Less levity Professor Stern! Economic growth, climate change and the decoupling question.

windmills in an arid landscapeSteady State Manchester has argued, along with most ecological economists that continued economic growth is incompatible with ecological safety. That is to say continued increases in Gross Domestic Product, (GDP and also Gross Value Added, GVA) cannot happen while reducing ecological impacts in general, and climate change-causing greenhouse gas (GHG)emissions in particular. It isn’t a popular message, and is one that is typically ignored, not least by our city leaders who still seem to think we can have some kind of ‘good growth’ while avoiding ecological catastrophe.

So what do we say to a well publicised international report that argues the opposite? This is not just any report, but one from the very well-resourced Global Commission on the Economy and Climate:

The Global Commission is chaired by former President of Mexico Felipe Calderón and comprises former heads of government and finance ministers, and leaders in the fields of economics and business. The Commission’s work is being conducted by a global partnership of leading research institutes. Reporting in September 2014, the project will make recommendations on actions and policies that can achieve high quality economic growth at the same time as addressing dangerous climate change.

The Global Commission on the Economy and Climate was commissioned by seven countries – Colombia, Ethiopia, Indonesia, Norway, South Korea, Sweden and the United Kingdom – as an independent initiative to report to the interational (sic) community.

The Vice Chair of the commission and chair of its Economics Advisory Panel is none other than Nicholas Stern, Professor of Economics at LSE and author of the 2006 “Stern Review on the Economics of Climate Change” (full text here). This report can take some considerable credit for helping to make the climate crisis a mainstream issue: as well as arguing that the climate emergency was evidence of a massive “market failure”, it argued that the economic costs of doing nothing would be greater than those of tackling climate change. A series of imitator reports, including Manchester’s Deloitte “Mini Stern” sought to cash in on the idea that there was money (economic growth) in climate change mitigation.

But let’s look at the new report.

The report’s conclusion is that countries at all levels of income now have the opportunity to build lasting economic growth at the same time as reducing the immense risks of climate change. This is made possible by structural and technological changes unfolding in the global economy and opportunities for greater economic efficiency. The capital for the necessary investments is available, and the potential for innovation is vast. What is needed is strong political leadership and credible, consistent policies.”

A strong claim. Now to be fair, the report has a lot of useful information and argument. It’s real target is those who want to “cut the green crap”, believing that actions to mitigate climate change would harm the economy. It is this focus that gives the report its emphasis which is on the actions that are needed. But what about that claim? The report makes a number of interlinked statements:

In this sense, the choice we face is not between “business as usual” and climate action, but between alternative pathways of growth: one that exacerbates climate risk, and another that reduces it. (p. 15)

Strengthening growth and tackling climate risk are therefore not just compatible goals; they can be made to reinforce each other. (p. 18)

And the crucial section is this:

The evidence for these conclusions has been accumulating over the last decade. The theoretical basis for them has been known for some time. What is new is the practical experience around the world. National and local governments as well as businesses that have adopted lower-carbon strategies and policies have found them associated with economic performance as good as or better than their high-carbon peers’.(33)

Much of this has been driven by recent technological advances. The decoupling of growth from carbon emissions in some of the best-performing economies, both in Northern Europe and in North America, demonstrates the gains that can be made in incomes, jobs, rates of innovation and profits from a low-carbon, resource-efficient model of growth.(34). (p. 18)

I was intrigued, because the evidence that I have seen suggests that, so far at least, it is not possible to decouple growth in carbon emissions from economic growth. We reviewed this evidence two years ago in In Place of Growth (see page 18). The relevant references are given below, together with a further one from New Zealand. So I looked up the reference notes (33 and 34).

33 PricewaterhouseCoopers (PwC), 2013. Decarbonisation and the Economy: An empirical analysis of the economic impact of energy and climate change policies in Denmark, Sweden, Germany, UK and The Netherlands. Available at: http://www.pwc.nl/nl/assets/documents/pwc-decarbonisation-and-the-economy.pdf.

34 See: Brahmbhatt, M., Dawkins, E., Liu, J. and Usmani, F., 2014 (forthcoming). Decoupling Carbon Emissions from Economic Growth: A Review of International Trends. New Climate Economy contributing paper. World Resources Institute, Stockholm Environment Institute and World Bank.To be available at: http://newclimateeconomy.report.
Also: Brinkley, C., 2014. Decoupled: successful planning policies in countries that have reduced per capita greenhouse gas emissions with continued economic growth. Environment and Planning C: Government and Policy, advance online publication. DOI:10.1068/c12202.

Well, the Brahmbhatt et al. paper has yet to appear on the New Climate Economy website, a little extraordinary since it seems to underpin a key and very controversial claim. I couldn’t find anything by those authors elsewhere that threw any light on the claim either.

The PWC report (2013) is certainly a very interesting one with a lot of detail. But the devil, as so often, is in the detail. Firstly it is chiefly focussed on energy supply. But secondly, it is critical to understand which emissions are being discussed. On page 17 we find a map showing the CO2 to GDP ratio reductions for the five European countries studied. They have all reduced the energy intensity of their economies. But the footnote tells us that “We use domestically created carbon emissions per GDP. This does not include emissions of imported goods (consumption based emissions).” And it turns out that the apparent decarbonisation of these economies, while partly due to increases in energy efficiency and changes in the fuel mix (in Germany and Denmark renewables play a big part), owes a lot to the outsourcing of production to the low wage economies of the ‘developing’ world. Or put it another way, as is all too familiar to those of us who have lived in Manchester over the last 3 decades, we have de-industrialised. Our increasing GDP includes our increasing consumption. Our expenditure on imports goes into the GDP growth figure, but the emissions created in making and distributing those goods do not enter into the GHG calculations. So the claim in the report that some of these economies have produced an absolute decoupling of GDP growth from GHG emissions, evaporates into….. the air.

What about the other, very new reference? It is so new that it only appears as a web preview of the article in press in the scholarly journal Environment and Planning C: Government and Policy. Those with University library access can see it here (others can only see the abstract). In this article, Catherine Brinkley “identified nine countries that have steadily decoupled per capita carbon emissions from GDP”. Her detailed study is again interesting, with a lot of pointers to where and how to make reductions in GHG emissions. But again, “Territorial emissions are emphasized in this research”, and as she notes, “some scholars argue that deindustrialization and commodity trading account for the majority of carbon emission reductions in wealthy nations, thereby distorting the true per capita carbon footprint”.

So this is the crux. While Stern and colleagues draw the conclusion that absolute decoupling is possible, they present no evidence for this, and the (available) sources they do cite, while rather airily talking about “absolute decoupling”, can only show either sectoral reductions (in energy use) or territorial reductions, that leave out all the outsourced emissions that are the sequelae of the rising GDPs.

But there is another problem – rebound, or the Jevons paradox. Suppose we follow the actions of Stern et al. and invest heavily in energy efficiency and renewables. My energy bills will go down. What shall I do with the money saved? I could go on foreign holidays, buy some more consumer goods (a new bike), eat more unseasonable fruits and vegetables, or fish (and if I weren’t mostly vegetarian, meat), build an extension. I could put the money into investments. All of these, as things stand, will generate more emissions. As Stern et al. are at pains to point out, the economy is complex and interconnected (just like the ecosystem!), but they themselves fall into a simplistic linear model that fails to take complex feedback effects into account.

So, the case that GDP growth and climate change mitigation are friends is not made.

Let’s look at what the real experts, the IPCC said earlier this year:

Globally, economic and population growth continue to be the most important drivers of increases in CO2 emissions from fossil fuel combustion. The contribution of population growth between 2000 and 2010 remained roughly identical to the previous three decades, while the contribution of economic growth has risen sharply (high confidence). Between 2000 and 2010, both drivers outpaced emission reductions from improvements in energy intensity (Figure SPM.3). Increased use of coal relative to other energy sources has reversed the long-standing trend of gradual decarbonization of the world’s energy supply. [1.3, 5.3, 7.2, 14.3, TS.2.2] http://report.mitigation2014.org/spm/ipcc_wg3_ar5_summary-for-policymakers_approved.pdf

So there it is. A decidedly serious problem that won’t be resolved by optimistically thinking that we can have our cake and eat it. Less levity, I think, Professor Stern.

A lot more could be said, about, for example, the faith of these economists in the carbon price mechanism – using the market to correct the market. But the report is not all bad. It is a call to action and it focusses on the key sectors where emissions can be cut (cities, land use and energy). It is just that their basic assumption and some of their recommendations (e.g. putting a price on things like forests) are inconsistent with that imperative.

For some other criticisms of this flawed report, see this interesting critique from the “Sceptical Economist” who also wrote this useful summary of the decoupling question.

And here are the other references on decoupling:

SERI, http://www.materialflows.net cited in O’Neill, D, Dietz, R, & Jone, N (Eds.). (2010). Enough is Enough: Ideas for a Sustainable Economy in a World of Finite Resources. The report of the Steady State Economy Conference. Leeds: Centre for the Advancement of the Steady State Economy, and Economic Justice for All.

Victor, P. A. (2011). Growth, degrowth and climate change: A scenario analysis. Ecological Economics. doi:10.1016/j.ecolecon.2011.04.013 available at http://degrowth.org/wp-content/uploads/2011/05/Victor_Growth-Degrowth-and-Climate-Change.pdf

Jackson, T. Prosperity Without Growth. London: Sustainable Development Commission, 2009. http://www.sd-commission.org.uk/publications/downloads/prosperity_without_growth_report.pdf , Næss, P., & Høyer, K. G. (2009). The Emperor’s Green Clothes: Growth, Decoupling, and Capitalism. Capitalism Nature Socialism, 20(3), 74–95. doi:10.1080/10455750903215753 http://www.tandfonline.com/doi/abs/10.1080/10455750903215753

Giorgetti, A (2007) A Discussion on Decoupling Economic Growth from the Emissions of Carbon Dioxidereport prepared for Environment Waikato & The Parliamentary Commissioner for the Environment, Wellington, New Zealand. http://www.waikatoregion.govt.nz/PageFiles/6131/tr07-02.pdf

Trapped in techno-scientism; is this hindering Manchester becoming an eco-city? | Platform

Trapped in techno-scientism; is this hindering Manchester becoming an eco-city? | Platform.

This is a provocative and very well written article by Nadine Andrews on the shortcomings of the dominant ideology, and hence strategies, here in Greater Manchester.  It does make sense to question the prevailing ‘rational-scientific’ approach to social and ecological challenges, since the very nature of the problems we face have their roots in the modernist expansion of technological, Promethean, capacity, which, in hand with a profit-seeking economic system, extends its reach over all aspects of human life, right across the planet.  That doesn’t mean advocating a return to some former ‘golden age’, or to ignorance and drudgery, but it does mean critically asking whether many of the vaunted ‘solutions’ to our economic, social and ecological ills are themselves part of the problem.  This means focussing first on the fundamental, contestable, and decidedly tricky questions of the kind of society we want to live in, how to live well, with dignity for all, without harming the planet?  Our pamphlet Living Well, looked at some of these questions from an internationalist perspective.

What do you think?

Mark H Burton

(Upcoming Event) HAVING ENOUGH GOOD FOOD IN THE MANCHESTER REGION: Shaping a viable food economy to multiply our impact

Saturday 18 October 2014, 1.30-5pm, Methodist Central Hall, Manchester

Book a free place today!

Food DiagramThere are many dimensions to the value of food in our lives; we are spotlighting food as an economic issue as this is an area getting less attention than other dimensions. We will consider the implications of wider changes for example; food prices are likely to escalate in coming years and the nature of work and its value is changing. We recognise that no dimension can be separated from others; we need a whole system approach.

We will focus on how we can rapidly stimulate availability of enough food in the region which is safe, affordable, sustainable, healthy and available for local consumption to make the big difference needed.

Who will be at this workshop?

  • People with all sorts of relationships to food including growers, eaters and sellers, activists, ‘professional foodies’, academics and others.
  • People who are interested in a viable economy and /or sustainable food.
  • People who are curious to know more about where what they are doing fits into the jigsaw of ensuring food in this region is affordable, locally produced and sustainable.

What we will achieve? A sense of what we all need to do to:

  • multiply the impact of current brilliant food related work to ensure enough affordable, locally produced sustainable food is available.
  • stimulate movers and shakers especially in low income areas

By the end of the workshop we will have recommendations and know who else we need to involve and how. We will all be able to take our learning forward including at the Greater Manchester Sustainable Food Cities seminar in November

The workshop will be draw on all participants’ strengths. It will include 3 minute presentations and group work to familiarise participants with what we are all doing. Together we will develop priorities and agree how to make them happen.

What difference will a viable food economy make?

It will work towards:

  • Reducing carbon footprint by maximising local food production for local consumption and minimising waste
  • Providing jobs

In the first instance we may need to identify ‘quick wins’ to get politicians, businesses and housing trusts on board. What should they be?

Do we need a shared vision of what a viable food economy for Greater Manchester looks like?

A vision may include:

  • What food would we be eating – meat, dairy, cereals….?
  • The role of hi-tech methods
  • What kind of economic production? To what extent will food be produced by households, communities, small, medium and large scale enterprises? What does this mean in terms of what work may look like?
  • Cost and access issues – how will food be distributed?

Book a free place here

For more information contact: ipogworkshop@gmail.com

Vermont re-orientates Economic Strategy to ‘Genuine Progress’ « Center for the Advancement of the Steady State Economy

In this post from CASSE Eric Zencey explains how the Genuine Progress Indicator (GPI) has been adopted as a measure of success by Vermont’s ‘Comprehensive Economic Development Strategy’. It aims to improve the GPI  by 5% over 5 years.

The GPI subtracts from GDP the social and environmental costs of economies, and includes other measures of value and prosperity, which are left out by the measures broadly used to gauge economic success, like GDP and its regional variant GVA.

The GPI takes into account the costs of crime, pollution, commuting and inequality, and the value of education, volunteer work, leisure time and infrastructure.

The above all sounds pretty agreeable and also un-exceptional for ‘community strategies’ or ‘economic development strategies’, isn’t this the kind of stuff public policy makers weigh up already?

The significance of bringing these social and environmental factors into a single metric like GPI, which is not without its dangers, is nevertheless demonstrated in graphs like this below.

Globally GDP and the broader measure of progress GPI rose in tandem to a peak in the mid 70’s after which the relationship breaks down with the GPI going into reverse. The increases in incomes are cancelled out or outweighed by increasing environmental and social costs. GDP growth, or the aggregate economic development pathway pursued, has arguably become uneconomic.

The graph for the UK where recession, unemployment and austerity in the 80’s caused a lurch in the GPI followed by a recovery, shows the fragile and complex relationship between economic stability and genuine prosperity. GPI cannot be restored by simply sending GDP into reverse.

Recession and austerity destroyed progress in the GPI by an order of magnitude higher than the downturn in GDP. This highlights the importance of a post-growth economics being about a coordinated approach to employment, incomes and well-being. Not, as it is sometimes misconstrued by those unable to see outside of the orthodoxy, a blasé attitude to recession.

Nevertheless, although GPI eventually recovered in the UK there has been little progress in the 20-30 years since the 70’s, despite continuous growth; GDP has not been a very good measure of economic progress for quite some time.

It demonstrates what economists are so familiar with at the micro-economic level, that diminishing marginal returns result in an equilibrium condition and an optimum size for an economic enterprise.

The national and global economies are the total of economic enterprise, subsets of the planetary eco-system and also have an optimum size defined by the finite nature of the planet. In developed countries we have exceeded our share.

This does not mean economic development ends. We must have more economic change not less and improve the social and ecological inefficiency of our uneconomic system. There is still plenty of room for the deployment of more ecologically efficient technologies, but most importantly, and most often overlooked, qualitative development in the organization of employment, well-being and quality of life. We need to work and consume less and focus on equality.

The adoption of GPI as a measure in Vermont, Maryland and Oregon is a good example for regional and local government in the UK to focus on economic development that better serves there citizens, as opposed to a blind pursuit of GDP. It is not however a fix-all.

Vermont’s Economic Development strategy still aims for growth in GDP, incomes and jobs alongside an increase in the GPI. Which as Zencey points out, suggests a failure to realise the impossibility of infinite GDP growth. It is nevertheless an important step in re-examining the way economic development is pursued.

The adoption of GPI won’t make bring a sustainable, prosperous, post-growth economy into being by itself. There are significant national and international reforms needed to do that. But a focus on genuine progress would be a vast improvement on current regional economic development policy making.

It would be interesting to see how Manchester has performed in relation to the GPI in recent years, I have yet to come across an attempt to measure this. What priorities for economic development would it now throw up?

Chances are it would throw into question some of the priorities currently taken for granted under the deceptive idea that Economic Growth is still a relevant measure of economic progress or prosperity.

Greater Manchester still needs to join up its policies – for a Viable Economy.

The focus of GM policy is driven by economic development and growth, with comparatively less emphasis on environmental or social considerations, or at least, less integration between them. In particular, there is less policy emphasis placed on social inclusion, equality and diversity of opportunity, with the possible exception of addressing fuel poverty.

From Beth Perry’s article about the SURF research on ‘sustainability governance’ in Greater Manchester, a year ago.  Nothing much has changed since then.

Steady State Manchester continues to press for a Viable Economy where Economic, Social and Ecological well-being and justice are of integrated, equal importance.

Supermarkets, levies and the social franchise

(open clipart)

(open clipart)

We have referred in recent posts to the idea of the social franchise.  This framework for local policy has been advocated and developed by colleagues at the CRESC research unit (Manchester and Open Universities).  The idea is simple: by operating in a local area, businesses have an obligation that goes beyond mere market considerations.  They are in effect operating a franchise from the local population and its elected (local) government – they get to make a profit and we provide labour, a market, and favourable conditions such as planning permission and often hidden subsidies (like the UK’s low and frequently avoided rate of corporation tax).  What do we, the community get back in return?

The social franchise particularly applies to those large businesses that are place-based.  They are part of what CRESC call the Foundational Economy: that mundane but large and relatively resilient part of the economy that isn’t going to go away, that keeps on going despite economic storms – utilities, retail banking, health and social services, food processing, and much distribution and retail.  Quite a world away from the glamorous hi-tech, financial, media industries beloved of the orthodox city leaders and the priesthood of advisors – although let’s remember that the boundaries of the Foundational Economy are not necessarily fixed or total – it may be a matter of degree.

How do we get big firms to deliver on the social franchise?

Enfield council has shown the way with its work with the utilities and supermarkets.  They called them in for a discussion. Not all played ball but some did, including British Gas which agreed to employ more staff locally.  Contracting with local small businesses was also under discussion.

There are other ways too.  Derby council, together with 18 other authorities has just approached the ‘government in London’ proposing a levy on big supermarkets under the Sustainable Communities Act 2007.

Specifically the proposal is for government to give local authorities the power to introduce a levy of 8.5% of the rateable value on large retail outlets in their area with a rateable annual value not less that £500,000 and for the revenue to be retained by local authorities in order to be used to help improve their local communities. This could generate hundreds of millions of pounds for local authorities across the country to spend on making their areas more sustainable.

It already exists in Scotland (9.3% levy) and Northern Ireland (8.5%), so we know its possible.

 Evidence shows that the revenue from the Northern Ireland levy has helped over 8,000 small businesses in Northern Ireland and has had no negative impact on jobs. The levy is being used to help public services in Scotland.  (source as above)

 63 other local authorities have also backed the call.  I can’t find the list of which these are – maybe some Greater Manchester authorities have also backed the Derby 19.   Is Manchester one?……

…….NO.  Astonishingly, the council has said it will not back the proposal.  Jeff Smith, executive member for housing and regeneration, is quoted, by the Evening News as saying:

“We work very hard to bring in big supermarkets because they provide much-needed regeneration.

“we want to encourage them and not run the risk of putting them off.”

He said they brought both regeneration and jobs to more deprived areas – and created large retail developments which meant investment in the surrounding areas.

But as Councillor Ranjit Banwait, Leader of Derby City Council says:

Research has shown that 95% of all the money spent in any large supermarket leaves the local economy for good, compared to just 50% from local independent retailers; this levy is a modest attempt to ensure more of that money re-circulates within and continues to contribute to local jobs and local trade.

The evidence for this claim can be found in work from New Economics Foundation.  The idea that supermarkets can help local regeneration seems to come from a report from Demos that was roundly criticised on the basis of the evidence from here and in North America, when it appeared.

Supermarkets siphon money away from local communities and towards shareholders and distant corporations. A study by NEF (the New Economics Foundation) found that £1 spent in a local shop selling local produce puts twice as much money back into the local community as £1 spent in a supermarket. An analysis of procurement spending conducted by Northumberland County Council with NEF has shown that£1 spent with local suppliers is worth £1.76 to the local economy, while £1 spent with suppliers out of the area is worth 36 pence. A Friends of the Earth study of local food schemes found that on average just over half of business turnover was returned to the local economy, compared to as little as 5 per cent for supermarkets.

I had a brief conversation with Jeff about this on twitter:


So we’ll see.  Maybe Manchester is, as Jeff suggests in the MEN article, ‘different’.  But if so it really needs to demonstrate the economic benefits, taking into account the well documented outflow (a.k.a “leaky bucket”, “leaching effect”) of the big supermarkets on the local economy.  Exam question to our council:  “How do you secure the social franchise for Mancunians?”.

For now at least we are stuck with these giants.  We need to see how we can tame them, capturing some of their money flows to use them in for the public good.

And while we are on it – how about we all refuse to use those automatic tills that are springing up everywhere.  That could be an agenda item for Manchester’s first calling to account meeting with the supermarket chains.  OK, supermarket jobs are not the best ones in the world, but they do (did?) make a contribution to many families’ income.  If the council’s priority is as Sir Richard has, I think said, “Jobs, jobs, and jobs”, what are they doing with their friends Aldi, Asda, Tesco and the like to protect them?

updated, 31 July, 2014

Can we end aviation dependency, and meanwhile how to spend the profits?


Last year Manchester City Council received what was described as a windfall of some £14m from its share of Manchester Airport Group. The other Greater Manchester councils have received a smaller, proportionate share.

This year the figure is £16.23m according to Manchester Evening News. It might seem puzzling that this is termed a windfall, since so long as Manchester Airport Group returns a profit, then there is a constant stream of money. But maybe it is safe to regard it as an unreliable, since levels of aviation are vulnerable to economic downturns, and while we know that there will be another financial crash, we don’t know when it will come.

In this piece we will,

1) consider what the airport contributes to Manchester’s well-being, and the costs involved,

2) suggest that there should be a strategy to use the funds the airport brings in to reduce levels of flying while building up other areas of the economy,

3) comment on how the money might be used, suggesting some principles to guide the use of non-recurrent monies.

1) The airport’s contribution to our well-being.  £16 Million sounds like a lot of money, but in relation to the council’s overall budget of £555,164 it is relatively small (2.88%). The airport does make a significant contribution to levels of employment and income in the city and region (although this is often over-estimated), but if our assertion above about the vulnerability of aviation to economic shocks is correct, then putting a lot of eggs in this basket is not a good strategy. Elsewhere we have criticised at greater length the strategy of reliance on aviation-based inward investment.

We should also make the obvious point that, in addition to noise and green belt encroachment, air traffic is a very significant source of greenhouse gas emissions, yet there is a taboo about even discussing the matter in relation to Manchester’s carbon reduction plan: try inputting the search term aviation on the MACF website.

Here are our calculations on the carbon emissions and their rate of growth (note that we have not factored in the ”aviation multiplier” commonly used to recognise the particularly damaging impact of jet aircraft).

Airport growth and emissions: Manchester Airport Group
Manchester reported reported projection
  2011 2014 2015
tons CO2 2,201,717 2,488,779 2,607,293
annual growth   4.35% 4.76%
passengers 18,577,805 21,000,000 22,000,000
per capita 0.1185 0.1185 0.1185
Stansted reported reported projection
tons CO2 1,013,173 1,130,000 1,243,000
annual growth   -0.44% 10.00%
passengers 18238050 18,000,000 19,800,000
per capita 0.0556 0.0628 0.0628
Sources 1 1,2,3,4 1,2,3,4
Key to Sources
1 http://awsw.co.uk/allco2/index_co2.html
2 http://stopstanstedexpansion.com/documents/Estimation_of_CO2_emissions_2014_R.pdf
3 http://www.manchestereveningnews.co.uk/business/greater-manchester-councils-30m-windfall-7421612
4 http://www.ft.com/cms/s/0/36bd3f1a-0b8a-11e4-8693-00144feabdc0.html?siteedition=uk#axzz37cmialAm
Emissions estimates do not include a multiplier for the additional impact of aviation emissions.
Growth rates for 2014 are based on the average since 2011.


2) A strategy to reduce aviation dependency. Our view is that in a world with an outside chance of avoiding catastrophic climate change, we should have a strategy to firstly cease airport expansion and secondly to downsize this sector, reducing and ending the ‘aviation dependency’ of the region’s economy. Some of the profits from the current operation could and should be used to build this strategy. Again we have discussed this elsewhere, suggesting that we need to construct a post-growth replacement economy, that is selectively grown while the damaging sectors are progressively shrunk. But while we live in awe of ‘the market’ and depend on the growth of other economies (China comes to mind), then our leaders will remain too timid to take this necessary plunge.

3) Spending it. So that’s one way to spend some of the ‘windfall’. What principles should guide the spending of the rest of it? We know that one off sums can be difficult to put to good use. Much council expenditure, directly or in directly, is recurrent. That is to say it isn’t a one-off expenditure but requires money to be spent every year. That’s mostly because it pays people’s wages, and services the council pays for, whether direct, such as looking after people are labour intensive.

It is perhaps therefore not very surprising that the council’s ideas on how to spend last year’s windfall were seen by some as vague and cosmetic, although doubtless some good was achieved through the “clean and green” scheme.

There are some tricks in spending non-recurrent monies to get the best benefit. Here are some of them (and we aren’t suggesting that all the examples we mention can be funded from this year’s £16M).

Principle one is to spend on things that will make a positive impact on people’s lives. So spending on affordable housing, in the context of a shortage (as a result of years of neoliberal government policy), is a good example. It also means a ‘multiplier effect’ as jobs are created, and people spend their wages in the local economy.

So that’s principle number two: spend in ways that multiply the benefit. Spend on fitting highly effective insulation to the 90% of the housing stock that need it would save residents money by reducing fuel bills, create jobs and build skills, and reduce greenhouse gas emissions – not to mention reducing fuel imports to improve the UK’s trade deficit and reduce vulnerability to external shocks. That’s the idea behind the New Green Deal Group’s proposal for Green Quantitative Easing, but it could be done locally.

That in turn suggests principle three: spend for the benefit of future citizens and for environmental benefit. We need to really ‘clean up the city’, so it reduces its ecological footprint. Retrofitting insulation is just one example of this. How about kick starting community energy generation, community food production, or community textile production? Our idea of investing to reduce airport dependency is another.

Principle four is about another kind of multiplier effect – invest to reduce ongoing expenditure, so that the council has more money available, recurrently in future years. To give just one example, supported housing for learning disabled people is expensive to staff because it is based on the ordinary housing stock. Investing more money in well designed supported housing options could pay for itself quickly. Without any wishful thinking about ‘reducing welfare dependency’ or promoting overall economic growth (or returning to institutional human warehousing), judicious investment can mean there is more to spend in future years.

Local government has the responsibility to make good use of its resources. To do that, our present system, like it or not, vests that responsibility in elected members and officers. But it is always good practice to consult in a meaningful way and get ideas from people in the city.

Mark H Burton


Germany: a case study in the post-growth economy?

Old German cityscape

Cityscape of Rothenburg, Germany by Helm42 via http://openclipart.org

We can’t possibly do without economic growth! This is the mantra repeated by the political and economic establishment, from the far right to the Trade Union movement’s leadership. This claim we know to be illiterate in terms of social welfare, distribution and ecology but could an economy actually function without growth?

There have been attempts to answer this question by ecological economists Peter Victor and Tim Jackson. Victor conducted macroeconomic modelling based on the Canadian economy to demonstrate that growth is not necessary to prevent poverty, unemployment, and economic collapse. Jackson used this material in his Prosperity Without Growth report and book.

But it has also been argued that capitalism relies on, is for the purpose of, capital accumulation and therefore has a built in requirement for growth. However, it is instructive to look at what is by most accounts a successful modern developed economy with low growth rates to try and understand the issues. What follows is an initial look at some of the statistics about the German economy, in comparison with that of the UK, in relation to this question.

click to READ MORE (.pdf document) Germany as a case study in post growth