Our own outlook for advanced and emerging economies in its base scenario hints at an economic slowdown with increased chance of a recession in Europe, and if things turn out worse (e.g. through more trade bans, renewed COVID-19 lockdowns or central banks overshooting in their tightening measures) even on a global scale.

The current polycrisis has detrimental effects on sustainable development, especially on the social side. Not the least because the current institutional and cultural setup depends on economic growth. In case of a recession, it immediately leads to social problems, while it makes ecological transitions harder to achieve. To attain sustainable outcomes for all, we must consciously, step by step, transform our economy. This includes making wellbeing growth agnostic: social provisioning should not depend on economic growth.

Downscaling

One way or another, we need to think about downscaling our use of natural resources. A world economy that has transgressed six out of nine planetary boundaries is not sustainable. If we don’t act, nature will do it for us: disasters, from extreme droughts as we’re seeing in Southern Europe right now, famine, floods, to the loss of ecosystem services, will eventually result in a collapse of economic activity and have a huge impact on society at large. The daily news shows that this is not a far-away scenario. The way we use our natural environment as input for our economic needs must change. Some still cling to the idea that this can be done through innovation: so-called green growth, making the economy ‘circular’ and in that way decoupling resource use and pollution from economic activity. It would be great if we could achieve that. And, moreover, we should do everything we can, with technological innovations, circular principles, and smarter working to make production more sustainable. Yet there is no evidence that this will be enough. Even the most favourable empirical evidence only shows local decoupling of, for instance, greenhouse gas emissions from economic activity. There are (at least) two reasons to not only bet on tech-optimism. First, if we don't succeed in finding a solution in time, it will be too late to turn the tide when we find out. And two: even if we manage, for example, to stop using fossil fuels, to reduce CO2 emissions and to tap into alternative energy sources, we still consume too much. As long as humanity takes away more from the globe than the globe can regenerate, we are doomed to lose in the end.

Therefore, we must shift from our customary growth paradigm to a paradigm of degrowth; what happens if we scale back economic activity? And this is exactly the hard part. If the economy does not grow, public finances derail. If economies don’t grow, companies whose business model is based on growth go bankrupt. If economies don’t grow, people lose their jobs. Hence, stagnating economic growth will lead to socially unsustainable outcomes. That is also reflected by the lack of progress on the UN Sustainable Development Goals. The corona pandemic, followed by a severe economic crisis, had detrimental effects on social elements of sustainable development: more hunger, more absolute poverty, and more health problems. The current polycrisis will not turn that picture for the better.

But this is the core of the problem. Our institutional setup, from all-for-profit to how we collect taxes, fully depends on growth.

From dystopia to utopia

Thus, it is paramount to think through how we can reorganise society in such a way that we do not depend on economic growth anymore. Here is where degrowth or post-growth thinking comes in.

Post- or degrowth is foremost a full-blown agenda to set the economy on a more sustainable footing. It is not per se about downscaling everything, but rather about upscaling wellbeing. It is about striving for a self-determined life in dignity for all. This includes deceleration of our pace of life, time welfare, and conviviality. It also includes a society that sustains the natural basis of life. It includes a rebalancing between the overproducing and overconsuming global North and the exploited global South. It includes the rethinking of democratic decision-making to allow for real political participation. It includes social changes and an orientation on sufficiency instead of purely technological changes and improvements in efficiency to solve ecological problems. It includes a redesign of tax systems and public finance in such a way that they don’t depend on economic growth anymore. And finally, it includes a financial system that serves the real economy instead of mostly itself. Only then can we combine ecological limits with prosperity for all.

Most people strive for progress and improvement, if not for themselves, then for their children. In a post growth world, progress and improvement will have to be redefined: from more consumption to a better quality of life.