The Hindu Business Line : Is the economy fit or fat?

Paris was the venue for a very different international conference on April 18 and 19 this year. The conference was to promote economic de-growth. In an era where politicians, industrialists and economists swear by economic growth and shudder at even the thought of lower growth rates, this conference certainly struck an offbeat note.

Fit or fat, a popular book on fitness, highlights a very critical concept. Thin is not synonymous with fit. You can be thin and sick or even appear fat and still be fit. The book separated the primary objective of fitness and its popular evidence, slimness. One is not the other. What holds for the human system also holds for the economy. Growth is gain in weight. While weight gain is desirable for an underweight individual, it is lethal for an overweight individual. Even for the underweight individual, weight gain desired is muscle gain and not fat gain. Likewise, all economic growth is not good. In economics too there is a muscle and a fat equivalent, but these are yet to gain popular acceptance. The fat equivalent is found in not just the developed countries — the heavier economies, but also the developing countries — the lighter economies.

Mystery of consumption

Titled the ‘Conference on Economic de-growth for Ecological Sustainability and Social Equity’, it was primarily a gathering of academicians and economists, who chose to focus on what the Romanian economist Nicholas Georgescu-Roegen in the 1960s emphasised was the outcome of the economic process: “The true product of the economic process is an immaterial flux, the enjoyment of life, whose relation with the entropic transformation of energy-matter [material consumption] is still wrapped in mystery.” It was this mystery that this group was trying to resolve.

In a simple but telling observation, Georgescu-Roegen differentiated economic growth from enjoyment of life. Highlighting the shortcomings of focusing on a single number for economic growth, without looking at its composition, he remarked, “He who does not have enough to eat cannot satisfy his hunger by wearing more shirts.” This message appears starkly relevant for us in India — ‘among the fastest growing economies in the world’ — where we see large-scale farmer suicides in periods of high economic growth.

At the conference, Philip Lawn of Flinders University Australia shared the bio-capacity of countries vis-À-vis the requirement, based on 1997 level of economic activity. Even a decade ago the requirement was 1.3 earths.

Bio-capacity is calculated based on four factors:

Extract renewable resources at a rate no greater than they can regenerate

Extract non-renewable resources at a rate no greater than they can be replaced by the cultivation of renewable resource substitutes

Ensure that the waste generated does not exceed the ecosphere’s waste assimilative capacity

Maintain critical ecosystems that provide life-essential support services

Indian urbanites are already familiar with the signs of congestion. No Indian living in large cities and commuting to work will deny the need for an expanded city, if not expanded roads. If this is the squeeze we face at the current level of economic activity, just imagine the requirement if India reaches the economic consumption level of the US. An ecological footprint of 10.3 hectares a person, equivalent to 20 Indias, would be needed as otherwise the congestion level will increase 13 times. Is there an alternative?

American ‘way’

The American way of economic life was built on the availability of abundant material resource, and a large land area with scarce population. Thus, centralised production and distribution coupled with an urban city base was developed as a practical model for economic growth. American lifestyle epitomised ‘the bigger the better’ value system — larger cars, larger houses and shopping as a hobby. After the Americans used up their abundant resources, they turned to the rest of the world, reflected in their external trade deficit of over $1 billion a day. American lifestyle can be captured in two basic ideas — wellbeing measured by consumption and economic relationship replacing the social relationships.

In the second half of the 20th century, the US-managed World Bank influenced economic policies around the world. This has resulted in countries blindly following the American model of growth, disregarding the ground-level differences. To state just one — the US has 4 per cent of the global population and 16 per cent of the total land area; in contrast India has 16 per cent of the global population and about 4 per cent of the land area.

This conference was debating alternatives to the American model of growth. For instance, health is measured by money spent on healthcare, education by number of years in schooling, and material wellbeing by ownership and size of the houses and cars. Absence of cars did not mean poverty if there was no need to commute. Better work-life balance would lead to better health without spends on healthcare.

Topics discussed among others included initiatives to achieve urban de-growth, waste de-growth, living space reduction through co-housing, and shift from supermarkets to localised production and consumption — in sum, moving away from globalisation to localisation where possible. In short, reversing almost everything that Indian economy is moving towards.

The call for economic de-growth is a call for reduced material consumption by the affluent and promoting technologies for efficiencies. While economic decline could be a loss of either muscle or fat or a combination of both, de-growth is the conscious reduction in fat, while replacing parts of it with muscles. Decline is the unwanted reduction and de-growth is a targeted reduction in the level of economic activity.

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