While the broad topics covered in Prosperity without Growth certainly go beyond the scope of this blog, which limits itself to climate change and other salient environmental issues, this book is still a good read for anyone interested in how to build a prosperous society within the ecological limits of our planet. Indeed, the quote “running out of planet” from this book inspired the title of this blog entry – when reading this book, I became more and more aware of the necessity of cultivating the prosperity of current and future generations while also decreasing the emission intensity of economic output (absolute decoupling rather than relative decoupling).
Economics gets around the difficulty of measuring the utility of goods by assuming their value is equivalent to the price people are prepared to pay for them in freely functioning markets. It casts utility (how commodities relate to satisfaction) as the monetary value of market exchanges. And so the logic goes that an ever-increasing GDP (the summation of the market value of all goods and services in an economy) means ever-increasing utility, which in turn means ever-increasing satisfaction for individuals in society. But unfortunately, this is not the case. The difference between GDP growth and GPI (Genuine Progress Indicator) stagnation and decline since the 1970s is evidence of this fallacy.
So, consumerism is a double-edged sword – consuming more stuff not only produces dangerously high carbon emissions but also doesn’t make us happier! Tim Jackson makes a great case for this, particularly in “Chapter 3: Redefining Prosperity” which explores the science of happiness and different ways of measuring social progress. Perhaps Richard Layard is right that government policy should instead adopt reported life-satisfaction or happiness, rather than GDP, as the appropriate measure of social progress. But now we are getting beyond the scope of this blog! Back to climate change!
Jackson makes a good observation that the profit motive of capitalism is the driver for efficiency in economic production. Increasing efficiency results in the relative decoupling of carbon emissions from growth. This seems positive on the surface, but efficiency needs to increase at a faster rate than the economy grows in order to achieve absolute decreases in carbon emissions, otherwise emissions will simply stay the same or increase. What’s more, there isn’t much evidence of this happening, which suggests that relative decoupling as a approach to tackling climate change is a myth! We can all understand the motivation to spend savings from energy efficient lighting (for example) on a cheap short haul flight, and we can all understand that this does not result in less overall emissions, which is the key indicator that we are doing the right thing. This happens not just on the micro-scale of an individual’s transactions, but throughout the economy. “Rebound” money saved through energy efficiency gets spent on other goods and services and continues to bring us closer and closer to our global carbon budget of 2,350 billion tonnes (of which we have only 350 billion left)!
This book references plenty of excellent, empirical research and has personally opened my mind to new ways of thinking about policy approaches to the climate crisis. It is a sketch of a possible approach to future non-growth macroeconomic studies. Many of the questions Jackson poses in the introduction are left unanswered by the end of the book. This is such a new approach to economics that it would be ridiculous to demand that all ideas be fully formed right now, but it was a slight disappointment for me, since I started the book thinking that all my questions would be answered.