ECONOMIC DE-GROWTH FOR ECOLOGICAL SUSTAINABILITY AND SOCIAL EQUITY”, Paris, 18-19 April 2008

De-growth: Addressing Cultural and Institutional Constraints

Igor MatutinovićGfK – Center for market researchZagreb, Croatia; GfK Group

2. The global capitalist system have the propensity to continue to grow until it exceeds the biophysical limits of earth ecosystems.

Potentially irreversible degradation of global ecosystems

Risks of international tensions and violent conflicts

Introduction: Initial Propositions

1. Capitalist economy is an autocatalytic system insitutionally designed for growth and dynamic change.

Range of solutions

1. Technological Fix: Improve energy efficiency, increase the share of renewable energy sources, and introduce new technologies

2. Behavioral Fix: Change production and consumption patterns & redesign lifestyles in capitalist economies

3. Managerial Fix: Improve global governance

4. Ideological Fix: Change the political and economic system

Behavioral Fix

RESOCIALISATION*

Reducing preference for material consumption

Incrasing preference for leisure

Decoupling well-being from material consumption

Culturally dependent changes

*Robinson and Tinker, 1997.

Decoupling of personal well-being from material consumption – more leisure for less work and lower

income!

major reduction of working week

earn & consume less

tax revenues decline

recession & sharp correction in capital markets

drop in profiltability, industrial production & GDP

capital escapeproduction relocate abroad

domestic production lags behind demandsocial services

enter in crisisprices go up and imports increase

unemployment rises

interest rates go up

capital escapeproduction relocate abroad

Putting a cap on material inputs*

Estimating sustainable rate of resource troughput

Auctioning tradeable resource permits to the industry

Letting markets drive the allocation and technological efficiency

Growth in GDP is possibleGrowth in income, profits and investments

Proceeds

Increase in Sustainable Economic

WelfareRedistribution

*Philip Lawn, 2004; 2005

Reduction of Working Week

Cap on Energy & Material Inputs

Reducing demand for consumer goods

Easening of human pressure on gobal ecosystems and

climate

DE-GROWTH

Reducing material troughput, waste and emissions

Mediated by Markets

_ _

+

Putting them together ...

Major Reduction of Working Week Cap on Material Inputs

Political problem

Not viable under regime of global trade

and capital flows

Redistribution: poverty problem in the South

Requires global governance for fossil fuels, material inputs, fisheries, fresh water, tropical forests

CHINA & INDIA

Dynamic growthOn the way to become fully industrialized major world economic powers.

Radical changes are required at the cultural and institutional levels!

Exploring constraints ...

Worldview

InstitutionsTechnology

Patterns of production &consumption

Human Biology

Environment

Waste & Heat

Human Subsystem

Resorurces

Systemic perspective ... Cultural constraints

{biological {ideational {institutional {economic}}}} HSP

(Salthe, 1996)

Substantial reduction/stabilization of material and energy consumption is constrained by:

• Capitalist institutions and Western life-styles getting global

• Huge gap in the material standard of living between advanced and industrializing countries.

• Dynamic growth momentum of China and India

• Population growth in the South

Summing up the constraints ...

1. To open up maneuver space for long-term behavioral and institutional changes, nation states would first have to abandon neo-liberal doctrine and gradually revert to international trade.

damp global economic growth

reduce global energy demand

more time for major societal adaptations ...

Policy recommendations ...

Thank you!

Economic and institutional globalization... predicted

Karl Marx, Communist Manifesto _____

“The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe. It must nestle everywhere, settle everywhere, and establish connections everywhere. The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilization.”

“Because of biophysical constraints the economy sooner or later will stop growing. Therefore, at some point we will move to a different socioeconomic system whose characteristic are at present unknown and unknowable” (Gowdy, 1994).(International Journal of Social Economics, 8, 43-55)

Island of Cres, road to town Lubenice

Opportunistic life-style switchers

AND WHAT EVENTUALLY HAPPENED?

Cultural entailments of Western civilization

Modern Worldview

Institutional framework

IndividualismWorking ethicEconomic rationalityMaterialism

Capitalist institutionsMarkets dominate socioeconomic relationsPolitical democracy

Economy Technology

Impact on Ecosystems

AutocatalysisDynamic growthHigh productivityGlobalization

Autocatalytic loop between science and technology;Explosive dynamics

Intensive DiversifiedGlobal SystemicSixth Extinction

Worldview

Beliefs, symbols, values and segments of objective knowledge that are widely shared by a society.

The “core” group of advanced capitalist economies manage to reduce and than stabilize its total energy consumption.

Who else wants to be reformed to a steady state?

DEVELOPING COUNTRIES

Population GrowthDebt RepaymentPoverty Reduction

EUROPEAN TRANSITION COUNTRIES

Increase p.c. consumption

CHINA & INDIA

Increase p.c. consumption.On the way to become fully industrialized major world economic powers.