One of the problems with the post-growth movement is that it can appear theoretical. More of the ideas have been tried than you might think, but certainly they haven’t all been tried at once as a deliberate strategy. No matter how confident we might be, we lack proof that a post-growth economy is possible.
Or do we? Perhaps the world already has a post-growth society, albeit an unintentional one. Here’s what Japan’s GDP has been up to for the last twenty years:
As far as economists are concerned, this is a tragedy and a disaster. How the mighty have fallen. Japan’s GDP is essentially unchanged since the early nineties, its share of global GDP falling from 17 to just 4%. China overtook it last year to become the world’s second largest economy, and now it limps along as a economic failed state, a cautionary tale for students of capitalism.
And yet, the lights are still on, everything still works. Literacy is high, and crime is low. Life expectancy is better than almost anywhere on earth – 82 years to the US’ 78. The trains run to the second. Unemployment is only 5%, and levels of inequality are enviable. Real per capita income growth matches America’s at 0.7% over the past decade. It’s hardly a basket case. In fact, it is living proof that growth isn’t necessary to deliver a high standard of living.
That’s not to say that Japan is to be envied or emulated. A legacy of failed stimulus ideas has left it with big debts, and the future is as uncertain as it is anywhere. Neither is it a steady-state economy in the way that matters most – in its materials. Japan consumes considerably more than a one-planet share and is not sustainable in that sense.
The point is that for well over a decade, one of the world’s most important economies hasn’t grown. And at the end of that stint, it’s still a great place to live.
So maybe Japan isn’t a failure. Maybe it’s just ahead of its time – not ‘stagnating’, but settling into the plateau of ‘enough’.
After 15 years of fretting, maybe it’s time Japan embraced its post-growth state and told the economists where to stick their theories. Professor Norihiro Kato recently suggested that Japanese youth culture was doing just that, downsizing and taking a more measured approach to consumerism. Japan’s population had already levelled off, he noted. He even suggested Japan was entering a post-growth era. “Japan is a small country” people are saying, “and we’re O.K. with small. It is, perhaps, a sort of maturity.”
The Economist declared this “one of the saddest things I’ve read in a long time” in an article entitled ‘Pity Japan‘, but the Economist has not yet entered the 21st century. Kato’s comments certainly struck a chord with others. Environmnental campaigner Junko Edahiro agreed that young Japanese are beginning to aspire to “a kind of prosperity not based on resources.” You might expect that from Adbusters magazine, but how about this from the Financial Times: “If the business of a state is to project economic vigour, then Japan is failing badly” wrote David Pilling. “But if it is to keep its citizens employed, safe, economically comfortable and living longer lives, it is not making such a terrible hash of things.”
Japan, whether it likes it or not, is the world’s first post-growth economy. It won’t be the last, and I suspect several other countries are dropping onto a growth plateau, perhaps including the UK. If so, let’s work with it. Japan proves that growth isn’t necessary to safeguard the things that matter most in life. There’s nothing to fear in levelling out, and if the alternative is boom and bust, then the plateau is a far safer place to be.
(cross-posted at PostGrowth.org)
Fantastic post! very stimulating and very relevant, I think, to the UK, as I am convinced that it is now impossible for the UK to achive anything like the growth rates it is historically used to. The UK will simply have to adapt to a post-growth economy simply because it is horribly exposed to peak oil which, of course, is now impacting with ever increasing force. Also, its banking sector is now systemically dysfunctional, and the spending cuts will force the UK into a double-dip recession anyway. The only growth worth having is in the renewable energy and green products and lifestyle sectors. It’s good to shout that Japan is the way to go, and its rich Buddhist heritage and tradition, with its emphasis on simple living and inner contemplation and meditation does offer them ways of living happily with less anyway. Indeed, contemplation and meditation is common to most of the world’s religions and spiritual traditions, including Christianity, so I suspect such activities will be a lot more popular in a ‘post-growth’ society.
An important aspect to note here: the interest rate in Japan has been hovering near zero for a quite some time – basically it is near nil since, incidentally, 1995. If I were an alien from outer space and only would know these corner data – the size and ressource situation of the country, the stop of population growth, the general wealth and welfare level – I would probably conclude that they decided, quite reasonably, to stop growing. When the base interest rate is practically zero, economic growth changes from a mandatory goal to an unnecessary option. I always marvelled at the motivation of multi billionaires to make yet another billion. So why would a ridiculously rich country want to become even more ridiculously rich? I do not see a disaster. I see Zen and the Art of Economics. So to say. (A closer look however reveals that some regions of Japan are in pain, similar to the Ruhrgebiet in Germany, which went through a painful 25 year transition from coal based heavy industry to high tech). Panta rei. Life is change.
@andydharma: great post! You were stressing a few things I also had in mind. In my novel “Rabenwelt” (German, meaning “Raven World”) that I published 12 years ago, a Taoist Master asked a Westerner: “What were the happiest moments in your life? (….) And yet what do you spend most of your time with?”
2 1/2 years ago I voluntarily reduced my job from full to half time. I don’t have that much monay anymore, but guess what: my little kids have more fun going to the river with me and feed the ducks and gulls with old bread than going to a theme park. We do more things ourselves, grow some of our own vegetable, installed a solar space heating system, buy used books… quality of life has little to do with economic growth. This so called growth, after all, has a lot to do with debt service, interest and with the production, marketing and sales of totally superfluous stuff. Some quietude and contemplation really is dearly needed!
Thanks, Stefan. I gave up working to bring up my daughter soon after she was born and have not worked since, except as a voluntary worker and teacher at my local meditation centre. I’ve therefore been very happy despite having very little money. My wife and I have a thriving vegetable plot, orchard, and chicken family in our back garden. And we are now getting into building a solar and wind power system off grid. We have no debt whatsoever, so we can use our cash in whatever way we want without anxiety, and we are beginning to participate in the Transition Town movement. Life looks good from where we are simply by downsizing from what we used to do – ie. spend all our time earning money in very stressful jobs in order to finance a mortgage and stuff like cars. I’m also very interested in how even politicians here in the UK, including the present UK Prime Minister, recognise that GDP is not good enough any more and they are now supporting attempts to build a well-being index that will largely supplant GDP as an accurate level of societal progress. Just as well, as some politicians have sussed that they can no longer guarantee continued GDP growth anyway. No good promising more jam tomorrow if it ain’t gonna come!
That makes three of us that have chosen to live more simply. I work three days a week, and keep the other two for growing vegetables, renovating the house, writing, and campaigning. There are things my wife and I can’t afford, and money will be tighter when our first child is born later this year, but as you say, quality of life has little to do with a rising income.
The question is how are the social indicators moving while the economy is stagnating?
For example society is becoming less equal in Japan, the Gini coefficent is rising during stagnation while it was falling in the preceding growth phase.
The Japanese do not seem to be a happy nation at the moment and that seems to be tied to the stagnation of their economy.
Generally speaking Japan has been more equal than Western nations. Which direction it’s going in I don’t know. As for happiness, I know that happiness in the UK and the US has been on a plateau since the 1970s despite all our growth, so I suspect that other factors are in play. Perhaps Japan would be happier if they stopped beating themselves up over their failure to grow, that would be a good start.
@DevonChap: that a transition of such an enormous scale involves painful changes is clear, and as long as some still expect (and insist on) continuously growing profit from their capital, inequality naturally rises. But Japan has been on a plataeu since the mid ninteties now, and despite problems, it is far from being a failed state. At the same time it has a very significant debt problem. What also concernes me: since Japan is not an interesting market to invest in these days and interest is near zero, the tremendous japanese capital probably is roaming the global market, significantly contributing to the erratic price movements.
@Jeremy and andydharma: Wealth and happiness are only loosely connected. That’s ancient wisdom. But it is also difficult to be happy when you live in absolute poverty that leaves you hungry and freezing and your children sick without being able to afford a doctor. But I think that there is a certain income level that’s “enough” and beyond which any sacrifices tilt the scale away from the realms of a contented life. But what is enough? It seems to be difficult to define for most. A fundamental problem of man appears to be that his momentary desires always seem so much more important than the needs of the future. Having said that, it has a very immature feel to it. Like a child that wants something. And NOW. The curse of craving. Someone said a long time ago:
Surrounded by craving,
People run around like frightened hares.
Held by fetters and bonds,
They suffer, repeatedly, over a long time.
Time to introduce some facts. Japan is not a zero growth economy per head. Its population is declining. Therefore a static economy is one in which the smaller number of people are getting richer. According to the Economist the annual GDP per head growth rate frome 2001-2010 was +0.8%, higher that of Canda or the United States and just less than the UK.
http://www.economist.com/node/18061550
Japan’s handwringing stems from the fact that on a country to country basis it is falling back because of the declining population and the rise of China. It has also transitioned from rapid growth from the 1950-80s to a rate pf growth per head more common with fully developed countries and it is that transition that is causing the cultural malaise.
Um, I hate to burst Japan’s post growth bubble(it’s effectively an enormous debt bubble), but I am pretty sure that they are massively (and I mean , way more than the US or UK or Greece, Ireland etc.). They experienced their own property and bank debt bubble back in the 90′s, and guess what, they opted for ‘bail-outs’. Thing is, at the time there was lots of real money within the japanese system in the form of private savings which they started tapping(and promising to pay back), only now the well is starting to run dry. Put another way, the government has been kicking the proverbial can down the road for the past 20 years now by just putting everything on the national credit card, in the process. Is this starting to sound familiar? It’s totally unsustainable and a debtbomb waiting to go off. There is good reason to believe their in the near future.
Sure, and I think you’ll find that at no point in the post is Japan singled out as a shining example.
Apologies for making a hash of my original post trying to use tags.
Jeremy,
Ok, true, you do not single Japan out as a ‘shining’ example. You single it out as an avant-garde example of post-growth satiety, “So maybe Japan isn’t a failure. Maybe it’s just ahead of its time – not ‘stagnating’, but settling into the plateau of ‘enough’.”
This is nonsense. Japan does not have ‘enough’. Otherwise, why would the country have to borrow so massively? By your own admission, “Japan consumes considerably more than a one-planet share and is not sustainable in that sense.” What other sense is there? They consume more than they produce, they pay for the difference with loans.
You claim that, “In fact, it is living proof that growth isn’t necessary to deliver a high standard of living.” It does nothing of the sort. This is the same type of delusional thinking by which someone with no credit card limit is ‘living proof’ that living beyond their means is a legitimately sustainable practice.
Look, I do not dispute that decent standards of living are possible in a no-growth economy, I am simply pointing out that what Japan is doing does not provide your elusive proof: “No matter how confident we might be, we lack proof that a post-growth economy is possible.”
Japan is delivering it’s ‘high standards of living ‘ by adhering strictly to an economic policy of ‘more’: substituting ever greater borrowings in place of economic growth. It is not ‘ahead of its time’, it is forestalling the inevitable, desperately borrowing from the future, forgetting this means there will be much less for tomorrow. In effect it is practicing totally unsustainable, good old-fashioned, growth economics.
“The importance of illusion in people’s lives and the tragedy that befalls from its eventual breakdown” – F. Scott Fitzgerald’s The Great Gatsby
I think Japan is ahead of its time not in what it’s doing, but in the emerging understanding of what it could be doing. It is a cultural movement and not yet a matter of policy – the stuff Professor Kato is describing about economic maturity.
Japan may be better placed than most to transition to a sustainable economy, but as you say, it is in a pretty desperate race against its own debt.
Hi again Jeremy,
That Japan may be ahead of the curve, so to speak, with regard to a cultural movement is very interesting and I enjoyed Kato’s piece in the New York Times. I did not understand this was the emphasis of your piece.
Whether Japan is better placed than most to transition to a sustainable economy is worthy of closer examination, you don’t present any solid basis for this in your article. Japan’s strong cultural identity with emphasis on family & community and their serf like work mentality will possibly stand them in good stead when the monetary economy disimproves. However you would also have to look seriously at factors like their fossil fuel dependence and domestic food production for a predominantly urban population of 130million of relatively high density.
I guess my main point is that Japan hasn’t grown for 15 years, and it is therefore a post-growth economy, whether it likes it or not – and it doesn’t. But having come this far, it would be easier for Japan to move to embrace a post-growth economy than those that have seen nothing but growth.
Whether they will or not remain to be seen. They may continue to pursue growth at all cost, racking up the debt until it crashes, which is just as likely right now. I think your own analysis is correct there, that Japan’s debts are impossible to ignore.
My impression is that Japan arrived at an end point of a mature industrial society. It has indeed been in a post growth phase for 15 years, and it indeed suffers from an enormous debt bubble ready to burst any moment, and it is out of the question that the current global financial system and the contemporary money systems are unfit for a postgrowth society. To quote from Bernard Lietaer (The Future of Money):
quote:
—
1. Interest indirectly encourages systematic competition among the participants in the system.
2. Interest continually fuels the need for endless economic growth, even when actual standards of living remain stagnant.
3. Interest concentrates wealth by taxing the vast majority in favour of a small minority.
—
I would add 4: Interest automatically leads to rising public debt in a post growth society.
Japan has the highest debt (compared to GDP) of all industrialized nations, yet it also holds almost 900 Billion in US Treasuries. The question always also is “who is indebted to whom?” It is not a natural law that money is concentrated in some hands while scarce in others. That is a systemic issue.
What also strikes me as odd: since the gold standard was abolished money has no real base anymore. Money forms out of nothing, and fiat money basically is backed by nothing but faith.
Ok Jeremy, I see where you are coming from. Sorry if I came across as being overly critical.
I guess my contention , that an economy like Japan’s should not be considered a de facto post-growth economy simply because its GDP has stagnated, is a little unconventional. I see the growth shifting from the more ubiquitous GDP figure to other measures. Government expenditure and national debt have both grown steadily over the past 15 years both in nominal terms and as a percentage of GDP. Effectively the same growth-economics process is at play.
It remains to be seen what happens to the standard of living re employment levels, education, healthcare, etc. when the national credit card is cancelled and genuine ‘post-growth’ effects are actually allowed to manifest.
Yes, and that’s the difference between post-growth as a fact and post-growth as a policy. Japan is still trying to restart growth, and it’s been a fool’s errand. I fear the UK is about to embark on a similarly futile course.
And thanks for the discussion!
Good post. It is about time policy makers stopped using GDP growth as an indicator of economic and social progression. Taking the UK as an example, there is enormous scope to improve the equity and balance of the economy, as well as society, without resorting to risky, short term GDP stimulants.
At least Japan hasn’t gone down the track of limitless and perpetual growth addiction to boost it’s GDP. Nations should primarily exist for the benefit of its citizens, and those of the future. For all Japan’s faults, they believe in themselves, and arrogantly don’t take on the world’s problems. They haven’t gone down the track of mass immigration, and this is offensive for economists and governments in Australia who believe we must continually grow our population and grow our economy. Nations are people linked together by a common purpose and a common history rather than be a resource for big businesses to grow their profits whether it’s in our interests or not.
“Once Japan has a trade deficit it will all be over pretty quickly, since then of course they will have to attract funds to finance the deficit, and this is where things will start to get pretty tricky.” – Edward Hugh
Japan Economy Watch
And, look what at just came in:
World’s Largest Pension Fund Needs to Sell Japanese Bonds; Japan’s Demographic Time Bomb Officially Goes Off
“Will growth be sufficient to make a long-term dent in Japan’s debt? I scoff at the notion. Moreover, rising energy prices will take a big bite of of Japan’s trade surplus.
By the way, in case you missed it, Japan’s trade surplus went negative last month. Supposedly it’s a one-time thing.”
As for “Japan: the world’s first post-growth economy” aaahhmm, no. It will be all over soon.
God help us all.
Troubling news for Japan. Can you explain how it disproves the idea that Japan is a post-growth society?
Jeremy,
Interested in your thoughts about Japan now that it has suffered natural, economic, and nuclear disaster. How does a post-growth economy move forward, saddled with debt and starved of resources?
Will their circumstances force a new generation of post growth economies (specifically the US)?
This would be a major setback for any country, but Japan’s debts make it particularly challenging. That’s why I was disappointed to see the government pump £200 billion into the markets this week to maintain liquidity – money that turns to steam every bit as fast as seawater pumped into a melting reactor. That kind of spending, anywhere in the world, is waste.
This has to be a turning point for Japan. It’s just slipped a place to the world’s third largest economy, and it can’t afford to see that as a threat. It’s already admitted that it will lose 1.5% of GDP to the disaster, possibly more. If it pursues growth again at all costs, it’s going to bankrupt itself. I’d like to hope that it accepts a little economic re-balancing and formally changes its goals.
So yes, I think Japan has reached the decision point that every country will face sooner or later. The circumstances will either force a more recognised post growth economy, or break Japan’s economy for good.
Hi All,
The fact that Japan will soon have not enough domestic workers to support all of the retired pensioners that currently live longer than most, therefore having a longer period of economic dependance, has been missed. Yes, technically Japan’s economy isn’t growing. Is it a good example of where to aim for post growth? No way. Japan has a more recent history of true self sufficiency than most other “Western” nations. For thousands of years, Japan existed apart from the rest of the world as an island of 30 million feudally governed artisans, poets and agrarians. The Japanese population is already headed back down towards 30 million from around 112 million today. How will they repay their national debt with reducing worker/consumer numbers? They won’t. They will have no choice but to default. In the meanwhile they will have to sell of US treasury bonds. Who will buy those bonds? They are worthless, as China seems to already know. China has been selling down US bonds and buying gold for a while now.
The third largest economy of the world cannot default without causing another massive shakedown in the global arrangements.
Japan is already culturally suited to simply close the doors and turn their collective back on the west, returning to the far higher standard of living they enjoyed under isolated agrarianism. I think this has a high chance of becoming the official Japanese response to decades of economic stagnation and now critical safety and energy issues caused by trying to prop up continual growth in a closed system.
Hmm, I’m not sure Japanese lifestyles were better under agrarian isolationism. But even if they did want to return to that, Japan’s population is too big to provide for all its needs within its own territory. It has to trade and import food and oil, so in that sense it has no choice but to play a part in the global economy. Difficult times ahead, either way.
ﾒｰﾙ友達がすぐに作れちゃうｻｲﾄ!完全無料だからはじめてでも安心・簡単に作れちゃいます。趣味別、年齢別など豊富なｼﾞｬﾝﾙから探せるからﾒｰﾙ友達が作りやすい。
Japans links to china will determine their future of growth in the long term. Another good thing on japans side is they are ahead of the game in technology. we can tale a leaf out their book if we wan to succeed.