The following article is authored by Max Koch.

• Given environmental pressures and long-term economic stagnation, GDP growth can no longer be considered as method to improve welfare resources.

• Researchers must investigate the relationship between growth and welfare, finding ways to decouple them, new welfare funding sources less dependant on economic fluctuations, and methods to decrease demand for welfare.

• Policymakers must realize the environmental limitations of the economy, working alongside researchers, activists and citizens to ensure public support.
   

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Welfare systems across the OECD provide foundational goods and services such as education, healthcare and social security. They are vital to the health and wellbeing of citizens and are central pillars of ‘just transition’ strategies to cope with climate change. These systems now face a range of multiple and interconnected challenges, including rising inequality, demographic challenges, crises of the climate and ecological systems and the ongoing social and economic challenges in the context of the COVID-19 pandemic. The standard answer to the correspondingly reduced fiscal capacity of welfare systems has been economic growth. GDP growth, the argument goes, brings greater resources for the management of poverty and demographic pressures, and for mitigating and adapting to crises such as climate change and COVID-19.

However, the traditional prioritization of economic growth in policymaking is no longer a sustainable answer to the challenges outlined above. First, due to increasing environmental pressures, it is no longer possible to maintain economic growth in rich countries. Very few countries have managed to decouple economic growth from the ecological footprints of production and consumption or from greenhouse gas emissions in absolute terms. Even where this has been achieved, the rates of emission declines are far too slow to match the Paris climate targets (Haberl et al., 2020). Second, prominent economists have begun to explore the notion that wealthy nations now find themselves in a long-term economic slump, often referred to as ‘secular stagnation’ (Corlet Walker et al., 2021). In consequence, policymakers may well have to do without growth whether they like it or not.  

It is therefore advisable to conduct research and develop corresponding policy strategies concerning the ways in which growth and welfare interact, examining how existing welfare systems rely on and in fact promote growth, and how the two could be decoupled (Büchs, 2021; Koch, 2021). This could require, on the one hand, finding new sources of funding which are less affected by economic fluctuations, such as taxes on property, land, financial wealth or inheritance. We can refer to this as the ‘supply’ side of welfare provision. On the other hand, an alternative and sustainable ‘political economy of the post-growth era’ (Koch and Buch-Hansen, 2020) could prevent rising needs for welfare through a more even distribution of work, resources and opportunities, greater economic security, and increased community and family capacities for social support, care and social participation. We can call this the ‘demand’ side of welfare.

Research on the supply side of welfare would focus on questions such as how alternative taxation systems for financing welfare can be justified philosophically and morally, while also taking intergenerational and environmental justice into consideration. Economists could develop scenarios for a reorganized supply of welfare, which assume greater taxation of inheritance, wealth, resource-use and fossil energy consumption. Theoretical insights could come from philosophical ‘limitarianism’ (Robeyns, 2019) as well as from political economy and ecological economics designed to understand and justify limitations, particularly on the amount of wealth individuals could accumulate in an environmentally-constrained world. Concerning the demand side, research can raise questions about how changes in the labour market, health and care sector, community, education and spatial planning could lead to diminishing demand for welfare. Other research could focus on the type of governance that would be required in private, public and civil society.

Policy actors in the rich countries must begin to consider the economy as environmentally limited; something that cannot grow any further and instead start to imagine forms of socio-economic regulation and corresponding institutions capable of governing a ‘degrowth’ process of re-embedding economy, society and welfare in environmental limits with a minimum of social exclusion. Electoral support for such a policy move is most likely when co-developed by researchers, activists and citizens in diverse deliberative forums (Lindellee et al., 2021). Civil society mobilization will be necessary to convince policymakers to take planetary limits seriously and, to reach that end, that welfare systems must be independent of economic growth (Koch, 2022).

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References

Büchs, M., 2021. Sustainable welfare: Growth independence has to go both ways. Global Social Policy Forum 21 (2): 323-327. https://journals.sagepub.com/doi/full/10.1177/14680181211019153.

Corlet Walker, C., Druckman, A. & Jackson, T., 2021. Welfare systems without growth: a review of the challenges and next steps in the field. Ecological Economics 186: 107066. https://www.sciencedirect.com/science/article/pii/S0921800921001245.

Haberl, H. et al., 2020. A systematic review of the evidence on decoupling of GDP, resource use and GHG emissions, part II. Environmental Research Letters 15 (6): 065003. https://iopscience.iop.org/article/10.1088/1748-9326/ab842a.

Koch, M., 2021. Social Policy without Growth: Moving towards sustainable welfare states. Social Policy and Society, 1-13, doi 10.1017/S1474746421000361. https://www.cambridge.org/core/journals/social-policy-and-society/article/social-policy-without-growth-moving-towards-sustainable-welfare-states/635A7EC691A0A16E40B888AFF39FB56B?fbclid=IwAR3UvloFDBQyvclixcVpwNWB30W631iy6TZX03LaebCtk6oc7oYD8WYKwOY#article.

Koch, M., 2022. State-civil society relations in Gramsci, Poulantzas and Bourdieu: Strategic implications for the degrowth movement. Ecological Economics 193: 107275. https://www.sciencedirect.com/science/article/pii/S0921800921003347?fbclid=IwAR1if3CnIXMWC_9u9qCYgB0CruXizrPtS7yFDOpWK2Kej64bIl73UEBdxT0.

Koch, M., & Buch-Hansen, H., 2021. In search of a political economy of the postgrowth era. Globalizations 8 (7): 1219-1229. https://www.tandfonline.com/doi/full/10.1080/14747731.2020.1807837.

Lindellee, J., Alkan-Olsson, J. & Koch, M., 2021. Operationalizing sustainable welfare and co-developing eco-social policies by prioritising human needs. Global Social Policy 21 (2): 328-331.

https://journals.sagepub.com/doi/full/10.1177/14680181211019164.

Robeyns, I., 2019. What, if anything, is wrong with extreme wealth? Journal of Human Development and Capabilities 20 (3): 251-266. https://www.tandfonline.com/doi/full/10.1080/19452829.2019.1633734.

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Max Koch is a sociologist and professor of social policy at Lund University, Sweden. He currently leads an interdisciplinary research project on postgrowth welfare systems.​.

The facts, ideas and opinions expressed in this piece are those of the authors; they are not necessarily those of UNESCO or any of its partners and stakeholders and do not commit nor imply any responsibility thereof. The designations employed and the presentation of material throughout this piece do not imply the expression of any opinion whatsoever on the part of UNESCO concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries.