Bidding farewell to growth: How to provide welfare in a degrowth society

Bidding farewell to growth: How to provide welfare in a degrowth society
Level: beginner
Johanna Hopp and Laura Theuer
Exploring Economics, 2019
Perspective: Ecological Economics
Topic: (de)growth
Format: Text

Bidding farewell to growth: How to provide welfare in a degrowth society

Authors: Laura Theuer and Johanna Hopp

Review: Daniel Bailey

This is an essay of the writing workshop "Socio-Ecological Economics" published on 15 May 2019 (Updated on 16 May 2019).

Introduction

Against the backdrop of multiple crises of neoliberal capitalism, the idea of a degrowth society has gained increased scholarly and activist attention throughout the past decade. A mutual starting point for the diverse movement is to challenge the hegemony of growth and to call for “a democratically led redistributive downscaling of production and consumption in industrialised countries as a means to achieve environmental sustainability, social justice and well-being” (Demaria et al. 2013:209).

The transition towards a post-growth economy would have immediate effects on welfare states, which are based on the redistribution of the state’s gains from economic growth. However, the degrowth discourse has so far paid little attention to the implications for social security schemes and public goods and services. Similarly, the progressive discourse on social policy refuses to question economic growth fundamentally in the context of ecological limits (Bailey 2015). The renunciation of the growth paradigm in both politics and economics requires the development of socio-political alternatives that allow for the decoupling of welfare provision from a growing GDP. The question of how to provide welfare in a degrowth society is especially pressing due to the historical meaning of economic growth for European welfare states: The period following the Second World War was shaped by an economic boom and constantly rising living standards, framing the hegemonic logic that increased economic growth results in increased social welfare (Lessenich 2014).

In light of the close link between predominating social security institutions and growth, the following essay asks how welfare could be provided in a degrowth society. Through exploring different approaches that are discussed in the degrowth literature, we seek to create awareness for the problem of social security in a shrinking economy, which currently seems inherently contradictory to the provision of social welfare. After tracing the inconsistencies between the mechanisms through which welfare is currently provided, and the fundamentals of the degrowth movement, we will provide an overview on reformist approaches addressing current social security schemes, basic income, and socio-ecological infrastructures. Finally, we will conclude that all approaches offer valuable starting points for answering the pressing question of welfare provision in an economy which no longer focuses on growth, although an emancipatory moment is necessary to deliberately reclaim society’s power to redefine what welfare and social security could mean.

The inconsistencies between current welfare provision and degrowth

Nowadays, welfare states, which protect their citizens against economic and social risks, are considered to be in a deep crisis, since the transition towards a post-industrial society implies many challenges, such as the expansion of the service economy at the expense of the industrial sector, demographic change, and alterations in individual behaviour. They encompass labour market changes as well as family instability, and increase the demands for social protection (Esping-Andersen 1999). European welfare states have responded to the rise of new social needs by extending their support in certain areas (e.g. family policy) and implementing neoliberal reforms (e.g. tax cuts, privatization and deregulation). This led to a rise in public debt, which evoked demands for fiscal consolidation and welfare state retrenchment in the past decades—especially in the aftermath of the financial crisis of 2007/08 (Streeck 2015; Hermann/Mahnkopf 2010).

In addition to fiscal and social challenges of social policy, expanding welfare capitalism represents an environmentally unsustainable mode of production and consumption. On the one hand, economic growth is associated with rising levels of natural consumption. Absolute decoupling of economic expansion from resource throughput would be necessary to reconcile economic development and ecological limits. However, rebound effects make that seem impossible (Jackson 2017). On the other hand, the growth hegemony limits the space for vital state intervention in the environmental sphere. For instance, the prominent discourse on the “Green Economy” shows that environmental policy is subordinated to the growth objective. However, the state could play an important role in the transition towards an alternative economy, which serves social and ecological objectives in the first place. More precisely, the welfare state could realize socio-ecological policies of redistribution of income and wealth, as well as carbon rationing (Koch 2017).

Degrowth proponents reject neoliberal welfare capitalism due to its monetary orientation that causes growing social inequality and environmental destruction. Starting from a critical perspective of the capitalist logic of endless profit rates and economic growth, degrowth offers an alternative to the hegemonic development and growth paradigm. Besides an equitable downscaling of production and consumption in industrialised countries, whose way of living exceeds their ecological boundaries (Demaria et al. 2013; Schneider et al. 2015), its proponents strive for a radical transformation towards socio-ecological sustainability. Drawing on a myriad of research strands, such as ecological economics, critical development studies, anti-utilitarian philosophy and social justice activism (ibid.), the degrowth movement considers a broad set of approaches and thus cannot be reduced to a shrinking of GDP. Rather, the primary and complex goal of degrowth is to improve well-being, social equity and ecological conditions through exploring alternative modes of economic activity and living.

In the current institutional setting, the absence of growth would lead to higher rates of unemployment, which would in turn imply less tax revenues and lower social security contributions. Therefore, reformist degrowth authors like Seidl and Zahrnt (2012) call for a reduction of the dependence of central economic and social institutions on economic growth in order to implement degrowth policies, while Kallis et al. (2015) demand new welfare institutions that “decouple paid employment from growth, or else decouple well-being from paid employment”. Similar to other degrowth authors, they propose work sharing in order to redistribute (un)paid work and basic income to ensure economic security. Another approach stems from proponents of socio-ecological infrastructures, which is most often considered as supplementary to a basic income. The following paragraphs shall provide an overview of these approaches.

Reforming social security schemes

Reformist degrowth authors emphasize the need to examine implications of a shrinking economy for welfare provision. For example, the German pay-as-you-go pension system is theoretically not dependent on economic growth, but demographic change causes new financing needs that require growth if the political promise of stable pensions is kept (Seidl/Zahrnt 2012). Although funded schemes are less sensitive to demographic change, they are not regarded as reasonable option, since they require capital accumulation and are highly vulnerable to economic shocks (Höpflinger 2010). As an alternative to the demand for further economic growth, Höpflinger (2010) introduces the concept of productive age. He takes up the discussion about a longer working life, which focuses on paid work, and calls for a new intergenerational contract that includes informal work, such as family and voluntary activities. They should supplement professional care and could be recorded in a time credit bank, so that the activities could be exchanged between life stages.

With respect to health care, degrowth proponents criticize rising costs due to diseases of affluence, demographic change and medical-technological progress as drivers of economic growth (Seidl/Zahrnt 2012). Studer (2010) calls for a paradigm shift towards a more sustainable health system. He recommends monetary incentives and cooperation of physicians to reduce unnecessary treatments and to increase efficiency of health care. Furthermore, he demands a more conscious handling of health and illness, which encompasses education and promotion of self-healing processes, and complementing conventional medicine with alternative and holistic approaches. Finally, Studer endorses significant improvements of working and living conditions to relieve the burden on the health system.

A community-based approach, in which Studer’s ideas are already practiced, are local solidarity communities. Artabana, Samarita and SOLIDAGO represent examples for self-governed health protection organizations in Germany that exist besides public and private health insurances. They are characterized by decentral organization, in which self-responsibility and solidarity are exercised. People are involved in local communities, which strive for building an alternative and needs-oriented health care. More precisely, the community, based on democratic decision making, supports its members in freely chosen medical treatment—be it conventional or alternative treatments.

Nevertheless, the ideas presented merely build a cautious first step of reformist degrowth authors in addressing the dependence of predominant social security schemes on economic growth. Overall, there is a lack of comprehensive considerations regarding reforms of existing institutions and causality chains.

In the wider degrowth literature, another approach has received more extensive attention: universal basic income. The following paragraph gives an overview of how a basic income could provide for social welfare, while simultaneously facilitating a gentle deceleration of economic activities.

Basic income for securing social welfare 

In the degrowth discourse, universal basic income is presented as an important instrument to combat social hardship (e.g. Alexander 2015; Kallis et al. 2015). Van Parijs and Vanderborght (2017) define basic income as “a regular income paid in cash to every individual member of a society, irrespective of income from other sources and with no strings attached” (ibid.:4). According to the authors, all residents of a certain geographic entity are individually entitled to basic income. Moreover, it is characterised by universality and freedom from obligation. Thereby, it differentiates from predominating unemployment insurances and social assistance schemes, which are contribution-based and means-tested, respectively. A basic income, by contrast, is paid regardless of other income sources and wealth, and recipients are not obliged to work or show the willingness to enter the labour market (Van Parijs/Vanderborght 2017). The unconditional access to resources serves to secure livelihood and social participation and is regarded as an expression of social and cultural rights that are essential for a sustainable degrowth society (Blaschke 2012).

According to the degrowth literature, basic income is supposed to build a “minimum safety net to all citizens” (Kallis et al. 2012:175). There is no assertion of the concrete basic income level, but it is meant to cover basic needs of individuals in order to provide for the measure to have an emancipatory effect. The amount should be subject to democratic decision-making (Casassas 2016). This distinguishes the degrowth concept of basic income from the neoliberal notion of Hayek and Friedman. By providing economic security, the basic income ensures greater personal autonomy and the freedom of society to overcome the growth paradigm. At the individual level, a basic income would eliminate extreme poverty and proponents highlight its potentials for social inclusion. For example, a basic income would increase the incentives to work for unemployed persons—be it in the context of the labour market, self-employment or worker cooperatives—since they need not fear transfer reductions like in means-tested schemes (Van Parijs/Vanderborght 2017). Likewise, a basic income releases people from the compulsion to engage in wage labour and facilitates involvement in voluntary and uncommodified activities (Kallis et al. 2012), as well as education (Van Parijs/Vanderborght 2017). Furthermore, basic income might strengthen workers’ bargaining position, since they may be able to reject a job offering unfavourable conditions (Alexander 2015).

At the aggregate level, basic income makes unemployment socially tolerable and relieves politicians from the need to strive for full employment by "break[ing] this unholy link between growth and security" (Andersson 2009:2). Casassas (2016) goes even further by asserting that basic income enables employees to reclaim control over production patterns. According to the author, the possibility to reject a job would facilitate a process, in which society can rethink the use of life experience and explore alternative modes of production and living outside the market. Basic income would contribute to economic democracy as it provides employees with genuine decision power regarding wages, work arrangements, and the design of social relations. Blaschke (2012) argues that a basic income facilitates a cooperative and cohesive economy that is needs-orientated, since people can freely decide on their participation in the production process. However, proponents of a basic income emphasise the need for a supporting institutional framework, which ensures minimum wages, part-time work and self-employment (Van Parijs/Vanderborght 2017; Casassas 2016).

A basic income that contributes to a fundamental change of current production patterns may have an ecological impact, as a needs-orientated economy is supposed to require less work and resources (Blaschke 2012). However, it may also have direct ecological effects if it is financed by environmental taxes. In a world without strong redistributive measures, these taxes are criticized for having adverse social effects, since they imply an increase in resource and energy prices (Kallis 2011). But the combination of environmental taxes and provision of the basic income is considered “a solution that curbs excessive consumption patterns and enhances the life chances of the poor at the same time” (Andersson 2009:5). In addition to environmental taxes, universal basic income is supposed to be financed through a progressive income tax as an instrument of redistribution. Basic income might also be supplemented by a maximum income in order to promote greater income equality (Kallis et al. 2015). In this sense, an ecological, redistributive basic income serves as a central measure in providing social security in a degrowth society.

Socio-ecological infrastructures – an alternative approach worth exploring? 

Another proposal for securing a certain level of social welfare that is decoupled from economic growth is the idea of socio-ecological infrastructures[1] (Novy 2016) or Universal Basic Services. Such infrastructures and services would comprise any kind of institution, which ensures that important and democratically defined basic needs are available to all citizens at no or explicitly little charge in a legally binding manner (Hirsch et al. 2013), as for instance housing, public transport, IT access, health care, energy, or education.

Free or at least feasible access to public goods and services, which are partly financed through taxes, already marks a characteristic of current European welfare states—one need only think of free public education or the concept of social housing in Germany—but from the 1970s onward, the neoliberal trend of privatizing and commodifying health care systems, public goods, and public transportation has led to rising inequalities and social disparities (Hermann and Mahnkopf 2010).

In the degrowth discourse, only small attempts have been made to consolidate both the ecological and social advantages of extended infrastructure provision. Besides Novy, only Barbara Muraca, who herself refers to Novy (Muraca 2014), and proponents of the French décroissance movement—the French equivalent to degrowth—broach the issue of such infrastructures or services in the context of the degrowth movement. This is surprising, since socio-ecological infrastructures provide fruitful starting points for enabling just access to social security beyond monetary means, thus allowing for a decommodification of basic social services, which are essential for providing social welfare.

Liegey et al. (2013) provide the most comprehensive proposition for socio-ecological infrastructures. They consider aspects such as nutrition, housing, health, education, water and energy provision, transport, elderly care, and care for people with disabilities. For energy and water, the authors suggest, for instance, that local communities should negotiate a locally appropriate minimum amount of free provision, and to increase the price for the respective resource if households cross this threshold. Through reducing working hours, providing free access to local public transport and democratically defining ecologically and socially just minimum amounts of basic goods such as water or energy, they expect local and solidarity economies to thrive, thereby increasing citizen’s autonomy for shaping social wellbeing. In terms of financing such a transition, Liegey et al. (2013) propose a maximum income and taxation on consumption that exceeds the defined basic amount. Additionally, they highlight long-term financial benefits due to a healthier society which remains inside the planetary boundaries and thus minimises its expenses for environmental degradation.

According to Hirsch et al. (2013), the distinction between commons and social infrastructures is the holistic approach of such infrastructures, which comprise complex institutions rather than natural resources. Interestingly, these authors attribute a much stronger role to the state. They argue that if, as can be observed in current neoliberal capitalism, working under secured wage labour conditions is only realized for a small amount of people, social security must be decoupled from the entitlements acquired through wage labour (Steinert 2013). This decoupling could either be achieved through “private” initiatives, such as community housing projects, privately organized child care, or food sharing initiatives. However, as Hirsch et al. (2013) argue, these initiatives are often tied to a socially privileged status of its practitioners, which allows access to social capital and time to organize such initiatives. Instead, only against the backdrop of publicly secured access to basic social and ecological infrastructures, autonomy can be realized to shape the provision of social welfare.

Andreas Novy (2016) coined the debate on socio-ecological infrastructures by claiming that human needs are not primarily satisfiable through money and that current infrastructural deficits are the main drivers for ecological destruction. Novy thereby draws on social philosopher André Gorz, who supports the idea of universal basic services. He claims that through a Universal Basic Income, people would remain caught in an individual logic of needs satisfaction, thus unable to break with a consumerist society (Ariès 2018). In contrast to that, through shifting the welfare focus towards infrastructures rather than a basic income, both social and ecological needs could be fulfilled more effectively. Andreas Novy foregrounds the argument, which has also been made by Hermann and Mahnkopf (2010), that through complementing monetary benefits by support in kind, such as free and publicly operated kindergartens or homes for elderly citizens, quality and access to these infrastructures would be more equal than through providing care allowances, which tend to foster gender inequalities and precarious working conditions through, for instance, semi-legal labour migration.  

In fact, many questions for a system change towards socio-ecological infrastructures remain unanswered, and political as well as economic feasibility requires further consideration. For instance, when Liegey et al. (2013) speak of the quantity of a certain good such as energy and suggest for its quantitative definition “sufficient in respect of local conditions, based on democratic decisions[2]” (Liegey et al. 2013), this can be understood as a conceptual signpost rather than as a politically feasible approach. Furthermore, the strong focus on deliberative democratic processes for negotiating minimum amounts of certain goods would require widespread support among the citizens and a radical structural change in social politics and the idea of welfare.

Nevertheless, especially against the political background of the basic income discourse, which has been picked up and reinterpreted for neoliberal ends, it might be worth advancing the discussion on supplementing a basic income with deliberately negotiated socio-ecological infrastructures for a degrowth welfare state.

Towards a better future

Degrowth represents a radical approach to a socio-ecological transformation of our society that is characterised by a democratically deliberated shrinking of economic activities in order to achieve a sustainable way of living. However, these efforts come into conflict with prevailing institutions that provide for economic security and social participation, such as social security schemes and public goods and services, as their financing is dependent on economic growth. Thus, the question of how to provide social security in a degrowth society is an essential issue, which has been addressed in this essay. More precisely, three approaches have been discussed: reforming current social security schemes, the basic income and socio-ecological infrastructures.

Especially reformist degrowth authors acknowledge the importance of welfare states for protecting their citizens against market forces and unforeseen incidents through social security insurances, and address the problem of growth dependency. They take up the current debate on adjustments of the schemes to new social needs, which is dominated by neoliberal ideas, and make valuable proposals on how to reduce the growth dependency of the German pension system and health care. However, these are only a few authors making singular suggestions, while a comprehensive consideration of interdependencies and alternative proposals is missing so far.

In the wider degrowth literature, a more fundamental change of economic and social institutions is suggested. In this context, a universal basic income is frequently presented as a means to combat poverty and increase individual autonomy. Furthermore, it is regarded as an instrument that supports a fundamental change of production patterns and overcoming the growth paradigm. In particular, an ecological basic income, financed by taxes on resources and energy, has the potential to contribute to a socially acceptable reduction of natural consumption. However, degrowth discourse does not indicate whether a basic income should be a substitution of current social security schemes or just a supplementation.

Shifting the debate of social welfare in a degrowth economy towards the provision of certain basic infrastructures, which could allow for both social security and ecological sustainability, has so far only received little attention. However, consolidating a basic income and free access to a basic set of social and ecological infrastructures, such as public transport, energy, water, or health, financed for instance through taxes on excessive consumption of certain goods, might be an interesting starting point for a revival of European welfare states that effectively provide social security for their citizens in a shrinking economy, without constantly crossing planetary boundaries.

The moral attachment to the institution of the welfare state as dependent on economic growth, due to the economic boom in Europe after the Second World War, is still strong among many European citizens (Lessenich 2014). This makes the question of how to provide welfare in an actual shrinking economy even more pressing. However, to satisfyingly answer that question, the current hegemony of neoliberal ideas regarding how a desirable development of society and welfare should look like must be disrupted. The degrowth movement contains powerful means for accelerating what Gramsci calls a social emancipation from the current way society is organised, and to hence both redefine the European welfare state and develop specific proposals how social security can be provided in a decelerating economy.

 

References

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[1] Novy (2016) himself uses the term sozialökologische Infrastruktur. For this essay, the term has been literally translated to English by the authors.

[2] Originally: „Quantité suffisante en fonctions des conditions locales. Décisions démocratiques” (Liegey et al. 2013), translated by the authors.

 

Title photo by Markus Spiske on Unsplash

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