Post- and degrowth - SUM: Sustainability Management Wiki

Authors: Carla Belau, Melusine Münch, Jana Schröer
Last updated: October 1st 2023

1 Relevance

Globally, social and economic systems are colliding with earth system boundaries.¹ According to the latest article by Rockström et al. (2023) ^“seven out of eight globally quantified earth system boundaries have been crossed […] putting human livelihoods for current and future generations at risk”¹. The changes that are destabilizing the earth system are primarily fueled by unsustainable resource extraction and consumption patterns rooted in current social and economic systems. The pursuit of economic growth has not only been associated with rising greenhouse gas emission levels, material use and other environmental impacts, but also with increasing social inequality.² ³Deprioritizing economic growth and the associated increase in gross domestic product (GDP) as a political objective is thus supported by a growing number of academics and organizations.⁴ ⁵ ⁶ ⁷The core assumption is that to avoid an acceleration of the environmental and social crises, it is necessary to reframe current economic thinking so that the focus is shifted on improving social welfare within planetary boundaries.⁸ ⁹

2 Definition and Delimitation of Concepts

2.1 Postgrowth

Postgrowth is an umbrella term for concepts and approaches that challenge the current economic thinking and advocate moving beyond the paradigm of unlimited economic growth.³ ¹⁰ Instead, the broad unifying vision of an economy and society that prioritizes social and environmental wellbeing is being pursued.¹¹ Postgrowth can be distinguished from the concept of green growth, which assumes that the reduction of environmental impacts and the achievement of social objective is in line with the goal of continuous economic growth.¹²

Postgrowth futures are widely defined and differ in their strategy for change, their relationship to capitalism as well as their perception of the role of the state. Postgrowth ideas provide a wide scope of approaches to transition that ranges from rather reformist to more radical positions.¹¹ ¹³ Reformist approaches advocate that the required transformation is achievable within the current structure of the market economy and centralized democratic states, even though fundamental reforms would be necessary to deprioritize economic growth. Representatives of this position may also share agnostic growth or a-growth ideas, suggesting abandoning the growth discourse altogether and shifting away the focus to other objectives of social welfare.¹² ¹⁴ ¹⁵Approaches that are more radical regard today’s capitalism as not compatible with a postgrowth economy and aim instead at differently organized forms of production.¹³ ¹⁶However, opinions differ on whether the democratic state plays an important role in the socio-ecological transformation or a shift beyond centralized states is required.

Nevertheless, various similarities between the different approaches can be identified. It is generally agreed that material throughput shall be kept within the planetary boundaries and natural ecosystems provide a framework for human activity.³ ¹⁰Moreover, alongside a greater focus on social objectives, changes towards the redistribution of wealth and income and decreasing inequality are of high importance. Another common point of view is that a reorientation towards more appropriate welfare measures than GDP is necessary.

2.2 Degrowth

Degrowth represents a more concrete approach under the postgrowth umbrella.³ It serves as a normative concept that criticizes the dominant paradigm of economic growth and provides an overarching vision from which analytical and practical applications can be drawn.¹⁷ At its core, degrowth can be defined as a “process of political and social transformation that reduces a society’s throughput while improving the quality of life”¹⁷, with throughput referring to the material and energy flows in and out of an economy. The underlying assumptions are that growth is unsustainable and human progress without economic growth is possible.¹⁸ Degrowth advocates pursue the objective of a degrown steady-state economy ensuring well-being, ecological sustainability and social equity.⁵ ¹⁸ ¹⁹Degrowth can thus be viewed as a transitory phase leading to a lower steady state, mostly applying to economies in the global North. A reduction in the society’s throughput will lead to economic degrowth, as degrowth scholars view a sufficient decoupling of economic growth from throughput as highly unlikely due to rebound effects and a lack of quantitative evidence.²⁰ ²¹This sustainable degrowth will most likely result in a decrease in GDP, but GDP degrowth is not the objective per se.

Degrowth is a concept that recognizes the need for systemic political, institutional and cultural changeand can thus be viewed as a rather radical postgrowth approach.²² Most advocates view capitalism as not compatible with the idea of degrowth, and thus a transformation towards a different system is needed to ensure “a prosperous way down”²³ and avoid unsustainable degrowth in the form of economic recessions with deteriorations of social conditions.¹⁸

As a movement, degrowth (décroissance) has been coined in the early 2000s by French activists protesting, amongst others, for a car- and ad-free city, which also mobilized activists in other European countries and beyond.²⁴ The term was derived from the title of a collection of essays written in the 1970s and 80s by physicist-economist Nicholas Georgescu-Roegen.²⁵ The impulse towards degrowth also stemmed from modern scholars including French economist Serge Latouche (2009)²⁶ criticizing the ideology of economic development. In 2008, the first international degrowth conference took place in Paris, bringing together a community of scholar-activists studying and practicing degrowth.¹⁷ ²⁷

3 Literature Review

3.1 The Growth Paradigm

3.1.1 Origin and Evolution of the Growth Paradigm

Before the 19th century, in the pre-capitalist era, the term economic growth was not used at all.¹²A rising population was not connected to economic output and activity, and rather seen as a constraint to this output and activity. In the 19th century, a growing economic output was seen as the natural outcome of capitalist production and commerce. In the beginning of that century, there was an unprecedented rise in population and economic activity and economic growth even outpaced population growth due to new technologies enabling labor productivity to increase. In the 20th century, the term ‘economic growth’ began to be used. Lots of countries industrialized leading to growing economies and falling poverty rates.

The Great Depression highlighted the need for more detailed economic data.²² ²⁸ In the early 1930s, United States Department of Commerce Commissioned Simon Kuznets developed a set of national accounts which were the prototype of the GDP accounts. During World War II and in the post-war era, GDP accounting developed to assist with planning militarization costs. Countries began to compare GDP per capita internationally to assess economic success and the relative social progress of nations, known as the growth model of progress. “Economic growth is defined as an increase in GDP, that is, an increase in the monetary value of all goods and services produced within a country in a given time period.”¹²^{, p.6} Even though it is since then seen as a valuable comparative indicator and benchmark, there are limits and critiques especially regarding its eligibility for measuring the welfare of a nation and its global standardization which will be further examined in section 3.1.4.

In the 1950s and 1960s, the growth paradigm took off since economic growth became the primary economic policy for national governments as it was seen to be essential for decreasing poverty, increasing living standards and reaching stable levels of employment.¹² Growth therefore became the stabilization mechanism for capitalist societies addressing post-war issues.Since then, the dominant economic growth paradigm is closely linked to neoclassical economics.²⁹ This approach focuses on the pareto efficient allocation of scarce resources. Pareto efficiency means that “nobody can be made better off without others being made worse off”²⁹^{, p.371}. Economic growth and especially growth in GDP is seen as a driver for the improvement of living standards and life expectancy of all rather than a redistribution tool for the poor.²⁹ According to Alexander (2014) “growth in GDP provides governments, by way of taxation, with more resources to pay for the nation’s most important social services.”²²^{, p.2.} It therefore contributes directly to social, economic and ecological wellbeing as it offers national security and environmental protection programs for example.²² Growth leads to growing personal incomes and as a result, to more freedom to purchase things people want or need.On the one hand, Alexander (2014) states that there is an optimal scale at the microeconomic level. If growth costs more that it is worth this is considered uneconomic growth. Hiring more employees or buying more industrial plants will not maximize profit. On the other hand, he points out that there is no optimal scale at macroeconomic level for the growth paradigm since there are no biophysical limits to growth. Technological and allocative efficiency innovations allow the economy to expand infinitely even though raw materials are finite.

3.1.2 Emergence of Growth Critique

According to Döring (2019) ³⁰ critique on economic growth has been existent as long as economic growth itself. There are multiple economists who have published growth critique over the time and three, who have shaped the discourse and continue to do so today will be presented in the following.²² In 1798, the ‘Essay on the Principle of Population’, also known as the Malthusian Catastrophe, was published by Thomas Malthus. He assumes that population growth will outpace the ability of agricultural production to feed people.³¹ Malthus was the first to lift up the idea that unlimited growth, especially population growth, coupled with economic growth would lead to social and environmental limits sooner or later. ²²The first defence of a postgrowth economy was published in 1848 as the ‘Principles of Political Economy’ by John Stuart Mill.²²Mill raises the question of the purpose of society’s industrial progress, challenging the idea that economic growth is inherently valuable.³² He suggests that economic growth might become purposeless, prompting consideration of how much growth is necessary and why. Mill proposes a ‘stationary state’ where society maintains stability in population and physical capital, focusing on technological improvement and the ‘Art of Living’. In this state, technology would reduce labour rather than accumulate wealth, aligning with modern efforts to enhance quality of life and reduce ecological impact. He also believes that a focus on cultural, moral, and social progress, rather than material gain, would flourish in such a state of mind. Later, Herman Daly (1974)³³ based his concept of a ‘steady state economy’ on this stationary state description. He describes an optimal sustainable state as an economy that neither grows nor shrinks physically but keeps material throughput within the biophysical limits and is still able to yield qualitative change and innovation. In 1972, the Club of Rome published the report ‘Limits to Growth’ which reached broad attention internationally and became the most popular growth critique according to literature.¹⁵ ³⁰ ³⁴ The Club of Rome is an informal international organization ³⁵ with the purpose to “foster understanding of the varied but interdependent components-economic, political, natural, and social-that make up the global system in which we all live; to bring that new understanding to the attention of policy-makers and the public worldwide.”³⁵^{, p.9.} The report states that “[t]he basic behaviour mode of the world system is exponential growth of population and capital, followed by collapse”³⁵^p.142. The main statement therefore is that exponential increase in economic output cannot be sustained in the long-term since the planet’s resources and absorptive capacities are finite.³⁵Pollution and resource depletion would lead to reaching earthly limits and a collapse as food production declines.

3.1.3 Ecological and Social Limits to Growth

In the last decades, growth criticizing literature has been particularly dealing with ecological and social limits to growth. ¹¹ ¹²

According to Büchs and Koch (2017)¹¹ economic growth is linked to an exponentially rising use of non-renewable resources and the generation of waste which threatens the functioning of ecosystems and leads as stated before to limits of seven out of eight planetary boundaries. ¹The 6th Assessment Report of the Intergovernmental Panel on Climate Change (2023)³⁶ reports that the global surface temperature has risen 1.1 Degree Celsius since 1850 to 1900 in 2011 to 2020. Local temperature increases can even be higher than that. NASA (2023) ³⁷ has reported the concentration of CO2 in the atmosphere at 421 parts per million (ppm) in May 2023. The concentration has therefore risen over 100 ppm over the past 60 years. Human activities contributed to 50 per cent of this increase since the beginning of the industrialization. The current concentration is seen as not safe anymore since a level of 350 ppm is considered as the long-term limit of CO2. The growth paradigm is based on the idea that technological and allocative efficiency innovations allow the economy to expand infinitely even though raw materials are finite leading to the decoupling of growth from environmental impact.²² However, current evidence does not show that decoupling is taking place so far. ³⁸ ³⁹ According to Vadén et al. (2020) ³⁸ who conducted a survey on recent research on decoupling including 179 articles from 1990 to 2019, there is no evidence of economy-wide, national nor international resource decoupling and that there is evidence of recoupling through raising material intensity.

Regarding the social limits, Büchs and Koch (2017) ¹¹ consider the benefits of economic growth as unequally distributed and state that they have not reached the people in need as predicted. Poverty and income inequality remain high and are even increasing in a couple of countries. Social pressure, driven by advertisement for example, to keep up with living-standards and consumer habits can lead to stress and even mental disorders. Technological innovation is increasing job insecurity and the fear for job losses. Indigenous communities in developing countries reliant on local natural resources often suffer exploitation, pollution or even destruction through the inclusion of local economies into global value chains. The Happiness Income Paradox (HIP), or Easterlin Paradox, is according to its publisher an explanatory phenomenon for the limits of social comparison in the long-term and internationally.⁴⁰ It is believed that happiness is connected to wealth and income and that happiness varies directly with income, but over time, happiness does not increase when a country’s income increases in the long-term since relative income matters more than absolute income.

Overall, according to Büchs and Koch (2017) “ecological and social implications of growth cannot be separated from each other as ecological destruction is inevitably going to undermine people’s wellbeing in the long term.“¹¹ ^{, p.52} An example can be climate change forcing people to migrate.¹¹

3.1.4 Critique of GDP

Even though Simon Kuznet developed the prototype for the GDP, he “argued against making this fundamental change in perspective permanent, and he urged governments to return to focusing on income and its distribution”²⁸ ^{, p.7}, but was ignored.²⁸ It is the increasing ecological and social limits that have brought up the discussion again whether the GDP as the primary indicator is sufficient for measuring growth, wealth and quality of life in general.¹¹ ²⁸ ⁴¹ The major critique of the GDP is that it excludes the environmental and social costs generated by production. Since emitting greenhouse gases is not associated with costs, damages are not reflected in the indicator. From an ecological perspective, the GDP might even increase as a consequence of environmental damages for example if deforestation increases. From an individual and social wellbeing point of view, the GDP is also seen as inadequate tool as it only focuses on the material aspects of wellbeing. The measurement includes all market transactions whether they increase or decrease welfare such as expenditures that arise from divorces for example. It excludes the informal economy in households, volunteering work, free government services, roles of capital stocks as well as leisure which can all be important contributions for the wellbeing. Furthermore, the GDP is not informative on the distribution of benefits and incomes in a society.“[A] rise of GDP can be consistent with a rise of inequality of income and wealth.”¹¹^{, p.46} In addition, the indicator cannot be compared among different countries with different sizes of the informal economy in terms of quality of life.¹¹

Most critics argue that the GDP should still not be abolished as a whole.²⁸ ⁴² Rather, the focus should lay on closing gaps, increasing its expressiveness and making it more comparable internationally by having uniform standards. In addition, alternative indicators could be included which will be further examined in section 3.2.5.

3.2 Towards a Post- and Degrowth Future

3.2.1 Economic Frameworks

The emerging body of post- and degrowth literature provides a breadth and diversity of ideas for many sectors and areas that would be affected in a future that departs from traditional growth-driven models. Moreover, postgrowth futures will most likely “be highly geographically and temporally heterogenous”⁴³ ^{, p.123}due to the different starting points of different states, especially between the global North and South. To give an overview of the multifaceted scientific landscape, this section will focus on key economic, political, social, and technological frameworks and concepts central to this discourse.

Concerning the economy in a post- or degrowth context, most scholars build on the foundations of growth critique that have been elaborated in the previous section. Economic concepts that have received great attention in the scientific community in the last decades include the works of Jackson (2017)⁴, Paech (2009, 2018) ⁴⁴ ⁷ and Latouche (2009)²⁶ which provide the most holistic frameworks of a post- or degrowth economy.

Jackson (2017)⁴ paints the picture of a ‘Cinderella economy’ that remains within ecological limits highlighting the potential of de-materialized services, reduced working hours and high levels of work satisfaction and participation in the life of society. The necessary transition shall be realized by ecological investments and a structural change that enhances citizens’ capabilities to flourish in less materialistic ways.

Paech’s (2009) ⁴⁴ postgrowth vision builds upon the concept of sufficiency and constitutes of five central developmental steps. These include decluttering and deceleration processes to eliminate unnecessary time, money and resource consuming activities, a balance between self-sufficiency and external supply as well as a regionalization of economic structures. Moreover, remaining consumption demands shall be realized under the concept of ‘material zero-sum games’ by extending the use of products and creating value without the need for extra material production whereas institutional innovations shall support consumers and firms to follow these paths.

As a degrowth advocate, Latouche (2009) envisions an economy “in which we can live better lives whilst working less and consuming less”²⁶^{, p.9} He proposes a circle of eight ‘R’s that represent the stages of the transformation to a degrowth economy. While values shall be re-evaluated and concepts of wealth reconceptualized, the production system of the economy needs to be restructured according to these changes. This does not only include redistributing wealth but also relocalizing production. Moreover, negative impacts of consumption and production need to be reduced, possibly by shortening the working week and decreasing overconsumption and waste. This can also be supported by reusing and recycling activities.

In conclusion, central economic aspects discussed in post- and degrowth literature are minimizing the negative environmental impacts of production and consumption by enacting structural shifts to labor-intensive and low-productivity sectors, such as the service sector, and localizing economic structures. Moreover, a re-organization of work and labor and more equal distribution of income and wealth are seen as crucial.

3.2.2 Political Frameworks

In the heterogenous literature on post- and degrowth futures and their political implications, the question of the role of the state and models of democracy is of central importance. While some scholars believe that it is possible to achieve the necessary transition towards an economy and society that does not exceed environmental limits and ensures social wellbeing through today’s centralized democratic state and its institutions, others call for a more radical overhaul of the political-economic system. ¹⁶ ⁴⁵

In growth criticizing literature, Illich’s (1973) ⁴⁶ conception on the relationship between scale and democracy presents a first key influence in this context. His main argument is that above a certain scale of a system, the distribution of power becomes unequal because the complexity can only be managed by experts of a ruling class. This implies that “only small systems can be democratically and collectively controlled”⁴⁵ ^{, p. 516}. Therefore, scholars point not only to the importance of a participation but also to the role of local level political decision-making to allow for more autonomy.²⁶ ⁴⁷ ⁴⁸

Ott (2012)⁴⁹ argues that a Habermasian deliberative liberal democracy would be most compatible with a postgrowth scenario as it subordinates the economy to ethical principles and politically agreed conditions. This democratic model is furthermore characterized by a deepened dialogue between state, civil society and private actors. Others advocate for a more radical transformation, where economic democracy presents a central aspect.²⁰ ⁴⁵Economic democracy can be defined as “a system of checks and balances on economic power and support for the right of citizens to actively participate in the economy regardless of social status, race, gender, etc.”.⁵⁰ ^{, p.564}It shall ensure more participation in decision-making within companies and a mitigation of the growth pressure in profit-oriented enterprises. Especially within the degrowth movement, the idea of real and direct democracy is promoted.²⁰The idea can be traced back to Castoriadis (1987)⁵¹ which highlights the ability of direct democracy to allow for autonomous self-institution. Most post- and degrowth advocates see a crucial role for state action, in contrast to some eco-anarchists believing that real change could only emerge from below.²²

However, under current conditions, a development towards these ideas of a postgrowth democracy seems highly unlikely due to the absence of movement toward a political transition of that order.²⁰ Instead, some scholars warn that without social forces that support this kind of political change, it is more likely that in a decreasing or stagnating economy there would be a shift towards a more authoritarian direction.²⁰ ⁴³This highlights the crucial role of “strengthening social movements and political tendencies aiming to revitalize democracy and politicize economics”²⁰^{, p. 4.18}.

To achieve the necessary economic and social changes towards post- and degrowth scenarios, scholars have compiled several policy proposals and instruments that can support this transition. The following table provides a non-exhaustive overview of the recommendations often mentioned in post- and degrowth literature to achieve the overarching economic goals elaborated in the previous section.

Policy Objective	Policy Instrument	Sources
Policies to lower production/consumption	Reduction of working hours Job guarantees/work sharing	⁴ ⁵² ⁵³ ⁵ ⁵⁴
Policies to reduce inequality	Basic income; minimum/maximum income	¹¹ ⁵⁵ ⁵⁶ ⁵⁷
Macroeconomic policies for above objectives	Environmental taxes and caps Progressive taxation Disinvestment from dirty sectors and investment in green sectors New modes of ownership Economic legislation favoring socially and ecologically responsible firms	⁴ ⁵⁸ ⁵⁹ ¹¹ ⁷ ²¹ ⁴³ ⁶⁰ ⁶¹

Table 1: Policy Instruments for Post- and Degrowth Scenarios

Own Illustration

3.2.3 Technological Frameworks

In current economic thinking, technological change and innovation are closely coupled with economic growth. This assumption can be traced back to Schumpeter (1934) ⁶² who has coined the idea of creative destruction and demonstrates that technological change is the driver of capitalist expansion. Pansera and Fressoli (2021)⁶³ summarize current perspectives towards technological progress under the terms of technological determinism and technological productivism. Technological determinism describes the belief that technological progress “is inevitable and the innovation pace in a given economy is bound to increase indefinitely”⁶⁴^{, p.383} whereas technological productivism suggests that innovation always leads to new jobs, economic growth as well as prosperity and is thus a good per se. As assumed in green growth strategies, innovation is also considered to be able to expand limits to growth imposed by resource scarcity and help to solve societal problems. ⁶⁵

Post- and degrowth scholars however point out to several limitations that can be associated with technological innovation. Some of the earliest growth critics have shown skepticism towards technologies within a post- or degrowth context.⁶⁶ ⁶⁷ ⁶⁸Ellul (1964) ⁶⁹ argues that the technological system has become uncontrolled and independent of human needs and thus technological change is only pursued for technological change’s sake. Similarly, Illich (1973) ⁷⁰ indicates that unguided technical change can result in an overgrowth of tools that cannot be aligned with a sustainable society and thus highlights the need for convivial tools that re-establish the autonomy of humans. These critical views on technology are still shared by some scholars.⁷¹ ⁷² ⁷³Mostly, it is pointed out that current evidence suggests that due to rebound effects, technological fixes will most likely not provide an escape from biophysical limits to growth.⁷⁴ ⁷⁵Instead, in an economy beyond growth with lower energy and resource requirements, it might be expected that technological sophistication and automation decrease. ⁷⁶

However, literature also provides several approaches that try to align innovation and the notions of a post- or degrowth economy. ⁷⁷ ⁷⁸ ⁷⁹ ⁸⁰ Whereas scholars such as Heikkurinen (2018) ⁸¹ come to the conclusion that refraining from technological practice is needed to obtain a degrowth society, others develop frameworks to evaluate technology and adapt or design them according to certain criteria. ⁸² On the basis of Illich’s⁸³work, Vetter (2018) ⁸⁴ has developed a ‘Matrix of Convivial Technology’, that sums up basic values and criteria into the five dimensions of relatedness, accessibility, adaptability, bio-interaction and appropriateness. Comparably, Lizarralde and Tyl (2018) ⁸⁵ propose two guidelines and recommendations that foster the design for conviviality.

Post- and degrowth literature also studies concrete measures and tools that might offer examples on how to align technology with the ideas of post- and degrowth, Kallis et al. (2018) ⁸⁶, Kerschner et al. (2018) ⁸⁷ as well as Pansera and Fressoli (2021) ⁸⁸ provide an overview of respective projects. These include amongst many others low-tech technologies (e.g. solar shower bags) that are compatible with low energy scenarios, so-called Bike Kitchens that provide space for repairing or building one’s own bike as well as diverse grassroot initiatives such as ‘Design Global Manufacture Local’ processes which put emphasis on developing and sharing designs through global digital commons and implementing them on a local level and thus helping people to become more autonomous. ⁸⁹ ⁹⁰ ⁹¹

3.2.4 Social Frameworks

When moving beyond the current paradigm of continuous economic growth, post- and degrowth literature argues that there will also be the need for cultural and behavioural changes within the society. ⁹²Currently, it may seem unlikely that citizens show great support of post- or degrowth scenarios due to concerns about potential negative wellbeing implications. ⁹³ Especially in a degrowth context, income and material levels of some individuals will most likely be affected, which might be perceived as a welfare loss. ⁹⁴ This is due to the fact that the growth paradigm is not only entrenched in economic thinking, but also in individual people’s minds and identities. ⁹⁵

However, post- and degrowth ideas build on the vision that economic activity should mainly be pursued to maintain or improve long-term human well-being and that this is also possible in the absence of growth.⁹⁶Therefore, it is argued that a fundamental re-ordering of values is necessary to ensure that a fulfilling life does not solely depend on income, consumption and economic growth.⁹⁷ ⁹⁸ Postgrowth literature suggests different conceptions of well-being, such as Elgin’s (1982)⁹⁹‘voluntary simplicity’, Soper’s (2008)¹⁰⁰ ‘alternative hedonism or Muraca’s (2012)¹⁰¹ ‘good life’. Comparably, Jackson (2017) ¹⁰² and Cassiers (2015)¹⁰³ provide alternative notions of prosperity. They all share the idea that a prosperous life is rooted in, amongst other things, finding meaning and purpose in life, having the opportunity to develop into one’s desired self and nurturing relationships.¹⁰⁴ In this context, scholars point out to the importance of citizens’ participation in political decision-making, educational activities and refraining from only relying on top-down interventions. ¹⁰⁵ ¹⁰⁶ ¹⁰⁷

3.2.5 Alternative Indicators

The aforementioned limitations of the use of GDP as a sole indicator for welfare are widely acknowledged, not only in the post- and degrowth literature. ¹⁰⁸ In the past years, various indicators that account for environmental and social aspects not reflected by GDP have been developed and may present an alternative measure of well-being.

Costanza et al. (2014) ¹⁰⁹ provide three broad categories into which alternative indicators can be divided into: adjusted economic measures, subjective measures of well-being and weighted composite indicators. This classification is congruent with O’Neill’s (2012) ¹¹⁰ classification, with the exception that the latter views individual biophysical and social indicators as an additional category. A non-exhaustive list of examples for each category can be derived from the table.

Adjusted Economic Measures	Subjective Measures of Well-Being	Weighted Composite Indicators	Biophysical and Social Indicators
– Genuine Progress Indicator – Sustainable Economic Welfare – Cost-Benefit Policy Analysis	– World Values Survey – Gross National Happiness	– Happy Planet Index – Better Life Index – Human Development Index – Social Progress Index – O’Neill (2012)¹¹¹	Biophysical: – Material Flow Accounting, Ecological Footprint, CO2 emissions, etc. Social: – Inequality, leisure time, unemployment rate, poverty levels, etc.

Table 2: Categories and Examples of Alternative Indicators to GDP

Own Illustration

Adjusted economic measures are expressed in monetary terms and expand economic key figures so that they reflect social and environmental factors. ¹¹² The Genuine Progress Indicator for example considers personal consumption expenditures and incorporates over twenty adjustments to account for factors such as crime, volunteer labor, pollution and climate change. ¹¹³ Subjective measures of well-being can be derived from surveys such as the Gross National Happiness index used in Bhutan to measure the happiness and wellbeing of the Bhutanese population within nine domains. ¹¹⁴ Weighted composite measures combine several subjective and objective indicators and compress a complex set of data into a single indicator. ¹¹⁵ ¹¹⁶ An example is the Happy Planet Index which multiplies data on life expectancy and experienced wellbeing and divides it by a measure of ecological footprint. ¹¹⁷ O’Neill (2012)¹¹⁸also developed an indicator-system to capture degrowth and steady state economy indicators. Moreover, the author as well as Kallis (2011) ¹¹⁹ mention that it might also make sense to have a look at several individual indicators such as CO₂ emissions or poverty levels that may indicate progress in the direction of post- or degrowth.

Despite the existence of well-developed alternative indicators of welfare, GDP currently remains an entrenched measure of economic progress. ¹²⁰This might be partly due to technical or data limitations and methodological drawbacks of the alternatives, but various scholars also point out to political barriers. ¹²¹ ¹²² ¹²³ Not only is there a lack ofconsensus on potential alternatives but also mostly insufficient possibility to influence them in the short term. Moreover, a shift from GDP is likely to worsen influence of some currently powerful interest groups. Other scholars point out that in general, post- and degrowth are concepts that, comparable to liberty, cannot be extensively expressed in numbers and that a focus on indicators might create a distraction from the fundamental and structural shift beyond growth.¹²⁴ ¹²⁵

3.3 Weaknesses and Avenues for Future Research

3.3.1 Critique on Post- and Degrowth

The following critique will be divided into critique on postgrowth and critique on degrowth. For the transition from the growth paradigm towards a postgrowth economy, critics point out that the development lacks content as a concept and is too easily modelled and remodeled.¹²⁶ ¹²⁷A framework is needed to reach enforceability and adapt to different organizational business structures. Furthermore, banking and financial system cannot simply change or adapt to a new economy without being rethought fundamentally. ¹²⁸ It is questionable what should be done with the debts in existence and loans that rely on the continuous money supply which would stop or decrease for example. Those debts will be harder or impossible to be repaid if growth changes.

Regarding degrowth, Alexander (2014)¹²⁹argues that the term might be misinterpreted since it could be analyzed as something against progress and therefore negatively connoted. In addition, it is debatable whether the term is adequate especially since degrowth does not mean that all sectors are shrinking but that there are sectors such as the renewable energy sector where growth is accepted or needed.

According to Holemans (2023) “[p]rosperity without Growth […] is still difficult for many economists and opinion makers to conceive, as it contradicts the dominant thinking.” ¹³⁰^{, p.19} Economic institutions need to change and rethink their goal of growth, competitiveness, short-term profits and meeting shareholder interests and rather turn to meeting people’s needs.¹³¹An overall cultural change is needed. This deep transformation of worldviews and structures and radical shift in values and norms is a strong contrast to business-as-usual approach which might make it difficult to motivate institutions to change since it might be seen as impossible. ¹³²

3.3.2 Future Research

Likaj, Jacobs and Fricke (2022)¹³³ discuss in what areas growth might still be needed and point out that a clarification is necessary for future research. The progressive increase in efficiency in the use of renewable energy sources can be an example where economic growth is still seen as logical and rather a shift towards these less damaging sectors is needed.

Alexander (2014)¹³⁴questions how or if it is possible to align a postgrowth economy with the property and market structures of capitalism. Moreover, he questions whether the term ‘degrowth’ is sufficient to express the transition that is needed or if alternatives are necessary.

Another question that remains is whether technological innovations will be able to decouple environmental impact from economic activity which is closely linked to techno-optimism.¹³⁵ According to Alexander and Rutherford (2019) in this sense “techno-optimism is the belief that the problems caused by economic growth can be solved by more economic growth (as measured by GDP), provided we learn how to produce and consume more efficiently through the application of science and technology”¹³⁶^{, p.232}

Maintaining social institutions like social security and health insurance in the face of declining economic output is seen as another challenge.¹³⁷ To address this challenge, the authors suggest several recommendations such as the transition to a public guaranteed standard pension to decrease reliance on economic growth or implementing supplementary funded provisions to support social security. However, further research is needed to develop specific measures.

4 Practical Implementation

4.1 Key Dimensions of Post- and Degrowth Business

4.1.1 Five Dimensions Framework

It is crucial to understand how the concept of a post- or respectively a degrowth economy is linked to the mechanisms of real societies, their agents and institutions.¹³⁸ Against the backdrop of the macroeconomic-centred literature and research on post- and degrowth, it is particularly important to operationalize these concepts for the microeconomic actors, i.e. businesses.¹³⁹ ¹⁴⁰Businesses and firms represent change agents that need to transform the existing structures of growth, productivism, consumerism and competition. In order to do so one needs to gain an understanding of which characteristics of existing business models can support such a transformation and are thus compatible with a post- and degrowth society. The research topic that interconnects the idea of an aggregated post- or degrowth economy and the practical implementation of this concept on the firm level is relatively young and so are the business models that are subject to this research. As of now, a clear-cut distinction between the business characteristics that can be aligned with postgrowth and the ones that are linked to degrowth concepts is not common. Therefore, most scientific papers use both, the degrowth and the postgrowth term interchangeably. ¹⁴¹ This is also shown by the findings of Pansera and Fressoli (2021) ¹⁴², Gebauer (2018) ¹⁴³ as well as Nesterova (2020) ¹⁴⁴ and Froese et. al (2023) ¹⁴⁵ on business characteristics that are respectively favorable for either a post- or degrowth transformation. The business attributes coincide in many ways, regardless of on which term the analysis was based on. In the following analysis both terms will subsequently be considered synonyms as well.

As mentioned, similar attributes and practices of businesses that are compatible with a post- and degrowth vision can be found in many scientific papers, they are however structured and categorized in different ways. ¹⁴⁶ ¹⁴⁷ ¹⁴⁸ Hinton (2021) ¹⁴⁹ structures his findings in five successive key dimensions: Relationship-to-profit, Incorporation structure, Governance structure, Strategy and Size and Scope. The dimensions represent institutional elements[1] of a business that can either be enabling or constraining factors for degrowth and postgrowth business.

Figure 1: The Five Dimensions of Business

Own Illustration based on Hinton (2021), p.6

Institutional elements towards the bottom of the figure are of a permanent and legally-binding nature, while dimensions at the top are less regulated and easily changeable. Legally-binding institutions have a high obligation to comply with and influence the elements towards the top. The dimensions above relate to purpose and goals, thus they can be altered to a certain degree, however, they are also constrained by the business’ legally-binding institutions. A firm can change its strategy in a short period of time without affecting its relationship-to-profit, if however, the firm decides to be no longer profit-oriented this will have a severe impact on the strategy. According to Hinton (2021) ¹⁵⁰, it is crucial to obtain an understanding of how the different dimensions relate to each other and how much effort it takes to change the structure of a certain dimension in order to effectively transform businesses. Hinton’s (2021)¹⁵¹approach offers the most holistic foundation for assessing to which degree a firm’s attributes correspond to post- and degrowth aspects since it allows for a complete picture. It includes all aspects of business, also the ones that are difficult to change from a legal point of view and considers how the different elements of business affect each other. It is therefore suitable to allocate the findings of other papers to Hinton’s (2021) ¹⁵² five key dimensions, if they are not yet included.

4.1.2 Size and Geographical Scope

This dimension “refers to how small versus large a business is, as well as how local vs. global it is”.¹⁵³ ^p.3 In the context of post- and degrowth literature, small and locally-rooted businesses without growth motives are frequently mentioned. ¹⁵⁴ These businesses avoid scaling up production, number of employees, or geographic extension by applying sufficiency-based limits to size of customers, production capacities, organizational complexity and avoid acquisitions. ¹⁵⁵ The IT consultancy BRM from Bremen for example does not intend to increase the level of sales, number of customers and number of employees, because at this ‘optimal firm size’ the quality of service and efficiency is the highest and growth could destroy the company’s success. ¹⁵⁶ Some firms even pursue production only to a subsistence-extent. This is in line with the idea of a right-size business that only satisfies real, basic human needs. ¹⁵⁷ ¹⁵⁸ Degrowth and postgrowth compatible businesses should be also embedded within the local communities they operate in. This is demonstrated by a localization and decentralization of sourcing, production and exchange as well as a generation of strong social networks and bonds. ¹⁵⁹ ¹⁶⁰A strong localization is also related to a reduced dependence on imported goods and a higher self-reliance that in turn minimizes the necessity for widespread and complex supply chains. In particular, small and medium sized firms demonstrate the attributes of post- and degrowth business with respect to size and geographical scope and are therefore frequently used as examples.¹⁶¹ ¹⁶²The dimension is neither legally-binding nor does it relate to property rights of a company. The decision to grow and respectively to expand geographically is a normative one, that can relatively easy be changed if desired or if an alteration in other institutional elements of the business demand this.

4.1.3 Strategy

A business’ strategy comprises how the company uses its resources to achieve a certain purpose. In this context important elements are business management, -planning and -practices. ¹⁶³ The strategy dimension encompasses a broad number of company attributes that are compatible with post- and degrowth business and has therefore been the main area of focus in the respective literature. The goals, norms and beliefs present in a business are directly linked to its strategy. In a post- and degrowth context, business models and goals are sufficiency oriented. Furthermore, instead of profit objectives, companies aim at satisfying real human needs as well as at enhancing the well-being of non-humans and nature. ¹⁶⁴ ¹⁶⁵Values such as community, diversity, solidarity, equality, cooperation, responsibility as well as social justice are commonly found in those companies and are created in a collaborative and participative manner. ¹⁶⁶ ¹⁶⁷ ¹⁶⁸The relationship between post- and degrowth compatible companies and their employees, customers and suppliers and other stakeholders is generally of high quality, long-lasting and intimate. This is also supported by companies offering their employees an “appreciative and meaningful work environment”.¹⁶⁹ ^{, p. 243}Employers that focus on developing human potential, increase spare time and respectively reduce work time are particularly suitable for a post- and degrowth transformation. Such a working environment, paired with a fair and needs-oriented salary then also ensures long-term employment and low turnover rates. ¹⁷⁰ ¹⁷¹

Aside from focusing on encouraging their own workforce to act sustainably, post- and degrowth compatible businesses also pass on their values to their external environment. ¹⁷² Companies promote sustainability-oriented learning and engagement in the communities they operate in. ¹⁷³ This is also exhibited by businesses publicly sharing their intellectual property and knowledge e.g. in the form of free-licenses. ¹⁷⁴

The post- and degrowth compatibility of a business is further manifested through the products offered and how these are produced and sourced. Post- and degrowth businesses promote ethical and fair sourcing and high standards in the supply chain via third party certifications ¹⁷⁵ Particularly raw materials are carefully selected and processed, in order to ensure high sustainability standards. ¹⁷⁶ Post- and degrowth compatible companies typically aim at offering high quality products and services, that are durable, repairable, safe and often based on renewable resources. In this context, companies make use of eco-effective and circular economy practices, such as closed loop processing, life cycle analysis and the collecting, salvaging of used products and using energy from renewable sources.¹⁷⁷ ¹⁷⁸At the same time material and energy consumption are reduced to a minimum both in the production process as well as in the usage phase, thus ensuring a high eco-efficiency. ¹⁷⁹ In this sense post- and degrowth businesses attempt to make their processes as lean as possible and to avoid waste production. ¹⁸⁰ Further, the usage of a product is increasingly provided by servitization and sharing resources, instead of private ownership. For instance, at German steel furniture producer Richard Henkel, customers are assured that their furniture can be repaired even after many years. Through this approach, the company doubled the share of business derived from services and could effectively maintain its financial viability during the economic crisis despite a decline in production and sales. ¹⁸¹

Also, in contrast to business-as-usual approach, post and degrowth compatible companies share more than the legally required information. ¹⁸² They further communicate non-financial information in a transparent and purpose-oriented way e.g. via common goods or sustainability reports. This form of reporting and external communication is often based on sustainability-oriented accounting tools. ¹⁸³ Being transparent about their operations, post and degrowth businesses are able to create a sense of trust between the company and its stakeholders – they rarely apply marketing and advertising to do so.¹⁸⁴ ¹⁸⁵The strategy dimension is neither legally-binding nor directly connected to the property rights of a business. Strategic decisions can be changed and adapted relatively quick if other institutional dimensions affect the strategy. ¹⁸⁶

4.1.4 Governance Structure

“The rules, protocols and processes by which decisions are made”¹⁸⁷ ^{, p.3} determine a business’ governance structure. This dimension hence looks at how and by whom decisions are taken in companies in a post- and degrowth context. Businesses show a high post and degrowth compatibility when their form of governance is democratic, inclusive and participative. This means that stakeholders of the respective companies need to be actively included into business’ decision-making processes. Decisions such as how to use the generated surplus of a company are no longer based on capital-ownership but instead are taken collaboratively and follow a common purpose. ¹⁸⁸ ¹⁸⁹ ¹⁹⁰Moreover, inside of the company, decision-making processes also become increasingly decentralized and democratic: Post and degrowth businesses demonstrate flat hierarchies and horizontal management styles. ¹⁹¹ This goes hand in hand with a high autonomy and worker self-management. Many businesses with post and degrowth tendencies avoid relying on debt financing or external equity in order to keep decision autonomy. ¹⁹² A business’ governance structure can be legally-binding, when e.g. a company is required to have a board, however many decision-making processes are rather informal and can easily be changed. ¹⁹³ This dimension thus can both have an impact e.g. on the strategy of a company and be influenced by other institutional elements such as a business’ incorporation structure.

4.1.5 Incorporation Structure

This institutional element settles who the owners of a business are and which legal rights, responsibilities and obligations the company has with respect to its proprietors and stakeholders. ¹⁹⁴ It is therefore a legally-binding dimension, that is closely related to the purpose and property rights of the company and deeply affects other institutional dimensions such as the governance structure of a company. Typical post and degrowth compatible legal forms are cooperative and democratic ownership and equity structures. Aside from privately- or family-owned firms, also worker/employee-, community or distributed ownership structures as well as operated or citizen’s cooperatives are suitable. ¹⁹⁵ ¹⁹⁶However, also less cooperative forms of ownership such as a limited company can adopt post- and degrowth patterns to a certain degree. ¹⁹⁷

4.1.6 Relationship to Profit

The relationship to profit or legal form of a firm can be distinguished into for-profit and not-for-profit business structures. ¹⁹⁸ This legally-binding dimension is thus immediately linked to the purpose and property right allocations of a company. Not-for-profit businesses such as charities or foundations, tend to have a post- and degrowth compatibility. These organizations abandon their private financial rights and hence financial gain or profit maximization as a main goal and focus on a social benefit purpose of their activities.¹⁹⁹ ²⁰⁰This deemphasis on a capitalist, growth-based vision allows for a focus on serving real needs and generating positive impacts not only for capital owners. Still, for-profit types of business can also demonstrate post- and degrowth compatibility if surpluses are not an exclusive goal and are made use of in a pro-social and pro-environmental manner. In this context, Johanisova et. Al (2013)²⁰¹speak of not-only-for-profit enterprises. Here, following a post and degrowth purpose, profits can be re-invested, recycled back into the business or redistributed.²⁰² ²⁰³ ²⁰⁴For-profit businesses that have proven to be suitable in a post and degrowth context are up to now for example social enterprises or small and medium sized enterprises. For instance, the social enterprise Greyston Bakery in New York uses all its profits toward fulfilling its social mission of aiding ‘unemployable’ individuals finding employment as well as directing resources towards early learning initiatives, community gardens and housing programs in disadvantaged communities. ²⁰⁵

4.2 Barriers for Implementation

Although post- and degrowth compatible business structures become increasingly established in the economic landscape, related research shows that the number of post- and degrowth oriented businesses in fact remains a small proportion.²⁰⁶The structural quality of the entrenchment of growth-based economic system makes it difficult for the institutions belonging to this system to transition to a post- or degrowth one. ²⁰⁷ Businesses that no longer follow the rules that the traditional system demands, thus put themselves at the risk of failing. Therefore, despite known undesirable consequences, certain barriers, so called structural drivers of growth prevent businesses from adapting their institutional elements to a post- or degrowth vision. ²⁰⁸

Posse (2015)²⁰⁹identifies the financing of a company as the main driver of financial gain and growth. Corporations, that have an interest in raising capital depend on the generation of interest and return on capital, since capital givers require it as compensation for their risk. The higher a business’ leverage ratio the higher the pressure on that specific company to grow. Simultaneously, the extent of interest payments a company can offer is decisive in the competition for capital and loans. In this context, businesses are mainly evaluated and estimated on the basis of their financial figures. Even though non-financial information is increasingly asked for by capital givers, the financial performance often determines whether a business receives capital or not. Another factor that requires companies to grow, are investments with regard to wear of production facilities, acquisition of technology or machines.

Another barrier, or more specifically a driver of business growth are positive returns to scale. ²¹⁰ High sales volume brings forth fixed cost degression i.e. the distribution of fixed costs such as bureaucratic or regulatory costs, over a high number of products, but also experience curve effects and better procurement conditions. ²¹¹ ²¹²At the same time growth and subsequently economies of scale may lead to a higher innovative capacity of the company, since more capital is available for research and development activities. Scale advantages might also foster stability and resilience towards unforeseen cost increases, that are triggered by external factors. When looking at the biggest and global operating corporations, these firms can benefit from regulatory differences e.g. with respect to taxation. Sometimes these multinational companies are even considered ‘too big to fail’.

Aside from growth drivers that derive from the systemic structure of the economy, also an organization’s internal structure can foster growth. ²¹³ Motives for growth from a management perspective can be rooted in the ambition for political influence or power as well as personal achievement and prestige. This ambition is often supported by growth-oriented incentive systems. Business growth is also closely related to the motivation of employees and the attractiveness of a company as an employer: Growing companies, that have little democratic i.e. hierarchical structures traditionally offer more prospects for promotion and high safety of employment.²¹⁴ ²¹⁵Concentration of decision-making power further excludes stakeholders’ interests, which many times include goals other than profit maximization and growth.

Moreover, companies are induced to grow because consumers’ needs often exceed real needs.²¹⁶ ²¹⁷Consumption derives from social and emotional motives, such as social recognition/status. Although an increasing number of people are aware of the risk that overconsumption poses to earth’s ecological boundaries, the majority does not act according to sufficiency. For this reason, companies also operate in markets that are in reality saturated. In order to continue to do so, businesses then create demand e.g. via marketing, planned obsolescence or differentiation of products and services. The creation of demand therefore acts as another growth driver.

4.3 Drivers for Implementation

Despite of the fact that barriers keep the number of post and degrowth oriented types of businesses low, an increasingly important number of degrowth drivers exist that are currently reshaping the economic landscape and give rise to a post and degrowth-oriented future of business.

First of all, the awareness of the limits to growth and the negative impacts that infinite growth implies for the planet drive particularly consumer’s but also other stakeholders’ demand for post- and degrowth oriented business structures. According to the German Environment Agency (2023) ²¹⁸ almost 50% of the persons questioned were already reducing their consumption or willing to consume less, in particular with regard to energy, transport, meat and appliances. By far not all consumers, especially those outside of European countries, are adopting sufficiency practices, however value and consumption patterns are notably changing. This consumer-driven degrowth subsequently acts a driver for post and degrowth business. ²¹⁹

Still, the key driver is the fact that resources are scarce and that the planetary boundaries must mark the limits of economic growth. ²²⁰ ²²¹It is thus inevitable that for example resource prices and the emission of harmful greenhouse gases will increase in price. In advanced nations, such as many European countries, economists have observed the possibility of a ‘secular stagnation’, where growth rates remained low over the last years or even declined. ²²² It is therefore evident, that businesses cannot circumvent considering becoming post and degrowth compatible in the long run. Moreover, an ever-growing number of businesses are legally required to do so. The regulatory frameworks that promote post- and degrowth compatible business behavior are becoming more and more sophisticated and holistic. Regulations such as the Corporate Sustainability Reporting that oblige businesses to report according to the European Sustainability Reporting Standards, as well as the EU Taxonomy for sustainable finance force businesses to manage degrowth and postgrowth-related business dimensions and to publicly report on these. ²²³ ²²⁴Businesses that demonstrate a low performance regarding the sustainability as well as post- and degrowth orientation of their institutional elements might then be confronted with disadvantages in capital provision or reputation. ²²⁵ Non-compliance or little effort then further imply costs and at the same time put the respective business at risk of not being able adapt the realities of a world with limited resources and ecological boundaries.

As mentioned before, the post and degrowth-compatible attributes of the different institutional dimensions represent constraining or enabling factors, or respectively barriers or drivers for a post- or degrowth transition, depending on whether a business already exhibits these attributes or not. ²²⁶ Looking at the different attributes hence can be helpful in order to gain an understanding of further internal barriers and drivers for businesses.

[1] Institutions are systems of embedded social rules that enable, guide, and constrain actors’ behavior (Hodgson, 2018)

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