(Green) growth for good – is it possible and how to achieve it?

Alessio Terzi is an economist at the European Commission and a lecturer at Sciences Po Lille. Prior to this, he was a Fellow at Bruegel, a leading European think-tank, and a Fulbright Scholar at the Harvard Kennedy School. He is the author of Growth for Good – Reshaping Capitalism to Save Humanity from Climate Catastrophe.

Jonathan Barth is the policy director of the ZOE Institute and an expert on the economics of the green transition. He recently advocated for a new consensus between green growth and degrowth proponents.

For Alessio Terzi there would be no viable alternative to not continue growing because settling for zero growth to contain emissions in a civilization built around fossil fuels would mean to opt for a state of voluntary scarcity - a scenario that people would certainly oppose.

He argued that we should rely on our ingenuity in the same way we have done through the course of history. It would be unrealistic to ask people to reduce consumption of services and products which they became accustomed to. Rather we should seek for replacing these services and products with cleaner options. In this regard he highlighted the importance of the role of technology and innovation for substituting fossil driven with carbon neutral production. In fact, Terzi argued, substitution was how humanity has always dealt with challenges in the past.

The acceleration of the development and deployment of sustainable technology would be key for the way forward and it would be under a capitalist economy that one could find the best conditions for this to succeed. In this context, Terzi mentioned that historically the fastest acceleration of technological revolution has always taken place in capitalist societies. Technological innovation fuelled by the expectations of increasing returns would be the main driver in turning our economy in an engine of decarbonisation.

Terzi further took aim at growth agnostic’s perception that economic growth is an obsession of capitalist societies, and he also refuted the argument that we devote all policies towards the compulsive pursuit of growth. Again, taking a historical perspective, he argued that the desire for growth is a human trait and not merely inherent to capitalism. Capitalism would, however, provide the perfect playing field for innovation and technology to thrive, hence generating more value added than under every other economic order.

In the end it would all come down to changing the quality of economic growth by making capitalism our ally and turning its tools into drivers of green growth in the quest towards a net-zero future.

Jonathan Barth began by mentioning common ground between the ideas of green and post-growth. Both sides would acknowledge the pressing need for faster decarbonisation and that GDP growth measurements would have to be accompanied by also qualitative indicators. Further, both would agree that decarbonisation and social cohesion are intrinsically connected. And while economic growth would make it easier to accelerate innovation and reduce distributional conflicts, the implications of what follows from sticking to the growth-first paradigm would be where both ideas collide.

According to Jonathan, all structural characteristics of our economic model are dependent on the prospects of future growth. However, measures to green our economy, limit emissions and attain a net zero future could disturb our economy’s status quo, thereby initiating an era of stagnation. Post growth could provide ideas for dealing with such a drastic scenario. And Barth identified various indicators hinting at such an outcome. A mismatch between the speed in which the green economy is phased in and the fossil economy phased out could cause economic prospects to decline. And in order for a green transition to be successful, the supply of green alternatives for “dirty” services and consumption goods would have to meet the demand or there would be either resource overshooting or suboptimal economic outcomes. We would then have to make the poisonous choice between sacrificing social stability or our planetary boundaries.

Only if we prepared for such a dilemma, we could find a solution for how to escape it. Preparing for a net zero future would also mean to find a way of resolving distributional conflicts without relying on economic growth. Against this backdrop, Jonathan identified the inequality-decarbonisation nexus as the major challenge to address in a post-growth world. Current stratification levels in wealth and income could not be sustained without relying on growth. Therefore, a comprehensive set of policies to reduce economic disparities would be of crucial importance in the post-growth challenge.