How Degrowth Economics Could Fix Capitalistic Market Failures Brought About in the 21st Century
During the W25 Semester, I took an introductory political economy course on “Market Failures & Critiques of Capitalism”. Taught by Ian Robinson of the University of Michigan’s Sociology Department, the course focused on what specifically makes capitalism (and especially America’s current neoliberal flavor) so unattractive to many due to it’s effects on labor, the enviornment, and society at large. By distinguishing between the negative externalities specific to capitalism and the more general category of market failures inherent to any market system, the course sought to advance a more nuanced and targeted critique of capitalism than is typically found in mainstream discourse.
This is my final paper, combining my knowledge and passion for degrowth economics (mainly sourced from Jason Hickel’s book, “Less is More”) with some of the course’s core concepts.
Introduction – An Economy Built on Growth
We as a human society are currently facing an unprecedented, man-made breakdown of the habitability of the only known planet that can sustain life (as we currently understand it), and are doing very little to stop it. In fact, each year the global economy –largely motivated and influenced by the economies of rich and wealthy nations in the global North– has not only continued to neglect this immediate threat to natural life, but has contributed to it, consecutively increasing CO2 emissions almost every year since the early 1950s. (Ritchie, Roser, 2020)
Numerous scientific reports and memos have shown that climate change associated with greenhouse gas emissions brings about devastating, unprecedented natural weather events at frequencies that cannot be effectively handled. As CO2 emissions rise, so do sea levels, increasing the likelihood of extreme flooding events, storm surges, and hurricanes, of which coastal communities across the world have already been deeply affected by. (Walsh, Hubbert, 2003) Devastating hurricanes continue to increase in frequency, and the damage done by these storms are unparalleled compared to those of the past. If we continue on our current path, even if nations put forth significant effort to get on track with the Paris agreement (which is becoming more unthinkable by the year), sea levels are still projected to rise another 30cm – 90cm in the next decade, further pushing the intensity of extreme coastal weather events, and if these projections are off, realizing the destruction of many coastal communities entirely. (IPCC, 2018) In other parts of the world, intense droughts and dry seasons have put entire food systems under direct threat. In prior times of environmental crisis, the lack of food in one region was thankfully supplemented by other areas still able to grow the food needed to supply the ever growing global demand for agriculture. Climate related weather externalities may now render previously nutrient rich agriculture hubs completely inhospitable to cultivating food for local consumption and/or for global export. (Porter, Xie, 2014) The potential for “multi-breadbasket” failure in our global food system is rapidly increasing, and we may face sweeping food scarcity and agriculture emergencies as a result.
These occurrences are far from natural, which is a well known fact in the scientific community and at least partially among the general population. (Pasquini, et. al., 2023) The rise, and even the very concept of emissions for material consumption is completely man made, and is continually pursued for the sake of growth. Capitalism, the dominant economic model across the world today, is based on one core goal; technological and financial growth, quarter after quarter, year after year, decade after decade. In the beginning, this seemingly worked well for the rich nations of the global North, benefiting from the technological and industrial innovations brought forth by capitalism. Though the often unmentioned and unrecognized reality is that this growth was never free, or generated with pure human ingenuity. It has largely been achieved through the violent extraction of labor and resources from the natural world, and continues to thrive on this primitive accumulation today. The goal of growth drives the capitalist machine, and financial stagnation is not an option. Capitalism exists to accelerate. This presents a problem, as when sources of this growth eventually saturate, there exists no choice but to scrape the edges of our world to find new sources of profit. This pursuit of growth transforms practices that may have once been sustainable and in balance with the natural world into extractive profit seeking ventures, with no considerations for the natural world surrounding the economy .
Take fishing, for example. The dominant narrative may suggest that capitalism and the resulting globalization is to thank for the wide range of fish American families can buy in supermarkets any given day of the year. Behind the curtain, corporations are ravaging the ocean floor, turning marine ecosystems upside down in search of the few, now scarce, species of fish that posses enough market value to make a profit off of. As a result of this, recent figures suggest that a large majority of global fish stocks are depleted, or facing collapse. In the Asia Pacific region, fishery yields are projected to decline as much as 90% by the end of the century due to overfishing, destruction of marine ecosystems, and other climate related effects like the warming of ocean waters. (Blanchard, J.L. & Novaglio, C, 2024) Capitalism has taken far more than it has given back to the natural world, and until now, Mother Earth has accepted this ingratitude for her contributions to the global economy. Adam Smith, the father of free market theory, recognized that the invisible hand could not possibly be the solution to all aspects of human society, especially as it relates to common goods like roads and education. (Smith, 1776) These goods are separated from others due to their direct societal need to sustain and advance human life, and their inability to be effectively cultivated through normal market behavior. It is time rich nations recognize the natural world in the same light, the future of humanity has but no other choice.
The current levels of growth being pursued are unsustainable socially, economically, and ecologically. Growth above the amount that satisfies basic needs provides very little benefit enmasse, and has far more costs than benefits. (Kallis, Kerschner, Martinez-Alier, 2012) In fact, negative environmental externalities are one of the primary market failures produced by capitalist markets according to Bowles et. al., authors of their book, Understanding Capitalism. (Bowles et. al., 1985) It is proven that the main source of negative environmental effects like rising global temperatures, major wildfires, melting ice caps, and rising sea levels, is the intrinsically capitalist pursuit of endless, unregulated, exponential growth. Why must we continue in this endless downturn? Why is there no conceivable alternative to the ecologically detrimental feedback loop of endless production and expansion? It is naive and irresponsible to think that through the years of human ingenuity and development that brought about multiple intellectual and industrial revolutions, we are still unable to imagine an alternative to our current global addiction to growth.
Degrowth – Ecologically Positive Economics
Fundamentally, degrowth scholarship aims to explore and suggest ways in which societies of today could fundamentally re-imagine the goals and priorities of their economies, moving the goalposts from financial performance and gain, to human prosperity and natural flourishing. (Parrique, 2019) Other economic and political systems have shifted their focus in this direction on smaller scales. Take unions and worker co-ops, for example. These organizational structures still allow reasonable (and sometimes exceptional) amounts of economic activity while also prioritizing the social needs and desires of their workers and the world around them. Degrowth seeks to apply this same way of thinking to entire economies as a whole.
The idea of “degrowth” might ruffle a few feathers when brought up in discussion, but this indignation typically comes from a place of misunderstanding or misinformation. The term has become politically charged, and often is associated with extreme ideas like population reduction and manufactured economic recessions. Degrowth is often characterized as an authoritarian economic and/or political response to overthrow free markets, and reduce the power of citizens in the national economy, forcing them into poverty. (Parrique, 2019) As will be expanded on later, this is far from the case. Degrowth is not a system that imposes harmful rules from the top down onto those below for the sake of reducing emissions and saving the planet (Parrique, 2019); this would be eco-fascism. Instead, degrowth requires working from the bottom up, to establish a more democratized economy that mobilizes many ideas currently held by the majority of some populations. (Hickel, 2020) Degrowth must be rooted in collective, community and labor based organization to collectively decide what should be prioritized in a new world order and economy. (Hickel, 2020) This is why the United State’s recent decisions around tariffs and trade restrictions are not an example of degrowth practices. Even though these policies are poised to significantly reduce economic output from the nation (York, Durante, 2025), a core aspect of degrowth, they were imposed in a unilateral fashion with no consideration for the needs of the American people.
Degrowth is often poised as a direct opposite to current growth based economies and their associated systems of governance. This misdirected comparison results in many of the negative socioeconomic effects that are associated with periods of low growth in capitalist economies to be unfairly pinned on degrowth. In growth based economies, a continued period of negative economic movement is a recession, and a period of low to no economic growth is stagnation. In both of these scenarios, many people (often working, or middle class families) suffer, and systems begin to fall apart. This is not due to some empirical rule; this is simply due to our current economies not being equipped to handle anything except constant, exponential growth. (Hickel, 2020) Degrowth economics does not suggest that we live in a constant state of economic downturn and disrepair, instead it pushes to imagine an alternative to our currently grim reality, to one where we can support human well-being while also moving beyond the requirement for greater economic activity and material production each year. (Parrique, 2019) Is this such a radical concept? Some may suggest that capitalism already has all of the tools needed to solve the climate crisis, and that the free market has the power to produce solutions to some of the problems enumerated above through technological innovation. After all, we’ve seen a steep rise in renewable energy production, as well as some technologies that might be able to reverse some of the negative aspects of climate change. It is true that we have produced and improved many different sources of green, renewable energy in the past decade, yet despite these great steps toward green energy, the United States still only produces 21% of its total energy with renewable sources. (USEIA, 2024) We have also developed many new technologies that allow for the capture of carbon emissions, promising to reduce the impact of this harmful practice. Yet we still see emissions increase year after year. (Hickel, 2020) Why could this be?
This is the fallacy of “green growth.” History has shown us that each time an improvement of this nature is produced by the free market, it is never used to correct the problems of the past. Instead, it is used as justification to consume even more energy, or produce even more emissions. (Hickel, Kallis, 2019) Since 2000, each year the world has produced over eight billion more megawatt hours of clean energy. Over the same time period, economic growth has required the production of over forty-eight billion new megawatt hours in overall energy consumption. (Hickel, 2020) Even if we were to substantially increase our green energy production, our current rate of economic growth and the associated energy production with it would still outpace our best efforts. In the case of advanced carbon capture technology, these tools, which were only produced after years of advanced development time and through significant amounts of research funding, were marginal in their actual ability to reduce emissions. Yet upon release, fossil fuel companies, against the scientist’s wishes and advice, screamed to the rooftops that the solution for what is currently the world’s greatest problem had arrived. (Hickel, 2020) This was obviously so they could continue to produce greenhouse gas emissions without as much public opposition, and justify their annual growth yet again.
Degrowth makes the case that these green tech innovations alone are not enough to save us from a global climate emergency, and to rely on their ability to do so is irresponsible. As anthropologist and prominent degrowth scholar Jason Hickel states, continuing to emit the amount of carbon into the atmosphere as we are today with no foreseeable technological solution to its negative effects, is “…like jumping off a cliff while hoping that someone at the bottom will figure out how to build some kind of device to catch you before you crash to the rocks below, without having any idea as to whether they actually will be able to pull it off.” (Hickel, 2020) Degrowth is not an anti-technology position, it just pairs technology with sensible political and economic decisions to systematically control a reduction of material consumption. (Hickel, 2020) In addition to the continued development and implementation of technologies like renewable energies, rich nations must drastically reduce their exorbitant amounts of overall energy consumption, and collectively decide to reduce production in socially unproductive sectors. Degrowth scholarship makes the simple observation that in a time of international crisis, it is silly to continue to expend precious resources on producing items and services that only serve to benefit elite levels of consumption and financial gain. (Hickel, 2020)
Degrowth scholarship aims to understand how we can move to a socially productive alternative economy that remains stable even in the absence of socially unproductive, carbon intensive goods, and prioritizes metrics of social progress instead. This question is deeply rooted in political economy, as it relates to ideas like public goods, and controlling negative externalities of markets, lines of inquiry that have been tackled by some of the earliest political economy thinkers. A modern spin on the idea of public goods involves questioning not only how we can equip market and governmental actors to provide said goods, but how we can tune markets and economic actors to prioritize these socially positive realities, and arguably more importantly, be held accountable for the negative effects of the other goods markets may produce. This may come in the form of regulatory practices over certain aspects of production or trade, or a democratic decision to scale back certain aspects of the economy, but one major roadblock outside of political action still prevents these realities from taking shape.
Currently, gross domestic product, abbreviated to “GDP”, dominates as the global standard metric for economic progress. This is problematic, as GDP measures nothing but economic activity, and has no relation to the well being or health of a nation, or the planet. While free healthcare or investment in public transportation may indirectly lead to an increase in economic activity, so will increased production of plastic goods and single family homes. The latter is far more socially harmful than the former, and is often the chosen path by economic actors due to a higher immediate return on investment. The metric of GDP bears no relation to the world around it, and is simply a number that seeks to annually grow, rewarding its adherents for the largest possible increase regardless of surrounding effects on society and the natural world. (Vanham, 2021)
In fact, at a certain point, too much economic growth will cause a decrease in human well being, as once most basic social needs of society are met, excess growth does nothing but serve the elite class in their pursuit of profit. This only deepens existing divides in wealth and class inequality, lowering happiness and trust in societal institutions among the working class. (Hickel, 2020) Degrowth calls for the abandonment of GDP due to its flaw of poorly measuring any metrics outside of pure economic growth, a drawback even the creator of the framework, Simon Kuznets, warned of. “The welfare of a nation can scarcely be inferred from a measure of national income … Goals for more growth should specify more growth of what and for what.” (Vanham, 2021) (Hickel, 2020) Adopting an alternative measure that more holistically accounts for the welfare of people, not profit, is a critical step to designing a more just, equitable economy that serves natural life in a far better fashion. Shifting away from GDP would allow economies around the globe to finally critically consider the ramifications of the decisions they make to push themselves further, not just for the sake of higher economic activity, but for the sake of human life and sustainability as we want to know it.
How Degrowth Can Create More Socially Just Markets
Many capitalist nations, including the United States, are currently facing a two pronged crisis, an unprecedented ecological emergency driven by growing resource and energy consumption, and an increasing social divide among working and middle class families and the economic elites above them. Both of these are being caused and or exasperated through the current flavor of neoliberal capitalism, but are there more links between these issues than just their cause? In what ways are the struggles facing labor groups and working class populations across the world related to the same issues plaguing our planet with at times irreparable damage to ecosystems and natural actors?
Some may think that as average household incomes have continued to rise over time, happiness and wellbeing must have risen higher with them. Researchers have found that the actual level of income does not impact general happiness as much as the distribution of income across a population. (Wilkinson, Pickett, 2010) The materialistic and consumerist ideals prominent in some of the richest countries in the world not only significantly impact the environment through the needless consumption of certain high intensity goods, but also contribute to lower social welfare by reducing individual’s sense of meaning and happiness to a competition over material objects and accumulation of wealth. (Hickel, 2020) In his book Less is More: How Degrowth Will Save The World, Jacon Hickel gives a hypothetical scenario of an individual getting a raise at work, but soon after finding that their coworker received a raise that is double the size of their own. All happiness initially received through the news of the raise is lost when a sense of unfairness and self doubt sets in instead. A similar situation occurs in consumption patterns, and as individuals compare their material goods to those of others. Inequality makes individuals feel that their own possessions are inadequate, and that they continue to consume more not because they need to, but because they must keep up with social patterns of wealth and status. (Hickel, 2020) Bowles et. al. also partially support this notion of herd consumption, explaining that social and cultural norms within a society play a key role in economies, “limiting the extent to which individuals can pursue their own self interest.” These norms are not adhered to to avoid any significant punishment, but simply because people would not feel right doing otherwise. (Bowles et. al., 1985) More meaningful, non-material interests might find themselves silenced by the large domination of consumption. Because of this, individuals find themselves trapped in an endless competition of status, with the end goal being continually pushed out of reach by the extreme consumption patterns of the rich. Research shows that those in unequal societies are more likely to shop at luxury brands than those in more equal societies. (Walasek, Gordon, 2015) This race of little meaning drives needless consumption and helps devalue the items that are purchased, contributing to more consumption and waste respectively.
Egalitarian societies produce higher senses of solidarity, trust and equality among working people, which not only results in a higher sense of self worth and happiness, but reduces material consumption in the process. (Hickel, 2020) Reducing inequality would also reduce emissions in more indirect ways, as the richest 10% of people make up over half of all global emissions. (Oxfam, 2015) Due to the excessive material and energy intensive patterns and consumption the elite class promotes, likely any policy that reduces the overall wealth accumulation of the very rich will have great ecological outcomes, and will also likely increase social well being. Also in an effort to reduce inequality, and increase representation of working class individuals, degrowth scholarship calls for democratization of the economy on the global, national and local levels. As explained by Bowles et. al. in Understanding Capitalism, in order for capitalist, free markets to function effectively, individuals must have accurate information and strong stake in the economic and political system at large, and must also possess significant individual power to alter the direction of these systems. (Bowles et. al., 1985) American capitalism is currently failing on both of these fronts, with inadequate political landscapes that have been captured by the elite; and markets that largely ignore consumer interests with few, inadequate manners for working class individuals to voice their opinions. (Gilens, Page, 2014)
Globally, the richest nations around the world – and particularly the United States, who possess ultimate veto power over all major decisions made in both the IMF and the World Bank – hold majority vote in the few international institutions that exist to determine economic policy on the global scale. In the World Trade Organization, bargaining power is determined largely on GDP, yet again giving preference to rich countries to countries to pursue whatever goals they deem important. (Hickel, 2020) This presents a lack of sovereignty, resulting in many countries having no choice but to succumb to the power and influence of rich countries and their desires, regardless of their preferences or national values. Altering these institutions to have more equal representation in decision making would free many global South countries from the dirty work forced upon them by rich nations in order to bolster their own economies, and allow them to pursue reasonable growth and development at their own pace, ultimately fostering a more equal, just global economy. (Hickel, 2018) This need for democratization also persists at the national and local levels, with current political and economic systems giving preference to private entities and the ultra rich, while suppressing working class individual opportunities for participation in government. (Gilens, Page, 2014) How can progressive eco-focused policies expect to take hold in national and local contexts when the systems that develop, enforce and evaluate them are designed to support economic growth, the antagonism to meaningful and lasting environmental progress? Degrowth looks to increase representation and democracy within economic institutions for the sake of environmental progress and social justice.
The parallels made between working class and environmental struggles are no accident. The issues are intrinsically linked as the success of one area only builds on the success of the other. As seen, many of the issues facing the working class today also contribute negatively to climate progress and moving to a sustainable economy. (Hickel, 2023) Degrowth scholarship offers food for thought into how a more just, socially productive economy could look past growth to both sustain human prosperity, and remain within planetary boundaries. Degrowth policies have yet to wholly take shape into a nation’s entire economy, though this is no reason to scoff at the principles and specific ideas proposed by the relatively recent area of economic study. Economic inequality in the United States continues to rise, with the gap between lower, middle and upper class families growing wider by the year. (Horowitz, Igeilnik, Kochhar, 2020) Emissions and global temperatures grow alongside GDP, as rich nations have failed to recognize the need to decouple their economies from energy consumption and material production. It is time for a radical change in our social and economic systems, to realize real social and ecological progress for the sake of the global population, and our home, planet Earth.
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Thanks for reading. I am aiming to post a piece every month on topics relating to urban planning/technology, transportation, public policy, socio-economics, and more. I hope you’ll follow along.
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