Low- and middle-income countries are demanding UN-led solutions to mounting debt problems and wealth inequality.Credit: Cristina Quicler/AFP via Getty
Imagine a world in which nearly 90% of the population earns twice as much, while working half as many hours as they do today. One in which the poorest half’s share of global wealth increases, while billionaires’ share decreases. All while capping global warming at 1.8 °C above pre-industrial levels by 2100. That’s the vision laid out by researchers at the Paris-based World Inequality Lab in their Global Justice Report, a modelling study released last month1.
The report proposes financing the plan through global taxes on the very rich, with revenues going into a fund to support health, education and the shift to sustainable development, including transitioning from fossil fuels to renewable energy. It also proposes the creation of a new international currency to end some of the financial advantages that wealthy countries enjoy at the expense of poor ones.
Another report, presented to the United Nations last month, goes further. The Roadmap for Eradicating Poverty Beyond Growth2 calls for escaping the “trap of growthism”, the idea that progress depends on continuously increasing gross domestic product (GDP). It has been endorsed by more than 1,000 signatories, including the Nobel laureate economist Joseph Stiglitz at Columbia University in New York City.
“People are realizing that just pursuing growth and hoping that it will reduce poverty and inequalities is not working,” says its lead author, Olivier De Schutter, the UN’s outgoing special rapporteur on extreme poverty and human rights.
But many economists are critical of these reports, with some dismissing them altogether. Nature spoke to researchers who have differing views on the role of economic growth in tackling poverty and climate change.
Here’s what they had to say.
Must economies grow to end poverty?
Many economists consider economic growth a necessary condition to end poverty3. They reason that a growing economy creates jobs and increases incomes, which together generate taxes that governments can invest in health, education and other public services. The number of people living in extreme poverty has decreased substantially over the past three decades. The World Bank attributes this achievement to economic growth in East and South Asia. “The biggest thing that’s reduced poverty globally in this century has been the growth of China,” says Eoin McLaughlin, an economic historian at Heriot-Watt University in Edinburgh, UK.
The two recent reports, however, argue that it is possible to end poverty and reduce inequality without relying on a growing GDP. To achieve that, the roadmap proposes a list of 80 policy measures, including a job-guarantee scheme in which governments would employ people unable to find work, focusing on activities involving care and recycling, for example. To finance these measures, it proposes several tax reforms, including a wealth tax on the world’s richest individuals and increasing taxes on activities that harm the environment.
Andrew Fanning, an ecological economist at the Doughnut Economics Action Lab, who is based in Cádiz, Spain, agrees with the roadmap’s premise that growth is not necessary to end poverty, at least not beyond the infrastructure that people need to live good lives, such as roads, schools, hospitals and comfortable homes, he says. The economies of low-income countries might still need to grow to satisfy these needs. “After that point, then we don’t need to grow,” he says.
Can economies continue to grow without hurting the planet?
Some economists advocate ‘green growth’, the idea that countries can continue to increase their GDP while reducing their environmental impacts by developing cleaner technologies. China’s economy, for example, is growing at relatively high rates even after its carbon dioxide emissions recently levelled off and began to decline.
De Schutter acknowledges this example but notes that there are many more environmental impacts beyond greenhouse-gas emissions that might worsen with growth. These include most of the planetary boundaries, the concept that there are limits to Earth-system processes, such as biodiversity loss and changes to the water cycle, that cannot be breached if Earth’s environment is to remain stable4. “There’s no example of a country that has managed to grow without impacting the nine planetary boundaries,” he says. “When you grow the economy, when you increase the metabolism of the economy, you use energy, resources, you produce waste and pollution.”
But Diane Coyle, an economist at the University of Cambridge, UK, says that in rich economies, growth has become less energy- and materials-intensive over time. “The ‘growth’ that is measured by GDP is not a measure of material and energy use, as it includes intangibles and services, which make up a steadily rising proportion of the total,” she says. “A new vaccine or a more efficient solar inverter will add to GDP, and innovations like these are surely welcome.”
