective is possible by respecting the limits of Earth and taking part in the regeneration process.

Some additional principles of this concept are as follows:

• Many resources that humans depend on and utilize are limited and depend on ecosystem services.
• In a finite world, infinite growth is impossible.
• Every non-renewable resource withdrawal can impact humanity’s survival chances in the long term.

Examples

Let us look at a few degrowth examples to understand the concept better.

Example #1

Suppose the government of Country A passed legislation banning ‘planned obsolescence’ practices. A lot of smartphone companies operate assuming that a device will need upgrading after the completion of two or three years. Hence, they make it difficult and costly to replace the battery and give incentives to their customers to purchase a new, more expensive phone every few years by opting for the exchange facility.

As a result, excessive precious metals are utilized in the manufacturing of new phones. The implementation of degrowth policies by the government forced the organizations to make it straightforward for customers to stick with the mobile already purchased by simply replacing the battery at an affordable price to get additional years of active use.

Example #2

According to Wim Naude, a visiting Economics professor at the University of Johannesburg, most key proposals of degrowth will likely stimulate consumption and economic growth rather than curtail it. For instance, the movement demands energy sufficiency, 4-day working weeks, and basic income grants. Moreover, it proposes putting a ban on advertising. All these could be subject to the rebound effect and would actually stimulate the economy’s materialization and growth. That said, the policies may not be effective in minimizing the ecological overshoot.

Benefits

The advantages of this concept are as follows:

• It prioritizes human well-being more than gross domestic product. The focus switch enables people in an economy to reassess their values.
• Reduction of working hours is a strategy proposed by supporters of the theory. It plays a vital role in preventing unemployment in economies with no growth potential. Moreover, it allows people to have family, leisure, and personal time.
• This concept challenges the consumerist culture, recommending the prioritization of crucial requirements over trends concerning luxury consumption. The switch from excess to sufficiency is important to achieve a future that is more sustainable.
• The theory offers a new perspective on how economies can redefine well-being and progress.
• The theory encourages a switch to circular and local production. Economies can minimize environmental impact and resource consumption through the reduction of reliance on international supply chains and the promotion of local economies.

Criticism

Let us understand some of the criticisms of the degrowth theory:

• Many critics believe that the slowing of growth in an economy would lead to increased poverty, lower per capita income, and increased poverty.
• A lot of experts suggest that since there is no historical example of degrowth, one cannot study any empirical data to understand its impact on human well-being.
• Implementing degrowth strategies or policies from the top down can be challenging as it requires a transformation in individuals’ attitudes.
• Some believe that the key is to promote and not reduce growth.
• In developing economies having widespread poverty, a focus on economic growth can make a huge difference to the standard of living rather than slower growth.

Degrowth vs Green Growth vs Ecomodernism

The concepts of green growth, degrowth, and ecomodernism can seem confusing at first for one who is unfamiliar with them. That said, they can develop a clear understanding of these ideas and understand their meaning and purpose by knowing how they differ. In that regard, individuals must know their key differences. Let us look at them.

Degrowth	Green Growth	Ecomodernism
This theory broadly suggests shrinking rather than expanding economies.	It means fostering economic development and growth while ensuring that natural assets keep offering the environmental and resource services on which human well-being depends.	This idea is centered around utilizing technology to minimize technological effects while maintaining high living standards.
Some objectives include facilitating the equal distribution of wealth and income and mitigating environmental justice and harm.	Its objective is to ensure that the natural assets of economies can fully offer their economic potential sustainably.	It aims to improve human life and allow people to modernize while safeguarding the natural world.

Frequently Asked Questions (FAQs)

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This article has been a guide to Degrowth and its meaning. We compare it with green growth & ecomodernism, explain its examples, criticism, and principles. You may also find some useful articles here -

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