Thread by @g_kallis

One of the seemingly strongest arguments in support of green growth is that an economy can keep growing based on non-material goods and services without using more energy. @Noahpinion distills this into a thought experiment of a Matrix economy. THREAD/1

https://twitter.com/Noahpinion/status/1309171221758607365

The Matrix economy is a world where energy/resource input is steady, but GDP keeps growing as we pay more and more for virtual experiences that give us more and more pleasure (paying with virtual work) /2

This is a thought experiment, a parable meant to show that a service-based green growth is possible. The response cannot be that a Matrix world is technically impossible, or socially undesirable, as Keanu and co thought. @Noahpinion does not propose this literally, granted /3

True, however, in the real economy, growth in services comes with growth in energy and resource use. Pop singers spend their millions in learjets. And miners work in mines to buy pop albums /4

Recent research shows that a shift to a service-economy does not reduce resource use because service sector employees making more money will also consume more resources. iopscience.iop.org/article/10.108… /5

We also know that according to real-world scenarios reducing emissions and resource use to sustainable levels is next to impossible with predicted growth rates. The tertiarization of economies does not change this. tandfonline.com/doi/full/10.10… 6

Such real-world observations do not refute the possibility of an endlessly growing weightless economy though they do point to the limits of its real world relevance. Colonizing Mars is also theoretically possible, but this does not make escaping earth a relevant option now. /7

But let’s focus on this as a thought experiment, which is more fun. The interesting feature of any model is its premises. So what does @Noahpinion 's Matrix model assume? /8

The model assumes a constant throughput of energy/resources (presumably at a lower, and more sustainable level than the currently, but that's not so important). And an endless, compound growth of experience-based services that DO NOT use more energy or resources. /9

So, those who make money selling their services in the Matrix economy can buy other experiences, but they can’t buy energy/resources or goods/services made with more energy/resources. /10

As the rest of the economy grows to infinity, the relative cost of energy becomes infinitesimally small. Naturally this would lead to more energy use. But since more energy cannot be bought in the Matrix economy, the cost of energy is maintained by fiat infinitesimally high. /11

Don't get me wrong: I like the world implied in this thought-experiment. I do not mean the world of Matrix, but a world with a steady state of resource/energy use, where the economy revolves around more and better qualitative experiences. /12

Indeed, this is what ecological economists like Herman Daly defined as ‘the steady state economy’. And an economy with low throughput where goods are relational is how Serge Latouche imagined ‘degrowth’ /13

@Noahpinion argues that GDP can still grow in such an economy. Maybe. But in the world of the model this would be nominal, not real GDP growth. Matrix people will have more money, but their money will buy them less/same energy and material goods than we can afford today. /14

If we were to move for a moment also out of sci-fi and back to reality, I find it hard to see how GDP would keep growing if we were to enforce such a strict energy cap, basically limiting the growth of the economy only to growth in services/experiences that do not use energy. /15

Notice that without such an enforced cap, there is no reason why people making more money from services would not use them to buy more energy and energy-intensive goods (a lot more given that the relative price of energy will go down) /16

So such a cap would likely drag economies down, at least initially. But ok, let’s remain agnostic on the GDP effects, because as I said, I actually like @Noahpinion’s implied vision of an economy of low and steady energy/resource use, ‘producing’ experiences and relations /17

You may accept or not that this is close to what we mean by ‘degrowth’. The point is that this vision is extremely radical - much more radical than what comes across as green growth, or even the most radical of the radical Green New Deals /18

It means that we would have to cap not only fossil fuels but all energy and resource use. And that economic activity and life would transition to a completely new set of activities that do not use energy and resources. /19

@Noahpinion criticizes degrowth for its lack of political realism, and for ignoring the needs of the poor. But note that his model implies an similar and dramatic political change - limiting all resource/energy use and making sure this limit is respected /20

The poor by the way in this thought experiment will get richer in terms of access to poems and massages, but not in terms of energy, material goods or what most people consume today /21

Finally: the theoretical possibility of a Matrix economy does not prove that ANY green growth is possible. When people speak of green growth, they mean that more growth will bring greening. Or at least that growth can – and will - be greened. /22

Most green growth proposals focus on efficiency, new technologies, etc. The Matrix thought experiment does not prove that any of this can bring green growth. It says instead, that the economy could still grow if we first put a tight limit that secures greening first. /23

I would say, let’s work then indeed to put such limits and transform the economy into an economy of relations and experiences, and who cares what happens to GDP / END

If you liked this thread and you want to know more about the alternative vision of degrowth, that we juxtapose to that of green growth, check our new book ‘The case for Degrowth’, it is just 25,000 words long.

If you want to go deeper in the issues touched here, check my 2018 book Degrowth. You will find there more on ecological economics, theories of value and debates/controversies around degrowth, with due recognition of the limits of the degrowth proposal. agendapub.com/books/32/degro…