Is Europe looking beyond growth?
Geopolitical shifts have supercharged the continent’s energy transition efforts, can they shake up its economic system too?
“A growth model centred on fossil fuels is simply obsolete.”
European Commission President Ursula von der Leyen’s words at the European Parliament last week carry an exceptional message from a conservative politician, especially one belonging to Germany’s Christian Democratic Union (CDU).
Under the leadership of former Chancellor Angela Merkel, the CDU was the party that had hoped to phase out coal by importing more fossil gas from Russia. (A terrible decision both in geopolitical terms and in climate ones, as we covered in past issues of this newsletter here and here.) Following the Russian invasion of Ukraine and the resulting energy crisis, conservatives in Europe are now happy to go on the record saying that fossil fuels are obsolete. This is a welcomed, if belated, step forward.
The occasion for President Von der Leyen’s speech was the 2023 Beyond Growth Conference, a 3-day gathering organised by a coalition of progressive and conservative parties. The aim was to discuss how Europe could stop assuming that economic growth should be infinite, and instead focus on meeting the needs of its residents within planetary limits. Von der Leyen concluded her remarks by saying that:
“Today, on a very fundamental level, we understand [...] that economic growth is not an end in itself. That growth must not destroy its own foundations. That growth must serve people and future generations.”
European Commission President Ursula von der Leyen speaking at the Beyond Growth conference at the European Parliament in Brussels
When a conservative politician—who happens to be the world’s most powerful woman—concedes that economic growth is not a tide that lifts all boats and that we must re-frame our approach to it, one could be excused for thinking that long overdue, systemic change may be happening in Europe.
What do we mean by Beyond Growth?
Beyond growth (or the related concepts of post-growth and degrowth), has its critiques, but these are usually based on the misconception that a reduction of the size of the global economy (measured via GDP) will decrease our standards of living and is thus undesirable. If you follow the money, you quickly discover this is what oil major Exxon Mobil would like you to think. However, most people intuitively understand that infinite economic growth on a finite planet is impossible.
The focus of the conference was on this much needed systemic change and on the many questions that it raises: if GDP growth is not a policy objective, what should be instead? Who should get to decide how we measure progress? How can policies that support prosperity instead of climate-wrecking overconsumption not be perceived as “rationing” or top-down impositions?
The quality of the speakers reflected the complexity and sensitivity of the topics: Nobel laureate Joseph Stiglitz discussed macroeconomics; climate scientist Johan Rockström explained planetary boundaries; economist Kate Raworth introduced her doughnut framework (and how it is being used in cities); activist Vandana Shiva helped the audience reframe their relationship with nature; Tim Jackson, Robert Costanza, Julia Steinberger, Dan O’Neil, Jason Hickel and Giorgios Kallis outlined the principles of ecological economics and many more intervened.
Aren’t cities tackling these issues already? Yes.
The urban perspective was not a focus in any of the sessions, but the organisers confirmed that this was because city policy is not among the European Union’s core competencies, rather than for lack of transformative action taking place at the urban level.
In fact, cities have been working on this for a while now. Researchers from LSE Cities recently published a fantastic article in our Journal for City Climate Policy and Economy discussing how European cities are embedding post-growth principles into their policies: from Amsterdam to Brussels, and from Copenhagen to Paris.
These urban policies should be seen in the context of addressing the social shortfall and the ecological overshoot of our current economic system. This means ensuring that basic services such as shelter, nutrition, mobility, education, security, health and care are met within our ecological ceiling. The figure below shows the scale of this global challenge using Kate Raworth’s doughnut framework.
Source: The social shortfall and ecological overshoot of nations, Fanning et al. (2022)
Crucially, the actions needed to get everyone between the ‘social foundation’ and the ‘ecological ceiling’ will be different depending on their local context. This is visible in the chart below. Many countries—predominantly in the Global South—are still falling short of the social foundation. For these countries, looking beyond growth consists in focusing on meeting social foundation needs without following the unsustainable path taken by Global North countries. On the other hand, the countries in the top-right corner of the chart will need to find ways to return below the ecological ceiling while continuing to meet their social ambitions.
Number of social thresholds achieved versus planetary boundary overshoot by countries over time, 1992–2015
Source: The social shortfall and ecological overshoot of nations, Fanning et al. (2022)
It is easy to applaud politicians that call for a focus on wellbeing and prosperity over GDP growth, but it is hard to implement the necessary changes in a way that is fair, inclusive, and sustainable. By phasing out gas boilers and retrofitting buildings, building affordable housing, making local shops and basic services accessible with a short walk or cycle, and working to understand and reduce the impact of their consumption, cities are not shying away from this challenge. They are proving to be laboratories for innovation and action, showing the political leadership that for too long has been missing on the national and international stages.
What I’m reading
I’ve recently enjoyed this remarkable New Yorker article on the relationship between A.I. and capitalism.