economics energy simple living

Degrowth and the new economics of energy

Some of the most coherent writing around new economics, energy and sustainability is coming from the Simplicity Institute at the moment. If you haven’t come across their work, scoot on over and download their latest publications.

The most recent is Degrowth, expensive oil and the new economics of energy, by Samuel Alexander. It looks at the price of oil and its effects on the economy, and what that means for the much sought after economic recovery:

“Unfortunately, mainstream economists, including those in government, seem oblivious to the close relationship between energy, debt, and the economy, and this means that they are unable to see that expensive oil is one of the primary underlying causes of today’s economic problems. Consequently, they craft their intended solutions (e.g. stimulus packages, quantitative easing, low interest rates to encourage borrowing, etc) based on flawed, growth-based thinking, not recongnising that the new economics of energy means that the growth model, which assumes cheap energy inputs, is now dangerously out-dated.”

It’s hard to argue with this analysis, when you consider that the British government has attempted to stimulate the economy by making petrol cheaper and building more roads. As I’ve explained before, prolonging our oil dependency makes us poorer, and it’s the epitome of a short-term political win. Government efforts to promote lending have been even greater, offering to underwrite loans, stump up deposits for house buyers, or giving money to the banks on condition that they lend it out to small businesses.

None of this borrowing makes sense unless the economy grows enough to pay back the interest. But the economy can’t grow without cheap energy. We’re essentially taking out a second mortgage on an economy that is already underwater.

What’s the answer? You could look at interest-free forms of money, such as the reforms the Positive Money campaign champion, or Islamic finance. That would remove the growth imperative of interest without locking up the money supply. That deals with future investment, but you’d also have to look at existing debt. As Greece, Spain and Italy show, the moment you stop growing your debts start to overtake you. The only way out of that is some form of jubilee, a write-down that creates a new starting point. With debt and finance stabilised, we could then fund the transition to fossil fuel dependency to a much lower energy, lower materials-intensive way of life.

That’s a rather theoretical and idealistic paragraph, but those are my solutions. Samuel Alexander’s are, fittingly, much simpler. “Ultimately the aim should be to build a fundamentally new, degrowth economy ‘from below’ and thus effectively replace existing economic structures by ignoring capitalism to death” he writes, though he concedes that building resilience might be “the best we can reasonably hope for.”

I love the idea of ‘ignoring capitalism to death’, but I share Alexander’s suspicion that it won’t be quite that easy.

2 comments

  1. Hi Jeremy. Great to see Samuel and the Simplicity Institute get featured – they have a number of fantastic writings and a wonderful book – Voluntary Simplicity you might like to read. I’ve met with Samuel a number of times and he is very engaged to see simplicity in the mainstream. Also just a couple of quotes from their last blog post: ‘simple living isn’t simple’
    ‘the choice to live more simply implies inner change – not a rural lifestyle’
    ‘a way of living based on being is preferable in my experience to one based on having’
    and many other wonderful insights… http://simplicitycollective.com/the-simplicity-exercises-a-sourcebook-for-simplicity-educators

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