Prosperity Without Growth | UK Sustainable Development Commission

The UK Sustainable Development Commission has published "Prosperity without Growth? - The transition to a sustainable economy." Excerpt below from a review by the Sierra Club's Charles Siegel. Hat tip: Energy Bulletin.

When a British government commission publishes a report calling for an end to economic growth, it suddenly seems that we live in a world that is changing its direction. ...

We have all heard about the environmental effects of growth, such as resource depletion and global warming, but the conventional wisdom says that better technology can deal with these problems. This book argues that, if growth continues at its present pace, better technology alone cannot reduce greenhouse gas emissions sufficiently. ...

In response to these concerns, this book cites the studies of Peter Victor, a Canadian economist, who has run computer models of how the Canadian economy would react to the end of growth with differences in macroeconomic variables such as the savings rate, the rates of public and private investment, and the length of the work week. Results are dramatically different with different values for these variables. In one run, the end of growth brings economic instability, high unemployment, and rising poverty. In another run, the end of growth brings economic stability, cuts both the unemployment and poverty rates in half, and reduces the ratio of debt to GDP by 75%. In part, the difference comes because the second scenario has a higher savings rate, a lower rate of private investment, and a higher rate of public investment. In addition "unemployment is avoided ... by reducing both the total and the average number of working hours. Reducing the working week is the simplest and most often cited structural solution to the challenge of maintaining full employment with non-increasing output."

There are very few macroeconomic studies of this sort, and we clearly need more to help us make a successful transition to a slow-growth or no-growth economy.