On the Value of Economic Growth #3 – The Stationary State Paradigm behind Degrowth-Thinking

3. The stationary state paradigm

Over the past two centuries, humanity has experienced unprecedented, exponential economic growth. Global GDP per capita rose from $1,102 to $15,212 between 1800 and 2018 (Maddison Project Database 2020). The positive effects of the prosperity achieved through this growth – such as the increase in life expectancy, the reduction in poverty and infant mortality – are rarely questioned. However, the potential and value of growth itself has often been and continues to be strongly questioned. Economists and philosophers often advocate, usually implicitly, an attitude that can be described as a stationary state paradigm.

This paradigm can be broken down into two statements:

1) Further or even infinite growth is impossible.

2) Further or even infinite growth is normatively undesirable. Instead of growth, the normative goal should be to achieve a stationary state, i.e. a stagnating economy that maintains a certain level of prosperity but in which there is no economic growth.

The steady state paradigm, which was developed and advocated by the economist Herman Daly, is to be distinguished from the stationary state paradigm. This is primarily based on the influential ecological critique of growth and associated concepts such as degrowth. Daly’s steady state paradigm can be seen as one of the more influential variations of the stationary state paradigm, as it refers to the same canonical origins in Malthus and Mill and represents the same core ideas, although it expands these to include several ecological and thermodynamic premises and argues more strongly from a neo-Malthusian and anti-anthropocentric perspective (cf. Daly 2012, p. 14 – 24).

This work focuses on the much broader and in political philosophy more prevalent stationary state paradigm and on the associated questions about the meaning of growth, particularly in the context of society and institutions, i.e. from a classic anthropocentric perspective. Ecological arguments, even though they play a significant role in the discourse on the normative value of growth today, will only be discussed in passing – firstly because they are not so central to the paradigm discussed here, and secondly because a detailed examination of the ecological critique of growth can already be found in my work Klimakrise, Degrowth und die Grenzen des Wachstums: Warum wir mehr und nicht weniger Wachstum brauchen (see: Skrobisz 2022).

In the following, the stationary state paradigm will be analysed in terms of its origins, premises and prevalence, particularly in political philosophy, before the arguments against this paradigm are presented in the following sections. The focus here is primarily on the second statement, as this, in contrast to the first, is not only descriptive but also normative in nature and is significantly more influential in the discourse.

3.1 The origins of the first idea

The idea that a perfect society would be an economically unchanging, i.e. stagnant or static one, can already be found in its basic outlines in the beginnings of political philosophy. The concept of the perfect state, which is presented by Plato in “The State”, recognises no change through disruptive technologies or economic growth. Moreover, the philosopher-king is supposed to align it with the realisation of the good, which is an eternal being and thus “not subject to change through becoming and passing away” (cf. Plato 485b). The only possible change that Plato concedes to the perfect state – and with which he somewhat anticipates the scepticism of progress of the stationary state paradigm – is decay, since “everything that comes into being also perishes” (cf. Plato 546a).

The paradigm as such began with the start of political economy, namely with Adam Smith. In his An Inquiry into the Nature and Causes of the Wealth of Nations, published in 1776, he articulated the first premise of the impossibility of endless growth. Smith postulates that a country will inevitably reach a stationary state if it generates all the wealth available to it through its climate, resources and trade relations, which would result in the marginal utility and thus the return on invested capital approaching zero (see Smith 2007, p. 78). He also speculates that the Netherlands of his time, or the province of Holland, was approaching this state (cf. Smith 2007, p. 79). However, Smith does not see the achievement of this state as something normatively desirable, as “while the society is advancing to the further acquisition, rather than when it has acquired its full complement of riches, […] the condition […] of the great body of the people, seems to be the happiest and the most comfortable. It is hard in the stationary, and miserable in the declining state. The progressive state is in reality the cheerful and the hearty state to all the different orders of the society. The stationary is dull; the declining, melancholy” (Smith 2007, p.68).

Smith reasoned that when returns in the form of profits fall in an economy, workers’ wages also fall due to the increasing competitive pressure between companies. As a result, the general population in the steady state becomes impoverished in the long term. This idea that diminishing marginal utility of invested capital would lead to the end of economic growth and consequently to the precarisation of the working class was very influential in economics until the beginning of the 20th century. It also had a lasting influence on political philosophy. It served as the basis for John Stuart Mill’s utilitarian reflections on political economy and ultimately his normative considerations on the stationary state (see Mill 2009, p. 598). In a slightly modified form, as the Marxian law of the tendency of the rate of profit to fall, it is also one of the central premises of Marxism (cf. Marx 2004, p. 209).

Alongside Smith, Thomas Malthus in particular was instrumental in popularising the first idea of the stationary state paradigm. In his essay On the Principle of Population, published in 1798, Malthus argued that the output of an economy essentially results from the combination of labour and land, whereby each additional worker only contributes a decreasing marginal utility to the increase in productivity (cf. Malthus 1998, p.6). In Malthus’ model, the limited availability of arable land leads to a cycle in which population growth is always followed by falling per capita productivity until the population is decimated back to a subsistence level by crises such as famine.

In Malthus’ model, the only way to achieve relative growth per capita is therefore to reduce the population, but there are hard limits to absolute growth (see Aghion 2023, p.30).

Malthus’ theories did not hold up empirically. He did not consider that each additional person is not just a uniform labour force and a sink for resources. He overlooked the possibilities of technological progress and that more people are also potentially more sources of intelligence and knowledge, which contribute to accumulating innovations, which in turn enable the decoupling of calories produced from available land. For example, in the last sixty years alone, the global average yield of wheat per hectare of arable land has tripled from around one tonne to over three tonnes (cf. Ritchie et al. 2022).

In the 1960s and 1970s, however, neo-Malthusian theories, which predicted cataclysmic famines and wars if the world population continued to grow, once again gained great academic and political influence. As a result, millions of people were sterilised, often under duress, particularly in developing countries – the global population has nevertheless doubled since then and famines have become rarer (see Mann 2018). Although the predictions of neo-Malthusian thinkers, such as Paul Ehrlich or Herman Daly, could not hold up empirically any more than those of Malthus, their argumentation patterns are still widely used today and often implicitly form the basis for stationary state arguments.

This is probably due to two phenomena in particular:

1) People generally have great difficulty understanding exponential growth mathematically and intuitively predicting its development – a phenomenon known in psychology as the exponential growth bias. It is very pronounced even among educated people who are aware of this bias (cf. Schonger & Sele 2021). Exponential increases through accumulative processes, whether through compound interest, technological developments, knowledge diffusion, population growth, etc., are difficult for us humans to comprehend – but they are what drive economic growth.

2) Throughout its history, mankind has repeatedly experienced phases of extensive technological and economic stagnation. These phases were actually characterised by oscillations between population growth and decimating crises, as described by Thomas Malthus – several such phases have now been empirically documented for the period between 1200 and 1800 (cf. McAfee 2020, p.11). Due to slow technological progress and the slow spread of knowledge in feudal societies, global GDP per capita grew at a negligible rate of 0.05% per year between 1000 and 1820 (cf. Aghion 2023, p.21) until a phase of relatively constant, significant global growth occurred from 1820 onwards, in which we still find ourselves. In general, global GDP per capita has grown cumulatively by around 1,300% over the last two hundred years (Maddison Project Database 2020). Living in a noticeably economically growing world is therefore a relatively new phenomenon for humanity. It can therefore be assumed that the experience of existing in a largely growthless world, which has dominated the majority of human history, has been engraved in the collective memory, at least culturally, and, together with the tendency towards linear thinking, has led to a rather pessimistic perspective on the possibilities of growth.

The second idea of the stationary state paradigm, according to which an end to economic growth is normatively desirable, is implicitly anticipated by Malthus in its contours. Namely, when he argued that population growth had to be curbed in order to maintain humanity’s standard of living – ergo for Malthus, further growth, even if related to population, is normatively undesirable, as approaching its natural limits leads to mass pauperisation, pandemics and famine. The same pattern of argumentation can be found, in relation to the growth of economic activity, among many representatives of the steady state paradigm, who postulate from a neo-Malthusian position that economic growth is not possible in the long term due to the scarcity of resources and that the attempt to continue to grow will lead to the destruction of the basis of human life in the long term (cf. e.g. Schmelzer and Vetter 2021, p.19; cf. Daly 2012, p.11).

The concrete, more far-reaching second idea that an end to economic growth is not only normatively desirable due to natural limits and thus to avert the destruction of one’s own livelihood was established primarily by thinkers after Malthus.

3.2 The origins of the second idea

The general idea that striving for a higher level of prosperity is not worth striving for and should be rejected for moral reasons is already very pronounced in early Christianity, which negates the value of this life in favour of a promise of salvation in the hereafter. The New Testament admonishes: “Do not heap up treasures on earth. […] Rather, lay up for yourselves treasures in heaven.” (Luther Bible 2017, Mt 6, 19 – 20) Both the early Christians and the Christian philosophers of scholasticism, such as Augustine of Hippo, saw the pursuit of material possessions as something sinful and glorified asceticism. They were only concerned with the economy insofar as they analysed it for its possible fit with religious principles, and thus for its righteousness or sinfulness (cf. Friedman 2021, pp. 51 – 53). This early Christian perspective, which ascribes something disreputable to the accumulation of material goods and financial transactions, shaped and continues to shape normative thinking in European culture in the long term. Its echoes can be heard again and again among some representatives of the stationary state paradigm, especially when they argue with intuitions that are not further substantiated.

However, the concrete concept within philosophy that a stationary state is generally desirable in normative terms was first articulated and effectively popularised by John Stuart Mill in his book Principles of Political Economy, published in 1848. In it, Mill endorses the idea established by Smith and Malthus that there are natural limits to economic growth and that humanity will inevitably reach a stationary state in which capital and population stagnate (and thus, in today’s terminology, GDP per capita) – however, Mill explicitly criticises the idea established by Smith, which was still prevalent at the time, that an end to growth would be a bad thing (cf. Mill 2009, p. 593), thereby initiating the change to a paradigm in political philosophy that views the end of growth as something normatively desirable, and which still exists today.

Mill’s arguments can be summarised as follows:

  1. controlling population growth or reducing the population – as already proposed by Malthus – is, according to Mill, necessary anyway, regardless of the existence of growth, in order to raise the standard of living of mankind (cf. Mill 2009, p.593). According to Mill, the horror of the stationary state in Smith and Malthus is primarily that the population grows beyond the available amount of vital capital and therefore becomes impoverished and decimates itself. According to Mill, however, this can be prevented by controlling or reducing the population, which is normatively desirable anyway, so that this horror loses its effect for Mill (cf. Mill 2009, p.593).
  1. economic growth or an increase in productivity is only a relevant issue for “the backward countries of the world”, while “in those most advanced” (cf. Mill 2004, p.593) – i.e. the Western European countries of the 1840s, which at the time had an annual GDP per capita of around $2,500 (Maddison Project Database 2020) – all the benefits of economic activity or a sufficiently high level of prosperity have actually already been achieved. A certain amount more economic growth might still be possible, but Mill sees “very little reason for desiring it” due to the level of prosperity already achieved, as he assumes that more absolute prosperity would make people neither “better” nor “happier” (cf. Mill 2004, p.594). He also expresses scepticism towards technological progress: “Hithero it is questionable if all the mechanical inventions yet made have lightened the day’s toil of any human being.” (Mill 2004, p.595)
  2. the only thing that really matters in advanced economies is “better distribution”, “of which one indispensable means is a stricter restraint on population” (cf. Mill 2004, p.593). Instead of focussing on more growth, we should instead be concerned with the fairest and most egalitarian distribution of existing prosperity. Such a just and egalitarian society is normatively desirable.
  3. the stationary state is a better starting point for such a just society. If a greater accumulation of wealth is not possible, people will inevitably concentrate more on distribution issues. The just society is therefore “more naturally allied with that [stationary] state than with any other” (cf. Mill 2004, p.594). Accordingly, according to Mill, growth is even an obstacle to achieving a just society.

Arguments 2, 3 and 4 in particular, according to which there is already enough prosperity and more growth is not desirable, as all problems are only a matter of forming a just society through the right distribution and that such a distribution would be easier in a stationary state, had a great impact in political philosophy.

After economics established itself as an independent science at the end of the 19th century and especially in the course of the 20th century and thus increasingly distanced itself from its moral philosophical roots, a two-world thinking emerged in academic discourse with regard to political economy. Ethics and economics diverged into two different spheres with little interaction with each other. On the one hand, this led to specialist economics becoming uncritical with regard to the normative foundations of economic activity. On the other hand, it also led to a tendency in practical philosophy to stop reflecting on economic categories (cf. Ulrich 2008, p.66). In the course of this academic specialisation and separation of functions, philosophers generally became less and less concerned with the concrete nature of economic phenomena such as growth, its limits and its causes. Instead, in the field of political philosophy, they turned more to questions of distribution, while the premises established by Mill were largely adopted uncritically and paradigmatically.

How wealth is created, whether growth is necessary and related questions no longer seemed to be pressing issues after Mill established the primacy of distribution over wealth creation.

This becomes particularly clear when you look at the most influential works of political philosophy of the 20th and 21st centuries: Even though John Rawls drafts an alternative theory of justice to the utilitarianism advocated by Mill in his A Theory of Justice from 1971, he adopts the assertions established by Mill with regard to growth. Accordingly, Rawls does not address this issue at all in his work and merely refers in footnotes to the fact that he explicitly agrees with Mill’s position (cf. Rawls 2000, p. 107). Rawls also agrees with Mill’s fourth argument and echoes the sentiment of Christian scholasticism, according to which the pursuit of wealth is an obstacle to achieving justice: “It is a mistake to believe that a just and good society must wait upon a high material standard […] To achieve this state of things great wealth is not necessary. In fact, beyond some point it is more likely to be a positive hindrance, a meaningless distraction at best if not a temptation to indulgence and emptiness.” (Rawls 2005, p.290)

In Robert Nozick’s libertarian counter-proposal Anarchy, State and Utopia, published in 1974 as a response to Rawls, there is not even a single word about economic growth. Economic growth is also not addressed in the work of communitarian philosopher Michael J. Sandel – neither in his 2009 book Justice: What’s the Right Thing to Do? nor in What Money Can’t Buy: The Moral Limits of Markets from 2012, which deals with the moral dimensions of the market economy. In Democracy’s Discontent: A New Edition for Our Perilous Times, published in 2022, Sandel then identifies the political focus on economic growth as one of the causes of the neglect of civic values and the political tensions in the USA (cf. Sandel 2022, pp.14, 17). Even Martha Nussbaum, who deals intensively with development policy and global justice in her work, addresses economic growth only rudimentarily in her work and argues that the focus should not be on it, but rather on justice, people’s freedoms and empowerment, following the Capabilites Approach developed by her and Amartya Sen, without analysing in depth how these are related to economic growth (cf. Nussbaum 2013, p. 51 & p.194). Even if the latter three philosophers do not explicitly advocate the stationary state paradigm and their positions are compatible with a rejection of this paradigm, they seem to be at least influenced by this paradigm to exclude growth as a relevant factor for their theories. This leads to gaps and errors in their theories, since, as later sections of this thesis explain, the prevalence of civic values, freedoms and democratic institutions is significantly related to economic growth.

While growth was still a relevant factor for normative considerations for Adam Smith, who considered himself a moral philosopher, today it no longer plays a significant role in political philosophy, at least in mainstream discourse.

Continue reading in part 4: On the Value of Economic Growth #4 – The limits of growth


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