What do we really mean by “growth” and why has it become both an economic goal and a source of deep unease? Sam Gilbert explores the tension between rising prosperity, widening inequality, and environmental limits. He puts forward two competing paths for the future — degrowth and green growth — and the choices they force us to confront.
What is growth and why is it important?
When politicians talk about wanting “growth”, they mean they want economic activity to increase – or in other words, for more things to be made, sold, bought, and consumed. They don’t usually mind whether these things are jet engines, tennis rackets, haircuts or accounting services, as long as the total value of the transactions – known as Gross Domestic Product (GDP) – keeps increasing.
They care about growth because it tends to bring higher rates of employment and higher wages, giving people more disposable income. Growth also generates higher tax revenues which governments can use to fund healthcare, education, and transport.
Over time, the result has been remarkable improvements in people’s living standards. There are many people alive in the UK today who grew up with rationing of butter and sweets, outside toilets, tin baths, coal fires, and no washing machine, TV, or car – let alone air travel, WiFi, video gaming, streaming services, flat whites, or cancer treatment. In the developing world the changes have been even more dramatic, with 1.5 billion people leaving extreme poverty behind since 1990.
Increasingly, politicians in democracies have understood their main job as continuing to deliver incremental improvements in living standards to the people they represent. Certainly those who preside over periods of economic stagnation or decline get punished when elections roll around.
Criticisms of growth
So what’s not to like? Some believe pursuing growth leads us to value the wrong things.
They might acknowledge the aggregate benefits, while pointing out that at an individual level increased economic activity is a poor proxy for well-being. If I sign up for a gym membership but never go, drive to my desk job every day, and end up on heart medication, I contribute much more to growth than if I cycle to work, run in the park during my lunch break, and seldom trouble my doctor. Subscribing to Netflix, Spotify, and Sky Sports is much better for growth than a weekly singalong around a neighbour’s piano, but much less convivial.
Some would go further still, and say that by turning us into “consumers”, growth is to blame for the loss of meaning, purpose and belonging that manifests in declining democratic, civic, and religious participation.
Growth and inequality
Others associate growth with inequality, pointing to the influence of neoliberal economists such as Milton Friedman on public policy since the 1980s.
The neoliberal idea is that governments best stimulate growth by deregulating, privatising state-owned industries, and cutting taxes on businesses and individuals. This programme unashamedly serves the interests of wealthy elites, but theoretically benefits everyone else by generating increased business investment, jobs, higher wages and so on.
In practice, however, there is strong evidence that the benefits of growth in recent decades have not been shared equitably. Between 2000 and 2024, world GDP increased by 121% – but the net worth of the world’s 10 richest people increased by 464%. It feels like the billionaire class has been taking the rest of us for a ride.
Growth and the environment
Most importantly, the pursuit of growth has been a major driver of climate change and environmental destruction.
This is because, historically, growth has been dependent on the resource-intensive, carbon-emitting production and consumption of energy and goods at ever-increasing scale. To make matters worse, GDP doesn’t factor in the environmental costs of economic activity, skewing political decision-making.
Degrowth
It’s primarily these costs that motivate the degrowth (or post-growth) movement.
Proponents of degrowth think that we ought to cut “unnecessary” forms of production – for example, SUVs, industrially-farmed beef, and fast fashion – and dramatically reduce our consumption so that we are living within planetary boundaries, while implementing redistributive policies to address economic inequality.
They accept that the result of shrinking the global economy will be a decline in living standards, particularly in the affluent Global North, but argue that it is ecologically and morally required, and not incompatible with greater overall well-being. Even the US President thinks American children can manage with fewer toys.
Green growth
The middle way between untrammelled neoliberalism and degrowth is green growth, which involves the so-called “decoupling” of growth and carbon emissions.
Many advanced economies have managed to grow their economies at the same time as reducing their emissions – including the UK, where GDP per person grew 53% between 1990 and 2024 while CO2 emissions per person fell by 57%. However, emissions are not falling fast enough to stop climate change, and the UK economy has barely grown since the 2008 financial crisis.
In this context, advocates of green growth see massive investment in clean energy generation, battery technologies, public transport infrastructure, electric vehicles, heat pumps, insulation, and carbon capture and storage as “win-wins” that both reduce CO2 emissions and drive growth.
Degrowth vs green growth
Degrowthers generally agree these are good ideas, but think they’re insufficient, and that to continue measuring success in terms of growth is to be dangerously in denial. Green growthers might counter that without growth and the resulting improvements in people’s living standards, it won’t be possible for politicians to maintain democratic support for the transition to a green economy. Technological breakthroughs like a cure for cancer or nuclear fusion would generate a lot of growth, meaning that politicians who were committed to degrowth would be forced to deliberately make living standards worse.
Green growthers might also highlight new economic measurement methodologies which make sure that the environmental costs of production and consumption are properly accounted for, and point out that these are key for getting financial markets behind the green transition. At this point the degrowthers might roll their eyes and sigh that it was subservience to financial markets that got us into this mess in the first place.
Political differences
When it comes to inequality, the green growth perspective is that it’s a consequence of political choices, rather than an inevitable outcome of pursuing growth.
Countries like Denmark have market economies, but choose to have high tax rates that channel the proceeds of growth into generous welfare, free university education, and quality public services. Not coincidentally, democratic and civic participation is stronger in Denmark than in the UK, with higher voter turnout in elections and much higher membership of clubs and voluntary associations.
While degrowthers prefer the Nordic social democracies to more neoliberal economies, there are some important points of difference. The degrowth movement is explicitly socialist, meaning that it wants companies to be controlled by their employees and/or the public, rather than private shareholders, and believes that the state should guarantee jobs and housing for everyone. It also supports the redistribution of wealth from the Global North to the Global South as a matter of justice.
Conclusion
The growth debate is really a debate about what we think economies are for. Growth has delivered dramatic improvements in living standards, but at a terrible cost to the environment. Degrowth and green growth offer competing answers to the question of how future generations and the planet can flourish. The choice between them is as much political as it is economic, prompting us to weigh up what we value, what we are prepared to give up, and what we think is possible.
The views and opinions expressed in this post are those of the author(s) and not necessarily those of the Bennett Institute for Public Policy.
