Is it even possible to get back to growth?

perhaps there is a form of growth which it is possible to sustain - 'green growth' – and if there is, we all need to know what it would look like. And if it’s impossible, we need to know that too.

Victor Anderson is working on the Anglia Ruskin project as a Visiting Professor

So much of the political debate now is about how to return to economic growth that the whole set of arguments about the costs, problems, and feasibility of continued growth is in danger of getting forgotten.

It is also easy to forget that growth acted as one of the triggers for the 2008 financial crisis. In the run-up to the crisis that Autumn, the prices of food, oil, and metals were rising extremely rapidly in the spring and summer – enough on their own to threaten the future prospects for growth in Europe and North America.

Rapidly rising prices for commodities leads to stagflation – stagnant output because firms can’t afford to buy-in larger quantities of raw materials.

On its own, in a simpler economy without a complex finance sector, that would have been enough to bring a halt to growth. But on top of that, we had a finance sector entirely dependent on debt and interest – and repaying debt with interest depends on having more money in the future than you do now.

Debt-based economies

When that is the situation across the whole economy, a debt-based economy has got to be a growing economy. If the expectation of medium-term growth goes away, as it did in the US in Autumn 2008, there is a financial collapse – which is exactly what happened.

The problem for advocates of growth policies now, of almost all varieties, is that there is no guarantee it won’t happen again. The future may be coming out of austerity, returning to growth, bidding up materials prices – and then back to stagnation again.

At the same time, growth on current patterns adds to carbon emissions and climate instability, whilst accelerating the decline of the world’s ecosystems, which everyone’s water, food, lives, and livelihoods ultimately depend on.

Prospects for sustainable growth

Is there a way out?  This is where ‘green growth’ comes in – maybe. Politicians who recognise the strength of green arguments love the idea of ‘green growth’ because it appears to square the circle nicely and efficiently, in a single phrase. And if such a thing is possible, we can envisage a recovery from recession which doesn’t just grind to a halt four or five years later.

But is it possible? I don’t know, but I am part of a research project designed to find out. The project is being carried out at the Global Sustainability Institute, based in Cambridge at Anglia Ruskin University. We are exploring issues about economy, environment, and resources through building a computer model of their interrelationships.

The project will develop a series of scenarios for how things may go. Amongst these, we want to develop a scenario for continued economic growth – by asking: ‘what sort of composition of GDP production and consumption would be necessary in order for GDP growth to continue in the long run?’

Growth on the current pattern clearly cannot be sustained: it faces severe constraints from climate, land availability, and in some parts of the world, water availability. But perhaps there is a form of growth which it is possible to sustain – ‘green growth’ – and if there is, we all need to know what it would look like.  And if it’s impossible, we need to know that too.

Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by becoming a Left Foot Forward Supporter today.