There will be no escape from fires and floods without a transformation of our economic system

As bushfires rip through Australia and a deluge floods Indonesia’s capital city, policymakers continue to place ecocidal economic growth above all else. Addressing climate and ecological breakdown will require nothing less than a deep social and ecological transformation of our economy.

Climate change is driving an increase in the frequency and severity of natural disasters across the globe. Currently, Australia is experiencing forest fires at an unprecedented scale, resulting from record-breaking heat and drought. To date, the fires have taken 25 human lives, hundreds of homes, and over half a billion animals as entire species are being driven to extinction. The smoke pollution will likely cause health impacts for years to come. Meanwhile in Indonesia, following the highest level of rainfall on record, the death toll from flash floods is now over 60 and rising.

As of yet, neither the Australian or Indonesian governments have accepted that climate change is the main factor behind the severity of these disasters, and neither have announced any changes to climate policies. Rather, Scott Morrison – the Australian Prime Minister – claimed that calls to scale back the country’s coal industry were ‘reckless’ insofar as the economy is concerned. Even more despairing was the full-on climate denial of former Prime Minister Tony Abbott on public radio and his claim that the world is “in the grip of a climate cult”.

Why the dangerous denial and inaction? Because, in short, the status quo of the economy is untouchable, and GDP growth is paramount. Despite ecological economists’ (and others) explanations that GDP is a terrible proxy for wellbeing and its growth is driving environmental destruction, policymakers continue to ward off action in the name of ‘economic growth’. Iron ore and coal are Australia’s most valuable exports, while coal and palm oil are in the lead for Indonesia. For both countries, accepting that climate change is driving their natural disasters would mean rolling back on some of their primary contributors to GDP growth.

The reality is that while growth in ‘green’ sectors is necessary, overall GDP growth must be at or below zero to reach a sustainable economy. This is particularly urgent for an advanced economy like Australia, though even for a lower income country like Indonesia, benefits of economic growth are dubious at best. In all cases, people and planet would be better served by a direct focus on enhancing wellbeing. Further, ‘green’, ‘clean’, or ‘sustainable’ growth, as promoted by a multitude of economists, international institutions, and our own government in the UK (among many others) is increasingly proving to be a myth, as warned by ecological economists for decades.

It is high time that policymakers abandon the pursuit of GDP growth. This suggestion should not be met with fear, as increases in GDP show little to no positive correlation with measures of wellbeing. A couple thousand kilometers from the beaches of New South Wales and Victoria (which are currently harbouring thousands of evacuated Australian citizens), New Zealand offers an alternative approach to economic policymaking. The New Zealand Living Standards Framework – which places social and environmental wellbeing at its core – is now being used to inform the government’s budgeting process. While traditional economic indicators such as GDP and productivity are still being used alongside the Living Standards Framework’s elaborate dashboard, this is a big step in the right direction.

Moving towards an alternative framework for assessing wellbeing and formulating policy is essential for addressing climate and ecological breakdown, but that is just one piece of the puzzle. In order for us to abandon the pursuit of GDP growth and reach a steady state or even shrinking economy without negative repercussions, structural shifts are necessary. As things stand, various aspects of the economy – often referred to as ‘growth imperatives’ – require economic growth in order for the system to remain stable. If these structures are not transformed, a low / no / negative growth system will inevitably cause economic and social crises.

Our 2018 report ‘Escaping Growth Dependency‘ first identified the destructive relationship between our debt-based money system and policymakers’ pursuit of economic growth at any cost to the environment. In a sequel to be published later this year, we’ll further develop this argument and show how the monetary system is inextricably linked to growth imperatives across the economy. We’ll then make a case that, in order to escape this ‘growth dependency’, we must explore a range of transformational monetary, financial and other policies to foster an alternative socioeconomic system. These include modern debt jubilees, alternative banking systems, special-purpose currencies and more.

As we enter the new decade, policymakers must face up to the scale of the challenge that climate and ecological breakdown presents. 2020 can be another year of denial and inaction, or it can be the year in which our leaders start to grapple with the systemic change that is necessary to achieve a just, prosperous and climate-safe economy.